I think there is a case to be made for buying out Krug this summer. I don't expect it to happen and this front office and ownership group clearly doesn't like buyouts.
However, the team's financials are about to take a massive hit. Season ticket renewals are obviously going to go down barring a draft lottery win. Single game tickets are going to decrease barring a major turnaround. I'm sure I'm not the only one who has noticed that the Blues are advertising ticket deals better than anything offered last year and that tickets on the second hand market have gone way down in price. Even if next year isn't a tank, ticket sales are going to be softer than they've been recently.
Possibly more importantly is the Bally Sports situation. Maybe we re-structure the existing deal. Maybe this is the end for Bally Sports Midwest and the team has to find a new RSN (and/or explore a streaming service). Maybe the team has to produce the games without a provider and sell them directly to consumers. I don't know what the future will hold, but I am confident that the short-term outcome is that the Blues will make less money from their TV rights in 2022/23 than are now. And negotiating whatever they do next will be markedly harder if the team sucks. There was no way to predict that the team was going to have to re-sell its TV rights in 2023, but here we are.
Together this could mean tens of millions less revenue for the team than this year. Which is awful timing, because a lot of players are getting big raises and I'm not just talking about the new contracts kicking in for Thomas and Kyrou. Let's talk about our 10 biggest contracts next year compared to our 10 biggest contracts this year.
8 guys are in our top 10 biggest contracts for both 2022/23 and 2023/24. In real dollars, Schenn, Buch, Saad, Faulk, Parayko, Krug, Leddy, and Binner will make $9.5M more next season than they did last season.
The other 2 spots are different. ROR and Tarasenko rounded out our top 10 biggest contracts this year while Thomas and Kyrou will round out the top 10 next year. Thomas and Kyrou only make $1.25M against the cap than ROR/Tarasenko did, but they will make $6.5M in real dollars next year than Tarasenko/ROR did this year.
All told, despite our top 10 contracts only counting for an extra $1.25M against the cap next year, the team will be paying $16M more in real dollars for its highest paid 10 guys than they did this year.
This organization pushed a lot of salary off until 2023/24 to get through the losses in revenue brought on by COVID. This was also likely driven by players who wanted to delay big paydays until the escrow rates went down. It looked like a win-win for everyone, but no one expected the team to crater this badly and no one expected the TV money to evaporate.
Ownership doesn't like paying guys not to play for the team, but there is a real chance that this team needs to cut payroll next season if you can't bank on putting 18,000 fans in the seats on a regular basis. Krug's contract is structured perfectly for a buyout this summer. With a buyout, we would owe him $2.46M a year for each of the next 8 years in real dollars. Yes, it doubles the length of time you're paying him, but that is a $6M savings in 23/24 and another $6M in savings in 24/25 when money might be genuinely tight for the organization.
There is a real argument that from a financial standpoint, the team is better of paying him $19.6M over 8 years not to play here than it is paying him $29.5M over 4 years to play here.
From a cap point of view, a buyout saves us $6M against the cap in 23/24 and 24/25. We would take a hit of just $458k in those seasons. We would then take $2.5M a year for each of the following 6 seasons (with a one-off $2.9M hit in 26/27). 8 years of cap hits is a lot, but given our current cap structure, the organization's desire to not do a multi-year tank, and the likelihood of the cap increasing a substantial amount by year 5, I'd argue that $2.5M a year for an extra 4 years would hurt the team less than the immediate help of freeing up $6M a year for each of the next 2 years.
Trading him without retention should be plan A. Trading him with retention should be plan B. But I think that a buyout this summer is a viable plan C. It's easy to say that when it isn't $20M of my money, but an immediate savings of $6M a year in what could be this ownership groups most difficult fiscal years would be a big deal.
