Why A Matt Martin Buyout Will Never Happen

With the Leafs signing fourth-liner Matt Martin to a contract worth $10 million, there’s been lots of talk already about how the Leafs will probably regret that contract in the future. By extension, there’s been lots of talk about how the Leafs might eventually get out from under that contract.

The expansion draft is a possibility, though probably unlikely. As far as rules about which players you have to expose, two forwards must be exposed that both played at least 40 games the previous season, as well as be under contract for the 2017-2018 campaign.

I imagine the Leafs will protect Van Riemsdyk, Kadri, and Komarov for starters. As far as two forwards the Leafs have to expose, the team likely exposes one of Holland or Bozak along with Martin. And given the good defensemen that will likely be left unprotected, there’s a good chance Las Vegas chooses a forward from Toronto.

But, you’d have to think most GMs would prefer to have Holland or Bozak than Martin. So it’s probably not going to happen.

Another option is buyout. We shouldn’t assume anything, but let’s do that anyways. Let’s assume that no matter how good or bad Martin is next year, the Leafs don’t buy him out one year into his deal. If he does perform poorly, the team probably gives him a second chance.

So maybe they buy him out after two years. The organization obviously likes him so this might be unlikely, but let’s just pretend. What would that look like?

First of all, the bulk of Martin’s contract is paid out in signing bonuses (($6.5M out of $10M) so it’s what we’d consider “buyout-proof”. Now that we recognize that, let’s get into the nitty gritty: Martin’s buyout would carry a cap hit of $2M for two years, followed by a cap hit of $250k for two years.

Not too pretty but not too awful either. So why will a buyout never happen?

Because if you send a player on a one-way deal down to the AHL, their cap hit on the NHL team becomes their NHL cap hit minus $925k. So here’s what a 2018 buyout would look like versus the Leafs just sending him down:

So, it makes literally no sense for the Leafs to buy out Matt Martin’s contract at any point. They’d have a higher cap hit doing so in all four seasons than if they just placed him on waivers and had him report to the Toronto Marlies.

And, just for clarity, the same holds true if the Leafs ever decided to buy Martin out at an earlier or later date. If the Leafs were to buy Martin out in 2017 they’d be on the books for three seasons with a $2M cap hit, and three seasons with a $250k cap hit. If they bought him out in 2019, it would be one season of a $2M cap hit and one season of a $250k cap hit.

Of course, salary retention in a trade is another possibility. Given that you can retain up to 50% of a player’s salary in a trade, the Leafs could conceivably get Martin’s cap hit down to as low as $1.250M until his contract expires in 2020.

Put in another way, this is a really long-winded way of me saying, “yes, Matt Martin’s contract is indeed buyout-proof.

Hopefully this article isn’t taken as overly doom and gloom. “They’re already talking about buying Matt Martin out!? Calm down!”. This is more-so just an exercise in exploring the various options if the Leafs do in fact come to regret Martin’s contract. It also, hopefully, should serve to show people that if the Leafs end up regretting his contract the consequences aren’t that bad. Obviously you’d prefer to avoid that mess altogether, but a cap hit of $1,575,000 for two seasons isn’t that bad.

As we can see, while Martin’s contract is laden with signing bonuses and thus buyout-proof, the Leafs have other options as far as getting out from under his contract. Hopefully it never comes to that.