Under Review: Contracts

This is the first “Under Review:” post (hopefully the get better over time) I’m going to be talking about contract (I bet you can guess what inspired this post.) Here are a few thoughts I’ve had on them and maybe a few ideas that will spark some debate (or resonate with you.)

Should the NHL put a “cap” on the number of years you can offer on long term deals?

When you look at a contract (usually there are a few years on it) that is front loaded, and fair, you can understand why teams and players do it. From the players stand point you make the big bucks up front, which everyone wants, and if you walk away at the end your not leaving (in the overall picture) that much money on the table. From the owners point you create a situation where you can create a manageable cap hit and flexibility (usually for an above average player, or expensive player) and you can build a team around that elite player(s) in a cap age.

But when you mix a front loaded contract with long term deals you can create a recipe for disaster (ex. See Kovalchuk.)

The Devils had a deal in place that would have 11.5million for 5years, but ended with them paying him 3.5million in the last 6years (allegedly done to circumvent the cap.)

While the jury is still out on that, and people on both sides of the fence, in my opinion something needs to be put in stone in the next CBA on contracts, and perhaps that is to put a limit on the number of years you can offer a player.

Maybe the simplest and most efficient way is just to say that you can offer any player a deal up to their 39th birthday.

(ex. A 26year old can sign up to a 13year deal)

No Contracts extending past a players 39th birthday

I’m not going to throw every player who signs a long deal under the bus (a lot of deals appear to be reasonably done) but over the past few seasons a group of players have signed questionable contracts extending past their 39th birthday. My list of questionable offenders include Marian Hossa, Henrik Zetterberg, Johan Franzen, Chris Pronger, Roberto Luongo and potentially Ilay Kovalchuk.

There may only be a handful of contracts done in this fashion (right now), as we have seen with the Kovalchuk contract the CBA can be exploited and “if it can be done it will be done”.

So why sign a player to a long term contract?:

Players, generally, are signed to long term deals to keep a reasonable cap hit. Remember these are your elite players who are looking for excess of 50 or 60 million dollars (the big money guys.) If you signed that 30 year old 50million dollar player to a 7year deal your looking at a Cap hit of over 7million a season without front loading (which I will explain in a second). But if you extended that contract another 4years your only looking at a cap hit of 4.5million a season

So now that you only have to pay player X 4.5million a season, instead of the 7million a season you would have to pay if you signed him to a deal just 4years shorter, you can begin to front load and make changes to the amount player X will make each year he will likely play while keeping a manageable cap hit for the team.

But if these players (my list of questionable offenders) don’t play to the end of their contracts (for other reasons then career ending injuries) then the teams who signed them have effectively just circumvented the CBA, regardless if the player left 2.5million on the table (because if you just made 50million over the last 7years do you really want to stick around for another 4years to make 2.5?)

I’m not saying I’ am 100% that these players will retire before their contracts run out (we’ve seen players play into their 40’s) but you have to admit the odds they retire before their contract expires is greater then the odds the play it out.

So what I am suggesting is would it be in the interest of the NHL to institute a new rule in the next CBA saying that no player can be signed to a contract that extends past that players 39th birthday in that given year?

Now you may be wondering why 39?

While you can’t predict when a player will retire you can count the number of players who will be 39 or older next season on both hands. To offer contracts that go past a players 39th birthday (while possible for players to go that long) is improbable.

Maybe 39 is a high number still, maybe 35 is something that will make players think twice about long term deals (who wants to make peanuts when they still have years left to play) but the principle is the same.

(Just to make things clear I’m not saying everyone has to retire at 35, just they have to sign a new deal at 35 or 39 and maybe you even cap that two a maximum 2year deal or 3year deal.)

Max you must pay each year

Or what if you put a floor on the minimum a player can make each year when they sign their new contract. You couldn’t make it too high because of unexpected injuries that might occur and end a career (people still need to get paid) but maybe a 15% floor.

This might be the first one to be thrown out by the NHLPA, but maybe it deserves some consideration because something needs to be done. Whether the NHL is considering any of these possibilities (most likely not, they got a bunch of people smarter then I am) or some other options the one thing everyone agrees on is that this will be one of (if not, “the”) major issues when the league and players go to renew their contracts.

Feel free to leave a comment. OR! Let’s hear what you think at http://www.sportsjabber.net where the Jabber is always going on. Registration is free, and we offer tons of prizes throughout the year. So get in there 700+ members, 200k + posts, there is always room for more at Sports Jabber. Good forums, good friends it’s all going on at Sports Jabber!

Not yet Kovalchuk

By now (if you wanted to or not) you have heard about Kovalchuk signing his insanely long 17 year 102 million dollar contract, which was denied today by the NHL deputy commissioner Bill Daly:

“The contract has been rejected by the League as a circumvention of the Collective Bargaining Agreement. Under the CBA, the contract rejection triggers a number of possible next steps that may be elected by any or each of the NHLPA, the Player and/or the Club. In the interim, the player is not entitled to play under the contract, nor is he entitled to any of the rights and benefits that are provided for thereunder. The League will have no further comment on this matter pending further developments.”

More information can be found in the CBA, section 26.3 titled “Circumventions”

Basically the league is saying that because NHL contracts are averaged out (ex. a 25million contract/5years = 5million a season) that a contract of 102million over 17years breaks down to less cap hit each year then a contract of a 102million over 10years, giving (in this case) the Devils more spending money each year. While it is in the Devils power to give out 17year contracts the problem is that Kovalchuk is 27 meaning (27+17) Kovalchuk would be 44 when his contract expires and the likely hood that he can continue to play at that age is very slim.

Now the Devils will probably have front loaded the contract (meaning the next X amount of years they pay Y amount more then in the last few years) but the cap hit there still become reasonably less in a long term deal.

For Example1: 102million over 17years

If you average that contract out you would pay him 6million dollars a year over the course of the 17years.

You could front load that contract, for example, to pay him 8.5million a season for the next 10seasons (until he is 37) and have paid him 85million and then lower that for the last 7years. even though he would probably retire with some money left on the table (at that point it wouldn’t really matter), it’s all about the cap hit.

There are a few different ways they could spread this out (depending on cap space) such as 10mil the first 2season then drop to 8.5 or another number but it gives flexibility to the team, I just used 1number as an example.

Example2: 102million over 10years

If you average that contract out you would have to pay 10.2million dollars a year over the course of 10years.

You have to pay more each season (10.2 million) with practically no flexibility (there is a cap on how much 1 player can make each year.)

You don’t get the same flexibility as Example1 which is why people view Example1  as a loop hole in the CBA.

The league felt the Devils exploited this loop hole and thus rejected the contract.

But has Kovalchuk and his camp done something that other players in the league haven’t?

Two notables:

  • The Vancouver Canucks signed Roberto Luongo (31) to a contract extending into the 2021 season. A front loaded contract (the Canucks pay 10million this season) but less then 4 in the last 3 years.
  • The Chicago Blackhawks signed Marian Hossa (31) to a contract extending into the 2021 season. The put on an additional 2Million on for 7years (keeping the cap hit manageable) before it drops to 4million then 1million then less then 1million over the last 5years.

Of course you can look all over the league to see GM’s and players taking these types of deals ( how about Franzen and Zetterberg?) but perhaps the one difference between all these players and Kovalchuk is the length of the contract.

But we have seen contracts extending past 12years (DiPietro has a 15year deals) although he signed that at a young age and his contract is actually averaged out over the number of years offered (he makes the same amount at the last year of his contract as he did at the first year.)

Or perhaps it somehow doesn’t “feel” right (we’ve seen players in their 40’s before Chris Chelios, Mark Messier, Ed Belfore, and Dominik Hasek are a few) so who is to judge that Kovalchuk isn’t a name to one day be on that list?

But is it that much different then the contracts listed above?

Feel free to leave a comment OR! Let’s hear what you think at http://www.sportsjabber.net where the Jabber is always going on. Registration is free, and we offer tons of prizes throughout the year. So get in there 700+ members, 200k + posts, there is always room for more at Sports Jabber. Good forums, good friends it’s all going on at Sports Jabber!

NHL trade deadline looms around the corner…

Next week the NHL trade deadline will be upon us!

Be sure to check Hockey Jabber regularly for up to the minute deadline news, reviews and even some previews on what we can expect from this years trade deadline.

Be sure to check back on March 1st/2nd and check out our NHL sellers list, we will be talking about some of the names who may be moving.

Feel free to email us at hockeyjabber@ymail.com with questions or your thoughts on who is going where.

OR! lets hear what you think at http://www.sportsjabber.net where the Jabber is always going on. Registration is free, and we offer tons of prizes throughout the year. So get in there 500+ members, 100k + posts, there is always room for more at Sports Jabber.