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CBA cap space question re NJ Devils

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Old
07-26-2006, 01:02 PM
  #1
CapsFan2001
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CBA cap space question re NJ Devils

If the NJ Devils were to accept the $5 million arbitration award to Scott Gomez, their cap number theoretically would be $48.63 million -- $4.63 million over the cap. As everyone knows, the Devils have three deadweight contracts on their roster totaling $9.3 million:

D McGillis -- $2.2 million
F Mogilny -- $3.5 million
D Malakhov -- $3.6 million

Not knowing the CBA, my question is this, if the Devils were willing to pick up the salaries and include other assets in a trade, technically under the CBA (1) can the Devils trade McGillis and Mogilny since they were cut (2) can they trade the contract of the retired Malakhov.

Also, how much salary, if any, can the Devils pay toward a contract to a player who has been traded and not have that money count against their own cap number?

In the NBA, one sees many trades for players that either are injured or no longer active simply for salary cap purposes. I've always wondered why this has not happed more in the new NHL.

For instance, the Washington Capitals should have plenty of excess salary cap space available for 2006-07. Could the Devils approach a team like the Caps and offer a package of draft picks, prospects, and cash stapled to McGillis, Mogilny, and Malakhov for future considerations just to free up cap space to re-sign players like Gomez, Gionta, Martin, and Hale?

If something like that is possible under the CBA, the Devils would be crazy not to approach some of the rebuilding teams not utilizing all of their cap space. And rebuilding teams would be crazy not to try to squeeze assets out of the Devils -- it would be something akin to buying prospects and draft picks.

If you were the Devils, would you rather have Gomez, Gionta, Martin, and Hale now or prospects and draft picks for the future? Seems like a no-brainer to me to keep the established young NHL player together and deal the "future" assets to cover last year's mistakes with McGillis, Mogilny, and Malakhov.

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07-26-2006, 03:03 PM
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Your figures may not be accurate - check out the NJ Devils forum where there are some quite knowledgeable posters who have a better handle on the actuall cap numbers.

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07-26-2006, 03:25 PM
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Quote:
Originally Posted by CapsFan2001 View Post
If the NJ Devils were to accept the $5 million arbitration award to Scott Gomez, their cap number theoretically would be $48.63 million -- $4.63 million over the cap. As everyone knows, the Devils have three deadweight contracts on their roster totaling $9.3 million:

D McGillis -- $2.2 million
F Mogilny -- $3.5 million
D Malakhov -- $3.6 million

Not knowing the CBA, my question is this, if the Devils were willing to pick up the salaries and include other assets in a trade, technically under the CBA (1) can the Devils trade McGillis and Mogilny since they were cut (2) can they trade the contract of the retired Malakhov.

Also, how much salary, if any, can the Devils pay toward a contract to a player who has been traded and not have that money count against their own cap number?

In the NBA, one sees many trades for players that either are injured or no longer active simply for salary cap purposes. I've always wondered why this has not happed more in the new NHL.

For instance, the Washington Capitals should have plenty of excess salary cap space available for 2006-07. Could the Devils approach a team like the Caps and offer a package of draft picks, prospects, and cash stapled to McGillis, Mogilny, and Malakhov for future considerations just to free up cap space to re-sign players like Gomez, Gionta, Martin, and Hale?

If something like that is possible under the CBA, the Devils would be crazy not to approach some of the rebuilding teams not utilizing all of their cap space. And rebuilding teams would be crazy not to try to squeeze assets out of the Devils -- it would be something akin to buying prospects and draft picks.

If you were the Devils, would you rather have Gomez, Gionta, Martin, and Hale now or prospects and draft picks for the future? Seems like a no-brainer to me to keep the established young NHL player together and deal the "future" assets to cover last year's mistakes with McGillis, Mogilny, and Malakhov.
Actually, by all analyses I've seen on the Devils Board and the spreadsheets on Irish Blues website ( http://www.geocities.com/rmccleary97 ). the Devils are NOT over the offseason cap ($44M +10%) evein if they sign Gomez. They had ~$7.1M in cap space available. Remember, you cannot go by salary websites like TSN or the NHLPA, which just list '06-'07 Salary, not cap hit, and that the QOs for unsigned RFAs (Gionta, Martin, and Hale) have expired and do not currently count against the cap. And note that only Mogilney and Malakhov will count against the cap once the season starts - McGillis will be sent back to the AHL and his salary will not count.

Still, in all likelyhood the Devils will have to shed some salary before the season starts - likely trading Gomez, Gionta, or Rafalski, if they can't find a way to dump Mogilney's or Malkhov's cap hits.

Note to IB: You're getting too damn popular - you're geocities site is exceeding bandwidth limitations.

But to answer your questions:

Quote:
Not knowing the CBA, my question is this, if the Devils were willing to pick up the salaries and include other assets in a trade, technically under the CBA (1) can the Devils trade McGillis and Mogilny since they were cut (2) can they trade the contract of the retired Malakhov.
A team is not allowed under the CBA to pick up salary when they trade a player. The Jagr/Rangers/Caps thing was grandfathered in from the old CBA. If a team trades for McGillis, Mogilney, or Malakhov, they will be responsible for all remaining salary and cap hit. The Devils would have to do a JR-like dump (JR + a 2nd for nothing) and give away assets or draft picks for someone to take any of the M-boys.

The Devils are free to trade McGillis and Mogilny - they were not "cut", they were waived and assigned to the AHL.

If Malakhov actually filed retirement papers he cannot be traded. If not, he is just supended, and I believe the Devils could trade him.

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Also, how much salary, if any, can the Devils pay toward a contract to a player who has been traded and not have that money count against their own cap number?
ZERO. See above. A team cannot trade a player and still pay part of his salary.

Quote:
In the NBA, one sees many trades for players that either are injured or no longer active simply for salary cap purposes. I've always wondered why this has not happed more in the new NHL.
The NBA salary cap is a different beast than the NHL's. The NBA is based on the total annual salary of the players on the roster at any given point in time - the NHL is based on actual dollars paid and projections based on the current roster until the end of the season). The NBA is a soft cap with lots of exceptions - The NHL is a hard cap with only exceptions for injury replacement and some performance bonuses.

Trades in the NBA generally have to be salary cap neutral (+/- 15% IIRC), so teams frequently have to throw in players (even injured ones) in order for the cap numbers to balance. An NBA team over the cap (and virtually all are) could not just trade a player for a draft pick - they would have to take a warm-body and salary back to make it work. There are no cap restrictions on trades in the NHL - other than that neither team can be allowed to exceed the cap after the trade.

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For instance, the Washington Capitals should have plenty of excess salary cap space available for 2006-07. Could the Devils approach a team like the Caps and offer a package of draft picks, prospects, and cash stapled to McGillis, Mogilny, and Malakhov for future considerations just to free up cap space to re-sign players like Gomez, Gionta, Martin, and Hale?
Cash, no. Prospects and picks, yes.

Mogilney plus a first for "future considerations" (ie nothing) or a 7th round pick whould work.

The problem though, isn't just cap room, its actual dollars. If a team trades for McGillis or Mogilney, they would also be responsible for paying the remainder of their salary. They're on one way contracts and are earning their full NHL salary in the AHL. With Malakhov (if he hasn't officially retired, which I do not think he has), there is also the risk that he might actually report to the new team, file a grievence to be unsuspended, and the new team could be on the hook for real dollars there too.

Sure, the caps could eat an additional $3.5M in cap hit for Mogilny, but could/would they be willing to pick up an additional $3.5M in real salary costs.

Quote:
If something like that is possible under the CBA, the Devils would be crazy not to approach some of the rebuilding teams not utilizing all of their cap space. And rebuilding teams would be crazy not to try to squeeze assets out of the Devils -- it would be something akin to buying prospects and draft picks.
Unfortunately, those teams which have cap room also tend to be teams with budget constraints (which is likely why they have all that cap room). A team would have to pay through the nose in a salary dump in order to make it worthwhile for them to pick up the additional real salary costs.

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07-26-2006, 04:58 PM
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Originally Posted by kdb209 View Post
Actually, by all analyses I've seen on the Devils Board and the spreadsheets on Irish Blues website ( http://www.geocities.com/rmccleary97 ). the Devils are NOT over the offseason cap ($44M +10%) evein if they sign Gomez. They had ~$7.1M in cap space available. Remember, you cannot go by salary websites like TSN or the NHLPA, which just list '06-'07 Salary, not cap hit, and that the QOs for unsigned RFAs (Gionta, Martin, and Hale) have expired and do not currently count against the cap. And note that only Mogilney and Malakhov will count against the cap once the season starts - McGillis will be sent back to the AHL and his salary will not count.

Still, in all likelyhood the Devils will have to shed some salary before the season starts - likely trading Gomez, Gionta, or Rafalski, if they can't find a way to dump Mogilney's or Malkhov's cap hits.

Note to IB: You're getting too damn popular - you're geocities site is exceeding bandwidth limitations.

But to answer your questions:


A team is not allowed under the CBA to pick up salary when they trade a player. The Jagr/Rangers/Caps thing was grandfathered in from the old CBA. If a team trades for McGillis, Mogilney, or Malakhov, they will be responsible for all remaining salary and cap hit. The Devils would have to do a JR-like dump (JR + a 2nd for nothing) and give away assets or draft picks for someone to take any of the M-boys.

The Devils are free to trade McGillis and Mogilny - they were not "cut", they were waived and assigned to the AHL.

If Malakhov actually filed retirement papers he cannot be traded. If not, he is just supended, and I believe the Devils could trade him.


ZERO. See above. A team cannot trade a player and still pay part of his salary.


The NBA salary cap is a different beast than the NHL's. The NBA is based on the total annual salary of the players on the roster at any given point in time - the NHL is based on actual dollars paid and projections based on the current roster until the end of the season). The NBA is a soft cap with lots of exceptions - The NHL is a hard cap with only exceptions for injury replacement and some performance bonuses.

Trades in the NBA generally have to be salary cap neutral (+/- 15% IIRC), so teams frequently have to throw in players (even injured ones) in order for the cap numbers to balance. An NBA team over the cap (and virtually all are) could not just trade a player for a draft pick - they would have to take a warm-body and salary back to make it work. There are no cap restrictions on trades in the NHL - other than that neither team can be allowed to exceed the cap after the trade.


Cash, no. Prospects and picks, yes.

Mogilney plus a first for "future considerations" (ie nothing) or a 7th round pick whould work.

The problem though, isn't just cap room, its actual dollars. If a team trades for McGillis or Mogilney, they would also be responsible for paying the remainder of their salary. They're on one way contracts and are earning their full NHL salary in the AHL. With Malakhov (if he hasn't officially retired, which I do not think he has), there is also the risk that he might actually report to the new team, file a grievence to be unsuspended, and the new team could be on the hook for real dollars there too.

Sure, the caps could eat an additional $3.5M in cap hit for Mogilny, but could/would they be willing to pick up an additional $3.5M in real salary costs.


Unfortunately, those teams which have cap room also tend to be teams with budget constraints (which is likely why they have all that cap room). A team would have to pay through the nose in a salary dump in order to make it worthwhile for them to pick up the additional real salary costs.
The interesting case is if they can get one of those players to agree to retire but only after a trade... For example, trade alex mogilny and a first round pick to the penguins for a second round pick. After the trade alex mogilny retires... Cap hit is Pittsburgh's (not a problem) and salary isn't paid because player is retired... Pittsburgh gets a higher draft pick in return for helping out the devils...

Trick of course is to get Mogilny to agree to forgoe the rest of the $ owed him...

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07-26-2006, 05:16 PM
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Note to IB: You're getting too damn popular - you're geocities site is exceeding bandwidth limitations.
I noticed that when I got home from work - I'll have it fixed shortly.

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07-26-2006, 05:45 PM
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kdb, there have been statements attributed to the league office that they were also going to crack down on one-sided trades that were straight salary dumps as detrimental to the game and attempts to circumvent cap limitations, that is that they would require some appearance of equity in a trade. That is a power that the league offices has been very reluctant to use in the past, but that they have claimed will be used as needed to keep teams in line. It has at least been implied that this was applied for at least two trades at the deadline last season, though others claimed that the paperwork simply was not in order before the deadline and the league took a hard line on it. I would think something like Mogilny and a first for a second would fit into the category that would result in league intervention.

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07-26-2006, 05:58 PM
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Quote:
Originally Posted by gooseman View Post
kdb, there have been statements attributed to the league office that they were also going to crack down on one-sided trades that were straight salary dumps as detrimental to the game and attempts to circumvent cap limitations, that is that they would require some appearance of equity in a trade. That is a power that the league offices has been very reluctant to use in the past, but that they have claimed will be used as needed to keep teams in line. It has at least been implied that this was applied for at least two trades at the deadline last season, though others claimed that the paperwork simply was not in order before the deadline and the league took a hard line on it. I would think something like Mogilny and a first for a second would fit into the category that would result in league intervention.
This is one of the most ridiculous things I have ever heard. If the league is actually considering doing something like this then the NHL can go **** itself. The CBA with its Draconian rules and salary cap is bad enough, and now they want to tell you which players to keep or get rid of in order to get below the cap number. Little Napoleon is going too far if this is true. And I will not financially support a league that behaves this way.

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07-27-2006, 03:08 AM
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I'll ask this question here as I probably will get a better answer from some of you CBA junkie types, not that there's anything wrong with that.

Devils fans seem to believe the Caps won't make the salary floor this year but Capitals fans say they have nothing to worry about. The scenario for the question is let's go with the Devils fans assumption that Washington is going to have trouble meeting the floor.

Devils fans think it would be a good idea for NJ to ship Malakhov (if suspended and not retired) and his $3.5 mil cap hit to the Capitals with a pick or picks for future considerations. Washington would then be able to use Malakhov's $3.5 mil cap hit to reach the floor while only spending $24.5-25 mil in payroll, since they wouldn't have to pay Malakhov while he is suspended.

My question is, would the Devils and Capitals be allowed to pull off this trade or would the NHL say no because it's violating the salary cap? I think it would be a violation because the Capitals wouldn't be spending $28 mil in payroll, they'd actually be paying out $25 mil or so. The point of having a salary floor is so each team spends that amount on salary. If the Capitals were over the $28 mil floor, I don't see anything the NHL or NHLPA could do to make them spend more than the $28 mil that the floor requires, but I have a hard time believing the NHL would allow teams to trade dead cap space along with assets to a team that's under the salary floor.

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07-27-2006, 04:29 AM
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Originally Posted by danaluvsthekings View Post
I'll ask this question here as I probably will get a better answer from some of you CBA junkie types, not that there's anything wrong with that.

Devils fans seem to believe the Caps won't make the salary floor this year but Capitals fans say they have nothing to worry about. The scenario for the question is let's go with the Devils fans assumption that Washington is going to have trouble meeting the floor.

Devils fans think it would be a good idea for NJ to ship Malakhov (if suspended and not retired) and his $3.5 mil cap hit to the Capitals with a pick or picks for future considerations. Washington would then be able to use Malakhov's $3.5 mil cap hit to reach the floor while only spending $24.5-25 mil in payroll, since they wouldn't have to pay Malakhov while he is suspended.

My question is, would the Devils and Capitals be allowed to pull off this trade or would the NHL say no because it's violating the salary cap? I think it would be a violation because the Capitals wouldn't be spending $28 mil in payroll, they'd actually be paying out $25 mil or so. The point of having a salary floor is so each team spends that amount on salary. If the Capitals were over the $28 mil floor, I don't see anything the NHL or NHLPA could do to make them spend more than the $28 mil that the floor requires, but I have a hard time believing the NHL would allow teams to trade dead cap space along with assets to a team that's under the salary floor.
Look at IB's numbers, they will have no problems reaching floor with a 23 man roster. With the 17 signed one-ways plus 6 minimums they should be right at the $28 million.

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07-27-2006, 06:29 AM
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I have another question:

If the Devils somehow remain above the cap, what consequences will it bring? Are contracts nullified? Do they have to give up players for free (sustaining cap hit but not the salary)? Will they only be fined?

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07-27-2006, 07:41 AM
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Quote:
Originally Posted by Ogie Oglethorpe View Post
This is one of the most ridiculous things I have ever heard. If the league is actually considering doing something like this then the NHL can go **** itself. The CBA with its Draconian rules and salary cap is bad enough, and now they want to tell you which players to keep or get rid of in order to get below the cap number. Little Napoleon is going too far if this is true. And I will not financially support a league that behaves this way.
It's not saying the Devils CAN'T trade AlMo, it's just saying that they can't trade him to circumvent the cap.

Basically it's saying that if you trade Alex and a 1st rounder for a 2nd round pick, htere's no equal level of equity coming back in the deal which means that this is a blatant attempt to get around a mistake signing in the first place.

This is a portion of the agreement that more than likely the owners wanted. Rather I should say the poorer owners wanted so it would guard against the larger market teams pawning off mistakes to other larger markets that have the cap room for the future benefit of one hand washing the other.

Lou made his bed, now that he wet it, he's going to have sleep in it.

Silver lining? It's just 1 year of cap casualty that he has to deal with.


I wonder how long before the NHL follows the NFL and you see managment hire Cap-Ologists. Guys that will study the CBA and develope strategies to work in and around the Cap.

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07-27-2006, 07:59 AM
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I wonder how long before the NHL follows the NFL and you see managment hire Cap-Ologists. Guys that will study the CBA and develope strategies to work in and around the Cap.
Some teams already have.

AFA the idea mentioned above of the league enforcing rules to prevent trading guys away for squat little to get around the cap ... this is something that's probably covered in the league's by-laws (which are not public - or at least I've never seen a copy of them). It's not specifically mentioned in the CBA, so to a point we're speculating on this.

GuloGulo - this also answers your question; the details are very likely in the league by-laws, but from what I've seen the league can (A) force the team to drop players outright until coming into compliance, (B) levy fines, and/or (C) forfeit games in which the team is over the cap.

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07-27-2006, 08:18 AM
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Originally Posted by Ogie Oglethorpe View Post
This is one of the most ridiculous things I have ever heard. If the league is actually considering doing something like this then the NHL can go **** itself. The CBA with its Draconian rules and salary cap is bad enough, and now they want to tell you which players to keep or get rid of in order to get below the cap number. Little Napoleon is going too far if this is true. And I will not financially support a league that behaves this way.
What's the point of having a commissioner if he can't police the teams?

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07-27-2006, 06:53 PM
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Value of picks and prospects

Thanks for so many informative posts in response to my query. They raise many good follow up questions.

It seems like one question that teams should be asking themselves is how accurately to monetize the value of draft picks and individual prospects in light of the new CBA.

For a team not expected to make the playoffs, buying future assets might be the smarter long-term investment than signing two or three veteran mediocre players.

In the NBA, the maximum amount of cash that can be tossed into a trade is $3 million. In recent years, I can think of at least one first round pick has been sold for that price -- the New Jersey Nets selling the rights to Sergei Monia to the Portland Trail Blazers.

So, what would a 2007 1st round pick be worth? Would a pick in the 20 to 30 range be worth $1 million, $2 million, etc. Makes you wonder how many teams have done an analysis like this.

Or, if Devils could sell the rights to Travis Zajac, how much would those rights fetch on the open market in cash terms? $1.5 million? $2.5 million?

It makes you wonder how many teams have been creative enough to do this type of analysis.

Also, one comment on salary dumps. As for the prohibition on salary dump trades because it would allow teams to escape mistakes, I do not buy it. For a good chunk of the league, salary cap space is worth its weight in gold. If one team is forced to trade a 1st round pick to another team to dump a contract, that is a stiff penalty to pay for a mistake. Plus, the team taking on the bad contract, in essence, would be buying futures. I think a good percentage of the fans out there are sophisticated enough to understand these kinds of deals.

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07-27-2006, 07:03 PM
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Cash cannot be part of a transaction, so scratch the idea of selling the rights to a player or a pick.

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07-27-2006, 07:27 PM
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I brought up the example of selling picks in the NBA just as an example to try to figure out what a pick would be worth in a trade to take on salary.

For argument's sake, let's hypothetically say for cap purposes that the Washington Capitals value the Devils 2007 first round pick in the 20 to 30 range as worth $2 million -- in other words, if you threw in a first round pick, the Capitals would be willing to take off the Devils hands any player making $2 million, not caring whether he even could play a minute of ice time in 2006-07.

If the Washington Capitals were inclined to spend the money, think of the value of a trade like this:

Mogilny + NJ 2007 1st round pick to Washington Capitals for future considerations =

$3.5 million minus $2 million = +$1.5 million -- if I were the Capitals in this case, I'd ask the Devils to pick up $1.5 million of Mogilny's salary to even the trade. From the Devils perspective, you'd be looking at trading a 2007 1st rounder to free up $2 million in cap space.

I'm not saying that's what teams would value those assets, but that's the type of business calculation a team would have to make in order to swing a trade like that.

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07-28-2006, 09:01 AM
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Originally Posted by CapsFan2001 View Post
For argument's sake, let's hypothetically say for cap purposes that the Washington Capitals value the Devils 2007 first round pick in the 20 to 30 range as worth $2 million -- in other words, if you threw in a first round pick, the Capitals would be willing to take off the Devils hands any player making $2 million, not caring whether he even could play a minute of ice time in 2006-07.

If the Washington Capitals were inclined to spend the money, think of the value of a trade like this:

Mogilny + NJ 2007 1st round pick to Washington Capitals for future considerations =

$3.5 million minus $2 million = +$1.5 million -- if I were the Capitals in this case, I'd ask the Devils to pick up $1.5 million of Mogilny's salary to even the trade. From the Devils perspective, you'd be looking at trading a 2007 1st rounder to free up $2 million in cap space.

I'm not saying that's what teams would value those assets, but that's the type of business calculation a team would have to make in order to swing a trade like that.
Well, Philly sent JR and a third to LA for future considerations in a dump last summer. That might be a good point of reference. Molgilny is older, and arguably less productive prior to a potential deal. Roenick's 03-04 salary was $7,500,000 according to the HockeyZonePlus database and rolled back to $4,940,000.

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07-28-2006, 09:12 AM
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If the Washington Capitals were inclined to spend the money, think of the value of a trade like this:

Mogilny + NJ 2007 1st round pick to Washington Capitals for future considerations =

$3.5 million minus $2 million = +$1.5 million -- if I were the Capitals in this case, I'd ask the Devils to pick up $1.5 million of Mogilny's salary to even the trade. From the Devils perspective, you'd be looking at trading a 2007 1st rounder to free up $2 million in cap space.
Teams cannot assume part of a cap hit when trading players - when you trade a player, the other team assumes the entire cap hit and his entire salary.

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07-28-2006, 10:23 AM
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So the Devils would have to include additional assets to make up for the $1.5 million difference to equalize the trade for the Caps......moving these guys will be tough....

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