“The book says we may be through with the past but the past ain’t through with us.”
- Magnolia (1999)
While Jim Benning may no longer be the general manager of the Vancouver Canucks, much of what he did as GM will affect the team for years to come.
That’s true in positive ways, such as the drafting of core players like Elias Pettersson, Quinn Hughes, and Thatcher Demko, but also in negative ways, like some of the contracts he gave out.
There are obvious ways that Benning’s contracts will affect the Canucks in the future. Cap hits for free agent signings like Tyler Myers and Tucker Poolman could cause issues. Myers has a $6 million cap hit through 2024, while Poolman is getting $2.5 million through 2025.
But beyond the cap hits, what makes some of the contracts he gave out so onerous is the structure.
Holtby and Halak will still be on the books next season
For instance, there’s Braden Holtby’s two-year contract worth $4.3 million per year, which quickly proved an issue when he struggled in the first year of the deal, posting an .889 save percentage. That led to the Canucks buying out the second year of Holtby’s deal, clearing some cap space so Benning could go all-in on the 2021-22 season.
That was enough cap space to sign two players: Jaroslav Halak to replace Holtby as Thatcher Demko’s backup and…well, Tucker Poolman.
Having to buy out Holtby’s contract after just one season showed how short-sighted his signing was in the first place but what made it worse was the structure of his deal. His contract wasn’t just for $4.3 million per year. Instead, the bulk of the money was to be paid out in the second year — $5.7 million.
That increased the cost of the buyout by an extra million dollars. And, while it cleared cap space for the 2021-22 season, Holtby’s buyout will cost $1.9 million against the Canucks’ cap next season. That’s $1.9 million of dead money the Canucks won’t be able to spend to improve the team.
Meanwhile, Holtby’s replacement came with his own problematically-structured contract. Halak’s deal was just for one year but it will have a deleterious effect on the Canucks’ cap for a second year.
Halak had a $1.5 million cap hit in 2021-22 but he also had performance bonuses in his deal that, once reached, would put the Canucks over the salary cap. The Canucks were using the Long Term Injured Reserve (LTIR) pool to exceed the cap right from the start of the season because of Micheal Ferland, but the LTIR pool can’t be used to pay out bonuses. So, those bonuses will instead apply to next season’s salary cap.
Halak only hit one of his two performance bonuses — $1.25 million for games played — and came short of the second when his save percentage came in under .905 for the season. That’s another $1.25 million of dead money that can’t be used to improve the team.
There’s a certain amount of irony to Roberto Luongo’s $3.035 million recapture penalty coming off the books after this season only for it to be replaced by even more money going to two other goaltenders who won’t be playing for the Canucks. In fact, that was part of Benning’s justification for adding so much dead money to the salary cap.
“After this year, we lose Luongo’s $3 million on our cap,” said Benning. “So it’s not perfect, of course, we wouldn't like to have that situation, but I think trying to make our team as good as we could this year and as competitive as we could, that’s something that we looked at.
“In any given year, you look at any team, and there could be some dead money on, but the fact that we’re losing Luongo’s money next year I think played a part in accepting the fact that we’re going to have a little bit of money on the following year.”
Brock Boeser's backloaded bridge deal
Another contract with a problematic structure that could cost the Canucks belongs to Brock Boeser.
Re-signing Boeser, who is a restricted free agent (RFA) this offseason, has to be a priority for the Canucks’ new management group headed up by Jim Rutherford and Patrik Allvin. According to a report from The Athletic, negotiations with Boeser’s camp will begin in earnest this week.
While teams can usually take their time in the offseason negotiating with RFAs, Boeser’s situation is a little bit different. And it all comes down to structure.
The three-year bridge deal that Boeser signed back in 2019 came in right around where it was projected to be at the time: $5.875 million per year. The bridge deal gave Boeser a lower cap hit that was easier to work with for the Canucks but the structure of the deal heavily favoured Boeser because it was backloaded with $7.5 million in salary in the third year.
That backloaded third year means Boeser’s qualifying offer has to be at least $7.5 million.
A qualifying offer is a one-year contract that simply signifies that a team wants to keep a player. If a team doesn’t give an RFA a qualifying offer, they become an unrestricted free agent. A player doesn’t have to sign a qualifying offer and most don’t, instead negotiating for a longer term and/or higher salary.
Qualifying offers for RFAs are now based on the average annual value of the previous contact — what we think of as the contract’s cap hit — but Boeser signed his contract before that rule changed. His qualifying offer is based on the base salary of the final year of his previous contract. So, $7.5 million.
That gives Boeser and his agent a lot of leverage. If contract negotiations don’t go smoothly, Boeser can simply sign his qualifying offer when it’s made ahead of the July 11 deadline and get paid $7.5 million on a one-year deal that will leave him as an RFA again next year, with another $7.5 million qualifying offer waiting for him.
Boeser could just sign a pair of one-year, $7.5 million contracts and take himself right to unrestricted free agency.
Hopefully for the Canucks, it won’t come to that. The Canucks will be looking to sign Boeser to a multi-year deal at a lower cap hit. But the structure of his previous deal might make that negotiation a little bit more complex than it needs to be.
Really, it’s a tidy bit of work by Boeser’s agent to give him that kind of leverage when RFAs typically don’t have much negotiating power.
The continued impact of Loui Eriksson
Finally, there’s one other contract whose structure will continue to affect the Canucks for years to come, even though it didn’t need to: Loui Eriksson’s.
Eriksson’s contract was bad not only because of his $6 million cap hit for six years when all six years would be in his 30s. That was an issue, of course, but the structure of the deal made it an even bigger headache for the Canucks.
The vast majority of his contract was composed of signing bonuses, which made it essentially buyout-proof. That’s because signing bonuses can’t be bought out — they have to be paid out in full. A buyout would give a small amount of cap relief on the base salary of his contract but none on the bonuses.
As a result, the cap savings of a buyout for Eriksson would have been so negligible that they were essentially non-existent. The cost of a player to replace Eriksson, even on a league-minimum contract, would have been more than the cap savings. A buyout would have actually cost the Canucks more against the cap because of the need to replace him on the roster.
So, how does that structure still affect the Canucks? After all, he’s not on the team anymore.
The issue is that Benning was so desperate to get rid of Eriksson’s cap hit for the 2021-22 season that he packaged him — as well as two other problematic contracts in Jay Beagle and Antoine Roussel — with the team’s 9th-overall pick in a trade to the Arizona Coyotes for Oliver Ekman-Larsson and Conor Garland.
That got Benning the top-six forward and top-four defenceman he was looking for and both players had decent enough seasons for the Canucks this past year.
The trouble is that Ekman-Larsson is 30 and likely to start declining in the near future. His cap hit, however, won’t be declining. He’ll cost the Canucks $7.26 million against the cap through the 2026-27 season.
If Eriksson’s contract had been structured in a different way, he potentially could have been bought out instead of being traded, freeing up that cap space to improve the Canucks’ defence and forwards in a way that didn’t evolve anchoring the team to a hefty cap hit for an aging defenceman for another five years.
Not to mention, the Canucks could have kept the 9th overall pick. That would have been nice.
Canucks' new management have to focus on the future
All of these issues with contract structure stemmed from a desire for short-term gain with little regard for the long-term pain they would cause.
Holtby’s backloaded contract allowed Benning to bring in a big-name veteran that cost the Canucks as little as possible in the first year, where the team’s cash budget was affected by the COVID-19 pandemic. The team didn’t want to risk taking a step backwards by fully trusting in Demko in his first year as the number one and going with a cheaper backup.
Ironically, Holtby performed far worse than a cheaper backup would have and the team still took a step backward.
Halak’s bonus-laden contract again gave Benning a big-name veteran backup on a much cheaper cap hit, with little regard for the long-term consequences. Meanwhile, Spencer Martin, with a near-league-minimum $800,000 cap hit, significantly out-performed Halak when he was called up.
Boeser’s bridge contract was a way to keep his cap hit down as the team continued to spend to the cap each season and push for the playoffs. The negotiations came down to the wire at training camp and the backloaded structure was evidently the compromise needed to ensure Boeser didn’t miss the start of the season.
And, finally, Eriksson was another short-term move. The potential pain of the last few years of the contracts was dismissed because of the value he was supposed to bring in the first few years while playing with Daniel and Henrik Sedin.
That “win now” mentality resulted in very little winning in the here and now and it will make it harder to win in the future as well. As Jim Rutherford and Patrik Allvin work to build the Canucks for the future, they’ll need to avoid those types of structural issues in the contracts they hand out this offseason.
