Buyouts are a tool a team can use to create cap space and open a roster by paying out a player’s contract before it expires. But it comes with costs and there is a process involved. This post explores buyouts for the New Jersey Devils ahead of this offseason.
The buyout. It is a tool that is used by teams to pay a player to leave. This is done to free up cap space in the short term, open up a spot on the roster, and have the player find a new place to play on a new contract. It does come with costs and it is not always the most preferable tool. However, if New Jersey Devils General Manager Tom Fitzgerald is serious about making changes to his team for 2025-26, then he needs to consider all options. One of them is to buy out a player’s contract.
If you have read Sunday’s post about the team’s cap and roster situation ahead of this offseason and thought, “Wow, the Devils could use some more space,” then you already know of this option. You may have even been in favor of it. Several of the People Who Matter want to see one given to Ondrej Palat. Namely because his contract has a $6 million cap hit and his performance on the team is not even close to that. I can agree with that. I even argued for it back in February. Gerard argued the Devils should purge some forwards in March and Jared concurred in a separate post. However, it must be asked: how much would it cost the Devils to buy out Palat? Would be the benefit? Should the Devils consider buying someone else out instead? This post will answer all this and more.
What if Every Devils Player Gets Bought Out?
In order to illustrate the value of a buyout for the Devils, I used the buyout calculator at PuckPedia for every Devil on the New Jersey roster. I used who was called up to the roster that has a contract for 2025-26 per their site as of May 12, 2025. Would every one actually be bought out? No. That would be ridiculous. Should everyone be bought out? Also no. This is an exercise to point out how much savings (and costs) would be involved. Does buying out Palat provide the most sense financially? Surprisingly, no.
PuckPedia
Sure, Palat would free up close to $2.5 million in space for 2025-26. And another million more in 2026-27. However, the dead cap hit for the two seasons after is fewer than $1.5 million. It would be the second highest such dead cap hit behind the big hit a Nico Hischier buy out would yield. Given that the Devils would still be expected to be cap ceiling team and a contender in 2027-28 and 2028-29, a dead cap hit of $1.483 million can hurt the budget where every dollar counts.
It is also worth noting that the range of potential savings runs from $0.194 million to $7.233 million with most Devils yielding just over $2.1 million or less in savings. The buyout process can provide some extra cushion but not as much as you would expect given all of the cap hits on the roster.
The chart begs more questions. How is it that Dougie Hamilton provides so little in cap savings – the lowest on the team! – if he was bought out for next season? How come Dawson Mercer provides more savings despite having a smaller contract than Palat? Why is the dead cap hit from Jacob Markstrom’s buyout around the same amount as Nico Daws? Why did John put the trade clause information as of July 1, 2025? To eventually answer all those, let me explain how buyouts work under the current CBA.
The Buyout Process
First, a buyout can only take place freely during a buyout period. This begins on June 15 or 48 hours after the Stanley Cup Playoffs end, whichever is later. The buyout period ends on June 30. This is why I included all of those trade clauses on July 1, 2025.
If a team does not think they can trade the player, then they have to act before the clause begins. In the case of Palat, this is a tough one. Palat will provide a list of 10 teams he would accept a trade to. Fitzgerald has to wonder whether any of those 10 teams would want Palat, much less make a deal involving him. If not, then he needs to decide whether to buy him out in June and have some additional cap savings for the biggest day in free agency. Plus more time to replace him.
There can be a second buyout window if a player goes to arbitration and there is a settlement or award from it. Then there is a 48 hour buyout window three days after that settlement or award. It is limited to players with cap hits over $4 million and were on the team by the previous season’s trade deadline. In other words, Palat could be bought out in a second window – it just needs someone else to file for arbitration and have that sorted out.
Second, when a player is bought out, they will become an unrestricted free agent. They will be free to sign with anyone when free agency begins. Which is, not coincidentally, on July 1 – right after the first buyout window ends. As far as I know, you cannot re-sign the player. Not that the player would likely want to do that since the team who bought him out clearly got the message that he was not wanted.
Third, while the player is paid off in real money, the salary cap is affected differently. There are a number of factors involved in that.
1. The contract status of the player. A team cannot buyout a player out of contract. That should be obvious. A team also cannot buyout a player whose contract is just starting. For example, Jonathan Kovacevic cannot be bought out until 2026 because his new contract starts in 2025-26.
2. The remaining base salary left on the contract. Not the signing bonus (which the player will still get). Not the total salary. Not the cap hit. Their base salary is a big driver of what a buyout costs and how much it does or does not save. This is critical.
3. The age of the player at the buyout. If the player is younger than 26, then the cost of their buyout is a third of the total remaining base salary. If the player is 26 years old or older, then the cost is two-thirds of that salary.
4. The remaining length of the contract. This will determine the buyout cost and how long the buyout can provide savings. Buyouts require an equal length of what is remaining to be a dead cap hit. Two seasons being bought out will cost four seasons total. Three seasons will cost six. And so forth.
5. The cap hit, or average accrued value of the contract. This is the base for determining any savings.
Now let us do some math. Let us use Palat. Assume it is June 16 and we want to buy him out.
Palat has a total base salary remaining of $8.9 million with salaries of $3.95 million next season and $4.95 million in 2026-27. He’s 34, so that number is multiplied by two-thirds. That gives us $5.93 million. With two seasons left on his contract, that number is divided by four. For Palat, that is $1.483 million. That is the cost of Palat’s buyout per season.
A formula is then used for the cap hit. It is the Cap Hit minus the Base Salary plus the Buyout Cost per Season. This is applied for each season of the buyout. For 2025-26, Palat has a $6 million cap hit and a base salary of $3.95 million. The difference of 2.05 million plus the buyout cost yields a new cap hit of $3.533 million. That is a savings of $2.467 million for 2025-26.
For 2026-27, Palat’s base salary increases. This means that the cap savings also increases. $6 million minus $4.95 million is $1.05 million. When the buyout cost is added, the cap hit for 2027-28 is $2.533 – increasing the savings to $3.467 million for 2026-27.
Palat’s contract would normally end after the 2026-27 season. However, the buyout is double the length so it counts for 2027-28 and 2028-29. With zero base salary in those seasons and zero cap hit, it is just the buyout cost per season. Which is $1.483 million. The Devils have to eat that cap hit no matter where Palat goes after his buy out.
There are other costs involved with a buy out. Buying a player out often means needing to replace his spot in the lineup. Even if you feel Palat is underperforming his contract and not likely going to get much better, the Devils may not have anyone ready to take his minutes. If they did, then they may need a replacement for that player. This may mean signing someone. Which costs cap space. Which the Devils freed up from the buyout.
There is also the human factor I am told I do not write enough about. Palat, for example, is not just some guy on the squad. He has been seen as a kind of a leader given how often he wore the ‘A.’ On a veteran-laden team, he is one of the most experienced. While I do not think much of his intangibles, his teammates and his coaches may really like him. Fitzgerald would have to consider how the locker room would take Palat being bought out. Players are not ignorant of the fact that hockey is a business and underperforming players have to go. But they are not necessarily going to take it well.
If this seems like this is a difficult process, then it is because it is. Trading a player is often a cheaper way to move on from a player and clear cap space. Depending on the math, retaining salary could cost less than a dead cap hit. But that buyout window and those trade clauses – especially ones that change on July 1 – may make it a viable if non-ideal decision to move on instead of Fitzgerald hoping he finds a deal he would make. It is an option for a team. At the least, it is one the team can enact instead of needing another team or player buy-in.
Answering the Questions
Let us go back to the chart of every Devils’ buyout and answer some questions (and more!) based on the buyout process.
PuckPedia
How come Dougie Hamilton’s buyout would save so little money? Simple: his base salary is really low for the next two seasons. It is just $1 million until it bumps up to $5.25 million in 2027-28. Hamilton’s big cap hit is not impacted very much by his base salary and the buyout cost does not provide much relief. This is not to say Hamilton did the Devils did any favors. He is getting paid $10.55 million on July 1, 2025 in a signing bonus and $7.4 million on July 1, 2026. The way his contract is structured suggests that if there is a buyout, then it should happen in two seasons. If you want to move on from Hamilton now, then a trade is the move to make. Which is a little more viable after July 1, 2025 given his trade list of only 10 teams.
How come a buyout of Dawson Mercer would save the Devils more money? And it is a lot. Only Nico Hischier and Jack Hughes would command more savings. Two buyouts that will never happen in 2025 unless Tom Fitzgerald wants to be immediately fired in 2025. This is for two major factors. One: Mercer is 23 so the buyout cost is only a third of his remaining base salary. Two: Mercer’s contract is entirely in salary. There is no signing bonus. The formula is favorable for the Devils as the cap hit is close to his actual salary for the season. This leads the cost of the buyout to be minimal for each of the next two seasons. His cap hit for the first season of the buyout is actually zero.
The combination of these factors makes it tempting to buy out Mercer. I doubt it happens. I do not know what it says about Fitzgerald if he somehow cannot trade a 23-year old forward who has some skill with no trade clauses. Short of a scandal, I suspect a buy out of a young forward would not go over well. This is more wishful thinking than something we should hope and demand happens.
Why is Jacob Markstrom’s buyout around the same amount as Nico Daws? Recall that Calgary retained salary when they traded Markstrom to the Devils. Specifically, 31.25% of it. This is also factored into the buyout. This means the buyout savings and the dead cap hit would be split between the Devils 67.75% to Calgary’s 31.25%. This reduces the savings for the Devils as well as its cost while also adding to Calgary’s own books. Not a lot at around $0.3 million but still a cost not in their control. Then again, Fitzgerald would look real silly buying out a player he made such a big deal for a year ago and performed fairly well in 2024-25. I would not expect this to happen either.
Let me answer some other questions:
Why is Seamus Casey’s buyout just the one season when he has two seasons left? PuckPedia’s calculator defaulted to 2026-27 for a buyout of his entry level contract. I am not entirely sure as to why but it may have to do with how entry level contracts work. I could be wrong. Maybe PuckPedia’s calculator is wrong. It is moot because why on Earth would someone buyout Casey now? This logic also applies to Simon Nemec, who is in the final year of his entry level contract.
Is Palat really the player the Devils should buy out? From a pure financial sense, no. I can understand and agree that buying him out is more or less a way to get him off the Devils without a trade that may not even be possible to find. But that dead cap hit of $1.483 million is not so insignificant with a rising cap. Recall that 2027 is the Summer where Hischier needs a new deal, Casey’s ELC ends, and other players (Quinn Hughes) become UFAs. It would be rough if nearly $1.5 million kept the Devils from making a crucial move. That said: I can agree with the idea of buying him out as Palat’s returns are likely to diminish as his contract goes on.
Who should the Devils buy out instead of Palat? For the savings, Erik Haula is an attractive option. It would give the Devils an extra $1.6 million to play with with a much smaller and shorter dead cap hit of $800,000. Given that a NHL minimum salary is $775,000, Haula’s buyout can yield two league minimum players for the cost of one. Two immediate arguments against it come to mind. One: his trade clause is more open with a 6 team no-trade list, which makes it easier to just trade his contract outright. Two: the Devils would become even thinner at center. I argued on Sunday that the Devils need centers anyway and I cannot imagine a huge market for Haula. Buying him out is easier to swallow financially than Palat.
A more heartless option would be Brenden Dillon. Heartless since he is still suffering from a neck injury that requires an offseason procedure. Heartless also because Fitzgerald just signed him last year. But he would provide almost as much savings as the cap as a Palat buyout would be for 2025-26, which is the immediate need. The buyout would yield a smaller dead cap hit in the two seasons to follow 2026-27. It also opens up a spot on the blueline for Simon Nemec and Seamus Casey (and later, Anton Silayev) to take over. Even as an outsider hockey blogger, I cannot say I recommend it given his circumstances. I would be remiss to point out that it is otherwise financially viable. That is all.
As would a buyout of Stefan Noesen. It would be smarter to trade him after his career season since interest would be high and the Devils arguably got the best out of him. It may be smarter to also consider buying him out in 2026. Further more, replacing a middle to bottom six winger would be easier and cheaper than a center. The Devils certainly did so on the power play already when Noesen was moved off the primary power play unit in March and the unit still cooked. That said, a savings of $1.417 million for 2025-26 and $1.917 for 2026-27 may not be enticing or worth the $0.833 million dead cap hit. But it would be less costly than Palat. Again, this would be a repudiation of Fitzgerald’s own work so I certainly would not expect it.
Basically, my answer is Haula. I would buy him out. For Palat, I would hammer the phones in early July based on his 10 team list. Unrelated: bury Kurtis MacDermid’s $1.15 million cap hit in Utica for additional savings with no downside except for the Comets.
Concluding Thoughts
The best way to move someone under contract off the books is still a trade. There is no dead cap hit beyond the contract ending. There is no math to be done in savings outside of salary retention. There is no specific process or window of time to make a trade. The trade may even bring back the player to replace from the trade. The buyout is a non-ideal option.
Yet, again, it may be one Fitzgerald has to make. Whether you want Palat gone or a more sensible buyout of Erik Haula comes down to deciding whether the player will significantly help them in 2025-26 and whether they can be moved in a deal. If the answer to both is ‘no,’ then a buyout may be the way to go. There are others that could be bought out to provide similar or lesser savings, then but even that comes with costs. It may be better to wait another season for some. Such is the buyout process.
Now I want to know what you think. Would you still buy out Ondrej Palat knowing these costs and savings? Do you think the Devils should buy anyone else out for 2025? What did you learn, if anything, about how buy outs work in the NHL? Did I get anything wrong? Please let me know your answers and other thoughts about buyouts in the comments. Thank you for reading.