Welcome back! Last time, we discussed the pros and cons of the Detroit Red Wings re-signing forward Daniel Alfredsson, in terms of roster spot competition and health/production. Today, via Ansar Khan of mlive.com, general manager Ken Holland announced he is “probably” going to make a push to sign the Swede (link here). This announcement has brought up another concern to some fans on Twitter that was left untouched in the last installment: the effect of his cap hit and performance bonuses.
If you’re pro-signing Alfredsson, don’t be afraid, the Red Wings can afford to sign him. Detroit has $5,270,455 in cap space available, with only defenseman Danny DeKeyser to sign undoubtedly.
Alfredsson signed a 1-year, $3.5 million contract, but the contract included a bonus clause. The clause granted him $2 million extra in not only salary, but against the team’s salary cap as well. Bonuses for players over 35 are sometimes in the form of “performance bonuses”, in which the player has to accomplish an established goal or set of goals, like point totals, to get the money. The details of bonuses aren’t usually known, but because Daniel is such a talented player, it is almost guaranteed he will earn the bonus. So, in the end, if Alfredsson were to re-sign, his cap hit will figure in his bonuses.
So if the cap hit is going to be the same regardless, why is it is such a big deal?
That’s because bonuses work a bit differently than the money in the rest of the contract. Because of the new CBA introduced after the 2013 lockout, each team has what’s called a “performance bonus cushion”, which means they can exceed the salary cap by 7.5% through performance bonuses. With this year’s cap hit set at $69 million, the performance bonus cushion is $5,175,000. Now, the cushion will only protect the team from cap penalties this year, because the amount a team is over the cap and into the cushion will actually count against their salary cap for the next season. The cap overage is the concern of signing Daniel Alfredsson.
So, with $5.27 million in cap space, the Red Wings absolutely have to sign Danny DeKeyser, who could probably earn, at the most, $3 million/year for a bridge contract. That leaves $2.27 million to sign Alfredsson, but the team will also give him a bonus clause that will run over the cap limit and count against next season’s cap. Is bringing Alfredsson back for one last season, along with a cap overage for the following season, a season for which Gustav Nyquist, Tomas Jurco, and Brendan Smith will all need extensions after becoming restricted free agents? Alfredsson’s bonus overages will probably very small, no more than $2 million I’d assume. But anything could happen next offseason in the free agency market, and the team’s payroll could screech towards that upper limit.
Now with the issue of bonuses and cap overages thrown into the mix, the question resurfaces: should the Detroit Red Wings re-sign Daniel Alfredsson?