Why Canucks are executing one of NHL’s biggest buyouts on Oliver Ekman-Larsson

The entire hockey world knew that the Vancouver Canucks were stuck.

As NHL general managers, scouts and agents from all corners of North America congregated for the NHL Scouting Combine in Buffalo last week, everybody was aware of the Canucks’ dire cap situation. Vancouver was the only team in the league that had already exceeded the $83.5 million projected upper limit in contractual commitments for next season. The club still had RFAs left to sign.

NHL teams knew that the Canucks needed to shed salary before they could even think about possible ways to bolster their roster this summer. And upgrading the roster this summer so that the Canucks are a playoff calibre team next season was a must, given the aggressive moves such as the Filip Hronek trade that this front office has made. Nobody wanted to give the Canucks a get-out-of-jail-free card, and so to this point, it hadn’t been easy moving money out in a flat cap climate.

The Canucks will now turn to the buyout option, with Sportsnet’s Elliotte Friedman reporting and the club later confirming, that they will exercise one on Oliver Ekman-Larsson, who had four years left on a $7.26 million cap hit for Vancouver.

In January, Canucks president of hockey operations Jim Rutherford said that the organization would look into buyouts if they were unable to move money. In that press conference, Rutherford spoke about how the club was pursuing a quick retool rather than a rebuild, and that the front office wouldn’t be able to turn the team around until they solved the cap situation to give themselves flexibility.

Canucks GM Patrik Allvin walked that back at the end of the season and said that he didn’t “intend” to use buyouts, but moving salary out clearly hasn’t been easy.

Why buy Ekman-Larsson out now? Buying the 31-year-old out will instantly free up roughly $7.1 million in cap space this summer and $4.9 million for 2024-25. The savings taper off in future years, which is why a buyout only made sense if executed now. That flexibility will come at a significant cost, however, as OEL will have a dead cap hit on Vancouver’s books until 2031.

An OEL #Yotes will also carry a small cap hit for 8 years.

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— PuckPedia (@PuckPedia) June 16, 2023

When Ekman-Larsson first arrived in Vancouver in 2021-22, he offered the Canucks quality top-four minutes. He clearly wasn’t as dynamic offensively as he was during his prime, but he was driving the best defensive results of his career. OEL anchored the Canucks’ second pair which absorbed the toughest matchups against the opposition’s best players. In those challenging minutes, without a stellar partner by his side, Ekman-Larsson was about break even in controlling shots and scoring chances, while driving a positive goal share at five-on-five. He wasn’t worth the full $7.26 million cap hit that the Canucks were on the hook for, but he was at least playing at a bona fide top-four level.

All of that changed last season.

Ekman-Larsson broke his foot while on national duties at the world championships and he entered the 2022-23 season looking like his game had fallen off a cliff. OEL’s diminishing foot speed was a major hindrance. He was unable to pivot and retrieve dump-ins, which made it impossible for him to efficiently move the puck up ice.

Ekman-Larsson was consistently exposed defending the rush, which was a huge difference compared to 2021-22 when he’d effectively funnel rushes to the outside. He wasn’t even effective in stationary defensive settings as opposing power plays connected many cross-seam passes and backdoor plays, one of the biggest reasons why the Canucks’ penalty kill was 32nd in the NHL.

It speaks volumes that AHL call-ups like Christian Wolanin looked like legitimate upgrades when Ekman-Larsson went down with a season-ending injury late in the year.

You can essentially break the logic of a buyout from the Canucks’ perspective like this:

• Vancouver has a clear desire to make the playoffs next season, for which upgrades at multiple positions will be needed this summer.
• The Canucks had an overwhelming cap crunch that would have prevented them from making those moves, and efforts to trade other contracts had yet to bear a suitable deal.
• OEL’s play dramatically fell off to the point where he arguably wasn’t even one of Vancouver’s six best defenders last season. He has a full no-movement clause and a mammoth cap hit, so his contract was untradeable.
• The $7.1 million savings in a flat cap summer are massive. The savings dwindle to $4.9 million next summer and taper off to $2.49 million from 2025 to 2027, so this was a now-or-never proposition — a buyout a year or two from now would not have made any mathematical sense.

According to CapFriendly, Ekman-Larsson’s buyout is the sixth largest ever in terms of the salary Vancouver will owe (Zach Parise and Ryan Suter’s buyouts, for reference, had a devastating impact on Minnesota’s salary cap situation, but they were not actually owed much in terms of actual cash since their contracts were front loaded).

The Vincent Lecavalier, Rick DiPietro, Ilya Bryzgalov and Brad Richards buyouts were all compliance buyouts executed in 2013 and 2014, which means they did not have any impact on their respective teams’ salary cap situation.

What it means for the Canucks’ offseason

Exercising an ordinary course buyout on the Ekman-Larsson contract raises the stakes of this offseason considerably for the Canucks and their hockey operations department.

Prior to buying out the Ekman-Larsson deal, the Canucks were holding more cap commitments for the 2023-24 campaign than any other team in hockey. After exercising this punitive, prohibitive ordinary course buyout, the club has freed up just over $7.1 million in cap space for next season.

It’s telling that the Canucks made this move proactively. We don’t often see buyouts exercised so early in the NHL buyout window, since the device is most frequently used as a last resort by teams seeking to carve out some additional flexibility. That the Canucks have taken this step right off of the bat, and without placing Ekman-Larsson on waivers as reflects his rights since he holds a no-movement clause, speaks volumes. It’s a set of facts that shouts that Canucks management wasn’t remotely comfortable with the other options available to them to shed cap space in less punitive ways.

The Ekman-Larsson buyout gives the Canucks some cap breathing room entering what’s widely expected to be one final flat or nearly flat cap offseason, with CapFriendly.com currently projecting the club as having $6.44 million in salary cap space in the wake of the Ekman-Larsson buyout. That figure assumes an $83.5 million upper limit and doesn’t account for the club’s restricted free agents like Nils Höglander, Akito Hirose and potentially Ethan Bear who will be due qualifying offers before the July 30th deadline or will become unrestricted.

In any event, the total cap savings of exercising an Ekman-Larsson buyout are nearly $10 million over the eight years in which the club will pay Ekman-Larsson two-thirds of the salary previously owed to him, spread out over twice the duration. The structure of Ekman-Larsson’s deal served to reduce the aggregate cap benefit of a buyout significantly if the club hadn’t acted now, and the club would’ve only netted $6 million in cap benefit if they’d bought out Ekman-Larsson after next season with the number dropping below $2 million thereafter.

Vancouver’s cap circumstances are still crunchy, but freeing up nearly the entire freight of Ekman-Larsson’s commitment for this upcoming season gives Canucks management more maneuverability than the absolute zero they were looking at before the buyout window opened.

Does the move make sense for Vancouver?

Given that Ekman-Larsson’s play had fallen off to the point that the club’s overall defensive form spiked significantly following his departure from the lineup late in the season, this step was probably necessary.

Perhaps Ekman-Larsson can bounce back to the classy two-way form he showed in his first Canucks season in 2021-22, particularly given that he was injured last summer, but it isn’t easy for aging defenders with a history of lower-body injuries to simply put lost time behind them in a league as difficult as the NHL. Keeping him on the books at a $7.26 million cap hit was going to be a massive risk.

So, yes, given his recent play, the club’s overall cap situation and the fact that Ekman-Larsson had a full no-movement clause, exercising a buyout on his contract was very likely the best of a bad set of options facing Allvin, Rutherford and the Canucks.

The key to making this stand up for the Canucks, however, is that Canucks management must avoid turning around and committing the $7.1 million in short-term cap space this buyout has freed up unwisely.

If the Canucks use this cap space to buy pieces at a discount from a cap-strapped team this offseason, or to take on an inefficient contract while netting meaningful, liquid assets in a trade, or to place a multitude of Dakota Joshua-style bets on the unrestricted free agent market, then this could be the start of the sort of offseason this club is desperate for. The leverage of carving out $7.1 million in cap space in one final flat cap offseason is arguably worth the pain of the Ekman-Larsson buyout from a long-view perspective, provided the club takes sharp advantage of this expensive, newfound flexibility.

If, however, the club turns around and hands out a $4.5 million, four-year commitment to a second-pair calibre free agent defender, or a good but not great middle-six centre, then the Canucks will have kicked the can further down the road, lowering this club’s ultimate ceiling further for the benefit of marginally improving a perennial non-playoff team short-term.

It’s too soon to know whether this move is the start of something far more prudent and disciplined than what’s come before it for the Canucks. If the club is prepared to stop digging at last, we’ll know soon enough.

(Photo: Michael Martin / NHLI via Getty Images)