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How Does Andrew Ladd on Waivers Impact the Islanders?

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We used to have the Carp Lad, now we have the Cap Ladd.

Vancouver Canucks v New York Islanders Photo by Mike Stobe/NHLI via Getty Images

A Quick ‘Andrew Ladd Got Waived’ FAQ

How does Andrew Ladd getting waived affect the Islanders?

By now, if you’re reading this you almost assuredly have heard that the Islanders waived Andrew Ladd on Thursday. There’s actually quite a few implications in terms of the short-term and beyond, so my hope is that this small “FAQ” will help complete the puzzle in terms of the options the Islanders have as a result. For the purposes of intuition and common sense, I’m going to assume that he will clear waivers today. So, with that said, let’s get to it.

Question 1: Will Andrew Ladd stay in Bridgeport permanently?

Maybe. Maybe not. Lou Lamoriello did not seem to be wedded one way or the other, largely stating that Ladd simply was not ready enough to play in the NHL. That doesn’t sound like a one-way ticket over the Long Island Sound, but things can change quickly. If Ladd redevelops his game, there’s no reason to expect that he couldn’t get called up. If not, it might be a longer stay than he’d like.

There’s also a slight possibility this is a precursory move to a ‘Robidas Island’ situation, where Ladd essentially never comes off long-term injury reserve (LTIR) and we never see him again. But, that seems extremely premature at this time.

Let’s assume that does not happen. If Lamoriello does want Ladd to spend the remainder of his Isles time playing in Bridgeport, he would need to be waived at the start of each year.

Question 2: LTIR… is Ladd still on that and how does that impact the Isles’ cap?

Ladd is still technically on long-term injury reserve, but the results of that are pretty negligible. The only thing that really did for the Isles was open up a roster spot on the 23-man roster, which regular injury reserve does too. The cap implications for LTIR are more relevant when a team is over the salary cap ceiling. The Islanders are projected to be approximately $4.67 million below that (per CapFriendly), even with Ladd’s contract counting currently towards their overall team cap hit. So, there’s no real impact either way unless the team acquires some big contracts in the very short-term.

Question 3: So, are there any cap implications at all?

There are. The Islanders will save $1.075 million on the cap prorated through the rest of the year, as per the CBA. That means Ladd’s cap hit will shrink down and display $4.425 million on sites like CapFriendly, but his actual full season cap hit will be approximately $4.792 million instead of his annual average value of $5.5 million.

Question 4: How the heck did you get to that number?

The way the NHL salary cap actually works is that it compounds on a daily basis. In other words, each team has a daily 23-man roster + injured reserve players cap hit based on a season of 186 days. For example, for salary cap purposes Anders Lee actually makes $37,634 per day on the cap. As it is extraordinarily likely he will be on the roster all season, that will eventually total a $7,000,000 cap hit for the season.

So, the way it works for Andrew Ladd is like this:

This is a little tough to read, but it basically states that Ladd has counted for $1.301 million on the cap with his $5.5 million AAV through 44 days (a daily cap hit of $29,570), and will count for an additional $3.49 million should he stay in Bridgeport for the remaining 142 days of the season. That totals up to the $4.791 million in the bottom right.

Because the cap hit is a compounding number, the less the Isles spend now, the more money they will have to spend during the season. Right now, CapFriendly has the Isles projected to have upwards of $21 million dollars to spend at the trade deadline. So this savings is minimally impactful, but not prohibitive for the Isles to make future moves. If anything, Ladd being healthy and in Bridgeport will allow them an extra roster spot should a move be made before the 2020 NHL Trade Deadline.

Note: this is all cap hit related. Ladd will still be receiving the entirety of the $5 million in compensation he is owed this season. He already received $4 million on July 1 via signing bonus, and will get his $1 million salary over the course of the season no matter where he is assigned to play.

Question 5: The cap savings are fairly minimal, so why waive him at all?

It’s a fair question, and this is a level of veteran maneuvering that we have rarely seen in Isles history. Ultimately, the team is on a 13-game point streak and if the coaching staff and management do not feel he is ready to step into a lineup that is rolling along, this was really their only option.

Scratching Ladd is not going to get him into playing shape - he needs to play to get there. In the meantime, the Isles are getting healthier. Matt Martin is expected to rejoin practice this week, Tom Kuhnhackl will be skating soon, Derick Brassard is essentially a full time wing, Leo Komarov is back and doing Komarov things, and the Isles still have Otto Koivula with the NHL squad. If Lamoriello feels that Ladd can’t outplay that collection of players at this juncture, his demotion to Bridgeport makes the most sense for the team (and likely even the player).

Question 6: Can the Islanders buy Ladd out after the year?

They could, but it does not seem worth it. Signing bonuses preclude team-friendly buyouts, and as we see with CapFriendly’s buyout calculator that is the case for Ladd as well:

Source: CapFriendly

The way this works is that signing bonuses are essentially exempt from buyouts. The team must pay the signing bonus to the player on the date it was promised. In terms of salary, that’s paid out at a ⅔ rate for double the length of time. So Ladd’s $3 million in salary owed will be paid out in $333,333 increments for six years. The result of that on the cap?

The buyout on the cap is the expected AAV less the yearly savings. But because the salary bonus must be paid out on the date as promised, the Isles only save $666,667 in real dollars ($1 million owed - $333K paid) for the next three years. So Ladd’s $5.5 million expected AAV minus the $667K owed is how the team would have a $4.8 million dead cap hit for three years (with an additional $333K liability for three more years).

Meanwhile, they could just keep a player in Bridgeport for an NHL cap hit of $4.425 million (as referenced above) for that same time period. A buyout just does not seem to make any sense, and that’s largely due to the salary bonus structure.

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I think that about wraps it up. I hope this answers a lot of questions people had from a cap/financial perspective. Thanks to CapFriendly for being awesome and providing the public with such amazing resources.