Tommy Novak and the revolving door

Novak had performed admirably since his call up from Milwaukee. Why did he spend Christmas in the minors?

When the Nashville Predators reassigned Tommy Novak—who had had points in every game since his call up—to Milwaukee on December 24th, it got a lot of attention on Twitter.

Why would the team reassign a player who had given this offense-starved team a boost?

The initial outrage was countered by some who noted that this was probably a paper transaction and Novak was likely to be back on the roster for the next game (he was).

But the decision to send down and then recall Novak deserves some scrutiny. This isn’t the first time the Preds have had players riding the reassignment carousel. During the COVID season, for example, Matthew Oliver and Eeli Tolvanen were among many players in the league who were regularly reassigned to taxi squads on non-game days. What makes a team do this?

Because the Collective Bargaining Agreement (CBA) and the rules surrounding entry-level contracts are complex, there are a variety of reasons that teams may choose to send players who are performing well to the minors. But which of these could apply to a situation like Novak’s? To think about this, let’s take a minute to consider a number of these possibilities.

Extending the Period of Team Control of the Player

The vast majority of NHL players are signed to their first contract before the age of 25. Thus, they have a period at the beginning of their careers where the team that drafted them, traded for them, or signed them as an undrafted player has much more control over their career. This period occurs before players reach unrestricted free agency and can generally be thought of as having two sub-periods: entry-level contract (ELC), and restricted free agency (RFA).

Players on their entry-level contract are cost-controlled with a current maximum salary of $925,000 as well as caps on signing and performance bonuses. For high-end young players, this is a period of time when their team enjoys significant benefits by getting an elite player for a non-elite price.

Because the performance of young players is often uncertain, the CBA allows for up to two “entry-level slides” for players under the age of 20 who meet certain conditions and play fewer than 10 NHL games (regular season or playoffs). These players essentially have their entry-level contract extended for an additional year each time their contract “slides.”

The ability to “slide” a contract provides an incentive to send young players down in situations where they might otherwise stick in the NHL. This can clearly be seen in the case of teams who are not currently performing well but hope to improve in future seasons. In that situation, losing a young player this year in exchange for an additional cost-controlled year in the future may make sense.

For example, in the year that the Toronto Maple Leafs were tanking for the Auston Matthews draft, Mitch Marner was sent down to the London Knights, even though he may have been ready for the NHL. This allowed the Leafs to maximize their chances of acquiring the first-overall draft pick (Matthews) while also saving that year of Marner’s ELC for the future, when the team would hopefully be improved through their acquisition of Matthews and other young players (William Nylander, for example) would also be ready to contribute at the NHL level.

But “entry-level slide” transactions do not typically result in the kind of revolving door that Novak recently found himself in. This is because these types of transactions only apply to very young players who, because of agreements with other leagues, are not able to be recalled to the NHL except in dire emergency (see 2017 Vegas Golden Knights goaltending). But even for players eligible to return to the NHL, the decision to bring them back after 9 games played will “burn” that year of the entry level contract, making future recalls very unlikely.

Further, there is nothing to be gained by sending such players down to the minors between games, because only the number of NHL games played affects the ability to “slide” a contract, not the number of days on the NHL roster.

Maximum Roster Size and Waivers

NHL teams must have an active roster size between 20 and 23 players. Call-ups to replace injured players are common and thus sometimes players must be sent down because an injured player is returning to the active roster and there isn’t sufficient space to reactivate them. In these situations, the waivers process can influence a team’s decision on which player gets sent down.

Simply stated, players who don’t need to clear waivers are more likely to be sent down when a team needs an open roster spot. There are two types of players who do not have to clear waivers: “waivers exempt” players and players who have cleared waivers recently enough.

Young players are “waivers exempt” for a period of time that varies depending on their age when they signed their NHL contract, the number of years elapsed since that signing, and the number of NHL games they have played. This system largely defies simple explanation, but CapFriendly provides a useful table and answers many questions about waivers in its Waivers FAQ. Waivers exemption applies to relatively few players on most teams. On the current Predators roster, for example, only two players (Novak and Juuso Pärssinen) are waivers exempt.

Players who are not waivers exempt must clear waivers before they can be sent down to the minors. However, if a players clears waivers (for example at the beginning of the season) this allows the team some leeway to briefly recall that player to the NHL without the need for him to clear waivers again.

Specifically, a player who has already cleared waivers in the current season does not need to pass through waivers again unless they have been on the active NHL roster for 30 days (cumulatively) or have played 10 or more NHL games since they last cleared waivers. This may cause a team to send a player down earlier than they would prefer to avoid the risk of waivers if they wait. In addition, there may be some advantage to sending the player down during off-days if the schedule is particularly sparse (for example around the all-star break) when cumulative days on the roster would move the player more quickly to the 30 days mark.

Opportunity to Play

In the case of a player who is playing well at the NHL level, the situations where you might send them down to give them the opportunity to play are relatively few. In particular, the time periods around the NHL All-Star break and the bye week present an opportunity for a young, waivers-exempt player to get some more ice time in the AHL. This can be a good choice for both the team and the player.

For example, the Preds sent Juuse Saros back to  Milwaukee during his first year in the league because as the backup goaltender, he got less than ideal ice time in the NHL. Giving him the opportunity to be the starter in Milwaukee for that period, while the Predators did not have any games, allowed him to keep his rhythm and build his skills in important real game situations.

Salary Cap Space

When a player on a one-way NHL contract is assigned to the minors, the team receives some relief in the form of cap space. Currently, up to $1,125,000 of a player’s salary can be “buried” in this manner. So, for example, when former Predator Craig Smith cleared waivers on December 19th, this enabled the Boston Bruins to send him to their AHL affiliate and reduce the cap impact of his contract from $3,100,000 to $1,975,000. For players on two-way contracts, the cap relief from sending the player to the minors is complete as the player receives their minors salary once they are sent down.

In either of these cases, a team who is tight on cap space can gain usable space at the end of the season by sending players down during off-days. Because cap-hit is calculated daily and there are 185 days in the NHL season this year, sending a player like Tommy Novak, who has a $750,000 cap hit down, gains the team $750,000/185 = $4,054 in cap space for each day he is in the minors.

This is very little when compared to the total salary cap of $82,000,000. But for contending teams who are very close to the cap, this may buy them the ability to acquire some extra help at the trade deadline. Further, because only 40 days of the NHL season fall after the trade deadline, a team that saves a $1,000,000 of their annual cap hit every day before the deadline would have the ability to accommodate the addition of a player with a $3,625,000 cap hit at the trade deadline, improving their chances to make and compete in the playoffs.

Saving Real Dollars

The physical dollars paid out in salary by a team functions differently than cap dollars. Contracted salaries of one-way players must be paid regardless of the league they are playing in. Thus there is no real dollar relief from sending a one-way player down to the minors. But for players on two-way contracts, teams can save money by making this move. Analyzing this is a bit more complicated because there are a number of factors that must be considered to determine the savings from this move. For example, signing bonuses would need to be paid regardless of the league, but performance bonuses would only apply to NHL play.

In Novak’s case, there are no complicating performance or signing bonuses. He commands an NHL salary of $750,000, but only earns $80,000 in the minors. However, he has one complicating factor, which is fairly common among players who are fringe NHL players: he is guaranteed a salary of at least $115,0000 for the season.

Given the 185 day season, Novak earns $432 a day in the AHL and $4054 in the NHL. This would suggest a savings for the team of $3,622 a day from sending him down. The minimum salary might ordinarily complicate this, but after his recall on December 27th, Novak only needs to spend 4 more days in the NHL to achieve this level. Thus, it feels pretty safe to assume that this will become a non-issue. What is an issue, however, is that players in the NHL must pay escrow.

Escrow is a mechanism to ensure that there is a 50/50 split of revenues between players and owners. Players pay a share of their salaries into an escrow fund to cover the 50% owed to owners in the event that player salaries exceed 50% of league revenues. In normal times, some (or even all) of the money in escrow might be returned to players. But when the league returned to play during the COVID-impacted season, the decline in revenue from reduced ticket sales resulted in a “debt” that players still owe to the owners. Thus it seems extremely likely that one again this year all escrow funds will go to the owners.

This year, players contribute 10% of their salaries to escrow, meaning that the owners will get a rebate of 10% on any salary paid at the NHL level. This means the savings from sending Novak down are closer to $3,217 per day. Thus for the three-day Christmas break, the Predators saved approximately $9,650, or 0.011% of the team’s estimated salary expenditure according to CapFriendly.

Tommy Novak

So let’s think about Tommy Novak in particular. What motivated the Predators to send him to the minors over the Christmas break?

Novak is 25 years old and on his second NHL contract. Thus he is not eligible for an “entry-level slide,” eliminating team control as the reason for the Predators’ decision with respect to his status.

Roster size also does not explain this move, because the Preds were only maintaining an active roster of 21 at the time Novak was sent down. Thus they had two open spaces, making a reduction unnecessary. In addition, Novak is waivers exempt, so there was no need for the team to send him down to avoid triggering waivers at some later point in the season.

This move could not have been made to get Novak playing time because Milwaukee had no games on the days Novak was returned to their roster.

So, there are really only two options, which are not mutually exclusive. 1. The Preds are banking cap space for a playoff run (or to take on other teams’ bad contracts) or 2. The team is trying to save real dollars.

On the cap-hit front, the 3-day reduction in cap hit from Novak’s reassignment would allow the Preds to take on $56,250 in additional cap hit at the deadline, or about 7.5% of a player who makes the league minimum salary. This is so marginal that it seems unlikely to have any real impact on the team’s ability to acquire players for a playoff run or leverage its cap space to gain future assets. But as previously noted, the team is maintaining an active roster below the maximum allowed. This is pretty uncommon and may also be to bank cap space for the trade deadline.

All things considered, it seems likely that Novak was sent down to save $9,650 on the team’s player salary expenditures. But, if this is the case, why was Novak sent down and not Parssinen (who is also waivers-exempt)?

Because the team must maintain a minimum roster size of 20, they could only send one player down and in a pure dollars-saved sense, Parssinen would have been the better choice because he has a lower salary in the minors than Novak. If the team had sent down Parssinen, they would have saved $3,270 a day, $53 more than they saved on Novak. This is tiny—only $159 over the whole break. But why would they not save the most they could, if the goal were penny pinching? Perhaps there is some unwritten last in, first out rule.

Regardless of whether this decision was made to save cap space or salary dollars, it represents a drop in the bucket for the team itself. But those salary dollars likely mean a great deal more to a young player like Novak, who still has relatively low career earnings. Losing 88% of your salary for your few contractual vacation days is not a great reward for a guy who came in when the team was struggling and looked like one of the better players on the ice.