Lafrenière signs & how it affects the cap situation

QUEBEC CITY, QC – OCTOBER 18: Alexis Lafreniere , drafted first overall by the New York Rangers (Photo by Mathieu Belanger/Getty Images)

Alexis Lafrenière signed his Entry Level Contract with the New York Rangers

It didn’t take long as the New York Rangers got a bit of business out of the way, signing prized rookie Alexis Lafrenière to a three year Entry Level Contract.  The deal will pay him $925,000 a year in salary and signing bonus, but he could make an additional $2.85 million in performance bonuses every year.   So, despite a $950k cap hit, the Average Annual Value (AAV) of the contract is $3.775 million.

Performance bonuses are an issue we’ve covered before here at Blue Line Station.  They are the hidden factor for every team and can be a huge hit to a team’s ability to spend on player salaries.  It’s especially difficult for a team with a lot of young players, like the Rangers.

With the signing of Lafrenière, the potential performance bonus hit for the Rangers is now $10,062,500, the most of any team in the NHL by far.   What it means is that at the end of the season, if all of the performance bonus targets are hit and paid out, the Blueshirts will need to have over $10 million in cap space at the end of the season.  Anything short of that number will then be carried over to the 2021-22 season.   So, the Rangers are facing a flat cap in 2021-22 and could also be hit with a carryover bonus overage that will hit their total cap number.

The cap situation

Here’s where the team stands right now.  The Rangers have 11 forwards under contract.  They have six defensemen under contract. They have one goalie under  contract.  For those 18 contracts on the major league roster, their cap hit is $49,701,189.   They have $12,994,444 in dead cap space due to the buyouts of Kevin Shattenkirk, Henrik Lundqvist and Dan Girardi.

That leaves them with $18,804,367 in remaining cap space.  With that, they need to re-sign Ryan Strome, Tony DeAngelo, Brendan Lemieux and Alexandar Georgiev.  Phil DiGiuseppe needs to be re-signed, but he should close to the league minimum of $700k that he made last season.

Here are rough salary estimates for three of the four from EvolvingHockey.com:

  • Tony DeAngelo:  $5.548 million
  • Ryan Strome:  $5.617 million
  • Brendan Lemieux: $1.32 million
  • Alexandar Georgiev:  $1.5 million (estimate based on comparable salaries)

That adds up to almost $14 million and gets the Rangers to the roster number of 22 players who count against the salary cap.

Barring any additional signings or trades, that would mean that the Blueshirts would go into the season with almost $5 million in cap space.

Bear in mind that includes newly signed Kevin Rooney and Colin Blackwell.  Replace them with Vitali Kravtsov and Morgan Barron and the cap hit goes up by $400k.

That’s where the performance bonus hit is important. If the full $10 million is paid out, it would mean that there would be a carryover of $5 million in 2021-22.   The good news is the dead cap space from buyouts drops from $13 million to a little over $4 million.  Even if the team has a bonus carryover of $5 million, their dead cap space would be less than this year.

The bonus carryover potential is one reason why at $2 million a year, Jesper Fast was too expensive for the Rangers.

What it means

Looking ahead to this off-season, it means that the Rangers aren’t going to be active in the free agent market place moving forward.  If the team is looking to improve their second line center position it will have to be via trade and that would mean that Ryan Strome has to go.

The three players with the highest performance bonus exposure are Lafrenière  ($2.85 million), Igor Shesterkin ($2.85 million) and Kaapo Kakko ($2.65 million).

If Lafrenière , Shesterkin and Kakko have spectacular seasons next year, it will mean the Rangers will have to shed salary by the end of the season to make room for the bonus hit. That could mean a sell-off at the trade deadline, with the team swapping salaried players for draft picks.

It’s a sticky wicket.  Great seasons for the kids and it hurts the Rangers’ cap situation.  Great seasons could mean playoff contention and the team would be in the tough situation of having to shed salary while fighting for a playoff spot.

After the draft Jeff Gorton said that there won’t be very many hockey trades made this off-season, that every transaction will be dictated by financial considerations.  It’s hard to believe that the Rangers are actually in better cap shape than most teams considering that they didn’t want to spend $2 million on a valuable veteran like Jesper Fast.

The Rangers will be like every other NHL team, jumping through hoops to make the dollars work.  It won’t be easy.

#13

This morning we speculated on what number Lafrenière  would pick and it appears he has made his choice:

Since it was on the Rangers’ twitter feed, it has to be his choice.  The best player to wear it was Sergei Nemchinov and most recently, Kevin Hayes.  Good choice.