Is a Cap Crunch Coming?

I know, I know. You must’ve taken the wrong exit on the 417 because we can’t possibly be talking about the Ottawa Senators in the context of spending too much money, can we?

In the famous words of Barack Obama: Yes, we can.

Over the course of this offseason, we’ve seen the Ottawa Senators start to make some win-now moves. General Manager Pierre Dorion opted out of the first round, moving a top ten pick to bring in 40 goal scorer Alex DeBrincat while successfully bringing in a big ticket free agent in Claude Giroux. For fans, this is exciting. With the growing young core and these additions, this team is one to watch heading into the 2022-23 season.

But it also has raised some questions around Ottawa’s ability to put together a good team while remaining cap compliant, as Tim Stützle and Alex DeBrincat will be due for a raise next summer, while Jake Sanderson will follow just one year later.

Let’s take a look at how spending at the top of the roster has looked in the NHL over the past five years, so we can get an idea of what we might be in for as fans, watching Ottawa navigate what could very well be a difficult road trip through contract extensions.

The Data

I compiled the salary data for every playoff team over the past five seasons, recording the cap hits of each team’s top six contracts while looking at the percentage of the salary cap each team used up on these contracts.

This isn’t a perfect formula. I arrived at six contracts relatively arbitrarily. I decided six made sense because most teams spend a decent amount of money on their top six players and, with a few exceptions, the top six contracts tend to be six of their most important players. For example, the top six players under contract for the reigning Stanley Cup Champions are Mikko Rantanan, Cale Makar, Nathan MacKinnon, Gabriel Landeskog, Erik Johnson and Samuel Girard. The same thing can be said for Tampa Bay’s most important players, Toronto’s most important players. You get the picture.

We are also only looking at the total contract value, not the players themselves, who they are, their age or what position they play. Some of these top six contracts - like Tampa Bay and Montreal - include a goaltender. Others don’t.

Overall, we’re going to take a look at the breakdown of contract value overall as well as by how far teams tend to make it in the playoffs, to see if there is any correlation between the amount you spend on your top six contracts and putting together a playoff team.

Let’s dive in.

Overall Playoff Team Spending

Looking through five years of data, we get a sense for the spending and cap percentages of 80 different rosters. Overall, playoff teams have spent 50.18% of their cap space on their top six contracts. Unsurprisingly, the teams that spend more have, on average, gone further in the playoffs.

There are always outliers in both directions. There are teams who spent a lot and didn’t make it very far. There are teams that didn’t spend much and managed to win a round or two.

Above are the five rosters over the past five years who have spent the largest chunk of their cap space on their top contracts. Of course, we all knew who we’d see at the top - the Toronto Maple Leafs, who famously have spent a ton of money on some stars but don’t have much to show for it. Of these five rosters, the two Toronto teams as well as the 2021-22 Dallas Stars were both bounced in the first round, while the 2020-21 Lightning won the Cup and the 2021-22 were finalists. This is all to say what we all know - just because you spend, doesn’t mean you’ll win.

Playoff Spending by Round

As we know, playoff teams tend to spend half of their cap space on their top six most expensive contracts. But does that spending have anything to do with playoff success?

In short, kind of.

While it’s not a massive leap, the past five Stanley Cup Champions have spent 54.1% of their cap space on these six contracts, compared to the 49.95% spent on first round exits and 47.53% spent on second round exists. Similarly, those teams who made it to the finals but were unsuccessful at bringing home the glory also spent over half of their cap space on these contracts.

Since 2017-18, only one team has won the Stanley Cup while spending under 50% on the top end of their roster - the 2018-19 St. Louis Blues. That team was certainly the exception, not the rule, as they were built on middling experienced veterans who were primarily on $4-5M contracts. This team, unlike the other recent Champions, didn’t have a single player on their roster that made more than $7.5M.

Looking Ahead

So, what does this high level investigation mean for the Ottawa Senators?

In short, uh oh.

It’s not time to panic, there’s plenty of time and there are plenty of moves that could be made to make things more palatable for the Sens in the long term, but if we look at what Ottawa is currently spending on some of its young stars and take an educated guess at what players like DeBrincat and Stützle will cost, the Sens will be a team featured in that first graph of top end heavy spending.

In 2023-24, I project Thomas Chabot, Brady Tkachuk, Josh Norris, Alex DeBrincat, Tim Stützle and Claude Giroux will be the highest paid players on the team. Four of these players are currently under contract and will count as $30.66M. With a projected salary cap of $84.5M, that’s already 36.7%. Based on his qualifying offer and expected standout performance this year, I’d guess DeBrincat’s services on a long term deal will come in under but close to Matthew Tkachuk’s deal of $9.5M per year.

For Stützle, it’s tough to gauge. He’s still on his ELC and hasn’t produced offensively enough to become Ottawa’s highest paid forward but a year in this new top six may prove expensive for Ottawa’s front office. According to his player card, courtesy of The Athletic, Stützle’s market value based on his production to date sits around $6.3M.

I would expect, based on improved teammates and another year of development, Stützle will improve upon this value and will likely come in somewhere near Norris, just under $8M per year.

With DeBrincat and Stützle possibly commanding $17.5M together, that brings Ottawa’s top six contracts up to $48.16M, which would account for almost 57% of the projected salary cap in 2023-24.

On top of this information, we haven’t discussed what Jake Sanderson could be making at this time. As a young defenseman with two years left on his ELC, it’s possible that Sanderson plays well enough to earn himself a tidy extension in the $4-5M range. It’s also possible he takes the league by storm and earns himself something closer to what Chabot makes, in the $8M range. If the latter happens, it bumps Giroux out of the top six contracts but means outside of those contracts, they’re also paying Giroux and Drake Batherson over $11M. Which means they would have eight deals taking up almost 70% of their cap space.

Is a Cap Crunch Coming?

Yeah, probably.

Should fans be worried? No, I don’t think so and here’s why.

First and foremost, spending big on your contracts is only a problem when those players don’t live up to the value of their contracts. In the realm I’ve detailed above, you aren’t spending over $11M on a defenseman who is years past their prime. And you’re not spending $9.9M on a shell of what Tyler Seguin used to be. You’d be putting money into good, young players, who are just heading into their prime years. And by the time 2023-24 rolls around, players like Nikita Zaitsev and Travis Hamonic will be off the books, so there will be money to work with.

Second, players can be moved. If, like I said above, you are spending big money on players who are worth that money, those players are tradeable, if need be.

Third, bridge deals are always an option. With both Jake Sanderson and Tim Stützle, you can buy yourself time by going the bridge route before the big payout. If you can’t put together a roster that goes deep in that time, then you’ve got some decisions to make. It’s a strategy that just sees you kick the can down the road, but it’s a perfectly reasonable course of action.

Overall, it’s going to be fascinating watching how Dorion and the Sens front office handles this situation moving forward. They’ve done incredible work building a team that could surprise a lot of people in 2022-23, but once next summer hits, that great roster construction could become costly.

We might have to take a page out of Leaf Fan 101 and cross our fingers that the NHL’s salary cap makes a larger than anticipated jump sooner rather than later, so we don’t have to bid farewell to a great, young player because they’ve earned themselves a golden ticket.