FanPost

The Real Cost of Buying Out Ondrej Pavelec

Marianne Helm

Last weekend Romang67 wrote an article titled Why buying out Ondrej Pavelec is in no way a bad idea. The article touched on three common arguments for why the Winnipeg Jets shouldn't buy out Ondrej Pavelec, then went on to counter those arguments.

  1. He could rebound, and become a quality starting goaltender.
  2. It's not his fault. No goalie would have good stats behind the Winnipeg Jets' D.
  3. If we buy him out, and we don't manage to pick up a starter in free agency, we could be in a really bad position, as we don't have an experienced NHL player to put in a starting role.

Gary Lawless touched on a fourth argument in his article in the Winnipeg Free Press earlier this week.

The Jets are a budget team so perhaps a buyout isn't a tool in Cheveldayoff's shed. The cost of buying out Pavelec would be $8.5 million spread over six years with no additional cap hit. Maybe the Jets looked at this option and deemed it too expensive. Or maybe not. The Jets, quite rightly, don't offer up this information.

The argument is usually geared to why people think the Jets won’t buy him out as opposed to why they shouldn't, but it is still another factor that has to be considered. Although some NHL franchises wouldn't think much of throwing away $8.5 million to fix a mistake, that is not a luxury most franchises can afford.

Gary is right; the Jets are a budget team and are unlikely to be in a position to just walk away from that much money. But how much are the Jets really walking away from if they buy out Pavelec? Are they really throwing away that much?

I wanted to take a look at the real cost to buy out Ondrej Pavelec, and why I believe the Jets can buy him out and upgrade at the position without spending a lot of extra money. I made the assumption that Michael Hutchinson will either be the back up next year, or used in a 1A/1B, so his contract is a fixed cost in any case.

COST TO KEEP PAVELEC

First lets look at what it will cost the Jets to continue rolling with Ondrej Pavelec as their starter.

SEASON SALARY
2014-15 $ 3,750,000
2015-16 $ 4,250,000
2016-17 $ 4,750,000
TOTAL $ 12,750,000

Although Pavelec's cap hit is $3.9 million, his actual salary increases in the final 3 years of his contract. This is the money he was supposed to have earned as he got better each season. Instead, his performance has trended indirectly proportional to his salary.

But I digress.

TOTAL COST: $12.75 million

CAP HIT: $3.9 million

COST TO REPLACE PAVELEC

To calculate the cost to replace Pavelec, we need to include the cost to buy out his contract plus the cost of his replacement.

Buyout Cost

Via capgeek, the cost to buy out Ondrej Pavelec's contract would be 2/3 of his remaining salary paid out equally over twice the remaining term. That breaks down as follows.

SEASON BUYOUT
2014-15 $ 1,416,667
2015-16 $ 1,416,667
2016-17 $ 1,416,667
2017-18 $ 1,416,667
2018-19 $ 1,416,667
2019-20 $ 1,416,665
TOTAL $ 8,500,000

Replacement Cost

To determine the replacement cost, first I want to look at the most realistic replacement options for the Jets in free agency. There are also trade options, but for this exercise I’ll stick with what we know is available. I took the list of upcoming unrestricted free agents and narrowed them down as follows:

  • started a minimum of 20 games last season
  • has a career save percentage of .910 or higher
  • is under 35 years old
  • made less then $3 million last season
  • isn't named Ilya Bryzgalov

That left me with a list of 5 potential free agents that the Jets should have a realistic shot at signing, and would more than likely be an upgrade over Pavelec.

PLAYER 2012-2013 2013-2014 NHL TOTALS CURRENT CONTRACT
NAME AGE GP SV% GP SV% GP SV% CAP HIT
Alex Stalock 26 2 0.846 24 0.932 27 0.931 $ 625,000
Chad Johnson 27 4 0.954 27 0.925 37 0.926 $ 600,000
Thomas Greiss 28 6 0.915 25 0.920 69 0.915 $ 750,000
Al Montoya 29 7 0.899 28 0.920 91 0.910 $ 601,000
Brian Elliott 29 24 0.907 31 0.922 235 0.911 $ 1,900,000

To determine a fair market value of the above goalies, I looked at goalies with comparable NHL experience and performance numbers that signed a new contract under the current CBA. That left me with the following group:

PLAYER 2012-2013 2013-2014 NHL TOTALS NEW CONTRACT
NAME AGE GP SV% GP SV% GP SV% PREVIOUS DATE TERM CAP HIT
Reto Berra 27 - - 31 0.893 31 0.893 $ 850,000 2014 3 $ 1,450,000
Anton Khudobin 28 14 0.920
36 0.926 57 0.928 $ 800,000 2014 2 $ 2,250,000
Ben Scrivens 27 20 0.915 40 0.922 72 0.917 $ 612,500 2014 2 $ 2,300,000
Jonathan Bernier 25 14 0.922 55 0.923 117 0.918 $ 1,250,000 2013 2 $ 2,900,000
Semyon Varlamov 26 35 0.903 63 0.927 210 0.917 $ 2,833,333 2014 5 $ 5,900,000
Steve Mason 25 20 0.916 61 0.917 300 0.907 $ 1,500,000 2014 3 $ 4,100,000

Stalock and Johnson are both due for a raise, but how significant will it be? Their closest comparables for NHL experience are Berra and Khudobin, but their save percentages are more in line with Khudobin's. I expect the market for them should max out somewhere in between the two. Either could potentially be had at a bargain, but a team looking to add one of them as a starter could be spending upwards of $1.5 - $2 million AAV (average annual value).

Direct comparables for Greiss and Montoya would be Khudobin, Scrivens and Bernier. Based on the market, I would expect them to max out at $2 - $2.5 million AAV as starters.

Brian Elliott is much more established than the other free agent options. He's had varying degrees of success over his career, but has posted a .927 save percentage over the past 3 seasons. He is likely due for a larger contract then the other options. I expect to see him land a starting job with a contract somewhere between Bernier and Varlamov, ending up with something similar to the Mason Contract. The point of this article is to look at options where the Jets won't have to spend a lot of extra money to replace Pavelec, so for this reason I am going to exclude Elliot as an option.

Total Buyout + Replacement Cost

After looking at the comparables, that leaves the Jets with four affordable options to potentially go into next season with. I would expect 2 years to be a reasonable term for any of them, but for simplicity let's say the Jets look to sign any of the four goalies for 3 years to bridge the term remaining on Pavelec's contract. That would leave them with the following range:


LOW AVERAGE HIGH
AAV $ 1,500,000 $ 2,000,000 $ 2,500,000
Term 3 years 3 years 3 years
Total Contract $ 4,500,000 $ 6,000,000 $ 7,500,000
Buyout $ 8,500,000 $ 8,500,000 $ 8,500,000
TOTAL COST $ 13,000,000 $ 14,500,000 $ 16,000,000

TOTAL COST: $13.0 - $16 million

CAP HIT: $1.5 - $2.5 million

ACTUAL COST TO REPLACE

LOW AVERAGE HIGH
Replacement + Buyout $ 13,000,000 $ 14,500,000 $ 16,000,000
Pavelec Contract $ 12,750,000 $ 12,750,000 $ 12,750,000
DELTA $ 250,000 $ 1,750,000 $ 3,250,000

So the actual additional money spent to find a suitable (most likely better) option to replace Ondrej Pavelec would be $250,000 to $3,250,000, which will be paid out over the next 6 years. That works out to an average of $41,667 - $541,667 / year. The high end of that works out to less then the Jets lowest paid prospect. The low end probably doesn't even pay one of their security staff. For an NHL team, that isn't a significant amount. And for a team like the Jets that has some cost certainty with their core group locked up long term, they should have a pretty clear picture of their finances over the next three seasons.

OTHER FACTORS

Playoffs

Playoffs?! Don't talk about playoffs! Are you kidding me? Playoffs?!

Yes, playoffs. It has been well documented that if the Jets had even league average goaltending, there is a good chance they would have made the playoffs in one or all of the seasons since moving to Winnipeg. Now it's no guarantee that any of the goalies listed above would lead the Jets into the playoffs, but if they were able to in even one of the next three years, the revenue the Jets would generate would more then offset the cost to replace Pavelec.

Salary Cap

Being that this is based on the assumption that the Jets don't have a lot of extra money to spend, the cap flexibility may not matter too much. But what if the Jets made the playoffs next season and had a bit of extra cash to spend the following year? Having that extra space could be beneficial.

Let's take a look at what the cap savings would look like.

LOW AVERAGE HIGH
Pavelec Contract $ 3,900,000 $ 3,900,000 $ 3,900,000
Replacement Goalie $ 1,600,000 $ 2,000,000 $ 2,500,000
DELTA $ 2,300,000 $ 1,900,000 $ 1,400,000

The Jets could potentially have anywhere from $1.4 - $2.3 million in additional cap space to work with over the next 3 seasons. On top of having room to spend, it would give them some flexibility to make a trade where the other team retains some salary, and the Jets take on the full cap hit.

Regardless of how the Jets may or may not use additional cap space, it's beneficial to have the flexibility. It's always better to have and not need, than to need and not have.

Buyers Market

With what appears to be more potential starters available than open starting positions, this off season could prove to be a buyers market. The projected salaries were based on the market comparables for promising young goalies, but when supply out paces demand, basic economics suggests the price will go down. A prudent GM could potentially sign one of the available options at a bargain.

At this stage, can the Winnipeg Jets really afford to not buy out Ondrej Pavelec?

all contract information above is via capgeek

If this FanPost is written by someone other than one of the blog's editors, the opinions expressed in it do not necessarily reflect those of this blog or SB Nation.

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