James Neal Buyout More Likely With Flat Salary Cap?

No matter how you paint the picture, a James Neal buyout isn’t pretty. If the Edmonton Oilers choose to cut loose their veteran forward thanks the announcement of a flat salary cap — or simply because they’ve decided he’s too pricey an option to keep around for the production he brings — the organization will have to eat a good chunk of salary for an extended period of time. It’s certainly not ideal.

But, is there a scenario in which a buyout is better done while the cap stays low for the next two-to-three seasons? One might be able to make that argument.

Neal’s Buyout Numbers

According to CapFriendly, if the Oilers buyout Neal this offseason the total cost of the buyout would be $11.5 million with a total savings of $5.75 million over the next six seasons. The team would be sacrificing available funds in years four-to-six, but freeing up money in years one-through-three.

It would break down as such:

SeasonBase SalaryInitial Cap HitBuyout CostSavingsCap Hit
2020-21$5.750,000$5.750,000$1,916,667$3,833,333$1,916,667
2021-22$5,750,000$5,750,000$1,916,667$3,833,333$1,916,667
2022-23$5,750,000$5,750,000$1,916,667$3,833,333$1,916,667
2023-24$0$0$1,916,667-$1,916,667$1,916,667
2024-25$0$0$1,916,667-$1,916,667$1,916,667
2025-26$0$0$1,916,667-$1,916,667$1,916,667

Important to keep in mind is that the league has already said they’ll be no compliance buyouts and the Oilers are retaining salary on Milan Lucic’s deal until the 2022-23 season ($750K) and they still owe on buyouts for Benoit Pouliot ($1.333 million next season) and Andrej Sekera ($2.5 million next season and $1.5 million for two seasons after that). It’s a fair amount of money to be paying players who aren’t actually playing on your team any longer.

Related: Taylor Hall for Adam Larsson Trade Revisited

The Argument For Buying Neal Out Now

As you can see, Neal’s cap hit is the same over the next six seasons but the savings on the cap in years one-through-three are substantial.

Mike Smith Edmonton Oilers
Mike Smith, Edmonton Oilers (Jess Starr/The Hockey Writers)

The argument for buying him out when the salary cap doesn’t increase is one of short-term flexibility, unique opportunity, and need. As soon as this season ends, the Oilers will be forced to find ways to clear up salary. That money would be used to sign players like Mike Smith, Riley Sheahan, Ethan Bear and potentially go to Ryan Nugent-Hopkins and Adam Larsson next summer. Without the $3.83 million in cap savings that comes from buying out Neal’s contract, it’s hard to envision where the Oilers get that money from.

Some will suggest trading Kris Russell, which is certainly an option. But, is it enough? If Edmonton trades Russell and buys out Neal, the $7.83 million along with the close to $10 million they’ll already have should give Edmonton all the space it needs to not only sign their current guys, but take advantage of another team’s misfortune. Remember, Edmonton isn’t the only team facing financial troubles. If the Oilers see an opportunity in the marketplace, potentially replacing Neal with a less expensive alternative, should they not give themselves the wherewithal to make a move?

Essentially, if the Oilers can spread out the payments on Neal’s deal, taking a hit in the later years when the salary cap rises again, they can do more now. And by now, I mean in Connor McDavid’s and Leon Draisaitl’s prime years. It’s in these next two-to-three seasons where the Oilers might turn into a really strong team and with the right complimentary pieces coming from a unique marketplace, who knows how good they could be?

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The Argument Against Buying Neal Out Now

Keeping Neal in your system longer than you have to hurts the long-term strategy of the Edmonton Oilers. If this team wants to draft and develop properly, at some point, those young prospects and blossoming players will have moved beyond their entry-level and bridge deals and played themselves into a situation and time where they deserve the bigger bucks. The Oilers will need the money to keep them.

James Neal Edmonton Oilers
James Neal, Edmonton Oilers (Jess Starr/The Hockey Writers)

Among those that could be affected in years to come are Darnell Nurse, Ethan Bear (assuming he’s signed to a bridge deal this offseason), Kailer Yamamoto, Caleb Jones, Evan Bouchard, and others. If you’re still paying Neal when these guys ask for bigger dollars in a rising salary cap, would the Oilers be handcuffing themselves?

$1.9 million being spoken for doesn’t seem like a ton of money, but it could be enough to make it so the Oilers can’t afford what Nugent-Hopkins might command if he has an 80-point season in 2020-21 or Ethan Bear shows himself to be a potential top-two d-man.

The Answer is to Understand the Marketplace

There are pluses and minuses in either scenario, but the key for GM Ken Holland will be in having a better-than-good understanding of where other teams will struggle and where he can pounce. If that opportunity isn’t there, the need to find extra money immediately isn’t as great. In that scenario, a Neal buyout doesn’t make as much sense.

That said, if a handful of teams have no choice but to offload players with good contracts, every dollar counts. In three months, there could be a ton of surprising players floating around and available to teams with a little extra money.

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