<p>Now that the dust has settled, we can step back and take a look at the entire landscape surrounding the Clarkson trade 2.0. Let&#8217;s take a look at why the trade makes sense for both teams, and what impact it will have moving forward.</p>
<h1>Why it makes sense for the Golden Knights</h1>
<p>One look at Vegas&#8217; cap situation gives us a pretty good understanding as to why they need to free up cap space. With 22 players on their roster, VGK has just over $1 million left to sign a 14th forward.</p>
<p>In most circumstances, that would be plenty, however, that 14th forward is Restricted Free Agent, Nikita Gusev. Gusev has not played a single NHL game. And yet, his incredible production in the KHL means he has the leverage of returning to Russia for a big payday &#8211; where he is reportedly asking for $4 million on a two-year deal, while the Knights are offering $2 million.</p>
<p>So how does trading David Clarkson help the Golden Knights sign Gusev? He was going to be placed on Long Term Injured Reserve, and his cap hit would flutter off the books, right? Wrong.</p>
<p>While Vegas would have likely utilized &#8220;Prior to Opening Day&#8221; LTIR <em>[CBA Article 50.10(d), pages 291-292]</em> to get the full $5.25 million in relief for Clarkson, LTIR isn&#8217;t free cap space. With Clarkson on LTIR, the Golden Knights would not have been able to accrue salary, which may be necessary to sign Gusev.</p>
<p>It&#8217;s tough to predict what VGK is planning on. But if they&#8217;re set on keeping Ryan Reaves and Cody Eakin, this trade gives them the option of signing Gusev, running with 20/21 players, and then making recalls when they have accrued enough space.</p>
<h1>Who cares about Vegas, why does it make sense for the Leafs?!</h1>
<p>The idea that the Leafs essentially &#8216;bought&#8217; a draft pick by taking on Clarkson has been floating around. It makes sense because the Leafs have done it many times before &#8211; be it with Brooks Laich, Eric Fehr, or Raffi Torres. That&#8217;s not the case here, though, as the Leafs had a hidden incentive to take on a bad contract they handed out over six years ago.</p>
<p>No, it&#8217;s not to assemble the best checking line of 2011.</p>
<p>Depending on your projection of the opening day roster prior to the trade, the Leafs had roughly $9.5m to sign Mitch Marner. The problem was that if Marner wasn&#8217;t signed by October 2nd, the Leafs would have no way to manoeuvre any closer to the cap than ~$3.5m, meaning they could not properly utilize LTIR and get full relief for Horton. This undercut the Leafs&#8217; leverage, as they had to get a deal done by the end of training camp.</p>
<p>This is a major part of the issue with LTIR, and why teams like the Chicago Blackhawks (with Marian Hossa), and Vegas Golden Knights (with Clarkson) tried so hard to move contracts they could&#8217;ve otherwise gotten LTIR relief for. It&#8217;s because the contracts are a large block of cap space that can only be recovered if the team is over the cap by at least that player&#8217;s cap hit, or right at the cap. If a team&#8217;s roster is primarily waiver eligible, they essentially have no wiggle room to maximize their relief pools.</p>
<p>The Clarkson contract was a near-perfect fit to align the Leafs with the salary cap, by sending the waiver exempt Ilya Mikheyev to the Marlies for a day, waiving all the defensemen that are vying for the 7D position (except for Justin Holl), and keeping Kasimir Kaskisuo on the roster, the Leafs could get within $15,301 of the cap. They would then place Horton and Clarkson on LTIR, send down Kaskisuo, recall Mikheyev and a 7D, (it sounds like that will be Harpur).</p>
<p>If that&#8217;s the route the Leafs take, they will have exactly $9,575,000 to sign Marner.</p>
<p>The Leafs could still sign Marner before the season starts and easily get full relief for Horton and Clarkson, but there&#8217;s a reason they made this move: They feel they may be unable to get a deal done.</p>
<h1>How long can the Leafs wait?</h1>
<p>Now there is one other implication to this strategy. Some of you will remember last year when William Nylander signed a $6,962,366 deal on December 1st, his first-year cap hit was $10,277,778. That is because the first year of the contract pro-rates, in order to discourage teams from holding out on their RFAs for cap savings.</p>
<p>In essence, whatever the Averaged Annual Value (AAV) on the contract is, that is the effective cap hit for the year. To simplify, if a player making $2 million signs one-third of the way through the year (meaning they will be on the roster for the remaining two thirds), their daily cap hit will be $3 million, but they will only be on the roster long enough to cost the team $2 million.</p>
<p>Here&#8217;s where the LTIR and inflated first-year salary intertwine.</p>
<p>Last year with Nylander, the Leafs had so much cap room that they didn&#8217;t actually place Horton on LTIR at all. He was simply on Injured Reserve for the entirety of the season. This year, Horton and Clarkson will both be on LTIR, and that means the Leafs&#8217; cap space will be calculated differently.</p>
<p>For starters, the Leafs will be unable to accrue any cap space whatsoever. Teams can technically accrue cap space with players on LTIR by getting under the Accruable Cap Space Limit (ACSL), which is whatever the team&#8217;s cap hit was on the day they placed a player on LTIR. Since the Leafs will need to make moves just to be cap compliant on the first day, then place players on LTIR, they will be over the ACSL by the time they play their first game.</p>
<p>Since the Leafs cannot accrue salary, they need to have enough daily cap space to sign Marner. If Marner were to sign a 6-year deal with no signing bonuses and $9m in salary for each of those 6 years, the Leafs wouldn&#8217;t be able to afford it on just the 14th day of the season.</p>
<p>For those who don&#8217;t know, the longer the holdout goes on, the more the first-year cap hit increases. We all know that Marner won&#8217;t be inking a deal with no signing bonuses though, and it will likely be heavily frontloaded. For the purpose of covering a wider range, I&#8217;ll propose three different contracts, all with the same structure; heavily frontloaded with $1 million in salary, and the rest signing bonus. That is except for the first year, as we saw with Nylander&#8217;s contract, because it has a large impact on how much the first year is inflated.</p>
<h2>$8.5 million for 6 years</h2>
<p>In the first year, this contract has $12 million in salary, $2 million in signing bonus. In year two it&#8217;s $1 million in salary and $9 million in signing bonus, then in years three to six, it&#8217;s $1 million in salary and $5.75 million in signing bonus. The Leafs have until October 27th to offer this deal, where it would have a first-year cap hit of $9,556,250, and $8,220,430 for the remaining 5 years.</p>
<p>It would pay Marner a total of $49,322,580</p>
<h2>$9 million for 7 years</h2>
<p>In the first year, this contract has $14 million in salary, $2 million in signing bonus. In year two it&#8217;s $1 million in salary and $9.5 million in signing bonus, then in years three to seven, it&#8217;s $6.3 million in signing bonus and $1 million in salary. The Leafs have until October 15th to sign this deal, where it would have a first-year cap hit of $9,569,767, and $8,849,462 for the remaining 6 years.</p>
<p>It would pay Marner a total of $61,946,237</p>
<h2>$9.5m for 8 years</h2>
<p>In the first year, this contract has $16 million in salary, $2 million in signing bonus. In year two it&#8217;s $1 million in salary and $10.7 million in signing bonus, then in years three to eight, it&#8217;s $1 million in salary and $6,716,667 in signing bonus. The Leafs could only offer this on October 3rd, and the cap hit across all years are ~$9.5 million.</p>
<p>It would pay Marner a total of $68,197,313.</p>
<h1>Conclusions</h1>
<p>As you can see, the Leafs bought themselves some time &#8211; but not much.</p>
<p>It appears to be more of a negotiating tactic, as in the end, it&#8217;s beneficial for both parties to get a deal done before the season starts. If anyone is concerned about the Leafs being unable to match an offer sheet, Toronto has the option of placing Hyman and Dermott on LTIR as well, however they&#8217;d need to make moves to become cap compliant and activate either of the two.</p>
<p>The Leafs using so much LTIR means they will probably not be capable of making a significant addition at the trade deadline. As for potential performance bonus overages, none of the players on my projected roster has them, and the only ones with an outside shot are Mason Marchment, Timothy Liljegren, and Teemu Kivihalme. Even if those players do make the roster, they&#8217;re unlikely to hit any of their bonuses, and even if they do, those three only combine for $665,000 in potential Performance Bonuses.</p>
<p>I&#8217;m sure many Leaf fans are looking forward to next summer, when both Horton and Clarkson come off the books, and they don&#8217;t have to think about LTIR anymore.</p>


Now that the dust has settled, we can step back and take a look at the entire landscape surrounding the Clarkson trade 2.0. Let's take a look at why the trade makes sense for both teams, and what impact it will have moving forward.
<h1>Why it makes sense for the Golden Knights</h1>
One look at Vegas' cap situation gives us a pretty good understanding as to why they need to free up cap space. With 22 players on their roster, VGK has just over $1 million left to sign a 14th forward.

In most circumstances, that would be plenty, however, that 14th forward is Restricted Free Agent, Nikita Gusev. Gusev has not played a single NHL game. And yet, his incredible production in the KHL means he has the leverage of returning to Russia for a big payday - where he is reportedly asking for $4 million on a two-year deal, while the Knights are offering $2 million.

So how does trading David Clarkson help the Golden Knights sign Gusev? He was going to be placed on Long Term Injured Reserve, and his cap hit would flutter off the books, right? Wrong.

While Vegas would have likely utilized "Prior to Opening Day" LTIR <em>[CBA Article 50.10(d), pages 291-292]</em> to get the full $5.25 million in relief for Clarkson, LTIR isn't free cap space. With Clarkson on LTIR, the Golden Knights would not have been able to accrue salary, which may be necessary to sign Gusev.

It's tough to predict what VGK is planning on. But if they're set on keeping Ryan Reaves and Cody Eakin, this trade gives them the option of signing Gusev, running with 20/21 players, and then making recalls when they have accrued enough space.
<h1>Who cares about Vegas, why does it make sense for the Leafs?!</h1>
The idea that the Leafs essentially 'bought' a draft pick by taking on Clarkson has been floating around. It makes sense because the Leafs have done it many times before - be it with Brooks Laich, Eric Fehr, or Raffi Torres. That's not the case here, though, as the Leafs had a hidden incentive to take on a bad contract they handed out over six years ago.

No, it's not to assemble the best checking line of 2011.

Depending on your projection of the opening day roster prior to the trade, the Leafs had roughly $9.5m to sign Mitch Marner. The problem was that if Marner wasn't signed by October 2nd, the Leafs would have no way to manoeuvre any closer to the cap than ~$3.5m, meaning they could not properly utilize LTIR and get full relief for Horton. This undercut the Leafs' leverage, as they had to get a deal done by the end of training camp.

This is a major part of the issue with LTIR, and why teams like the Chicago Blackhawks (with Marian Hossa), and Vegas Golden Knights (with Clarkson) tried so hard to move contracts they could've otherwise gotten LTIR relief for. It's because the contracts are a large block of cap space that can only be recovered if the team is over the cap by at least that player's cap hit, or right at the cap. If a team's roster is primarily waiver eligible, they essentially have no wiggle room to maximize their relief pools.

The Clarkson contract was a near-perfect fit to align the Leafs with the salary cap, by sending the waiver exempt Ilya Mikheyev to the Marlies for a day, waiving all the defensemen that are vying for the 7D position (except for Justin Holl), and keeping Kasimir Kaskisuo on the roster, the Leafs could get within $15,301 of the cap. They would then place Horton and Clarkson on LTIR, send down Kaskisuo, recall Mikheyev and a 7D, (it sounds like that will be Harpur).

If that's the route the Leafs take, they will have exactly $9,575,000 to sign Marner.

The Leafs could still sign Marner before the season starts and easily get full relief for Horton and Clarkson, but there's a reason they made this move: They feel they may be unable to get a deal done.
<h1>How long can the Leafs wait?</h1>
Now there is one other implication to this strategy. Some of you will remember last year when William Nylander signed a $6,962,366 deal on December 1st, his first-year cap hit was $10,277,778. That is because the first year of the contract pro-rates, in order to discourage teams from holding out on their RFAs for cap savings.

In essence, whatever the Averaged Annual Value (AAV) on the contract is, that is the effective cap hit for the year. To simplify, if a player making $2 million signs one-third of the way through the year (meaning they will be on the roster for the remaining two thirds), their daily cap hit will be $3 million, but they will only be on the roster long enough to cost the team $2 million.

Here's where the LTIR and inflated first-year salary intertwine.

Last year with Nylander, the Leafs had so much cap room that they didn't actually place Horton on LTIR at all. He was simply on Injured Reserve for the entirety of the season. This year, Horton and Clarkson will both be on LTIR, and that means the Leafs' cap space will be calculated differently.

For starters, the Leafs will be unable to accrue any cap space whatsoever. Teams can technically accrue cap space with players on LTIR by getting under the Accruable Cap Space Limit (ACSL), which is whatever the team's cap hit was on the day they placed a player on LTIR. Since the Leafs will need to make moves just to be cap compliant on the first day, then place players on LTIR, they will be over the ACSL by the time they play their first game.

Since the Leafs cannot accrue salary, they need to have enough daily cap space to sign Marner. If Marner were to sign a 6-year deal with no signing bonuses and $9m in salary for each of those 6 years, the Leafs wouldn't be able to afford it on just the 14th day of the season.

For those who don't know, the longer the holdout goes on, the more the first-year cap hit increases. We all know that Marner won't be inking a deal with no signing bonuses though, and it will likely be heavily frontloaded. For the purpose of covering a wider range, I'll propose three different contracts, all with the same structure; heavily frontloaded with $1 million in salary, and the rest signing bonus. That is except for the first year, as we saw with Nylander's contract, because it has a large impact on how much the first year is inflated.
<h2>$8.5 million for 6 years</h2>
In the first year, this contract has $12 million in salary, $2 million in signing bonus. In year two it's $1 million in salary and $9 million in signing bonus, then in years three to six, it's $1 million in salary and $5.75 million in signing bonus. The Leafs have until October 27th to offer this deal, where it would have a first-year cap hit of $9,556,250, and $8,220,430 for the remaining 5 years.

It would pay Marner a total of $49,322,580
<h2>$9 million for 7 years</h2>
In the first year, this contract has $14 million in salary, $2 million in signing bonus. In year two it's $1 million in salary and $9.5 million in signing bonus, then in years three to seven, it's $6.3 million in signing bonus and $1 million in salary. The Leafs have until October 15th to sign this deal, where it would have a first-year cap hit of $9,569,767, and $8,849,462 for the remaining 6 years.

It would pay Marner a total of $61,946,237
<h2>$9.5m for 8 years</h2>
In the first year, this contract has $16 million in salary, $2 million in signing bonus. In year two it's $1 million in salary and $10.7 million in signing bonus, then in years three to eight, it's $1 million in salary and $6,716,667 in signing bonus. The Leafs could only offer this on October 3rd, and the cap hit across all years are ~$9.5 million.

It would pay Marner a total of $68,197,313.
<h1>Conclusions</h1>
As you can see, the Leafs bought themselves some time - but not much.

It appears to be more of a negotiating tactic, as in the end, it's beneficial for both parties to get a deal done before the season starts. If anyone is concerned about the Leafs being unable to match an offer sheet, Toronto has the option of placing Hyman and Dermott on LTIR as well, however they'd need to make moves to become cap compliant and activate either of the two.

The Leafs using so much LTIR means they will probably not be capable of making a significant addition at the trade deadline. As for potential performance bonus overages, none of the players on my projected roster has them, and the only ones with an outside shot are Mason Marchment, Timothy Liljegren, and Teemu Kivihalme. Even if those players do make the roster, they're unlikely to hit any of their bonuses, and even if they do, those three only combine for $665,000 in potential Performance Bonuses.

I'm sure many Leaf fans are looking forward to next summer, when both Horton and Clarkson come off the books, and they don't have to think about LTIR anymore.

Why the Leafs Really Traded for David Clarkson

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