• A Ring For Rick DiPietro

    by  • June 16, 2010 • Uncategorized • 12 Comments

    I’m surfing through some salary information at the moment and came across a couple of interesting things. The two teams that spent the most money on salary this year in the NHL? Philadelphia and Chicago. This is actual dollars, not cap hits. The Hawks spent $64.5MM – in a league with a $56.8MM cap and Philly spent $62MM.

    At the other end of the spectrum, the Islanders spent only $38MM, plus whatever bonuses Tavares hit. I’d think that he, at most, hit his “A” schedule bonuses of $850K. The three hockey players who took the most money out of the Islanders this year? Rick DiPietro, Mark Streit and Alexei Yashin. Ouch. You’d have to think that Sheldon Souray might be attractive to them, because you can pay him less than his cap hit. In a related story, the Islanders are picking fifth in the draft.

    I’ve got escrow on the mind at the moment – I’m working on something longer that talks about the NHLPA and escrow – but if I endured the waking hell that must be playing for the New York Islanders (all forms of waking hell are relative, obviously), it would drive me completely insane that I was paying part of my salary back to the NHL so that the Blackhawks and Flyers can spend far more money than they’re ostensibly permitted to. At the very least, I’d hope that the Hawks would reward me with a Stanley Cup ring – if they’re giving them out to people who carefully built explosives set for July 1 into the foundation of the Hawks, they really ought to give them to people who’ve done nothing to hurt them and actually took money from their own pockets to pay the league back for the Hawks’ and Flyers’ profligacy.

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    12 Responses to A Ring For Rick DiPietro

    1. mclea
      June 17, 2010 at

      it would drive me completely insane that I was paying part of my salary back to the NHL so that the Blackhawks and Flyers can spend far more money than they’re ostensibly permitted to

      First, this is necessarily self-correcting. The total cash outlay on contract matches the cap hit, so it will work the other way once these guys get a few years into their front loaded contracts.

      Secondly, what’s the alternative? Your system where a player’s contract would entitle him to a percentage of the salary cap? Because a system where the cap hit matched the cash outlay for the year would be ripe for abuse.

    2. Oilman
      June 17, 2010 at

      You’d have to think that Sheldon Souray….?

    3. Schitzo
      June 17, 2010 at

      The total cash outlay on contract matches the cap hit, so it will work the other way once these guys get a few years into their front loaded contracts.

      Unless they retire first.

    4. Tach
      June 18, 2010 at

      The total cash outlay on contract matches the cap hit, so it will work the other way once these guys get a few years into their front loaded contracts.

      Or until they are traded to teams trying to make the cap floor and are more than happy to have someone’s cap hit be far less than the actual salary.

    5. mclea
      June 18, 2010 at

      Or until they are traded to teams trying to make the cap floor and are more than happy to have someone’s cap hit be far less than the actual salary.

      That’s exactly what I expect to happen. It’s an added benefit for the team when they agree to front loaded contracts. Not sure how that invalidates my point though. We’re in a period where cash outlays exceed cap hits. We’ll necessarily move to a period where the opposite is true, regardless of who is paying the contracts.

      Unless they retire first.

      Touche. But I’d say, within the context of all outstanding contracts, that these early retirement contracts are not even close to being material.

    6. Tyler Dellow
      June 18, 2010 at

      We’re in a period where cash outlays exceed cap hits. We’ll necessarily move to a period where the opposite is true, regardless of who is paying the contracts.

      This isn’t correct. Assume a two team league with Philly and the Isles. Pronger wants to keep playing in 2015-16 so the Flyers send his $4.9MM cap hit and $525K salary to the Isles. Assume that the Isles are willing to spend $45MM in cash. They can now spend $45MM in cash and $49.9MM in cap hit. The Flyers can sign someone else to a Pronger deal and pay him $7MM for a $4.9MM cap hit.

    7. mclea
      June 18, 2010 at

      They can now spend $45MM in cash and $49.9MM in cap hit. The Flyers can sign someone else to a Pronger deal and pay him $7MM for a $4.9MM cap hit.

      Well sure. It’s self perpetuating. It’s like paying off old debt with new debt. Or trading private debt for public debt. The option to defer the balloon payments is certainly there. But eventually someone has to pay the end dollars, and when that happens, the lower level guys will do better than good.

      Until then, things will remain in all material ways the same. And agents should act accordingly.

      The money is in figuring out when the pyramid will fall. It’s not in whether or not it will happen

    8. Tyler Dellow
      June 18, 2010 at

      I don’t think that’s neccessarily the case though. It would be if all of the salary cap room available to the league was used every year. As long it isn’t though, and there are teams with empty cap space, this can go on indefnitely.

      If I was a lower end guy,I wouldn’t want to bet on me eventually getting my payday when all the ballon payment deals work out.

    9. mclea
      June 18, 2010 at

      By changing the system at half time, you are without question screwing the guys that signed long term contracts prior to the change.

      Everyone understands how things work. Everyone understands that front loading a contract is such a dominant alternative that you would be stupid not to it. And everyone should understand what effect this incentive structure has on the cap and on escrow going forward.

      So given that, it’s on you to construct a contract that gives your client maximum value taking into consideration the expected the escrow sensitive conditions.

      • May 7, 2014 at

        What a great website! I just want to make sure I’m redniag the chart correctly so I sign up for the right color. I am in Greenville/Spartanburg area of SC. I believe I am in the Green which would be May 6th??

    10. Tyler Dellow
      June 19, 2010 at

      By changing the system at half time, you are without question screwing the guys that signed long term contracts prior to the change.

      I don’t buy this. To start with, there’s precedent for doing it, as Jagr and Yashin got screwed last time. There’s an entire generation of guys like Jason Smith who got absolutely fucked because the FA age dropped, other, younger guys were available and the distribution of money shifted dramatically. Secondly, one of the things that their agents ought to have cautioned them about when they signed deals is the possibility that the system would change. Presumably they factor that into their price.

      So given that, it’s on you to construct a contract that gives your client maximum value taking into consideration the expected the escrow sensitive conditions.

      Yeah, I agree with this wholeheartedly.

    11. mclea
      June 19, 2010 at

      ““I feel the [cap] inflator is necessary at this stage given precedent, given we have used it now in every season since 2006. We have contract cycles every year where 25 to 35 per cent of players [become free agents] … and every one of them has benefited somewhat by the fact the inflator was in place. To turn around now and take it away for me would be inherently unfair.”

      J.P. Berry

      http://www.theglobeandmail.com/sports/hockey/fehr-a-factor-in-nhlpas-cap-decision/article1610339/

      I find this argument pretty persuasive. Decreasing uncertainty benefits everyone in the long run. By changing things you’re creating winners and losers amongst the players, which will just further divide them.

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