Vegas Circumventing the Cap? Part 2

One of the most contentious issues in the NHL is the use of Long Term Injured Reserve (“LTIR”) to navigate the salary cap. As previously noted in “NHL Salary Cap Issues: Circumventing the Cap?[1] teams have often used LTIR to stay under the salary cap, and then activate players during the playoffs when the salary cap rules do not apply. Many within the league have called for a change to the rule regarding LTIR because it allows a team to produce a team that exceeds the regular season salary cap in the playoffs. 

The NHL recently addressed the LTIR rule when the general managers held their annual meetings, convening in person for the first time since 2020.[2] The LTIR rules were brought onto the agenda after some GMs became concerned that Vegas was trying to do with Mark Stone this season what Tampa did with Nikita Kucherov last season – hold him on LTIR in order to grossly exceed the salary cap, and then reactivate him for the playoffs when the salary cap rules do not apply. Further, the fact that Kucherov mocked the LTIR rules with “$18 million over the cap” T-shirts following Tampa’s Stanley Cup run rubbed many GMs the wrong way. 

After deliberation at the GMs meeting, it appears that LTIR rules will remain the same for the time being. LTIR rules will once again be on the agenda when the GMs convene at the draft in Montreal this July. Bill Daly, attorney for the NHL, said the league closely monitors LTIR cases where the projected return time is near the playoffs. He said, “[w]e look into it, we deal with the clubs, we get their medical records, we employ an independent medical expert and we make sure of the bona fides of the injury. We’ve never had issues that stem from that. It’s a thorough process.” The NHL and the NHLPA have had discussions regarding LTIR and potentially changing the rule, however, these discussions have not produced any results. So, for now, LTIR rules will remain the same, and will be addressed again following the season. 

Currently, sixteen teams have at least one player on LTIR. If a team with a large amount of salary on LTIR before the playoffs wins the Stanley Cup, it will be interesting to see if it would spark a change to the current LTIR rules. One team that has taken full advantage of the LTIR loophole is Vegas. Early in the season, to activate Jack Eichel, Vegas put Mark Stone on LTIR so it could be cap compliant with Eichel’s $10 cap hit. However, this strategy has not worked as planned for Vegas this season. With less than ten games left, Vegas is currently outside the playoffs looking in. As a result, Vegas has scrambled to find ways to clear enough cap space to activate players such as Alec Martinez and Mark Stone while remaining cap compliant. This was the major premise behind the attempted Evgenii Dadonov trade. However, as noted in “Dadonov Trade Rejected by the NHL,”[3] the trade was ultimately rejected due to a limited no-trade clause in Dadonov’s contract. 

Mark Stone was recently activated off LTIR and made his debut Tuesday, April 12, in a loss to the Vancouver Canucks.[4]In order to activate him, given Vegas’s cap situation, some interesting moves had to be made. The moves take full advantage of the current LTIR rules and could arguably be considered an attempt to circumvent the cap. Prior to activating Stone, Vegas had about $5 million in cap space. In order to activate Stone, and his $9.5 million cap hit, the team needed to clear about another $5 million in cap space.[5] To become cap compliant with Stone on the roster, Vegas placed William Carrier, Nolan Patrick, and Laurent Brossoit on LTIR, resulting in an additional $4.925 million in cap relief. Does this not appear to be an abuse of the current LTIR loophole? If necessary, Vegas will be able to activate each of these players in the playoffs when the salary cap rules do not apply. If Vegas wins the Stanley Cup, it will have done so with a roster that is significantly greater than the current salary cap.

Vegas also recently used the LTIR loophole to activate defenseman Alec Martinez.[6] In order to activate Martinez, Vegas had to move Reilly Smith from injured reserve to LTIR. This move resulted in an additional $5 million in cap to be used. However, these moves have led to major criticism throughout the league. Many believe Vegas is abusing LTIR and is using it to circumvent the cap, rather than using it for its proper purpose.

Given the fact that the use of LTIR has become more popular in recent years, it will be interesting to see if changes are in order at the next GMs meeting. It is especially likely this rule will be more closely examined if a team like Vegas, that has used LTIR extensively, wins the Stanley Cup. If the rule is changed, what would the amended rule look like? LTIR is a complex issue and one that would be difficult to solve with one change. It may take time but it appears to be likely this rule will be addressed and potentially revised in the near future. 

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