Drance: Why the end of the NHL’s flat cap era offers Canucks a significant opportunity

The artificial salary-cap austerity of the pandemic-induced “flat cap era” appears to be over. For now.

Over the weekend, the NHL and NHLPA announced an agreement on the terms of the salary-cap parameters for 2024-25. The cap upper limit is now locked in to rise by more this summer — a $4.5 million lift in total, from $83.5 million to $88 million — than it has over the previous five years combined.

With some luck, this could be just the beginning. Lifts to the upper limit should become the norm as the salary cap becomes directly tethered to hockey-related revenues again.

We may be at the dawn of a more flexible, less rigorously cap-focused era for NHL hockey. That would be a very good thing for the sport, but it would also be a fragile reality.

Business factors, from key rights deals expiring to the long-term health of regional sports networks, can suddenly impact revenue and cap growth. Major world events outside of anyone’s control, from currency fluctuations to the wider economy and natural disasters, have brought previous eras of cap growth to a lurching halt. These business environment hiccups are an inevitable part of the NHL game, and it would be naive to assume otherwise at this point.

If we’re entering a new era of cap growth, there will be more fuel in the business engine of the league this summer. Beyond that, when the frenzy fades, nothing is guaranteed or locked in. The best-positioned NHL teams, come what may, will still be the most disciplined ones.

Looking at the Vancouver Canucks, with the $88 million upper limit agreed to, set and confirmed, we can focus with a greater degree of precision on the team’s immediate future and the high-stakes decisions it’s facing this summer.

From a Vancouver perspective, the rising salary-cap tides will be felt even more keenly as a result of work that’s been done to untangle the Canucks’ salary-cap situation over the past few seasons by president of hockey operations Jim Rutherford, general manager Patrik Allvin and assistant general manager Émilie Castonguay. Yes, the $4.5 million in cap growth is helpful, but the continued savings netted by the seismic Oliver Ekman-Larsson buyout and the thoughtful discipline in avoiding expensive, long-term commitments to depth players over the past 18 months have permitted the Canucks to enter this summer with an uncommon abundance of options.

The Canucks will also enter this offseason with an uncommon number of spots in the lineup to fill and enhanced expectations after a dream campaign fell short against the Edmonton Oilers in the second round of the playoffs.

So precisely how much space do the Canucks have, and what does it mean for this summer? Let’s model it and take a look.

Here’s the Canucks’ cap-committed roster for the 2023-24 season, before accounting for the re-signing of any restricted or unrestricted free-agents players, using CapFriendly’s indispensable (but sadly about to go in-house) ArmChair GM tool.

This is an annual offseason primer in which we model where exactly the Canucks’ cap sheet stands heading into this offseason as objectively as we can. Be warned, we won’t be making any pie-in-the-sky trades to send out an inefficient contract.

We’re also not going to take this exercise across the finish line and actually flesh out a full 23-man roster. The point isn’t to predict what the Canucks will do this offseason. We’re trying to get a handle on Vancouver’s short-term options as a way of outlining and calibrating our expectations for what the club can accomplish this summer.

We’ll be using the confirmed $88 million number as the upper limit, but let’s outline some of our underlying assumptions in building this model:

1. Vancouver will carry a dead cap hit valued at $2,346,667 on the books for this upcoming season, the remnants of exercising a buyout on Ekman-Larsson’s contract last summer. That’s the only dead money on the books this offseason.

2. As our departure point for our model, we’re going to include all Canucks players who carry cap hits north of $1 million, or who played in at least 30 games on the NHL roster going into next season — regardless of whether they’re signed to a one-way or a two-way contract — on our initial 23-man roster.

3. We’re going to assume Tucker Poolman’s $2.5 million cap hit will spend the entirety of next season on long-term injured reserve (LTI), which will permit the Canucks to exceed the upper limit of the salary cap by the amount of his cap hit.

With those assumptions in mind, we’ll start by projecting the Canucks have roughly $60.5 million in cap commitments for the 2024-25 campaign allocated to 14 returning skaters.
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There are a lot of jobs left to fill, but with its core locked up, Vancouver will enter this offseason with a healthy $27.5 million in functional cap space with which to identify nine additional skaters to fill out the lineup.

That $27.5 million is a fortune of cap flexibility relative to the buying power most teams that spend to the cap possess. It’s certainly more than most teams that took a big step forward in one year have been able to rely on over the past half-decade.

Obviously a fair bit of that will be spent on keeping the band together and signing some of Vancouver’s many important pending free agents. We’ll start with the restricted players.

Because of different leverage points, restricted free-agent deals routinely take longer to get done than deals for expiring unrestricted players. Accordingly, the money a team requires to get its key restricted players signed tends to be kept in reserve and earmarked for when negotiations produce a deal later on in the summer. In projecting functional offseason cap space, it’s useful to start backward to account for this.

When producing our restricted free-agent valuations, we typically lean on Evolving Hockey’s contract projection model, which mines historical data from CapFriendly and is exceedingly accurate in projecting RFA values and solid but less accurate in projecting UFA values.

Like all tools, the model is both powerful and imperfect. It gives us something substantive and objective to hold on to, even if we might reasonably take exception with any individual projection by a few hundred thousand (or more) in one direction or another.

So let’s go about signing Vancouver’s key restricted free agents, using the figure the Evolving Hockey model believes is the most likely outcome based on the player’s history and comparables:

1. Filip Hronek — We’ll start with the big one: top-pair, nearly 50-point, right-handed defender Filip Hronek. The Evolving Hockey model believes the most likely third contract outcome for Hronek based on historical comparables is a four-year deal worth $6.3 million. That’s an exceedingly shy projection given what it’ll actually take to buy unrestricted free-agent years from Hronek this summer, but it’s probably only a bit off on the number we’d expect the two sides to settle on in the event of a one-year agreement (or award).

2. Arturs Silovs — Arturs Silovs looked ready for full-time NHL duty in the playoffs and is expected to serve as Vancouver’s full-time NHL-level backup next season. The model projects Silovs is most likely to come in on a one-year deal worth $775,000 for 2024-25.

Once we plug those restricted free-agent contracts into our model, we’ll have 16 players with $67.5 million in cap space committed, leaving the Canucks with roughly $20.5 million to fill out their roster.

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Now, $20.5 million is still a lot of cap flexibility. Only 11 teams in the NHL will have more, according to CapFriendly’s projections.

Even if you want to add $1-1.5 million to the Hronek valuation to keep it more realistic, Vancouver will still have enough relative buying power to be above the NHL average going into this offseason after signing its key restricted players.

In this scenario, the Canucks still have some crucial needs to fill — a top-six winger, a third-line centre, ideally two more top-four calibre defenders — and a whole host of important, marketable UFAs who will be in line for significant raises when the market opens July 1.

Once you factor in weighing extensions for players like Elias Lindholm, Nikita Zadorov, Tyler Myers and Dakota Joshua, it’s clear Vancouver’s space could evaporate in a hurry well before the market opens.

For our purposes, let’s plug Myers into the model given he’s rather widely expected to remain in Vancouver. Evolving Hockey’s model thinks the most likely outcome (25 percent) for Myers is a one-year deal worth $2.3 million, but the model also considers the odds of Myers signing a deal with more term are far greater (69 percent). So let’s take the cap projection on a two-year Myers deal — which comes in at $3.925 million — and plug that contract in.

We’ll also include Lindholm, the 29-year-old two-way pivot to whom the Canucks are reportedly prepared to offer $7 million across seven years of term, according to Sportsnet’s Elliotte Friedman. “I’m just not sure it’s going to get it done,” Friedman recently said on 32 Thoughts, “(but) I think the Canucks want this player.”

For what it’s worth, the model sees a $7 million valuation for Lindholm on a seven-year deal as a little light. It projects Lindholm to earn close to $8 million on a seven-year pact, so we’ll plug their $7.935 million projection for Lindholm into the model as well.

This is just illustrative and isn’t a commentary on what’s most likely to occur or a take on what should occur. What better way to stress test how much cap flexibility Vancouver has to work with this summer than by projecting it to extend its biggest-ticket pending UFA?

With Lindholm and Myers (and Hronek) in hand, Vancouver’s smooth cap situation is suddenly more familiarly crunchy. It now has $79.4 million in cap space committed to 18 players, and while the centre depth is exceptional and the top four is workable, the forward group is lean on the wing.

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With two priority unrestricted free agents signed, the Canucks still have roughly $8.5 million in cap space with which to sign a maximum of five additional players.

It should be mentioned here there’s also a direct route to creating an additional $3 million in cap space with a buyout of Ilya Mikheyev’s contract. We don’t expect that to be a top-line consideration this summer and it probably shouldn’t be, but it needs to be noted as a break-glass option for Vancouver.

Even without exercising a buyout, if the Canucks were comfortable going with more affordable options ($1.5 million or less) to fill out their defensive depth, there is still space remaining to chase a midrange contributor on the wings in unrestricted free agency or the trade market. And that’s with the club projected to sign Lindholm, Myers and Hronek to contracts worth a combined $18 million.

That’s the real takeaway here. It’s time to update our preoccupation with spending efficiency somewhat going into this summer. This is a team that just won 50 games, finished first in the Pacific Division and has its core locked up for next season. Every dollar still counts, but Vancouver has the space to afford some luxury items. In fact, adding luxury items is a necessity given Vancouver needs premium contributors more than anything else.

The Canucks are positioned to where they can make difficult decisions and seek to actively improve. The opportunity is there to consolidate the real gains they made this past season and ward off some inevitable regression by continuing to improve.

This is what life looks like on the other side of the flat cap era, for now. Good riddance to it.

(Photo: Derek Cain / Getty Images)

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