This is the question that has been on my mind this summer. As some of you are aware, the managing of cap space is a bit of an obsession with me. With the closing of the second buyout window, I am really left scratching my head about the Oilers decision making around the cap, and with it the reserve list.

Let's look at what appear to be two poor managed decisions:

Buying out Ference or Nikitin:

Buying out one of Ference or Nikitin this year has three potential benefits:

• Increased cap space this year (and potentially beyond)
• Opens spots on the reserve list
• Allows the Oilers to keep a player like Brandon Davidson with the big club rather than losing him to waivers

Granted, the Oilers could keep 8 defencemen and keep Davidson as the 8th defender behind Sekera, Fayne, Klefbom, Schultz, Nikitin, Ference and apparently Reinhart (if you believe Chiarelli). But it would seem more likely they would waive Davidson and keep seven defenders, so let's say at least they have to consider the possibility of waiving him to preserve cap space and not have him waste away in the press box.

Of course, buyouts also come at a future cost in terms of cap space, so it's a trade-off decision. Stauffer has also apparently mentioned the Oilers intend to buy out Ference next year, so let's assume the options are:

1. Buy out Nikitin now, keep Ference until end of contract

2. Buy out Ference now

3. Buy out Ference next year

4. Buy out Nikitin this year and Ference next year

Scenario analysis:

From a cap space perspective, buying out Ference now creates only $650K less cap space than buying out Nikitin this year, and generates $3.58M more cap space next year, and $2.08M more the next year at the cost of $1.16M in cap space in 2018/19. Based on these numbers, buying out Nikitin over Ference seems foolish.

Buying out Nikitin and then buying out Ference over buying out Ference this year generates $650K more cap space this year and $1.17M more cap space in 2018, but produces $1.5M less cap space next year. The positive cap space of $1.82M basely outweighs the cap loss. While it is far superior to the do nothing option, if you believe the Oilers need to make a push next year, then buying out Ference this year over buying out both is superior on the cap side.

But what about the reserve list? Spaces on the reserve list have value.

From a reserve list scenario, buying out Ference now is equal to buying out both, and superior to buying out Nikitin or doing nothing.

So, combined, it would appear that buying out Ference now was the right choice from a cap space and reserve list scenario. It gains $2.65M in cap space immediately, frees up virtually the same cap space as buying out Ference next year and 2017/18 and frees up the most reserve spots for the low cost of $1.17M in cap space in 2018.

As a bonus, it also increases the chances of keeping Davidson over the do nothing scenario, and frees a reserve spot to sign a free agent or grab a waiver wire pick up. With this in mind, the decision to do nothing seems mind boggling.

But, that's not all folks. The Oilers had to consider this decision twice, and they paid $275K in dollars and cap space to not make the right decision a second time.

Taking Schultz to Arbitration

The Oilers, rightly, gave Schultz a qualifying offer (QO) at $3.6M. As I understand the CBA, if Schultz chose not to sign the QO, the Oilers would have retained their rights to Schultz. He would not have been able to sign with any other NHL team without an offer sheet. So, all things being equal, the Oilers best option was to dare Schultz to sign the offer sheet. Had he not, he would have been relying on another team to sign him to a deal greater than $3.6M.

From the Oilers perspective, this was a no lose situation. With the compensation cut off at $3,652,659 for a second round pick, even if Schultz found someone willing to offer something between $3.600,000 and $3,652,659, the Oilers could easily match. No harm done. However, if Schultz found someone willing to pay more than $3,652,659, then the Oilers would receive a 1st round pick and a 3rd round pick. In that case, the Oilers would be crazy not to take the picks and trade them for a player to replace Schultz, or just sign Franson or Ehrhoff using Schultz's cap space and whatever top up was necessary. So, the oilers held all the cards, with the only downside risk being that Schulzt would chose to go to Europe or the KHL, in which case they could still sign Franson or Ehrhoff.

Instead, the Oilers took him to arbitration, which had the benefit of opening the second buy out window and cost them $275K to settle rather than risk an arbitration award they didn't like. And they didn't use the damn buy out, so they paid if for nothing and reduced their options and upside in the process.

Conclusion:

I strongly believe that Chiarelli is a better GM than MacT, but managing cap space has never been Chiarelli's strong suit, nor was it ever the strength of legacy management, and it would appear we are seeing some evidence that managing cap space is going to be a problem for the Oilers in the future.

Given the number of high draft picks on the roster and in the system, the Oilers could be in real trouble going forward when it comes to managing the cap.

Note - I did damn little research in preparing this, so my knowledge of the new CBA may have led to some factual errors in this post. Feel free to set me straight.

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