Making Sense of Tuesday’s Roster Moves: An Explanation of LTIR

Peter Chiarelli said in an interview from Europe that the paper transaction involving Ethan Bear was to maximize the amount of LTIR (Long Term Injured Reserve) relief that the Oilers would have upon placing Andrej Sekera on the LTIR list. I had no idea how that all worked and what he was talking about. LTIR is a complicated system apparently. I decided to do a bit of reading so that I could wrap my head around it. A big thank you goes out to the good people at CapFriendly, which is a fantastic resource. Any information regarding contracts or the salary cap that I use in my articles comes from them.

Here is what the 23-man roster looked like BEFORE Sekera went on to LTIR and BEFORE Alex Chiasson and Jason Garrison were signed:

Nuge ($6M) McDavid ($12.5M) Rattie ($0.8M)
Lucic ($6M) Draisaitl ($8.5M) Yamamoto ($0.894M)
Rieder ($2M) Strome ($3.1M) Puljujarvi ($0.925M)
Khaira ($0.675M) Brodziak ($1.15M) Kassian ($1.95M)
Caggiula ($1.5M)

Klefbom ($4.17M) Larsson ($4.17M)
Nurse ($3.2M) Benning ($1.9M)
Sekera ($5.5M) Russell ($4M)
Bear ($0.72M) Bouchard ($0.925M)

Talbot ($4.17M)
Koskinen ($2.5M)

Total Cap Hit = $77.249 million
Buyouts: Pouliot – $1.33 million, Gryba- $0.3 million
Buried: Montoya- $0.0375 million

Total: $78.9165 million
Space with $79.5 million cap: $0.5835 million

The assumption that people make with LTIR is that the player’s cap hit comes off of the books. That’s not how the league does the math. Instead, the value of the player’s cap hit is added to the total amount of cap space that the team is already using. This value is referred to as the Accruable Cap Space Limit (ACSL). It represents the new maximum total that a team can spend on player’s salaries while the injured player is on the LTIR list.

Note what that doesn’t mean: It does NOT mean that the player’s salary is added to the LEAGUE SALARY CAP.

The idea to take from this is that the more that a team is spending on salary, the more that a team is allowed to go over the salary cap once they put a player on LTIR because that salary gets added to the team’s existing cap hit.

When questioned about it, Chiarelli said that the Bear transaction was in an effort to maximize the LTIR space. In other words, the move was made to maximize the ACSL. To calculate the ACSL before the Bear transaction, you would add Sekera’s $5.5 million cap hit to the total cap hit of $78.9165. That makes a total ACSL of $84.4165 million.

Here is what the roster looked like after sending Bear down to Bakersfield and signing Chiasson and Garrison:

Nuge ($6M) McDavid ($12.5M) Rattie ($0.8M)
Lucic ($6M) Draisaitl ($8.5M) Yamamoto ($0.894M)
Rieder ($2M) Strome ($3.1M) Puljujarvi ($0.925M)
Khaira ($0.675M) Brodziak ($1.15M) Kassian ($1.95M)
Caggiula ($1.5M) Chiasson ($0.65M)

Klefbom ($4.17M) Larsson ($4.17M)
Nurse ($3.2M) Benning ($1.9M)
Sekera ($5.5M) Russell ($4M)
Garrison ($0.65M) Bouchard ($0.925M)

Talbot ($4.17M)
Koskinen ($2.5M)

Total Cap Hit (24 players) = $77.829 million
Buyouts: Pouliot – $1.33 million, Gryba- $0.3 million
Buried: Montoya- $0.0375 million

Total: $79.4965 million
Space with $79.5 million cap: $0.0035 million
ACSL: $84.9965 million

The combined values of the Chiasson and Garrison contracts are greater than Bear’s cap hit, which put the Oilers’ spending closer to the salary cap. The more you spend on player salaries, the greater the amount of LTIR relief is. As you can see, these transactions put the Oilers $3500 away from the cap. That is as close as you can realistically expect to get to the cap. Sending Bear down to Bakersfield increased the ACSL number by $0.58 million. That is a considerable amount.

However, the roster still wasn’t compliant because it had 24 players on it. Sekera being placed on LTIR reduced it to 23 men; but Russell is hurt, so he needed to be placed on IR. That opened up the roster spot for Ethan Bear. This isn’t the first time that we’ve seen a team do a paper transaction involving sending a player down and calling them back up again on the same day. I’ve always been confused by these transactions, but now that I have a better understanding of how LTIR works, this one made sense.

Once Bear was recalled, his cap hit was then added to the existing total. The new total of the 25 contracts that need to be counted against the cap is $80.2165 million. CapFriendly says that the Oilers’ current cap hit is $80.2 million. My math is sound. They also say that the Oilers are using $710k worth of LTIR space. Essentially, Bear’s contract is being accounted for because of Sekera being moved to the LTIR list.

The total amount that Chiarelli can now spend on additions if he so desired is the ACSL number ($84.9965 million) – the new total cap hit ($80.2165 million), which equals $4.78 million.

This revelation makes the Jakub Jerabek trade a bit clearer as well. He didn’t have a good camp and he was dealt for hockey reasons, but keeping Jerabek over Garrison would’ve meant having less LTIR space. Here’s the breakdown:

Nuge ($6M) McDavid ($12.5M) Rattie ($0.8M)
Lucic ($6M) Draisaitl ($8.5M) Yamamoto ($0.894M)
Rieder ($2M) Strome ($3.1M) Puljujarvi ($0.925M)
Khaira ($0.675M) Brodziak ($1.15M) Kassian ($1.95M)
Caggiula ($1.5M)

Klefbom ($4.17M) Larsson ($4.17M)
Nurse ($3.2M) Benning ($1.9M)
Sekera ($5.5M) Russell ($4M)
Jerabek ($1M) Bouchard ($0.925M)

Talbot ($4.17M)
Koskinen ($2.5M)

Total Cap Hit = $77.529 million
Buyouts: Pouliot – $1.33 million, Gryba- $0.3 million
Buried: Montoya- $0.0375 million

Total: $79.1965 million
Space with $79.5 million cap: $0.3035 million

The total cap hit in this scenario is lower than it is currently. Bear’s name is also missing. By the time Sekera and Russell would’ve been put on their respective IR lists, Bear would’ve been on the roster. Chiasson would’ve been the other body added to the roster. The difference is that the ACSL number would have been $83.3265 million after it was all said and done, which is $1.67 million lower than the current value. That is a huge difference! This had to have been a part of the reason why Jerabek was traded.

There have been some rumours suggesting that the Oilers might trade for Justin Faulk to offset the loss of Sekera. Justin Faulk’s cap hit is $4.83 million. That sum is greater than the $4.78 million of LTIR space that the Oilers currently have left. If Chiarelli were to add Faulk, then a defenceman would need to be taken off of the active roster to make room. Bear or Evan Bouchard could be removed quite easily. Yes, Faulk could be squeezed on to the roster. The problem would come later in the season when Sekera could possibly come back. There’s a chance that he could miss the whole season, which would mean that Chiarelli could make a trade with no repercussions. There’s also a chance that he could be back on Valentine’s Day, which could cause problems.

Hypothetically, let’s pretend that Chiarelli wants to do the Faulk deal without removing dollars from the current roster, and that Sekera will be back in February. When Sekera comes back, that LTIR relief is no longer applicable. The ACSL number would be null and void at that point. The Oilers would have to be underneath the salary cap of $79.5 million upon activating Sekera from the LTIR.

The earliest that Sekera could return is likely in mid-February. The NHL trade deadline is usually at the end of February or in early March. If Sekera were to come back before the deadline, then Chiarelli could just flip Faulk to another team, but the return for Faulk then would almost certainly be lower than the acquisition cost. Chiarelli could choose to move other players off of the roster instead. If he’s adding a defenceman now, then perhaps Chiarelli could look at moving Matt Benning. Zack Kassian is an expensive 4th liner that could be replaced effectively by Chiasson if push came to shove. Mikko Koskinen has an NMC, but if he is a train wreck then I’m sure there is an understanding that he could be asked to waive it. Or, perhaps a more expensive guy with an NMC like Lucic could get moved. You would need to assess the opportunity cost of acquiring Faulk. It would be Faulk and whatever the return at the deadline would be for whatever Faulk’s acquisition cost would be and whichever roster players need to be moved to become cap compliant upon Sekera’s return. It doesn’t make sense to trade for Faulk.

Adding a cheaper defenceman than Faulk right now might make sense because it would be easier to move a lower dollar value out later in the season, and the initial acquisition cost would be lower. All of our brains might explode if I laid out all of the possibilities and what it would take to make them happen. All we need to know is that there would be options if a defenceman were to be added now, and if Sekera were to return before the trade deadline.

However, the odds of Sekera returning before the deadline are pretty low. If Sekera comes back after the deadline, and Chiarelli has made a trade that uses more of the LTIR pool, then there would be no way for the Oilers to become cap compliant. Utilizing the LTIR relief pool is risky business in this scenario. It would be unwise. Chiarelli has previously stated that he is not in the market for an established offensive defenceman. I don’t blame him for not being in that market despite having the LTIR relief space to make that kind of a move. Don’t hold your breath waiting for a trade in the opening weeks of the season.

I definitely learned something from writing this article, and I hope that you have learned something from reading it. Once again, a big shout out to CapFriendly for the information on contracts and about how LTIR works. Here is the link to the page about LTIR on CapFriendly for your further reading.

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