Tuesday, March 13, 2012

The State Of Contracts In The NHL Today, Part 1

It's been ripping good fun watching teams ink their best players for periods of time that I hadn't even considered possible. By the time Ilya Kovalchuk's contract ends, people will be riding on Hoverboards, but not for leisure, as they will be using them in the fight against the deadly invasion of space aliens. Remember that you read this on Driving Play first; perhaps that will be your last thought as you enter the terrible tentacled maw of an interstellar conqueror.

I seem to have gotten off track here, but it's going to be fascinating watching teams maneuver with these contracts on board over the next 5-8 years. Some of them are time bombs, waiting to explode in a team's face. We can't say which. Others will provide the foundation for a Stanley Cup championship. And while I expect this trend to be reversed under the next CBA - even as many teams have one of these contracts on their books, they no doubt realize the enormous advantage conveyed upon teams that have multiple ultra-long-term contracts, and are going to work to remove the possibility of such a contract under the next CBA - the cat is out of the bag. Let's look at when these big contracts end.

2018: 9
2019: 4
2020: 6
2021: 5
2022: 2
2023: 1
2024: 0
2025: 1

That's a total of 28 contracts that end more than 6 years from now, and that number will no doubt increase when Ryan Suter, Zach Parise, and Shea Weber are re-signed this offseason, among others. 17 NHL teams have a contract that ends in 2018 or later.

Most of these contracts are at 'discount prices.' For instance, Marian Hossa and Ilya Kovalchuk are signed to deals that have a 5.2M and 6.6M cap hit, respectively, and that end roughly when your life's course will be fully determined and there's no extricating yourself from your fate. Their cap hits on contracts both signed after the end of the lockout, when the salary cap was 39M? 6M and 6.3M, respectively. Their cap hits have barely moved even as the salary cap itself has nearly doubled, and this was for players who were RFA when they signed their post-lockout deals, and UFA when they signed their lifetime contracts.

I decided to look at the top 20 largest cap hits in the league in 2008-09 and the biggest cap hits in the league in 2011-12. The summer of 2008 was when teams seemingly decided that the cap would never go anything but outrageously upwards - the economy was robust, NHL fans had forgotten about the lockout, and Glen Sather knew that the surge of Wade Redden jersey purchases would pay for that contract by themselves.

YearTotal Top 20 SalarySalary Cap% Of Total Cap Space

The 'Total Top 20 Salary' column refers to the summed amount of the top 20 biggest cap hits in the league. As we can see, it's barely moved despite the fact that the cap has grown by more than $7M. The '% Of Total Cap Space' refers to the top 20 salaries' total being divided by the salary cap amount times 30, for the 30 teams in the NHL. We can see that the percentage has gone down by nearly a full percent. That doesn't sound like very much, but we're talking about nearly 1% of 1.7 billion dollars. That means that cap-hit wise, the top 20 contracts are down by nearly an average of $766K relative to the cap. In total dollars, as we can see, things have remained relatively stagnant.

The deals that are super-long term don't really fit into this mold either, as only 5 contracts in the current top 20 biggest cap hits end in 2018 or after. That means these players whose big contracts end earlier will almost certainly face pressure to sign for a lower cap hit - odds are they will be out of their prime when their current deal ends.

In Part 2, I will examine RFA forwards to see if this trend also holds true among lower paid players, and in Part 3, I will give some reasons why the NHL is evolving in this way.

1 comment:

  1. How have the salaries changed if you make reasonable assumptions about the terms based on the deals? Kovalchuk has 3 years in a row of $1M starting the 11th year of his deal, so his salary is effectively $100M over 10 years if you ignore present-value type complications with getting part of it after you're done. That's about a 33% raise, not bad.