After Karl Alzner spent most of the season in Laval, the Habs will once again need to decide this offseason whether or not to buy him out. On the surface, the answer may seem like an obvious yes but the numbers suggest that they may be more inclined to keep him.
Before diving in, I know that some are hoping for a possible compliance buyout as a result of a levelled or reduced salary cap for next season. If that’s available, of course they’ll take it with Alzner. For the purposes of this exercise, let’s assume that’s not on the table.
Alzner has two years left on his contract with a $4.625M cap hit. The deal was considerably front-loaded with more than half of the money paid over the first two seasons on the five-year term. While that makes the buyout a little less painful in terms of outgoing money, it also makes the cap hit a little more painful. There’s also a signing bonus to contend with for 2020-21, an amount that is paid out in full regardless of whether or not he’s bought out. The remaining cash payout of his deal breaks down as follows:
2020-21: $1.5M base salary, $1.5M signing bonus
2021-22: $3.5M base salary, no signing bonus
The total salary eligible to be bought out is $5M at a rate of two-thirds divided by two times the remaining term of the deal. Two-thirds of $5M is $3.33M while doubling the term left means it’s paid over four years. That makes the buyout cost $833,333. Remember that number and the base salaries as we go along.
Keep Alzner for both seasons.
This basically is the status quo. He’s not getting any better so he’ll be back in Laval barring a rash of injuries. The reduction in the cap charge is $375,000 plus the league minimum salary ($700,000 in 2020-21, $750,000 in 2021-22). That would mean his remaining cap hits would be as follows:
2020-21: $4.625,000 – ($375,000 + $700,000) = $3,550,000
2021-22: $4.625,000 – ($375,000 + $750,000) = $3,500,000
Alzner is bought out this offseason…whenever the offseason actually begins (probably sometime in October).
This seems to be the preferred strategy for many fans and let’s face it, I’m sure Alzner is rooting for one as well. But since the signing bonus is paid out in full and is pulled from the calculation, the cap relief is reduced considerably.
2020-21: $4.625,000 – ($1,500,000 salary – $833,333) = $3,958,333
2021-22: $4,625,000 – ($3,500,000 salary – $833,333) = $1,958,333
2022-23: $833,333 buyout cost would be the cap hit
2023-24: $833,333 buyout cost would be the cap hit
Let’s look at that first year for a bit. It would actually cost more against the cap for the Habs to buy him out this offseason than it would be to keep him and send him to Laval by more than $400,000. Granted, Montreal has been far below the cap over the last few years so that extra charge may not seem like much but if they’re going to either add a player or two over the offseason and take on more money, that amount may be more notable.
Alzner is bought out next offseason.
The buyout cost changes here as now it’s two-thirds of $3,500,000 spread out over two years. That works out to $1,166,667 which replaces the previous $833,333 we’ve been using. That makes the buyout costs as follows:
2021-22: $4,625,000 – ($3,500,000 salary – $1,166,667) = $2,291,667
2022-23: $1,166,667 buyout cost would be the cap hit
The Year 1 cost isn’t as drastic as it would be if they bought him out in the 2021 offseason but at the same time, the cap hit in that season would actually be $333,334 higher. Again, that’s not a huge number but it’s likely that the cap will remain relatively flat and this is also the summer where a lot of Habs will be in need of new (more expensive) contracts. Even if they’re not a cap team in 2020-21, they will be if they re-sign a lot of their current core so that extra cost may be important. But it would still result in over $1.2 million in savings when compared to keeping him under contract for that season and sending him to Laval.
There are also trade with retention scenarios to take a player back and there are too many of those to really get into. However, I’ll at least mention that once Alzner’s signing bonus is paid whenever next offseason begins, they could trade him with 50% retention and the acquiring team would only pay out $2.5 million in base salary over the final two years. Theoretically, they could take someone making $2 million a year in return, send him to Laval, and actually yield more cap savings over just keeping Alzner and sending him to the Rocket. Come to think of it, that might be Plan A at this stage if there aren’t any compliance buyouts put in place as a result of the COVID-19 pandemic.
Getting back to the buyout talk though, while it may seem relatively obvious on the surface that the Habs should be going that route, it’s far from being obvious. A lot depends on what GM Marc Bergevin’s plans are for the cap. If they’re going to be well below the cap in 2020-21, then perhaps biting the bullet makes sense to lower the cap charge for 2021-22 when they’re going to need it. But if they plan on leveraging their cap space this offseason when there will be a lot of teams needing to offload contracts, they may not be able to afford the extra charge associated with buying him out right away.
There’s a lot that has to go into Montreal’s offseason planning, something that’s made trickier with no one knowing when the offseason will actually start. It’s safe to say that Alzner’s situation is one of the things Bergevin and management will be discussing a lot between now and then.