• How Zach Parise Signing for 13 Years Is Good for Kyle Brodziak

    by  • December 7, 2012 • Debacles, Hockey • 40 Comments

    I’ve been an optimist that a deal would get done sooner rather than later throughout the lockout, largely because since the late October offers, it’s seemed likely to me that the majority of owners were better taking whatever was on the table rather than wiping out a season and the majority of players were better off taking whatever was on the table rather than wiping out a season. Decertification hasn’t seemed like a real threat to me because I think that most of the players are probably better off with a union. Slowly, things seemed to be heading towards a resolution.

    And then yesterday happened.

    As much fun as the dog and pony show was – and it was fun – I try and force myself to be more interested in the issues that divide the parties than I am in the spectacle of Gary Bettman going bananas on live television. The issue of length of contract and variance in terms of annual salaries seems to be a big one and one that’s worth discussing in some more detail.

    It’s pretty easy to understand why this is an issue for the owners. When you squeeze the money that can be paid to the players, as the 2005 CBA did, people competing for the services of highly coveted players are forced to compete on something else. Length of contract is a pretty obvious one. It’s the exact same problem (from the owners’ perspective) that existed prior to 2004: it only takes one person willing to go very long in terms of years in a contract to force other owners to match it if they want to be competitive in getting the best players. If you’re an owner motivated primarily by a desire to increase the profits and value of your hockey team, this would be infuriating. It’s easy enough to see.

    The player interest in all of this has been a bit harder for me to see. Kevin Westgarth set it out late last month, in an interview with James Mirtle:

    As a fringe player, Westgarth added that he realizes some of what players are fighting for will never affect him directly, but he also argued that the trickle-down effect of eliminating creative contracts for stars would mean less cap space for the remaining players.

    He also believes those contract rights are worth fighting for after other players lost a season in 2004-05 to get them.

    “I will stand up for what I think is right for all the guys on my team,” he said. “The reason those contracts exist is because, in a cap system, that’s how you make room for paying other players. If we gave up the rights that the league wants, I believe it would annihilate the middle class of the NHL.”

    My initial reaction to this was “Nahhhh” and I started to write a sarcasm laden post arguing that it was nuts. As I played with some numbers, I encountered a problem: I could kind of see what Westgarth’s point was. I hate it when this happens.

    I’ve argued before that the best players did really poorly in the 2005 CBA, in that there was fantastic salary growth for lesser paid players, while the guys at the top saw marginal increases. Another way of expressing that is to look at how much the salaries have grown for the highest paid players in the game since 2000-01 – it comes out to about a 1.2% annualized growth in salaries. League revenues have grown by something like 7.5% per year. The people who have been rewarded by the growth in hockey since 2000-01 with a bigger piece of the pie each year aren’t the guys who bring people to the rink and lift them out of their seats; they’re the guys who fill out the rosters in the NHL’s cartel and the guys who run the cartel.

    The one thing that the best players have been getting since 2003-04 though is longer contracts. When Bettman was spitting out facts last night he cited some number for guys with contracts that go for six years or longer – it’s something like 90 guys in the NHL, according to him.

    If you or I were to hire an actuary to estimate the economic value of our working careers, it’s not as simple as just taking whatever salary we make, multiplying it by our working years and making certain allowances for promotions. They take into account positive and negative contingencies as well. For many of us, these aren’t going to create a massive swing. If you were to do this for a star NHL player, it strikes me that the negative contingencies are massive: injury or loss of effectiveness for some other reason are massive negative contingencies.

    Intuitively this doesn’t seem true: stars are stars and they tend to have long runs as stars, right? Except when you look back at something as rough as the NHL scoring charts, it becomes clear that this isn’t the case. Take 1995-96 as an example. There are lots of guys in the top twenty in scoring who enjoyed long, productive NHL careers. There’s also Peter Forsberg, Eric Lindros, Paul Kariya and John Leclair, guys who were shadows of what they once were by the time they were 30. Look at 2002-03. There’s Todd Bertuzzi, having his last big year at age 27. Milan Hejduk having his last big year at age 26. Pavol Demitra’s last huge offensive year at 28. Ziggy Palffy playing more than 42 games in a season for the last time at 30. In other words, it’s a brutal sport, in which healthy and star calibre play can be gone in the blink of an eye. If someone writes a similar post ten years from now, he may well mention Dany Heatley.

    Coming back to my point about contingencies though, it seems to me that the potential negative contingency of ineffectiveness for any star player five years down the road or so is going to be massive, larger than you’d think intuitively. If you’re a 25 year old player and the next season you play has an estimated value to your team of $10MM, it’s probably not accurate to value your season five years from now at $10MM; you have to take into account the possibility that you’ll be less effective, whether for injury or other reasons, and have significantly less value.

    Let’s talk about Zach Parise’s contract for a minute. He’s 28 this year and his contract provides for him to make $12MM, $12MM, $11MM, $9MM, $9MM, $9MM, $9MM, $9MM, $8MM, $6MM, $2MM, $1MM and $1MM. When people, including me, have talked about long tails on contracts under the 2005 CBA, years tacked on to get the cap number down, we’ve talked about the years at the very end of the contract, the $2MM, $1MM and $1MM years. It’s possible that we should maybe be looking a little more closely at those later $9MM years and the $8MM and $6MM years in a similar way, in that they’re years in which the team plans to pay the player more than an actuary might assess his value at today, taking the risk of injury and decline into account. In effect, the team is using those years in which they’ll overpay him to reduce the immediate cap hit – a couple of $9MM years, an $8MM year and a $6MM year will reduces the cap hit that he’d get if he was paid properly now.

    In other words, if there’s a five year limit on contract length, and teams can no longer make up for lower salaries up front with a long smooth ride into retirement, it’s reasonable to think that the price Parise demanded for the next five years – $53MM – is going to be higher, because he can’t effectively defer compensation to later in his contract. How much higher is an awfully complicated question; you’d basically need some way to figure out how much surplus value the Wild are paying him in years 6-13 versus his actual estimated value in those years as of today’s date in order to estimate that. My guess is that it’s significant.

    Zach Parise’s one guy but there are a lot of these contracts floating around. If Parise would demand $60MM over five years instead of $53MM and there are 20 guys or 30 guys in the NHL in similar positions, you can at least understand the PA’s concern about a realignment of dollars and the emergence of an NBA style salary structure where a greater share of the dollars are directed to the better players. If it’s 30 players, at an average of $1.4MM per year (just based on my Parise number), you’re talking about $42MM a year that moves to the highest paid players in the NHL from the rest of the league. If that’s a conservative estimate and the Parises of the world are actually being grossly overpaid after year five relative to what an actuary would come up with, it could be considerably higher. I’ve got a hard time seeing it being significantly lower.

    The way it works now, if Parise’s terrible after five years or so, he’ll still fill a spot on some bad team’s roster (like Minnesota!) as a “star” or go to the minors and get paid, like Wade Redden. He gets his money for being a star once and there’s room for the guys for whom there’s one big contract, like Kyle Brodziak because the overall cap hits are lower. If he needs to get all his money up front, which is basically what the NHL is demanding, that flexibility in the system is diminished. Minnesota can have Suter and Parise, but they’ll be more expensive up front, and the Wild will have fewer dollars for the rest of their roster today.

    I’m still not entirely convinced by this reasoning – there are niggling doubts in my own mind I’d need to work through. I assume the PA has some pretty sophisticated economists on the payroll though and I assume that all of this stuff has been modeled. If nothing else, this makes more sense than “Scrubs holding out for stars? That won’t happen because it’s crazy.” If this analysis is right, the middle class isn’t holding out for stars; they’re holding out for themselves.

    Email Tyler Dellow at tyler@mc79hockey.com

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    40 Responses to How Zach Parise Signing for 13 Years Is Good for Kyle Brodziak

    1. dawgbone
      December 7, 2012 at

      As we get more and more of these deals, especially in the next couple of years (while most of these guys are still in years making $10+mil), how will it impact the players share of the revenue?

      For instance, if this was a season, Weber would make $27mil, Parise, Richards, Myers and Suter would all make $22 mil.

      Doesn’t that trickle down to a lot of the current players in terms of escrow and that? Does that counteract any gains made by mid-range players in terms of cap hit?

      • Triumph
        December 7, 2012 at

        Huh? No they wouldn’t. You’re probably being fooled by capgeek – money listed as bonuses are not in addition to salary, they are part of salary. A player with a $12 million salary and $10 million bonus is being paid $12 million – $10M up front, and $2M spread out through the rest of the season.

        • dawgbone
          December 7, 2012 at

          I knew that… for some reason I thought Weber got his huge signing bonus in addition to a big salary this year so I had assumed cap geek changed their format.

          So it does change my question a little bit.. do these guys getting paid big money up front affect the middle class players in terms of them getting their % of total revenues?

          • Tuomas
            December 7, 2012 at

            Yes because when you make a 15 year contract for a guy, you can lower the cap hit down to 6,8mil a year when in a 5 year contract you might be paying him 9-10 mil a year. The longer contract leaves more cap space to pay better pay for lower string players.

          • Dulock
            December 7, 2012 at

            The escrow amounts have always been calculated in real dollars. If star players made the same money as their cap hit they would also get a greater percentage of escrow money on their contracts (as less dollars would be paid out) and mid-level players would be paid less on their contracts but get a bigger percentage of them. This would likely have a range of players in the middle making less and the guys on the top and bottom making more.

    2. Don
      December 7, 2012 at

      Certainly can understand the concern of “the middle class” players, but keep in mind there are 30 teams and owners will still need to fill out those teams with quality players. Yes, an owner could foolishly spend the bulk of his cap money on a four or five stars but have virtually nothing left for his remaining roster. Sorry, but the middle class then become the important assets for many clubs, and those teams who want to be competitive will need to have a sound balance of premier players, quality players, and grinders. If anything those second and third line players are going to be in high demand, and earn very good salaries, This is what a cap system does, is force owners to spend wisely and manage a balanced competitive team.

      Since 2004 the owners have been allowed to overspend throughout their lineups, but they have been frugal with third and fourth line players. Any one star player can only get 20% of the team’s cap. An owner can’t stack his team with stars like the Rangers have done, and still have money to fill out their roster. Smart GM’s will be actively seeking out quality second and third line players and outbidding other GMs to get those players. Demand for the middle class goes up, and with it, their salaries.

      my two cents

      • Triumph
        December 7, 2012 at

        No one is saying that teams would have too many stars – people are saying that in order to sign a star, you can’t just slide him in under the cap by jamming a bunch of front-loaded money in there anymore. So the Rangers have Brad Richards who signed in the open market for 6.8M per season, but what if he could only sign a deal for 5 years with no variability? He probably gets 8-9M. And if money is one of his biggest concerns, he may have to go to a team with a lot of cap space but without a lot of cachet. And so on – with all the front-loaded deals around, NHL contracts for everyone else, because they are shorter-term, are based on the presence of those deals. When star players start having to sign short-term deals for bigger cap hits, players farther down the depth chart will either have to take less money from their current team or go elsewhere.

        • Don
          December 7, 2012 at

          People are going with the assumption that star salaries will go up, or more importantly their cap hits will go way up and thus less for the rest of the players in the league. The reason that teams could sign these front-loaded ridiculous contracts in the first place was because they could keep the cap hits to a minimum. The owners could have paid even more, but they have to live within the cap and fill out their rosters.

          As well, that is within a $70Mil cap. Take that cap down to $60Mil, and now you put even more pressure on the owners not to overspend on the star players. Second and third line players are going to be in the highest demand, and will likely see pay raises. With the exception of a few superstars, the premier players of the league will likely see their salaries decline.

    3. Triumph
      December 7, 2012 at

      Doh – this is the article I wanted to write. Oh well.

      I wrote about how top teams have increased what they pay out – in 2011-12, by my estimate, the top 12 teams in salary paid out an amount equal to 109% of the salary cap. Now part of this is due to injured reserve and the ability to bank cap space + add it later on in the season – I have the top 12 teams at 99% of the total cap in terms of ‘cap hit paid’ over the course of the season. Still, 109% and probably climbing due to the increase in front-loaded contracts – that’s bad news.

      The NHL wants to go to an NBA system but the NBA and NHL are very different games, and I fear the NHL doesn’t understand this difference – in the NBA, Lebron James even in a cap system is worth a lot more than they are paying him – he plays for the majority of the game and is worth a ton of wins over replacement. So having a cap on salaries is good for players farther down the roster because they will see more money – I believe the NBA has a thriving ‘middle class’ of players who are routinely overcompensated by poor GMs. In the NHL it would work the other way, with top players eating up more salary space than they do at present. It would increase parity, though – remember the days where we used to think that a high-ticket free agent only had 2 or 3 legitimate destinations because of cap concerns? I mean, the Flyers just offered huge deals to Parise, Weber, and Suter this off-season – without front-loading, that would require enormous sacrifices. I imagine the downward pressure would work most on younger players without arbitration rights, where NHL teams would be more inclined to force them into holdouts or get them signed to deals well below their market value (note how also an offer sheet is much worse in this system because it can only go 5 years, depressing their potential value farther). This gets to Burke’s desire to bring back the ‘second contract’ – the second contract didn’t just go away because of increased arbitration rights, it went away because the cap has been going up so quickly that big-market teams are incentivized to sign their young players to long deals that will represent a giant cap savings once the front-loaded type deals they’ve also signed might not anymore.

      One thing I think people forget is how the NHL got taken to the woodshed on long-tail contracts by the PA during the Kovalchuk flap. People remember the original contract being struck down, but I think the 2nd one would’ve stuck through an arbitrator’s review, and then the NHL would be in even rougher shape now – the possibility of having players with $3 and $4 million dollars on the books for 2025 can’t have sat well with them. I think the limit on contract lengths is really a sticking point for OWNERSHIP – I put that in caps – because NHL owners are continually selling their teams, and owners just don’t seem to have any idea how bad and shortsighted their GMs are. Ownership has an eye on winning and an eye on franchise value and these two things do not see eye to eye.

    4. December 7, 2012 at

      If we assume that the actuarial projections that drive the differences in salary between getting the money up-front on a 5-year deal and spreading it out over 12 or 13 years are somewhat accurate, won’t the amount of money spent on this class of player ultimately end up about equal in either scenario?

      Taking Parise as an example, there’s a chance that he’ll be washed up by the time that years 9 and 10 of his current contract roll around. At that point, the $8MM and $6MM that he will receive is significantly more than he would get if he signed a new contract covering those years only. That money goes against the cap and leaves less money for “middle-class” players, just as paying huge amounts of money to stars up-front would today.

      This is really just a money-now-versus-money-later scenario, very similar to the decision to buy something with cash or finance it. It’s a little more complicated, since in the long-contract case the team is procuring the player’s services for a longer period, which has value and drives up the asking price, but again, that’s something that each side should be able to model and agree on a value for.

      As far as I can tell, all that these long-term contracts do is postpone the inevitable pain for the rest of the players, who will eventually have to play in a league where a lot of cap space is eaten up by players that are past their prime and are essentially receiving deferred payment for services rendered (star performances) in previous years.

      • Triumph
        December 7, 2012 at

        I disagree – the idea would be that new front-loaded contracts would keep coming in. Right now they represent a massive savings for owners against the cap which then goes to other players – as I posted above, the top 12 NHL teams paid out 109% of the salary cap in total salaries. Sure, some of them will go bad and no longer represent a savings, but these are balanced out by new ones that would, and the idea is that the top teams will always be doing their best to win a championship because they’ll always be giving 110% (of the salary cap in salaries paid). Remember also that as contracts go bad and represent a cap liability for big market teams, many of these deals will be slid to smaller budget teams who will welcome them as a cap savings.

        • December 7, 2012 at

          Moving the cost to other teams doesn’t really help from a player compensation standpoint, though I agree it definitely helps in keeping the top teams more competitive. The salary cap is just an abstraction on top of HRR; there are a fixed number of dollars in the pot to be spent on player salaries in a given year, so the difference between $8MM that will go to Parise in year 9 of his current contract and his actual value at that time is essentially dead weight that directly reduces the amount of money available to other players.

          • Triumph
            December 7, 2012 at

            Yes, these deals steal from escrow – the players that should be upset about it are players on small market teams who don’t get the benefit of playing with a player on a front-loaded contract but get their paycheck dinged anyway.

            Still, that doesn’t change the fact that that is true regardless of the length of contract the NHL allows – under 5 year deals, Year 5 could be a giant disaster too. The Parise deal is especially long and frightening – many of the other long-tail deals, especially the ones signed in the beginning, are less so.

          • Stephan Cooper
            December 7, 2012 at

            Keep in mind that 6 years from now in the current system the new player contracts handed out can also defer cap payments to from a new crop of future seasons. So say Parise borrows from years 2016-18 in 2012, then say Nathen Mackinnon in 2016 borrows from 2022-24 on his future monster contract.

            Basically, each off-season there is a fresh new future season on the fringe of what you can conceivably use to manipulate current player compensation

    5. Steve
      December 7, 2012 at

      How is this affected by linkage? This argument is clear in a world without linkage, long term deals allow teams to give out salary above and beyond the salary cap. Isn’t the NHLPA share of the pie fixed though and the actual salary paid eats into other players’ share?

    6. December 7, 2012 at

      This is roughly how I think it would play out as well, although I’m willing to consider the possibility that long-tailed deals have offered GM’s perverse incentives, causing them to inflate overall commitments.

      Take Parise for example – let’s say his current cap hit is actually what the Wild or any other team would rationally evaluate his worth on the ice ($7.53M) in those first five years ($37.65M) while the rest of the money is simply what the club felt it had to tack on to outbid other clubs to acquire his services.

      Now, that is true to some degree with high profile free agents no matter what but in the current system teams can up their total commitment almost indefinitely without overly inflating the cap hit thanks to the long tails. With a five year cap, if GM’s can’t benefit in the present with lower cap hits and they don’t have to outbid each other regarding long tails, then it’s possible the big stars won’t necessarily see their per year dollars sky-rocket to a grotesque degree.

    7. Firley
      December 7, 2012 at

      The missing piece here may be the effect of these long dated contracts down the road. If the prevailing theory is that long-dating these contracts to get stars their money guaranteed frees up money in the front for lesser players, then I think this comes due 10 years down the road when the cap is subject to the additional constraint of paying out the final years of Zach Parise’s contract when he sucks and you have other stars and players to pay. To be fair, I know NOTHING about the CBA and how this stuff gets counted against the cap, but it seems to me that ultimately, freeing up cap space by deferring payments will only reduce cap space down the road. (Also, add in the dynamic of mid range players saying, “I’m better than Parise and he’s collecting 8mm this year. Let’s go to arbitration”).

      The current CBA style of guaranteeing hockey revenues is confusing to me as well. If I understand it right, salaries are basically normalized (via the escrow account) to some percentage of hockey revenues. Is that right? If it is, then in that sense, the dollar-value of negotiated contracts is basically meaningless. You’re value isn’t absolute, so much as it is relevant to other players. So players signing large contracts is bad news for every other player. You don’t have to know exactly what is payout is at the end of the day, or if he’s worth it or not, just that it’s more than you. In the simple example, assume everything is held constant. League revenue doesn’t grow one year to the next and almost every player has the same contract/salary as they had the year before. Then they sign some star to a massive contract. Well, if the pie didn’t grow any bigger, your slice just got smaller.

    8. Pingback: Spectors Hockey | NHL Lockout Blog Beat – December 7, 2012.

    9. Brad
      December 7, 2012 at

      So this benefits Kyle Brodziak because Parise is going to get Wade Redden’d? Or because Brodziak will never be overpaid and therefore always have an NHL contract for his career?

    10. December 7, 2012 at

      This is a very interesting perspective, and seems to make a lot of sense when looking at the front end of Parise’s deal. But what about closer toward the back end when his cap hit is $7.5 MM but he’s probably only worth $3MM? At that point, his cap hit would be taking away from both the middle class AND whoever the new stars are. This is somewhat less of a concern for current “middle class” because they will be out of the league by then, but it’s valid nonetheless.

      I wrote a somewhat related post last night about how the owners’ desire for a 5-year term limit actually makes a lot of sense for the health of the league. http://gettoourgame.blogspot.com/2012/12/nhl-lockout-thoughts-on-bettman-fehr.html

    11. December 7, 2012 at

      This is a very interesting perspective, and seems to make a lot of sense when looking at the front end of Parise’s deal. But what about closer toward the back end when his cap hit is $7.5 MM but he’s probably only worth $3MM? At that point, his cap hit would be taking away from both the middle class AND whoever the new stars are. This is somewhat less of a concern for current “middle class” because they will be out of the league by then, but it’s valid nonetheless.

    12. sam
      December 7, 2012 at

      The greed of “star” players is what really causes the squeeze on other players on their team. They want every last million dollar.

      To be greedy is to be human.

      And maybe 5 year term limits won’t stop them from being greedy. They will be offered more money to play for the Islanders or Columbus, but they won’t have fun losing.

      Players wants every last dollar and they also want to be on a winning team. Most often, these two wants are inversely related.

    13. Marv
      December 7, 2012 at

      I love it how the players are saying that they are doing this for future generations and then want to be able to have these crazy long contracts that will mess with the cap space in the future. I think it is right that there is some relief in the short term, but there’s always a downside in a cap world and that downside will hit future players who will have less of the pie.

      I think that you also have to make a distinction between what a player would ask for compared to today and what the market place would give them. Since cap space could not be avoided with shorter contracts, those high priced players would never get the same kind of money even if they asked for it.

      I therefore believe that this is solely in the interest of the star players and not at all about the so called “middle class”. You do not win in hockey with one superstar if the other 3 lines are bad.

    14. mpowell
      December 7, 2012 at

      The problem with your reasoning is that if teams give out these long contracts, there will be a number of low value, former star players playing off the out years on contracts at any given time. And they will be hogging cap space then instead because even though the number isn’t huge, the cost/value ratio is. You could imagine a league where every team has one player, on average, making 8M/year but is a replacement level player. That takes money away from middle class players just as surely as a star getting 15M/year instead of 10M.

      I can see why the owners want to get rid of these contracts, I can see why stars want to keep them. I’m pretty sure that the NHL middle class is only looking short term by aligning with the stars on this issue. People are really bad at figuring long term.

      • dawgbone
        December 7, 2012 at

        Most of these contracts only have a couple of years like that… most of those years are tied up in the $1mil/season years when we expect the player to retire. Unless of course they change the rule to make all years count, in which case the players don’t get much benefit from this anymore either.

    15. Di
      December 7, 2012 at

      Interesting post. I think one thing you could think about more (‘niggling doubt’) is what those lower salaries at the end of the terms are really about. Those $1M years aren’t tacked on the end of those blockbuster contracts because they expect the players to be in decline, but because they are an effective way to lower the “cap hit” in the early years. No one expects players to be around playing for $1M a year, it’s just using math to work the system. So, in effect, I’m not eliminating those years would lead to higher salaries – the cap hit would go up, which would be a disincentive to teams to actually want to spend more.

    16. Mathew
      December 7, 2012 at

      Although I see your point on the breakdown and lowering of the overall total cap hit to “stars” in the league to make room for lesser players to receive more funds, we are looking at a very low sample size over a short period of time. When hockey revenue plateaus, and it will to some degree, some of these contracts will be taking away potential earnings of future players. If the salary cap remains around $65 or 70 million and Parise and Suter have cap hits far greater than their relative value leaving less room for their teammates. The last years where the players are only earning $1 million a year are not the issues, it is years leading up to that point where they will be earning $3-5 million when the market would value them at a much lower rate. The question the union should asking themselves is how many players are receiving contracts longer than 5 years and why should I worry about them (typically those players receive greater endorsement deals that would mitigate any reduction in salary). For a league built on the hard work of the third and forth line players it amazes me the blind loyalty they are currently showing Fehr, although this blind loyalty is the reason they are considered the fan favorites in the city in which they play. Putting the needs of the team above the needs of themselves.

      • Doogie2K
        December 9, 2012 at

        For a league built on the hard work of the third and forth line players

        I’m pretty sure that’s not what the League’s built on. Unless there’s a statue of Yvan Lambert outside the Montreal Forum that I’m not aware of.

    17. janet pele
      December 7, 2012 at

      Really good article. Thank you.

      Bottom line, no CBA, no season and they all burn a year on those front loaded contracts and lose a year of their quality game years.
      The players are playing with fire and following Fehr. I fear they are going to get burned and have no one to blame but themselves.

      Twinkie anyone

    18. Woo
      December 7, 2012 at

      What you are also forgetting, is the presumed economic model is that they cap will always increase in size long term (infinite growth right?) , so 10 years down the line, not only is Parise’s cap hit smaller then it otherwise would have been under a contract term limit, it is now also worth a proportionally smaller amount of the salary cap, meaning the owners get their “superstars” now, and minimize the pain later.

    19. chris
      December 7, 2012 at

      I call BS.

      The same cap flexibility that leaves more room in the system now, has the potential to strangle contracts in the future with the large cap hits on poor players (be it due to age, or a player fading quicker than he should have).

      The thing is, with all these deals being relatively new, players haven’t felt that cap space tighten up yet. Yes a player could get sent to the minors or retire, but its still a future threat.

      When you have shorter years, people are getting payed what they deserve. Why try and cheat a system that is based on trying to pay people what they are actually worth year by year.

    20. December 7, 2012 at

      I think this article is really well written, but the logic that is used to make the case for the middle class player is the same logic that makes the owners want this provision. Guaranteed contracts make sure that players are paid in full for the term signed regardless of injury or lack of performance. The owners need this provision and will die on the hill because they need to protect themselves from themselves from the Marc Savard/DiPietro, or Wade Redden Scenarios. Owners feel the need to limit the potential liability that these situations cause, which they have every right to request as business owners.

      The middle class will make their money, or be forced to improve their skill level to attract the longer contracts or more dollars. Darwinism will take over, and we as fans will be rewarded with a better product.

    21. Anonymous
      December 7, 2012 at

      You’re also assuming that this “flexibility” in cap space is spent on the Kyle Brodziak type players, which isn’t necessarily the case.

    22. Irish Blues
      December 7, 2012 at

      Tyler, you have it exactly right: shorter contract will cause higher salaries. GM’s aren’t offering guys a choice between 5/25 or 9/63; they’re offering 5/25 or 9/36. The more you limit contract lengths, the more you inevitably force salaries up for better players – which leaves fewer dollars for everyone else.

      Oh sure, someone will say “but if you have 5-year limits, teams can’t have 5 superstars on a team – and that leaves more of those players for the small-market teams.” Unfortunately, those teams still have to pay those guys; they’re going to want the full market rate, and some of those small-market teams still won’t be able to afford to pay it. If the superstar player who couldn’t get $8 million from the Rangers because of cap concerns could go to the Blue Jackets but they could only afford to pay him $5 million, why wouldn’t he take that same $5 million and go to a team he thought had a shot at the Cup? The NBA tried to put in rules to help small-market teams keep their better players, and it hasn’t worked; why would it be any different in the NHL with fewer explicit advantages given to those teams?

      The other problem with contract limits (which you don’t mention) is that it doesn’t fix the real problem of the ultra-long, front-loaded, potentially cap-circumventing contracts: nothing in the prior CBA or in virtually every proposal so far – the NHLPA’s, the NHL’s, or a fan’s – ensures that “$ paid to the player while playing in the NHL” = “$ incurred against the cap.” That’s how the cap system is designed to work, and those contracts are handed out to take advantage of the fact that nothing forces “$ paid = $ incurred.” You fix that, you instantly fix the problem; instead, everyone is treating the symptom (ultra-long, front-loaded contracts) and thinking the problem will magically go away.

      • Triumph
        December 8, 2012 at

        No, the NBA is a much, much different league. Yes, their plan has not worked. But that’s because NBA success is predicated on having at least 2 superstars – if you don’t have that, you’re not likely to win an NBA Championship. Small market teams just don’t have a chance in this regard. But it’s telling that even under the last CBA, Columbus retained Rick Nash and Carolina Eric Staal – however had they been UFA 2 years later, it’s entirely possible that neither would’ve re-signed with the team that they did, given the possibility of enormous front-loaded contracts. Ilya Kovalchuk only had one team offering him more money than did the Atlanta Thrashers – it’s not like when he hit the market he got offers way better than the one his small market home team was offering. However, the existence of the possibility of these front-loaded offers may have swayed his decision to leave instead of stay.

        If Evgeni Malkin has to get a 7 year deal max with no front-loading, it’ll probably be what, 7-70 ish? 7-63? Instead of what he would’ve gotten, probably 14 years at 6M per or something like that. I think the Islanders would have a good shot of retaining John Tavares – they already signed him up for 6 more years. Nashville kept Pekka Rinne and somehow managed to keep Shea Weber – a big market team would’ve been able to keep those two and Ryan Suter, but the scenario you’re describing suggests they would’ve lost all 3.

        I think the NHL recognizes that while the small market teams have yet to be stripped of their stars, front-loaded contracts are a giant threat in this regard.

    23. December 7, 2012 at

      The problem with these long term, front-loaded contracts is retirement – if the player actually sticks around for the entire term, it’s a timing question rather than an absolute advantage.

      For example, assume a one-team league with HRR of $105M. 57% of that is $60M (the player share). That’s the entitlement of the players – if the team spends less, they get a bonus cheque at the end of the year. If the team spends more, they lose part of their salary to escrow.

      Now assume this team has $52.5M in contracts, and Parise at a $7.5M cap hit. That might add up to $60M in cap hit, but the actual cash spent is $64.5M. So the players end up giving back about 7% of their contracts, to get back to $60M. Parise’s deal screws everyone.

      Fast forward to year 12 and assume the revenue stays the same. The team still has $52.5M in contracts, and Parise at $7.5M. He only makes $1M actual salary, so the team only spends $53.5M and the players get a bonus at the end of the year to get their total share up to $60M. Everybody is happy.

      End result is a timing issue – Parise hurts other players at one point, but benefits them at another.

      The real issue is the fact that Parise probably retires rather than playing out those last couple of years, so the team ends up with $60M in actual salary (or worse, is paying some new hotshot a front-loaded deal). The other players never see the benefit of the high-cap, low-dollar years of Parise’s contract.

      • Irish Blues
        December 8, 2012 at

        I largely agree with this, but I’ll caveat one thing mentioned:

        The NHLPA has shown it doesn’t care about limiting escrow. It says it does, but its actions say “if we’re getting $57 of $100 in the end, we don’t want to get paid $57 up front and be done; we’d rather be told we’re going to be paid $66 and immediately have to fork over $11 of it, and then get $2 of that back at the start of the following season.” So, while your point that the players in aggregate get screwed by Parise’s high-salary years via higher escrow is correct, the NHLPA inexplicably prefers to have it that way.

        A great way to actually fix the problem of the players having to pay into escrow would be to lower the cap ceiling. Say the true midpoint was $50 million with the cap at $58 and the floor at $42. Teams are more likely to overspend the midpoint than underspend it; say they average out at $52 million. If you lower the cap ceiling and floor by some amount, you also lower the average spending per team to closer to where the true midpoint is; this not only reduces escrow on the players, but the reduced floor makes it easier for low-revenue teams to reach, which also means they require less revenue sharing to hit it.

        The cap ceiling and floor could be lowered by limiting the amount of revenues from the top-10 teams that are included in the calculation of the cap to say 102.5-105% of the #11 team; this recognizes some of the revenue growth from the high-revenue teams, but puts more weight on revenue growth from the other 20 teams. The players are still getting their percentage based on total HRR (so they don’t lose any money), but the capping of revenues from the top-10 teams corrects to a significant extent the problems of (1) high-revenue teams driving the floor above what low-revenue teams can afford, (2) the resulting need for increased revenue sharing, and (3) a high escrow burden on the players.

        But again, this requires the NHLPA to actually want to avoid escrow. They don’t, they just want to get paid as much as possible and then complain about having to pay escrow. This also requires the NHL to want to fix the problem of low-revenue teams struggling to hit the cap floor; clearly, they’re not interested in that either because their idea (make the HRR split 50/50) guarantees low-revenue teams will again struggle to hit the cap floor at some point down the road.

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