David Clarkson’s contract was a millstone around the Maple Leafs’ neck the day it was signed. The Leafs drastically overpaid the 30-year-old winger back in 2013, giving him a seven-year deal worth $5.25 million per year. That was a shocking amount at the time, particularly for a player that had breached 20 goals just once in his career, a 30-goal season a year prior.
The odds of a power forward like Clarkson being worth his contract as he aged into his 30’s was slim, but then-GM of the Leafs Dave Nonis justified the expense and length of the contract as just the cost of doing business.
"I'm not worried about six or seven right now," he said. "I'm worried about one. And year one, I know we're going to have a very good player. I believe that he's got a lot of good years left in him."
Weirdly, he should have been a lot more worried about year one, while year seven is about to provide tremendous value to the Leafs. If that doesn’t make much sense, that’s fair. There’s a lot to unpack here and it involves a familiar name for the Canucks: Laurence Gilman.
Clarkson’s first year with the Leafs was a disaster, starting before the first game of the season, as he was suspended for 10 games for leaving the bench to join a pre-season brawl. Clarkson managed just 5 goals and 11 points in 60 games and, just one year into the contract, the Leafs wanted out.
There was just one issue: Clarkson’s contract wasn’t just exorbitant, it was buyout proof, with approximately 76% of his contract coming in signing bonuses. When buying out a contract, the team gets some relief on the base salary, only having to pay 2/3rds of it and spreading that money over a longer period of time. Signing bonuses, however, have to be paid in full and can’t be spread out.
Buying out Clarkson in 2014, then, would have meant a cap savings of just over $555,000 for most of the length of Clarkson’s contract, approximately $4.7 million of dead capspace.
If this all sounds familiar to Canucks fans, it’s because the Loui Eriksson contract is similarly structured. To buy it out would result in a cap savings of less than $500,000.
The Leafs had to get creative to rid themselves of Clarkson’s seemingly untradeable anchor of a contract and it led to one of the more bizarre trades in NHL history. The Leafs sent Clarkson to the Columbus Blue Jackets for Nathan Horton, who had a degenerative back injury that left him permanently on long-term injured reserve (LTIR).
The Blue Jackets got someone that could actually step on the ice, while the Leafs got someone they could stash on LTIR for cap relief. Since the Blue Jackets weren’t near the upper limit of the cap, they got no cap benefit from Horton being on LTIR.
At the time, the trade was called out as legal “circumvention of the salary cap.” With the Leafs once again in a cap crunch, they returned to the same legal circumvention well.
In a sadly ironic turn, Clarkson’s playing career ended with the same degenerative back injury that took Horton off the ice. Clarkson played a total of 26 games for the Blue Jackets after the trade and hasn’t played since.
Clarkson’s contract was moved to the Vegas Golden Knights along with a first-round pick and a third-round pick in exchange for assurance that the Golden Knights would take William Karlsson in the expansion draft. That worked out pretty well for Vegas, who got 43 goals out of Karlsson and a trip to the Stanley Cup Final.
Now Clarkson is on his way back to Toronto, as the Leafs sent Garret Sparks to the Golden Knights in exchange for Clarkson’s contract and a fourth-round pick. It amounts to the Golden Knights paying the Leafs a pick to take on the contract, even though it’s going to live on LTIR for the season.
There are reasons for the Golden Knights to do this, but let’s look at what this does for the Leafs. They now have both Horton and Clarkson on their roster for 2019-20, even though neither will play a game. They’re guaranteed to be put on LTIR as soon as the season begins. The two combined have a cap hit of $10.55 million, which becomes cap relief if the Leafs put themselves right up against the cap before putting them on LTIR, which is exactly what the Clarkson contract will do.
Hello Mitch Marner.
The Leafs still need to re-sign Marner, a restricted free agent looking for a massive payday — such as, perhaps, $10.55 million per year — after racking up 94 points at 21 years old. Add Clarkson to their IR may provide exactly the cap room they need to get a deal done, even if it has to wait for the start of the season to maximize that LTIR cap relief.
This seems like it has Laurence Gilman’s fingerprints all over it. Gilman was renowned in Vancouver for his salary cap wizardry, even if he didn’t like the term “capologist,” feeling it pigeon-holed him.
In Vancouver, Gilman used LTIR, shuffling players down to the AHL and back up for days at a time, and other tricks to get the Canucks as much out of the salary cap as possible. By the end of the 2010-11 season, the Canucks had a roster that was about $7.6 million over the cap with everyone healthy, but technically never exceeded the cap during the season. It was a masterpiece of finding every possible loophole and it got the Canucks within one game of the Stanley Cup.
Now Gilman is exploiting the loopholes in the collective bargaining agreement (CBA) on behalf of the Leafs as their Assistant GM, though that shouldn’t sell short Leafs GM Kyle Dubas, or Assistant GM Brandon Pridham, who is himself a CBA expert, considering he helped draft the CBA in 2012.
When Pridham helped draft the CBA, I doubt he foresaw teams intentionally acquiring players that couldn’t actually play, solely to maximize the benefit of LTIR. There’s something incredibly bizarre and wrong about one of the worst contracts in Leafs’ history somehow saving them from a salary cap nightmare.
This might particularly rankle the Canucks and their fans, as one of the loopholes Gilman exploited while with the Canucks is currently kicking them in the shins, as Jim Benning put it.
Gilman and Mike Gillis structured Roberto Luongo’s contract in such a way that they got one of the best goaltenders in the NHL on the roster for a paltry ~$5.3 million cap hit. To do so, they signed him to a 12-year deal that paid him $10 million in the first year, then steadily dropped to the point that it paid just $1 million per year in the final two years.
The contract was perfectly legal according to the CBA at the time, but the NHL didn’t like the Canucks exploiting the loophole. They retroactively adding a new cap recapture penalty, which became known as the “Luongo Rule,” which punished teams with back-diving contracts like Luongo’s.
So, with Luongo retiring this year, the Canucks have been hit with a cap recapture penalty of around $3 million per year for the next three years.
Luongo could have pretty easily found a doctor to tell him he should never play hockey again, given his hip issues, and gone on LTIR like Horton and Clarkson. Instead, he retired on his own terms, as is his right. The question is whether other players forced into retirement by injuries should be allowed to remain on rosters and be trade bait to provide this bizarre form of cap relief.
The issue isn't LTIR itself, which needs to be in place for teams to deal with injuries during the season. The issue is the players that are on LTIR that will never play again. Maybe the Leafs should go out and trade for Johan Franzen and Marian Hossa as well, to really maximize their LTIR.
The league is unlikely to punish the Leafs for exploiting the LTIR loophole and really, they shouldn’t. Gilman wouldn’t be doing his job if he didn’t find every way for the Leafs to put their best possible team on the ice, and that means finding and using these types of loopholes. The league shouldn’t punish a team for finding a loophole within their rules: they should just find a way to close the loophole in the future.
That’s also exactly what they should have done in the Luongo situation: close the loophole, but don’t punish the teams that found and used that loophole in the first place.