Thoughts on the Cap Hit
by JasonF on Jul 19, 2010 5:07 PM PDT
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PrintSo today Kovy signed while I was at work. Once I saw his numbers (reported 102 mil over 17 (holy crap) years), I got to thinking. What the heck is the point of the cap hit? Sitting there at work, wishing the day was over already, I could only come up with two answers to it. The first one is for teams to sign more money under the maximum cap by front loading load term contracts as we've seen with Hossa and Kovy and a few others. The second is to allow teams like the Thrashers and other teams looking to reach the cap floor and nothing above that, to take on front loaded contracts at the end of their life so the cap hit is more, but the payout that year is significantly less.
I thought the whole point of the cap hit was to bring parity to all the teams as much as possible. However, seems like the only two things that cap hit is used for are two things that are cheating the system. You get an advantage both ways if you're willing to use it. You can either pay less money for players and stay within the boundaries or you can get more but stay under the cap. Both way seem like a pile of you know what if you ask me. I for one would be pissed if the Ducks signed someone to a contract like Hossa or Kovy got. Knowing full well that they were trying to cheat the system by front loading and tacking on several years on the end that everyone and their mother knows they aren't going to play just to get the cap hit down. That's BS. Flat out.
I don't know why the NHL doesn't just make it so that what you pay a player in a given year is the cap hit. If the Devils feel that Kovy is worthy of getting paid 11.5 mil a season for several seasons, that should be the number that counts towards the cap. Not some BS contract that pays 93% of the contract value in less than 60% of the contract life. Of course no team or player is going to admit what they did in agreeing that the player would retire, because both sides win with the way it is. The player gets paid darn near exactly what he wants for the time he wants to play for, then can retire, and the team gets a player at probably 60% of what they should be paying and he'll come off the books once he retires instead of making a measly 750k or 550k a season. What a joke.
What's even more a joke is how the NHL just sits around and watches. Yes I understand they can't do too much until the CBA is re-negotiated, but they should have nipped this in the butt when it first started. When Detroit started doing it with Zetterberg and Franzen and then Chicago followed with Hossa, Luongo with the Nucks, and now the Devils and Kovy (I'm not counting Pronger because they screwed up, but they tried to be a part of this group). Each time it gets even worse too. It's turning in to a joke.
The NHL needs to find a team and somehow find that they and the player agreed to have the player retire at a certain point, and punish them severely. I'm not sure how or what kind of punishment can be set on a team, or if the NHL would have the balls to do so, but something needs to happen. If I'm the commish (I'd probably kill myself if I were Bettman, but that's another story) and I could find this and had to punish a team, I'd start with draft picks and I'd also make it so that their RFA lost the restricted status and could become UFA once their current contract expired. That'd be punishment enough in my opinion.
So if you got this far, you're probably wondering why the hell I'm rambling on... I had two questions. What do you all think should happen next time the CBA needs to be negotiated? The second question I had was does anyone know what happens to contracts next time it gets negotiated?
I think the cap hit needs to be the amount paid to a player per year. If the Devils clearly think Kovy is with some 11.5 mil for a few seasons and are willing to pay him that, that needs to be his cap hit. I think doing that, along with limiting contract years to 5 years or so. I think doing those two things will be the only way to get around this. I think if the NHL did that, they could create more parity, as well as do better in the off season. If you only could sign a player to 5 years max, that would mean more players becoming UFA each summer, and more signings and such. More signings generate more interest, which will ultimately benefit the game.
And I don't know what will/should happen with current contracts such as Kovy if things like this happen. If someone who is more familiar with the CBA wants to chime in, they might be able to tell us if there is a clause that states that teams can just wipe contracts off the books once a new CBA is put in place of what.
Anyways, that's enough of my typing, I'd be surprised if anyone makes it through that and replies. Hahaha. Go Ducks!
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A player has to be somewhere in the neighborhood of 30 for an “afterlife” deal to work. Players like Kane and Toews are signed to deals where the cap hit is on par with salary. Younger players can sign lifetime deals, but again, the cap hit is the same as the salary, see Ovechkin (13 year deal at 22, gets 9 or 10MM per year in that deal, on par with his 9.5MM cap hit). Frontloading money only works if you add years BEYOND when that player might actually be playing hockey i.e. Ovechkin would say NO to a deal that paid him 500K when he is 35 because Ovechkin fully expects to be playing hockey at 35.
Now if you’re 35 and over, the NHL has closed that loophole by saying that players who sign a deal at that age will have their salaries count against the Cap whether they play those years or not, so Chris Pronger threaded the needle on that loophole. If Chris Pronger signed such a deal today, then the Flyers would have to carry his cap hit into his retirement.
Players between 25 and 34 (prime UFA players and some final RFA years players) are seizing that loophole where they can sign “afterlife” deals that pay them based on their 40s, when they will most likely be retired. I assume the players union will fight to keep this loophole alive. But the system still works, in that RFA players can’t be raided by offer sheets as easily, guaranteeing clubs the players they were drafted. And that’s all the Salary Cap can really do. I doubt they’ll ever create a Cap that guarantees that Columbus is a major free agent player every year.
by Arthur from Anaheim Calling on Jul 19, 2010 8:00 PM PDT reply actions
The problem I see is what is to stop some players in their early to mid 20’s like Kane or Toews from signing a contract like that? If Hossa can sign a 12 year deal and Kovy can sign a 17 year deal, I see no reason that a 22-24 year old won’t sign a 20+ year long deal. I mean, it’s just a couple more years… What’s 5 more years when you’re already talking a 15+ year contract? Then these players might never see UFA and might just sign a huge deal to start with. I mean, I personally think Kane and Toews are probably already better and more proven than Kovy in some ways. They’ve proved they can show up when they need to in big games. I personally can’t say the same about Kovy. I don’t see why when their current contracts are up (assuming the CBA stays the same, which most likely won’t happen), they could sign lifetime contracts before evening hitting July 1 of their UFA year and never see the market. The age that these players are signing lifetime contracts keeps getting younger and the contracts keep getting longer. I see no reason why it will change. Maybe that’s just me.
well, the primary thing stopping afterlife deals for RFA’s is whether or not they want to play for their current team. Ovechkin clearly does, and the primary thing stopping an afterlife deal for him is what Ovechkin will actually be worth when he’s 35. That’s all very unpredictable, and the market will change, not just from CBA to CBA, but from year to year. Look at DiPietro’s 15 year contract. Even if he was good and healthy, there are years, like this one, where 4.5 is a lot of money for a goaltender and years where 4.5 would be a steal. The market fluctuates such that both sides should always be interested in flexibility.
If you erase the cosmetic cap hit adjusting years, the Devils are only tying themselves to Kovalchuk for about 12 years, not even as long as the Capitals are tied to Ovechkin and three years shorter than the Islanders tied themselves to DiPietro. If Toews signed a 21 year contract, the Blackhawks would be tying themselves to a player for maybe 17 years. There are plenty of pitfalls to losing that much flexibility. Campbell’s tied to an 8-year non-cap adjusted deal, and they’re already having buyer’s remorse. Teams may get more ambitious and players may be willing to roll the dice with their future value if this loophole isn’t closed, but it won’t become commonplace for teams to tie themselves to a player for 17 of his ACTUAL playing years.
by Arthur from Anaheim Calling on Jul 19, 2010 8:51 PM PDT up reply actions
And, actually,
when you consider that only the first 7 or so years are big money years, and it converts to old man prices for the last few years, signing Kovalchuk this way really is a 7 year deal, with leftover years that you can buyout if he faces chronic injury after 35 and his cap hit becomes troublesome. By contrast, signing him at 35, his cap hit would always count against you, whether he retired or you bought him out. So, it’s like signing Kovalchuk to three contracts: one real big money deal, one 35+ deal that you can buy out and one fictitious deal. Definitely easier than signing a player to four contracts, and that’s assuming he wants to play for you and is willing to speculate with you on what he’ll be worth in those three stages of his career.
by Arthur from Anaheim Calling on Jul 19, 2010 9:03 PM PDT up reply actions
I guess that makes some sense. I just don’t see how the NHL didn’t block this loophole when they had the chance. But I guess that’s a whole separate issue.
I know there are talks about trying to limit the length of contracts when the CBA is re-negotiated (or at least arguments for it), but do you know what will happen to existing contracts if this done happen? If they limit contracts to 5 or 7 years for example, what would happen to contracts such as Kovy’s and Hossa’s and the others? I don’t know if they would just be the exception of if there would be a chance for teams to just void contracts or what. Just curious.
contracts under the previous CBA are honored. For example, even if they raise RFA to 75 years of age, Getzlaf and Perry WILL be UFA’s when their current contracts expire. Had they been RFA’s at the conclusion of their current contract, they would be subject to the new CBA. That was the motivation for Paul Kariya taking below the league average in Colorado; he wanted to be sure that even if they raised the RFA age again, he would be a UFA that summer, which one year at below the league average guaranteed him as per that CBA’s rules.
I suppose the league could lower the 35+ rule to 32 or something like that, but I think the players association will lobby to keep this loophole in place. Again, though, the current Salary Cap guarantees small market teams their draft picks by keeping market price for RFA aged players relatively manageable and preventing offer sheet raiding. But there isn’t any realistic Salary Cap that would guarantee small market teams rock bottom prices in free agency, not unless there’s a massive luxury tax that gets redistributed into the league or something.
by Arthur from Anaheim Calling on Jul 19, 2010 9:55 PM PDT up reply actions
There you go, Jason F
The NHL rejected it using the circumvention language of the CBA. Apparently, the idea that Kovalchuk would play one year more than Hossa agreed to for almost no money was too much for them to stomach.
by Arthur from Anaheim Calling on Jul 20, 2010 7:03 PM PDT reply actions
I think the six-figure years and the sheer number of them was what crossed the line for the league here. It makes sense that they would have the same ’don’t make a fool out of me’ threshold that referees have.
by Arthur from Anaheim Calling on Jul 20, 2010 7:13 PM PDT up reply actions
I’m glad to see them reject it. I’m not sure if it’ll stand when they go toe-to-toe with the NHLPA, but it’ll hopefully be interesting. Can’t wait to see the two sides tango. Maybe this will liven up the summer!
I’m really torn on this. I know there’s a story somewhere in the archives where I hate on deals like this, but I also think it’s a little unfair for them to all of the sudden establish a bright line that was heretofore non-existent.
I dunno. I’m willing to say that there is nothing wrong with drawing the line here. And the line is basically an age line. If you want to sign a guy who wants this much money and isn’t 30, you’re going to have to game the system a little more. Pronger and Hossa’s deals were bad, but both players were 30+, so it was a little easier to game, and by investigating them, the league only accepted that it was possible to pay a player 1M per year in the final four years of a long deal (Hossa) into his early forties or 525K in the final two years of a long deal into his early forties (Pronger). Because Ilya’s 27, they had to tack five six-figure years (four of which were 550K years) onto the end and take him to his mid forties. You can’t really argue that the NHL greenlit that with the Pronger or Hossa deal.
by Arthur from Anaheim Calling on Jul 20, 2010 9:52 PM PDT up reply actions
So what happens now?
Puck Daddy has remained silent and I can’t find any explanation anywhere of what this actually does. Is Kovy still a Devil? Does this put everything back on hold (if so, FUCK YOU NHL)?
by PhantomPretender on Jul 20, 2010 9:50 PM PDT up reply actions
the NHLPA has to formally challenge it for it to go through as is. It’s also possible that the Devils try again with a slightly different contract. Definitely puts things on hold for at least a day or two, though. If it goes a lot longer, I doubt teams would wait to pull the trigger, no matter what they’re hoping to get out of LA or NJ.
by Arthur from Anaheim Calling on Jul 20, 2010 9:54 PM PDT up reply actions
I was just so hopeful
that we might finally get some movement. Sigh.
by PhantomPretender on Jul 20, 2010 10:11 PM PDT up reply actions
It creates a very interesting scenario though. The Devils have to clear at least some cap space to make a Kovy deal work, even at a 6 cap hit, but what do they do if the NHLPA files a grievance and this has to go to an arbiter. That process could take as long as a week. What happens if NJ has no one to trade with when this is all said and done.
NHLPA says they’re looking into it. Seems like a non-statement, so maybe they’ll just rely on New Jersey to submit a new contract structure.
by Arthur from Anaheim Calling on Jul 21, 2010 10:13 AM PDT up reply actions
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