# Red Wings’ Taxi Squad Use Benefitting Salary Cap & Bottom Line

Like clockwork, the Detroit Red Wings are remarkably consistent with their daily taxi squad transactions.

On game days, players are recalled from the six-man taxi squad. The next day, they are sent back down – regardless of performance the night before.

Believe it or not, there are a couple reasons why the Red Wings shuffle players back and forth as often as they do. Let’s dig into Detroit’s taxi squad dealings, with a quick primer on the salary cap first.

## Background on Salary Cap Management

Detroit’s salary cap is calculated on a daily basis. How is this done? Glad you asked.

Take each player on the active roster and divide their cap hit by 116—the total number of days in the season—and the result is their daily cap hit. Dylan Larkin’s daily cap hit is \$52,586 (\$6.1 million / 116 = \$52,586). Now, add together the daily cap hits from each player and you get that day’s overall cap hit and cap space.

Now, take the equation above and do that each day of the season. New day, new cap hit and cap space.

The salary cap space from each day accrues and can be used at the trade deadline. For example, let’s say the Red Wings have \$72,123 in cap space on Day 1, \$79,344 on Day 2, and so on. You take those cap space totals and add them together for the first 90 days of the season and that grand total gives you the amount of cap space teams have at the deadline.

In essence, if teams can minimize cap hits during the season, they’ll have more cap space to work with at the trade deadline.

## Red Wings Creating Cap Space

Now that you’re up to speed on the nuances of the salary cap, we can dive into Detroit’s taxi squad transactions.

When the Red Wings assign Mathias Bromé to the taxi squad, they open up \$7,974 in daily cap space (\$925,000 cap hit / 116). Let’s say Brome spends 45 of the 90 pre-deadline days on the taxi squad. This creates \$358,836 in cap space that can be used at the trade deadline.

Now apply the same logic to Givani Smith, Alex Biega, and now Danny DeKeyser spending time on the taxi squad. Detroit’s deadline cap space is quickly adding up, especially when you consider how far under the \$81. 5 million salary cap ceiling the Red Wings already are.

It’s unclear if Steve Yzerman will do anything at the deadline with all this cap space. Fortunately, he has the flexibility to add players/contracts if he chooses to do so.

If anything, this gives Yzerman the freedom to take on bloated contracts from teams trying to clear space and add other, more talented players for the postseason. Essentially, what he did with Marc Staal before the season began.

## Cutting Costs During the Pandemic

Remember the millions of times a player, coach, or front office executive said that hockey is a business? Well, it’s true – from a variety of standpoints.

We mostly hear the cliché phrase when a player is traded or let go – the team is disposing of an asset. In the context of taxi squad transactions, it’s more about revenues and expenses.

By sending players to the taxi squad, the Red Wings reduce their payroll expense. In Bromé’s case, the amount the organization pays him depends on whether he’s on the Red Wings’ active roster or the taxi squad.

 Red Wings Payroll NHL AHL Annual Salary \$925,000 \$70,000 Daily Salary \$7,974 \$603

Everyday that Bromé spends on the taxi squad, the organization saves over \$7,300. That adds up over the course of the season.

Normally, this would come across as a team being cheap. But the financial implications of the COVID-19 pandemic have made this sort of accounting a necessity.

According to The Athletic’s Joe Smith, about 55 percent of teams’ annual revenue comes from game day-related revenue streams, such as tickets, concessions, and suite sales (from ‘Calculating an NHL team’s finances and plan for expanding revenue’ – The Athletic – 2/15/21). With no or minimal fans in the seats this year, teams are making up the difference by adding revenue from alternative sources (cardboard fans, sponsored helmets, etc.) and cutting costs where possible. Moving players to and from the taxi squad reduces payroll expense and overall losses brought on by the pandemic.

## Final Word

The next time you see a player assigned to or called up from the taxi squad, you’ll understand why it’s just a paper move. Teams need to save money from salary cap and payroll expense standpoints.

Speaking of the trade deadline, COVID-19 could cause a significant shift to trading season. Find out why.