Carolina Hurricanes

Future Contract Costs and Budget Keeping GMRF From Big Move?
June 20, 2017, 6:55 AM ET [11 Comments]
Ben Case
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The NHL set the salary cap for next season, and this might not help the Hurricanes with acquiring top-end forward talent. Some of the teams that previously were tight on a budget might have the ability to make more plays than previously. The ceiling saw a $2M increase to $75M, and the basement rose to $55.4M.

Today, I want to talk about trading partners and also what I think has been the biggest factor in holding GMRF up with trades before the transaction freeze this past weekend.

Regarding partners, at the moment I still think that LV might be the Hurricanes best trading partner. I imagine that Vegas will have a few selections that they intend to trade immediately. While this probably isn’t the splash most Hurricanes fans were hoping for, I think this range of forward upgrade is the most likely.

GMRF could afford to move two or three prospects and some picks for some offensive upgrades. Obviously, they wouldn't receive top tier talent unless GMRF is willing to lose some of the higher-end prospects. However, shoring up the third line to be productive and strengthening the third pairing on D for short term could be a sound move. The biggest areas that could use reinforcements in my mind are C, RW, and third pairing RHD.

I see these types of smaller transactions more likely than a banner trade. This is because I am not sure that what is keeping GMRF away from making a banner deal are the asking prices. The biggest restriction that has been limiting GMRF abilities to make legitimate moves might be financial restrictions.

There are two factors to this: 1-The budget that Karmanos sets for the team and 2-Expected costs of new deals for the 2018-19 and 2019-20 seasons.

When looking at the committed salary a year from now for the 2018-19 season, the Hurricanes have almost $31M spent. Looking at this breakdown would give most people the impression that the Hurricanes would have good financial fluidity, right? I am not convinced though when you look at some history.

The last time Karmanos was willing to spend over $60M was 2014-15 at $63.6M, however, only $55M of that was on the active roster. So, if you want the last time that he spent $60M+ on active salary (not including IR, buyouts, or retained salaries) you have to go back to 2011-12.

In the 2011-12 season, the Hurricanes were almost at the salary cap ceiling and spent $62M. It’s crazy to think that five seasons ago the Hurricanes were spending dramatically more on their active roster and within $2M of the salary cap ceiling. Just how different is it now?

The active salary in 2015-16 was $38M-in fact, the Hurricanes paid almost $20M out in buyouts, retained salaries, and the IR. Last season, the active roster cost $40.4M, and they paid out almost $15M in IR, retained salaries, and buyouts. Regardless of active salary or not, the common trend the past five seasons is that these total costs tend to fall around $58-60M.

Taking into account future contracts, I think that a good comparison is to look at what the Flyers recent deal with Gostisbehere. I think GMRF is setting aside around $12-15M for Slavin, Pesce, and Hanifin next off-season. If Hanifin puts up production like he did with Faulk in the final 22 games, then there is no way he agrees to a bridge in the high $2M’s.

I think $3.8M to $5M (could be higher for a long-term deal) will be the range for each of them. Beyond that, it's a question of the term and where they fall in the salary range. If you add $12M in salary right now to the Hurricanes 2018-19 current salary costs, they’d be around $43 million.

It is unlikely that the Hurricanes will go from being one of the cheaper teams in the league to spending ceiling dollars. Let's assume the Hurricanes are around $43M to $45M next season off-season after signing Hanifin, Slavin, and Pesce.

Then, the Hurricanes still have to sign Lindholm (another $4 to 5M probably). That will probably put the Hurricanes at around $48M to $50M, and they’d only have six forwards, four D, and one goalie on their NHL roster based off of current contracts.

If we assume that GMRF can't go past the max from the past five seasons, then the ceiling for the GMRF to spend is around $62M for 2017-18 and 2018-19. That means in a year from now, whoever the remaining 6-7F, 2-3D and 1G are will need to cost around $12-14M. One can see how even$62M doesn’t give him the cap flexibility to make a play on a legit top line player.

Looking at the history though, I am not sure the budget will allow him to spend $62M. I think it is more realistic that his budget allows him to spend around $58-60M, which would give him about $8-12M to fill out the remaining roster with guys from the AHL and signings/trades next off-season.

There's no way in my mind that GMRF can spend on an elite talent this year if he is operating on a $58-62M budget plan next season and the following one in 2018-19. Especially because heading into the 2019-20 season, Teravainen, Aho, and Skinner will need to be signed to new deals too. I’d be putting aside $12-18M for this one too.

While the Hurricanes have cap flexibility now, fast-forwarding two years down the road based on prior spending levels indicate the Hurricanes could be operating on a very tight budget. Unless Karmanos is willing to let GMRF spend closer to $68M, then the moves will continue to be “smart money” moves as opposed to a play for acquiring elite talent.

This is why making smart decisions and taking on affordable contracts is more imperative now than ever for GMRF. As of now, the Hurricanes sit at around $48M in active roster for 2017-18 and are approximately $6M from the minimum salary cap requirement. This is where GMRF’s budget question and future signings come into play.

Looking at the roster, the Hurricanes have 8F, 6D, and 3G. If GMRF signs PDG, McGinn, and Ryan, it will most likely cost around $4-5M. This will put them close to $2M from the minimum salary requirement and fill their roster out they still would need around three to four more players. These very well could be AHL guys on ELC’s, and this would put Hurricanes around $56-58M spent.

The real question isn’t “does GMRF have the picks and prospects to make a move?” The real question is, “what is the budget for GMRF over the next two to three years?” Who knows, maybe I am wrong, and Karmanos is willing to spend around $68M+, but history indicates this team won't go beyond $62Mish.

So, LV is still my bet for a trading partner given the amount of top nine forwards available with one or two years remaining and on favorable terms.

What do you think is holding GMRF back from a big trade this past May and leading up to the freeze this past weekend? It'll be interesting to see what moves GMRF makes once the transaction freeze is lifted and if he has any deals in place with Vegas. Let me know your thoughts and thanks for reading!