• Crosby Signs

    by Tyler Dellow • June 28, 2012 • Hockey • 6 Comments

    So Sidney Crosby will be signing a new contract on the weekend worth $104.4MM over twelve years. My favourite reaction came from Norton Sports (presumably from Scott Norton), who had the following exchange with someone named Harry Ouzounian on Twitter:

    @NortonSports: So the ‪#NHL‬ cap keeps going up but ‪#Crosby‬ signs extension for exact same AAV? Is there any thought to players of past and future? JW

    @houzounian: Reports are that Crosby will earn $10m for 9 yrs, then salary slides to $3-4m in final 3 yrs. Good move for club and player.

    @NortonSports: Playing devils advocate – does ‪#Crosby‬ deal help or hurt the other top players in ‪#NHL‬ ???

    @houzounian: Good Q, tough to say as Sid has to be the standard bearer for the top salary in the NHL. Everyone else falls under him.

    @NortonSports: Agree in theory, so does a player owe it to ‪#NHLPA‬ + his peers to “raise the bar” on salaries so future players can make more?

    This is very much a 1995 CBA mindset. Under the current system, with revenues linked with salaries, it’s nuts. As a whole, the NHLPA is better off with Crosby taking, for example, an $8.7MM annual cap hit than they would be if he took a $14MM annual cap hit. That extra $5.3MM a year would have to come from somewhere and the place from which it would come is the pockets of other hockey players.

    Using last year as an example, by my math, the players as a whole were entitled about $1.765 billion in salaries. Assume, for the sake of discussion, that they were entitled to that next year and that the players are going to have to pay money back to the league. The difference between Crosby making $10MM in 2013-14 (which is what he will make in cash) and $14MM (if he had a $14MM cap hit with no tail) is about $2,265 on every $1MM in salary a player makes. Everyone else making more money is obviously good for everyone in the NHLPA except Crosby.

    So the initial point made by the @NortonSports Twitter account is nuts. There’s a secondary point there I think – is Crosby screwing over slightly less talented superstars by taking less than he could? As we’re all aware, the guys who really made out like bandits under this CBA are the guys who are a little further down the salary ladder. With that said, I’ve got some difficulty in believing that Crosby’s contract puts any sort of a ceiling on the income of NHL stars.

    NHL free agency is about supply and demand. If, for example, Evgeni Malkin became a UFA tomorrow, teams considering offers to him would be foolish to view what Crosby makes as a ceiling (assume, for the sake of this discussion, that Crosby is undoubtedly a better player and has no materially different health risk than Malkin). The mystery that NHL GMs are trying to solve when they sign hockey players is how to build a Stanley Cup contender for $X. In that context, whatever Sidney Crosby is being paid is irrelevant, except to the extent that if you pay way more for someone comparable, you have less money to build a supporting cast. Of course, maybe you then don’t sign Marc-Andre Fleury to a $5MM cap hit and the whole thing’s a wash.

    The problem with thinking that Crosby’s contract sets the market is that there isn’t an unlimited supply of Crosbys that a team can buy. If a Malkin costs $12MM annually, a team can’t say “To hell with this, I’m going to buy a Crosby for $8.7MM.” Crosby’s contract doesn’t really set a market for anything. If he took less than the fair market price for his services, well, it’s up to the agent who represents someone else to explain to potential buyers why the value of their guy’s services is more than $8.7MM and that Crosby taking less doesn’t change what those services are worth.

    * * *

    JP of JapersRink had a more insightful comment (I’m combining a few tweets here):

    If Sid signs for an AAV of $9m, Ovi’s deal is even a clearer miscalculation – guys were supposed to be going for more than $9.6m by now. And yeah, maybe there’s a discount on Sid due to the obvious risk. Guess we’ll see w/ Malkin next year. But Ovi deal was supposed to save $. The Ovi deal was supposed to be a long-term bargain (or else why do it?), assuming that salaries would be stratospheric by nowish. Are they? And, in the interest of disclosure, I liked the deal at the time. But then again, if I knew anything about the game, I’d be in it.

    I wasn’t as big on the deal as JP was at the time because of how common it is for elite players at a young age not to be elite players when they get older. That’s a pretty good point though. We’re four years beyond the date that deal was signed now and it’s still the top salary cap hit in the NHL. Washington’s carrying a lot of risk (which they must be horrified might be coming to pass after the past few years) and isn’t really getting any benefit in terms of salaries for superstars having become more expensive. I’ve previously mentioned, in passing, that I was surprised by the fact that the star salaries have been stagnant under this CBA. Looks like I’m not the only one.

    About Tyler Dellow

    6 Responses to Crosby Signs

    1. Triumph
      June 28, 2012 at

      Both you and JP used the words ‘stagnant salary’ to describe what’s happened with top NHLers, but that’s just not accurate. Star salaries have continued to climb. It’s just that star cap hits have not. Cut off all the fake years/cap hit deflating years and these contracts look pretty much the way you’d expect star salaries to look – if you go to Crosby, Kovalchuk, B. Richards, and so forth. It’s just that players have decided to mitigate risk and to help out their teams (as well as get a head start on collecting lots and lots of money) by signing front-loaded deals.

    2. skinny65
      June 28, 2012 at

      Really liked the article. I went back and read your article on ovi and it really magnified the point.
      Just for my own curiosity, who actually ranked higher then Gretzky in those charts? On 1 chart he was 2nd and another had him 3rd, but the people ranked above weren’t on there (my mistake, saw that Sakic was 2nd when Gretzky was 3rd). I’d love to see the numbers of whoever beat him.
      Keep up the great work.

    3. TrentonL
      June 29, 2012 at

      Hey Tyler, where did you pull the data from for your analysis on young stars not being elite as they age?

    4. Tach
      June 29, 2012 at

      It never ceases to amaze me that people who get paid to understand the NHL (this would seem to apply to some selection of media, agents and occassionally management) have such a shallow and uninformed view of how the NHL salary system works. Mind boggling, truly.

    5. TrentonL
      June 29, 2012 at

      Your links got me thinking about Ovechkins drop off in points. Look a little deeper and you can see it is related to zone starts and teammates.

      http://west.thecheckingline.com/blog/trenton-latos/edmonton-oilers/ovechkins-drop-points

      • Ralph
        June 30, 2012 at

        I think that article makes out what I see as correlations into causation. I do think Ovechkin has gotten worse, but I’ve been re-watching some games and I also suspect a lot of it has to do with the Caps simply not being as good a possession team. His SFON/60 was regularly around 32, and last season it was only a little over 26, a 20% decline. His individual pts% has also dropped, not sure why there.

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