For Hurricanes, Guaranteed Contracts Become A Burden

The second year of Jeremy Welsh’s contract was guaranteed at $1 million, leading to Carolina trading him rather than play him in the minors. - Jamie Kellner

Jeremy Welsh is the latest in a string of Hurricanes players that were given guaranteed NHL money in second season of their two-year contracts that failed to live up to GM Jim Rutherford’s expectations.

It's not easy being an NHL general manager. Since the league added a salary cap, it has become even more important for the hockey’s front office generals to find a balance between finances and on-ice results.

Since he took the helm of the budget-conscious Hartford Whalers in 1994, Carolina Hurricanes GM Jim Rutherford has always had to make decisions with the bottom line in mind. He did it to perfection coming out of the 2005 NHL lockout, most notably landing Red Wings buyout Ray Whitney and 2004 Stanley Cup champion Lightning castoff Cory Stillman to bargain deals that helped propel the Canes to the 2006 title.

Rutherford struck gold again in 2009, dumping a couple of salaries on the Lightning and getting Jussi Jokinen in return. While Jokinen’s tenure unceremoniously ended last season when he was dealt to Pittsburgh, his contributions to the Hurricanes — specifically in the 2009 playoffs when he scored seven goals and had 11 points in 18 postseason games — further exhibited Rutherford’s ability to find the occasional steal.

Every GM has his share of hits and misses. But for the Hurricanes and other small market teams, it is essential to find ways to succeed and thrive in unique ways to win against teams that have bigger budgets and thus more latitude to make mistakes.

One way Rutherford has tried to get ahead of the competition is by betting on young players. Four times since 2008, the Hurricanes have handed out two-year deals that included a guaranteed, one-way contract in year two, hoping that betting a low NHL salary in the second year of an up-and-coming player would pay dividends. But Rutherford’s attempts to do this to find a competitive advantage while staying under budget have backfired.

The most recent example of this failed experiment came in the wee hours of Sunday morning, when the Hurricanes shipped second-year pro Jeremy Welsh and fellow prospect Zac Dalpe to Vancouver for a fourth-round pick and minor leaguer Kellan Tochkin.

The deal was, in essence, a salary dump: Welsh was the most recent Hurricanes player to receive one of the aforementioned two-year deals from the team, and was guaranteed $1 million in 2013-14 on a one-way deal after earning $105,000 as an AHLer last year (along with a little more for the five games he spent in Carolina at a prorated $700,000 per season). His efforts to crack the Carolina roster fell short, meaning his guaranteed money would cost the team both against the cap and in its wallet.

How do you get rid of a guaranteed $1 million when the player is likely AHL-bound? You throw in Dalpe, a former second-round pick that, once upon a time, was expected to be a top-six forward for Carolina. As Rutherford told the News & Observer after the trade, Dalpe had failed to seize opportunities to stick in Raleigh the past few seasons and was likely again headed to for the waiver wire in an attempt to return him to Charlotte to start the year in the American Hockey League.

The Hurricanes actually did OK in the deal when you consider that both had failed to earn a roster spot. Welsh’s salary was a burden, and Dalpe could very well have been claimed on waivers with Carolina getting nothing in return. A fourth round pick — and throw-in player — isn't a bad return on the surface.

The disturbing part, however, is Rutherford's continued swing-and-miss efforts with these two-year contracts. Outside of Drayson Bowman, who signed a two-year contract about a month and a half before Welsh last offseason that guaranteed him $600,000 this season, none of Rutherford’s "guaranteed second year" contracts have come close to working out.

On July 1, 2008, Carolina gave rough-and-tumble Tim Conboy — who had played 19 games in Raleigh the previous season and become a fan favorite with his wrecking ball hits and willingness to fight — a two-year contract that paid him $100,000/$475,000 in 2008-09 and a guaranteed $500,000 in 2009-10. Over the course of the next two seasons, Conboy saw more time in Albany (Carolina’s AHL affiliate at the time) than with the Hurricanes by almost a 2-to-1 ratio (76 games in the AHL compared to 40 in the NHL), including a scant 12 games with the Carolina in 2009-10 that nonetheless saw him collect a half of a million dollars.

Four years to the day of the Conboy deal, Rutherford gave a similar deal to goaltender Jusin Peters, signing him to a two-year contract that paid him $105,000 in the AHL and $525,000 in the NHL in 2012-13, and a guaranteed $550,000, one-way contract for this season. And while Peters helped fill in during last year's truncated schedule when Cam Ward was lost to a knee injury, the Hurricanes didn't hesitate in pursuing a backup upgrade for Ward this summer. The team inked Bruins second-stringer Anton Khudobin to a one-year, $800,000 contract to be Ward's backup, leaving Peters — and his $550,000 payout — to toil in the minors.

But the latest and biggest failure was Welsh, a hotly-pursued undrafted free agent from Union College that never could parlay his NCAA scoring acumen into pro success. Welsh was outperformed in Canes camp by both Brett Sutter and Riley Nash — similarly aged and cheaper options, both on two-way contracts — and he will likely collect his $1 million salary in Utica, N.Y., with the Canucks’ AHL affiliate.

It was a victory for Carolina that they signed Welsh to an odd one-game contract that resulted in the biggest cap hit in NHL history and gave the team RFA rights over him during the summer of 2012. Rutherford's eventual failure was not in shipping out Welsh — along with Dalpe — less than a week before this season begins, but rather thinking a year ago that Welsh was a lock to contribute to the tune of $1 million.

In Rutherford's efforts to stay ahead of the competition and find ways to make Carolina competitive, he regularly tried these deals that guaranteed these players that they'd be paid like NHLer — even if they were in the AHL. Even Bowman, who rightfully earned a spot on the roster during training camp, has yet to prove he is a sure-fire NHL player worthy of a one-way contract.

Whether it's a shortcoming in talent evaluation or triggers a complacency in the player, the tactic has failed time and again, and it's time for Rutherford to go back to drawing board in his efforts to try and stay ahead of the competition.

Like Conboy in 2009-10, both Peters and Welsh will collect an NHL paycheck while spending the year in the AHL. Welsh will get his from the Canucks while in Utica, playing just 80 miles away from where he made his name leading Schenectady’s Union College to the Frozen Four in 2012.

It seems like a million miles from where both Welsh and Rutherford thought he would be right now.

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