For reasons that I don’t understand, one of the crosses borne by those who cheer for the Oilers is that deals tend to be announced days to hours before they occur. Sometimes, this backfires in that no deal is made and a bunch of people look foolish. It appears to have happened again with Dany Heatley. People who look foolish? The Oilers, the Senators and Bob McKenzie.
Why do the Oilers and Senators look foolish? Well, from MacKenzie’s story:
A lot of confusion has existed because there is a $4 million bonus payment due to Heatley on July 1. It was the understanding of many involved, including the Senators and Oilers, that once the clock struck midnight and turned over to July 1, the Sens would be on the hook for the $4 million bonus payment, which may have been a serious impediment to getting a deal done after midnight.
But as it turns out, the NHL says as long as a Heatley trade is concluded before midnight eastern tomorrow night, the bonus payment allocation can be transferred to the new team.
So, in effect, the Senators have another 24 hours to find a suitable deal that Heatley will approve and NOT be on the hook for his $4 million signing bonus.
I was wondering this exact thing - I’ve looked through the CBA and couldn’t see a time for payment (as opposed to a date) specified anywhere. Moreover, it just seems bizarre to me that such a term would exist.
What amazes me though is that the Oilers and Senators didn’t know this. It’s particularly amusing given the recent flap over Gilbert Brule and waiver eligibility, where we treated to a member of the local press corps basically acknowledging that what he was told didn’t seem to make a lot of sense and seemingly contradicted the CBA but that Rick Olczyk must know what he’s talking about because he has the job. I’m reluctant to criticize his knowledge of the CBA when I’m on the outside and don’t really have the opportunity to evaluate what he’s doing but, assuming that MacKenzie is right and has sources to back up the assertion that the Sens and Oilers were taken by surprise, that doesn’t reflect well on the Oilers.
The other guy who looks kind of bad here is Bob MacKenzie. MacKenzie changed his copy considerably tonight. He initially reported that the deal was dead at midnight and that the Sens were now on the hook for the $4MM payment. He then edited his story, with no mention of the previous version, which is a bit shady - blogging standards are to acknowledge the error.
The really interesting thing though is that I don’t think Ottawa necessarily has to pay Heatley the $4MM at some point today. The CBA specifically deals with what happens when a team defaults on a contract. It provides:
11.15 Default. If a Club defaults in the payment of any compensation to the Player provided for in his SPC or fails to perform any other obligation under his SPC, the Player may, by notice in writing to the Club and to the League and the NHLPA, specify the nature of any and all defaults and thereafter:
(a) If the Club fails to remedy the default within fourteen (14) days from receipt of such notice, except as hereinafter provided in subsections (b), (c) and (d) of this Section 11.15, the SPC shall be terminated, and, upon the date of such termination, all obligations of both parties shall cease, except the obligation of the Club to pay the Player’s compensation to that date…
There is, I think, some room here for the Senators to simply agree with Heatley that they will default on payment of his bonus and that he’ll hold off on grieving that default. Then, once he’s traded, he can file his grievance and his new team can cure the default. I don’t know whether or not that’s permissible or the specific standard that the league applies but, assuming that you’re allowed to do anything that you’re not specifically prevented from doing by the CBA, I’m not sure how that could be stopped. That might be an interesting solution to this problem and one that’s potentially within the best interests of all parties - the market for Heatley might get a little hotter once it is discovered that the Sedins, Marian Gaborik and Martin Havlat will not be joining 8 teams each.
I’m not a law-talkin’-guy, so I’ll certainly defer to your wisdom here… But wouldn’t the team that defaulted on the payment be on the hook, even if he was traded before the default was remedied? Wouldn’t trading the default be tantamount to trading cash (which the CBA forbids)?
The problem that I see with that is that the remedy available to the player is termination of the contract. If I was the team who had acquired the contract, I wouldn’t want my contract to turn on whether or not the Sens have the scratch to remedy the situation. It is, I think, a grey area and, if the rule governing interpretation is as I guess it would be, I think that there’s room to maneouvre there. At the very least, it’s worth a phone call to the NHL if I’m the Senators or a suitor to find out what their position on the issue is.
I’ll tell you the really interesting thing: what if the Oilers just decided not to pay somebody? The problem with it is that it’s a nuclear option - you get to use it once and there’s mutually assured destruction. As I read that though, the contract just terminates, no buyout, no nothing.
That’s really interesting. The original contract must still count against the cap in the case of refusal to pay, I’d guess, otherwise the buyout rules wouldn’t need to be there. Otherwise you could just be a complete dick and refuse to pay someone to kick them to the curb.
It doesn’t matter when the Senators and/or Heatley’s deadline is.
The Oilers’ deadline had to be last night, because free agency begins tomorrow, and the Oilers can’t wait around. They have to move on to plan B, and Tambellini and Katz are fools for not pointing this out to Heatley and JP Barry.
Is there any evidence that the Oilers or the Sens didn’t know that the deadline for the $4 million is acutally today?
I assume a signing bonus on paid on the first date (not the first minute or second) of the season they are signed for: July 1, 2009. As no time is specified, the team could argue (and the league agreed) that they have until the last minute of that day to pay the signing bonus.
Team 1260 speculating that maybe the Sens did know, but used the general belief that the deadline was 11:59 last night as a negotiating tactic. Pure speculation on their part. Millard says on Twitter that “ott-edm trade talks never got to the point of heatley making the call.” Whatever that means…
Also, I don’t know since I’m not a lawyer, but is it possible that the contract and not the CBA would specifiy the time of payment? If that is possible, then that could be used to explain why the Oilers believed that last night was the deadline–if indeed they did believe that.
Good question. What the heck is Millard trying to say here? He needs to explain . . .
the SPC shall be terminated, and, upon the date of such termination, all obligations of both parties shall cease, except the obligation of the Club to pay the Player’s compensation to that date…,
Doesn’t that say that the contract will be terminated, with no one having obligation to the other, except for the obligation to pay the player’s wages up to the date in which that contract is terminated? So basically, its a way to end the contract without future obligation, right? In this case, the Sens could default on the bonus payment to Heater, and then 14 days later, if they don’t fix it, the contract can be terminated. Ottawa is on the hook for the 4M, but they’re rid of him and more than that, they’re rid of the contract.
It may not be as applicable here, because OTT wants a return for Heater, but could that not be used as a way out of bad contracts?
Now I’m no expert on these things, but isn’t there more than one agreement in place. Sure the TEAM can default on a contract with a PLAYER, but then the LEAGUE gets involved (I’m assuming there’s a contract in place between LEAGUE and TEAM - maybe the LEAGUE takes ownership of the TEAM). So long as the penalty exceeds the benefit you wont see any teams defaulting.
Therefor that clause would only be used when the team is actually unable to pay the salary (and is going into bankruptcy for example).
I’m making all of this as I go. It’s more of a question than a statement of fact.