Tuesday, August 21, 2012

Why It's Inevitable That Your Favorite Player Ends Up An Islander, Coyote, Or Panther

I've held off on writing about the ongoing CBA negotiations, largely because all we have are first offers.  Yes, the owners' offer is ridiculous.  Yes, the players' offer gives a framework to help alleviate the issues that exist between rich and poor NHL teams by offering significant revenue sharing.  No, the owners probably won't like those aspects of it, since the salary cap exists largely as a profit generator for big-market teams rather than the cost control for mid-market teams that it was promised to be.

The question I've had throughout is how can the smaller market owners go with the same system we've got? I recognize that the NHL's first offer is a first offer, and so they asked basically to roll back salaries by a large percentage, as well as roll back time to around 1972.  These rollbacks would no doubt help out small market teams even if their paltry revenues aren't augmented in any way.  But shave back the revenue percentage and change nothing else significantly about the NHL's salary cap or revenue structure, and it seems like we're right back here in seven years, with big market teams still raking in profits while the mid-market teams break even (hopefully) and the smaller markets do everything in their power to avoid paying the full amount mandated by the salary floor.  How do small markets typically avoid paying the full amount of the salary floor?

A:  Contracts with lots of bonuses

I'm curious to see whether performance bonuses remain in the CBA for players 35+ - I imagine they will.  The Islanders gave Jay Pandolfo $800,000 worth of performance bonuses - he promptly scored 1 goal in 62 games, so I can't imagine he managed to hit them.

This also applies to young players on entry-level contracts - the Islanders also left Nino Niederreiter and his $1.925M in unreachable performance bonuses on the roster while he scored 1 goal in 55 games.  Still, it's tough to find players who are eligible for bonuses - only players on ELCs, 35+ players, or players who've missed an entire season to injury can get them.

B:  Contracts whose cap hits are greater than their salaries

Here's the real payoff for a small market team.  Let's assume that the owners to a large degree win this round of negotiations: the salary cap comes down, the salary floor stays in place, the players' cut of the revenue is heavily axed, and maximum contract limits are established.  This means an end to deals where a player gets way less than his actual market value as a tradeoff for a long contract that's significantly front-loaded.  We'll begin seeing contracts that are closer to the NHL maximum as teams are now unable to throw a bunch of cheap years on the back end to lower the cap.  This means that the salary cap will become a going concern for half the league again, like it was back in 2010 - teams will actually have to consider not keeping all the players they want to keep.  What players will be the first ones to go if teams do have a cap crunch several years down the road?  Why, the very players who were signed to very long deals for 'cheap' cap hits.  These players will be near the ends of their careers and likely won't be worth their cap hits any longer.  Plus, if the salary floor doesn't move or go away, we'll still see teams trying their hardest to hit it as inexpensively as possible.  So, if this is such a great solution to the cap floor problem, when will we start to see these players move?

To answer that question, I decided to look at all the players who have very long contracts (7+ years), the point at which their salary becomes less than their cap hit, and the clauses they have in their contract. I excluded players such as Miikka Kiprusoff and Patrik Elias who are still providing solid value for their teams even as their salaries have dipped below what I've termed the inflection point - the point at which these players' salaries dip below their cap hit. I've also noted if they have a No Trade or No Movement Clause in their contract. All numbers and clauses courtesy of capgeek.com.

PlayerInflection YearYrs LeftContract Clauses
Scott Gomez2012-132Limited NTC
Ryan Malone2012-133NMC/Limited NTC
Daniel Briere2013-142NMC
Zdeno Chara2016-171*NMC
Mike Richards2016-174N/A
Johan Franzen2016-174N/A
Ilya Bryzgalov2016-174NMC
Marian Hossa2016-175N/A
Niklas Kronwall2017-182Limited NTC
Vincent Lecavalier2017-183NMC
Brad Richards2017-183NMC
Christian Ehrhoff2017-184NMC
Duncan Keith2017-186NMC
Henrik Zetterberg2018-193N/A
Roberto Luongo2018-194Limited NTC
Jeff Carter2018-194N/A
Shea Weber2018-198N/A
Ilya Kovalchuk2019-206NTC
Jonathan Quick2020-213N/A
Zach Parise2021-224NMC
Ryan Suter2021-224NMC
Sidney Crosby2022-233NMC

* - Zdeno Chara was signed under the new rules, the final year of his contract is equal to its cap hit because it occurs after he is 40.

Not all of these players are going to play all of these years. In fact, I expect several of them to not play any years once their salary has dipped below the cap hit. Still, in the summer of 2016, we're looking at Hossa and Franzen each dipping below the inflection point, each without any sort of no-trade or no-movement clause, and Franzen will be 36, Hossa 37. If either guy has fallen well below their performance now, I expect their clubs will look at dealing them, and I have to imagine teams near the salary floor will be eager to buy.  What low-budget team wouldn't want a formerly great player on a cheap contract with a high cap hit and no no-trade clause to deal with?  And yeah, nearly half of these players have NMCs, but all NMCs really prevent are a player being placed on waivers.  It's difficult for a player to keep his team from trading him if he knows that they really want him out.

Are these contracts a panacea for what ills the NHL have-nots? No, not by a long shot.  It's unclear just how many of these players will actually finish out their contracts, or will even finish out the beginning of their salary declines.  Furthermore, the cap savings in some of these deals varies greatly - for some it's only a few hundred thousand dollars in the first few years.  Regardless of how this CBA turns out, I expect we'll see a fair number of great players ending their careers wearing a funny-looking uniform, a Band-Aid on a long-term problem.