• Horcoff: Compliance Buyouts and Marginal Cost

    by  • May 24, 2013 • Hockey • 10 Comments

    Craig MacTavish apparently did a question and answer type segment last night with Oilers season ticketholders last night in which the issue of buying out Shawn Horcoff came up. As is summarized in these two tweets from Twitter’s @regwald. The gist of it is that Horcoff’s future in Edmonton isn’t certain and that the Oilers might buy him out. There seems to be some generalized concern about the effect of all the losing on his spirits.

    That might be a way of putting a bit of lipstick on a pig of a situation. Horcoff, a guy who once dove face first in front of a slapshot to lock down a playoff win for the Oilers, was booed when he was introduced at the home opener this year. He has, unfairly in my view, come to be seen as sort of the face of what was wrong with the Oilers during the years in which there was something wrong. If he’s tired of people thinking his name is Shawn Horcoffscontractsucks, it’s perhaps understandable that he’d not be averse to moving along, particularly if he could go somewhere that’s good.

    As far as buying him out though, that sure seems like a longshot to me. As I see it, there’s a pretty straightforward analytical process to go through in evaluating a potential buyout. The first is “Is this player untradeable?” I’m not sure that’s the case with Horcoff. He has two years left on his deal at $3.5MM per. His cap hit is higher but for teams that aren’t cap teams, that’s kind of irrelevant. Is he worth $3.5MM per year? I’m not sure you could do better for that money on the UFA market.

    Even if a player is untradeable, you have to be able to do better with the cap space that’s created than you could otherwise do. In the case of the Oilers, I’m not sure that’s a realistic issue for 2013-14. According to CapGeek, they have $16.4MM to sign or otherwise replace Ryan Whitney, Nikolai Khabibulin, Sam Gagner, MPS, Mark Fistric, Ryan Jones and Lennart Petrell. That strikes me as awfully doable. If they want to take on money in a trade, maybe things get a bit tighter.

    If the Oilers had a bunch of players knocking at the door to whom they wanted to give some playing time, I could see a buyout making sense. Is anyone comfortable with Anton Lander as a fourth centre next year, let alone playing higher up the order? Is Tyler Pitlick going to replace Horcoff? Looking around, I don’t see the internal options who are pushing him out the door.

    The real killer though is that the Oilers wouldn’t actually save much money by buying out Horcoff. If they bought him out now, it costs them $1.167MM a year for four years – $4.668MM. If they kept him a year and then bought him out, it costs them $4MM for next year, plus two years at $1MM. So $6MM total. There’s going to be some small adjustment to that to account for the fact that you’re paying the money out over three years instead of four but the actual cash savings to the Oilers are pretty small: $1.332MM.

    Of course, with Horcoff gone, someone would have to fill his roster spot. Overall, buying him out probably costs them more money than it saves them. If it makes sense to do it, that’s fine and well but it’s hard to see how it would make sense for them, outside of what I call the “soft” issues – the temperament of the team and the impact that Horcoff’s continued presence has on it. Unless there’s a big negative there, it’s hard to see how this would make sense for Edmonton.

    Email Tyler Dellow at tyler@mc79hockey.com

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    10 Responses to Horcoff: Compliance Buyouts and Marginal Cost

    1. speeds
      May 24, 2013 at

      A couple things:

      (1) The Oilers only have 16.4 mil if they choose to use all of their bonus overage – if they choose to use none of that, they have less than 12 mil in room.

      (2) In terms of tradeable, I guess it depends how amenable to a trade he’d prove to be, but he does have a NMC through what I understand to compliance buyout window to be this summer, and a limited NTC through the same window in the summer of 2014. If he’s willing to be traded, that’s fine, but he may look at it more strategically and think to himself “Why allow a trade? If I don’t, they might buy me out in which case I likely get more money plus I can chooses my destination (to the extent that other teams are interested)”

      (3) MacT will have significantly more info than us regarding his replaceability – he may even be able to have the replacement acquired before the buyout window closes, which would remove the risk of buying Horcoff out and then finding that you can’t adequately replace him.

      (3)

    2. daryl
      May 24, 2013 at

      Excellent analysis, couldn’t agree more. Opportunity cost and all that. What if the replacement was Brad Richards at 3mill per?

      • wing-nut hunter
        May 28, 2013 at

        Richards’ salary for next season is $9.0M! Then $8.5M, then $8.5M, then $7M. His cap hit is also $6.67M.

        The ONLY way Richards goes to ANY other team is if the Rangers buy him out. He’s certainly a good buyout candidate and there is speculation that it will happen, but if NYR buy him out, then he’s a free agent and goes to the highest bidder, right? At that point, he’s not part of any deal.

    3. Benhur
      May 24, 2013 at

      Horcs performance has been on a steady decline over the last 3 years and I see no reason it should turn around. He’s dropped to a 3rd or 4th line centre role with special duties on the PK and some PP.
      If they can find a better player with more energy and performance I would trade him or buy him out.

      • Shelly
        June 1, 2013 at

        Bet the new head will be Donald Fehr, the former head of the bablasel players association, and the only professional players group to prevent a salary cap from being imposed.His first objective will be to try to “chip away” at the cap at the next collective bargaining date. This could be achieved by allowing each team to exempt one “franchise player” from the cap limit. Second, a two teir cap could be established with the existing cap $44 million, being the first level, after which a team would pay a luxury tax, up to a hard second cap of $54 million. All luxury taxes would be paid into revenue sharing for the poorer teams.I believe that within a year or two many of the big market teams (NY, Detroit, Phil. Toronto) will be very receptive to these proposals and many of the smaller teams, seeing that “the cap” has not solved their financial problems, will be receptive to the luxury tax providing them more revenues.Fehr, has the skills necessary to drive a wedge between these teams and Bettman.

    4. David Staples
      May 24, 2013 at

      I don’t see buying him out either, though from Mac’s full remarks, as reported by Tencer, I’m guessing maybe the Oilers do a change of scenery centre for centre trade with Horcoff, to give him a new start.

      He can still check tough competition, so unless Oilers are certain they’d get something of equal value in return, I’d hate to see him go… Can always buy him out next summer, if he gets hurt more or has another drop off in performance.

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    6. Fresh Mess
      May 25, 2013 at

      He has to provide a list of ten teams he would accept a trade to this summer, but more importantly, his no movement clause becomes a limited no trade clause. I take that to mean he can be moved by avenues other than trade.

      I think it is quite possible a cap floor team may claim him off waivers prior to the season if the Oilers expose him.

      The Oilers would then be swimming in cap space and poised to pluck a cherry from one of the teams sweating down to 64million. Horcoff would get a much needed clean slate.

    7. Pingback: Shawn Horcoff is still an important player for the Edmonton Oilers | Edmonton Journal

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