A proposal to prevent Kovalchuk-type contracts.
by Lindbergh 31 on Jul 23, 2010 2:51 PM EDT
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PrintI had this idea while reading Phigment’s fan post titled “Salary Cap Stupidity by All”. He proposed an idea of how to calculate the cap hit and I commented an idea to prevent front loaded contracts like the one Kovalchuk signed Monday which the league rejected. I decided to make my comment into a FanPost because I think this is a good idea for everybody to ponder.
My idea can hopefully cut down down on the front loaded contracts and not have one like Kovalchuk’s. They keep the same rule about the most amount the salary can drop from year to year as is in the current CBA. In addition, I think they should add a rule make the lowest salary in the contract no lower than a certain percentage of the cap hit for that contract. I am proposing a percentage of 33%, meaning that the player’s salary can’t be less than 1/3 of the total cap hit at any point during the contract. I think that this can cut down on league minimums being tacked on the end of the contract for a multiple years when it’s obvious the player will retire.
For a great example of what a contract can look like with my idea, we have to look no farther than Mike Richards’ contract.
A lot of us know the terms, but here they are:
Cap Hit: $5,750,000
Salaries:
2008-2009 $5,400,000
2009-2010 $5,600,000
2010-2011 $6,400,000
2011-2012 $6,600,000
2012-2013 $8,400,000
2013-2014 $7,600,000
2014-2015 $7,000,000
2015-2016 $6,000,000
2016-2017 $5,500,000
2017-2018 $4,500,000
2018-2019 $3,000,000
2019-2020 $3,000,000
So Richards’ lowest salary during the entire contract is in the last 2 years at $3M. HIs cap hit is $5.75M. The lowest salary is 52% of the cap hit, so it’s pretty good and would work. Even if the league has a 50% rule his would be a great example.
Now for an example of a bad contract that this idea will prevent, I will pick Ilya Kovalchuk’s.
Cap Hit: $6,000,000
Salaries:
2010-2011 $6,000,000
2011-2012 $6,000,000
2012-2013 $11,500,000
2013-2014 $11,500,000
2014-2015 $11,500,000
2015-2016 $11,500,000
2016-2017 $11,500,000
2017-2018 $10,500,000
2018-2019 $8,500,000
2019-2020 $6,500,000
2020-2021 $3,500,000
2021-2022 $750,000
2022-2023 $550,000
2023-2024 $550,000
2024-2025 $550,000
2025-2026 $550,000
2026-2027 $550,000
He has a cap hit of $6M and his lowest salary is only 550K (for the last 5 years nonetheless). If we apply the same math to this contract as I did to Richards’, Kovalchuk’s lowest salary is 9.17% of the cap hit, about 1/10 of the cap hit. This is much lower than Richards’, which only goes to about 1/2 of the cap hit, and is lower than my proposed percentage.
If we do this math to a few other contracts we get the following (I just divide the lowest salary year by the cap hit to get the percentage). I went through the teams in Capgeek to find good examples:
Marian Hossa – Cap Hit: $5.275M, Lowest Salary: $1M (last 4 years), percentage 18.9%
Duncan Keith – Cap Hit: $5,538,462, Lowest Salary: $1.5M (last year), percentage: 27.1%
Marc Savard – Cap Hit: $4,007,143, Lowest Salary: $525K (last 2 years), percentage 13.1%
Henrik Zetterberg – Cap Hit: $6,083,333, Lowest Salary $1M (last 2 years), percentage 16.4%
Johan Franzen – Cap Hit: $3,954,545, Lowest Salary $1M (last 2 years), percentage 25.3%
Vincent Lecavalier – Cap Hit: $$7,727,273, Lowest Salary $1M (last year), percentage 12.9%
Roberto Luongo – Cap HIt: $5,333,333, Lowest Salary $1M (last 2 years), percentage 18.75%
Danny Briere – Cap HIt: $6.5M, Lowest Salary $2M (last year), percentage 31.0%
Chris Pronger – Cap Hit: $4,921,429, Lowest Salary $525K (last 2 years), percentage 10.7%
So we can see that a lot of these have pretty low percentages. Briere’s and Keith’s are close to my proposed percentage, and Franzen is the only other one above 25%. But with others you can see some are clear circumventions and wouldn’t work with my idea. Pronger’s shouldn’t count since it’s a 35+ contract and we will be responsible for the cap hit, but then again they can get around that somehow (LTIR like Rathje?).
I think that my idea may cut down on it but hopefully keep everybody happy, both big market teams and small market teams. I do agree that players can be paid less as they get older since their production is expected to drop, but contracts that are like Kovalchuk’s, Hossa’s, Savard's, or Lecavalier’s scream to me that they are going to retire before they get to those low salary years.
If anybody needs me to explain my logic or if I need to clarify anything let me know. If anybody else proposed this idea, sorry if I repeated it. I hope this was a good first FanPost!
This item was written by a member of this community and is not necessarily endorsed by Broad Street Hockey.
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I like this idea a lot. I can’t quite articulate why (I’ll try again in a little bit), but I like it.
Contributor at The Brotherly Game, SBN's Philadelphia Union blog
Awesome I’m glad you do. I just thought of it and thought it would be a good solution and allow for somewhat frontloaded deals and I think can weed out any of those bad ones. Knowing the NHL they may do more like 25%, but even so all the bad ones will be exposed.
I am wondering what our CBA experts will think of this idea and I hope I get more comments.
#1 Flyers Fan in New York
by Lindbergh 31 on Jul 23, 2010 5:17 PM EDT up reply actions
It’s not perfect, but it definitely has potential. I think it would take at least 2 changes to the stipulations to be able to close the loopholes effectively, I’m not sure that there’s 1 perfect answer because they’ll just find a new loophole.
by DragonGirl0583 on Jul 27, 2010 10:58 AM EDT up reply actions
No problem, I wouldn’t have had this idea without you, and I should call Bettman, but I’m sure he won’t go for it because it’s a simple solution to a problem that is growing.
#1 Flyers Fan in New York
by Lindbergh 31 on Jul 24, 2010 7:50 PM EDT up reply actions
Gosh, you know, Gary’s really busy these days… I’m afraid he simply wouldn’t have the time to take the call…
Contributor at The Brotherly Game, SBN's Philadelphia Union blog
by Ben Feldman on Jul 25, 2010 10:30 AM EDT up reply actions
Haha that’s hilarious. But yeah he’s probably too busy to listen to a logical solution to a growing problem. But then again if I see this in the next CBA I’ll think he came here and stole my idea!! We can’t win with the Bettman… at least he got a nice booo from us after game 6!
#1 Flyers Fan in New York
by Lindbergh 31 on Jul 25, 2010 12:41 PM EDT up reply actions
Not sure if this idea would work, but...
This might give rise the 30 year contract, in which the overall salary is only about 3 mil a season, but for 3 decades. Then, instead of having the player retire, they can, like you mentioned, just put him on LTIR. This way, he gets his money, and the team has a really low cap hit that would be in compliance with your rule.
I think another solution to this whole mess is to just set a limit on how long a contract can be, like maybe 10 years. That would just nip the whole thing in the bud.
by philiafan14364 on Jul 26, 2010 12:31 PM EDT reply actions
I don’t think length of contract is the issue. It’s age in final year. What if you want to sign your 22 year old #1 overall draft pick for years? Why say you can only control him until age 32? If you want a length limit, say no contract over 10 years can extend past age 38 or something.
But then you have to worry about how you word it, which I don’t care to figure out right now.
Man-crushin' on Boucher since 1999
Broad Street Hockey - Makin' it look mean since 1967.
by Geoff Detweiler on Jul 26, 2010 4:17 PM EDT up reply actions
Yeah I’m not sure either. I didn’t think about a possible super long contract, but I think a 30 year contract would obviously be rejected. Who played for that long who wasn’t Gordie Howe? But I like your idea of maybe putting an age limit.
#1 Flyers Fan in New York
by Lindbergh 31 on Jul 26, 2010 9:23 PM EDT up reply actions
I dont see a problem with the years limit. I dont think any agent in sports would let a first overall draft pick sign a 10 year contract unless the total salary was HUGE. The reason being its the second contract where athelets make theyre money, not the first. A 10 year contract to a 22 year old just doesnt seem like it would ever actually happen now days.
by philiafan14364 on Jul 27, 2010 1:30 PM EDT up reply actions
An alternate idea – what if there’s a clause stating that if a contract is for more than x years (5 popped into my head, but that’s open for discussion), no year in the contract can have a salary less than double the league minimum salary of the first year the contract is in effect? That would restrict long contracts to a minimum of $1.1m based on the upcoming minimum, which would mitigate the ability to game the system. It wouldn’t remove it entirely, but it would stop the more egregious contracts from being written (including the Pronger and Savard deals from above – the others would be fine because the league minimum was $500k at the time). Maybe have the clause be inapplicable for a 35+, since the cap hit can’t be removed anyway, but I’m just thinking of how to reduce the ability to game the system without reducing the ability to frontload contracts if desired. I’m not worried about 34-year-old guy getting paid $10m for two years and then $5m for a year and $2m for three years (which breaks the proposed system). I am worried about that guy getting $10m for two years, $5m for a year, and $750k for a decade.
Honor is no substitute for victory.
I like the idea of setting a certain amount of years, but double the league minimum is still a low number that could bring down the cap hit significantly.
What if the lowest salary must be at least 33% of the highest salary in the player’s contract? This is similar to Lindbergh’s idea except that it’s a percentage of the highest salary rather than the cap hit.
by Giroux-ling for Cheese on Jul 26, 2010 1:53 PM EDT up reply actions
The reason I didn’t want to go that direction is it discourages the higher amounts early on, which is what the players typically wants. Briere, Timonen, and Pronger all break the 33% rule.
Other 33% breakers I noticed doing a quick run-through:
Savard
Hossa
Keith
Zetterberg
Franzen
Kronwall almost breaks it going the other way (his salary increases from $1.5 to $3.75)
Alfredsson
Lecavalier
Ohlund
Honor is no substitute for victory.
I do like that idea. I thought cap hit so they can go higher and lower. I really liked Richards as a great example since I think it’s a great contract and all. But maybe changing the percentage between the highest and lowest salary to something like 25% or 20% I’m sure would work just as well.
#1 Flyers Fan in New York
by Lindbergh 31 on Jul 26, 2010 9:26 PM EDT up reply actions
Why do we need to combat front-loaded contracts? What exactly is the point of preventing them? No one has presented a convincing reason for their evil being inherent, yet.
It’s not front-loaded contracts, it’s contracts that are signed where the player will almost certainly not play through completion of the contract, because of their age and their salary.
Man-crushin' on Boucher since 1999
Broad Street Hockey - Makin' it look mean since 1967.
by Geoff Detweiler on Jul 26, 2010 4:19 PM EDT up reply actions
How many of the people listed are we honestly concerned about skipping out on the end of their contracts? Do we think Duncan Keith will call in a career before 40? That Marc Savard won’t want his paycheck at 41?
There’s only three reasons completion of contract should matter: either it’s screwing the players, it’s screwing the franchise that signs them, or it’s screwing the league. I’ve heard argument no arguments for the second one, and the arguments I’ve heard on the first make sense, but are not applicable on most of these contracts. (As most of these guys are likely to complete their contracts, they won’t be escrow-fucking the plebs). Regardless, it is clear the NHLPA has no imminent intention of asking for a fix on the CBA; they just appealed on behalf of Kovy.
As for the third, and the one I’ve heard the most: imposing restrictions of spending to create artificial parity is completely arbitrary. I’m not even a free market guy, but this is ridiculous. Why shouldn’t owners be allowed to spend their money however they want? The cap was created the diminish to kind of spending that owners could no longer afford; these restrictions limit the kind of spending the owner CAN afford. The competitive balance is only a factor in so far as it effects the business operations of the league. Why would it impose rules that keep the best talent in the NHL (instead of running to Russia for an immediate payday) and allow the big markets—who float the fiscal tide of the league—to invest how they like? If nothing else, the highest paid players and the most profitable owners like structuring contracts this way, and all other players and owners aspire to be in that subset someday.
If nothing else, the highest paid players and the most profitable owners like structuring contracts this way, and all other players and owners aspire to be in that subset someday.
This is the same reason Joe Sixpack, working for $7/hr votes Republican. Because maybe, just maybe, one day, he can realize the American dream and earn a crap ton of money that he doesn’t want to pay taxes on. So lets vote for the guys who already do make a crap ton of money and don’t want to pay taxes, because surely they’ll help me… wait. Yeah, this argument is shit.
How many of the people listed are we honestly concerned about skipping out on the end of their contracts? Do we think Duncan Keith will call in a career before 40? That Marc Savard won’t want his paycheck at 41?
You think Marc Savard will want to play for (likely) below league minimum for two years at the age of 40 with his concussion history? Not even assuming he’s unable to play, you think a guy will risk his life at 40 for $525,000 a year after earning $5 million a mere two years ago?
You think Ilya Kovalchuk will be playing from age 39 through age 44 for $550,000 per year after turning down a 10 year, $100 million offer?
It’s not about “how many”, it’s about the fact that these guys won’t be fulfilling these contracts. And when it’s blantantly obvious why (the risk/reward for playing past age 40 for league minimum is not in their favor), and further why it’s being done (to benefit the team and player), it’s a problem.
If your main point is that owners should be allowed to spend their money however they want, you would really enjoy a 15 team league. There’s a salary cap because half of the league can’t spend to the cap. Allowing the half of the league that can to not only spend to the cap, but to write contracts that allow them to spend millions of dollars over the cap damages half of the league. If you really want NHL owners to spend their money however they want, you should also be calling for contraction. And get ready for jacked up ticket prices.
Man-crushin' on Boucher since 1999
Broad Street Hockey - Makin' it look mean since 1967.
by Geoff Detweiler on Jul 26, 2010 8:48 PM EDT up reply actions
This is the same reason Joe Sixpack, working for $7/hr votes Republican. Because maybe, just maybe, one day, he can realize the American dream and earn a crap ton of money that he doesn’t want to pay taxes on. So lets vote for the guys who already do make a crap ton of money and don’t want to pay taxes, because surely they’ll help me… wait. Yeah, this argument is shit.
The argument for Joe Sixpack to vote Republican may be shit, but the argument to enforce artificial parity amongst a bunch of entities that are essentially separate, private enterprises is not. We have protections for humans that fall through the cracks, because the loss of a human life is a tragedy. The loss of a business (i.e. an NHL franchise) is not a tragedy. The NHL imposed a salary cap because certain franchises could not afford the prices that the market had driven up. The support that the NHL is already the equivalent of welfare, the kind that is rarely afforded business ventures with a bad model, low profits, and poor management.
[Aside: this is the point where I lost my train of thought. There was more to this, but I had to do actual work, and it ruined my momentum. So, probably more on this later.]
Listen, I think this is a legitimate issue, and the Kovy contract may be a unique in that he can jump ship to Russia, which I highly doubt a lot of NA NHLers have much interest in doing. This will be the highest paying jobs that 99% of hockey players will ever have. Marc Savard, if he feels confident in his health, is not going to leave that contract just because it’s below league minimum. He doesn’t have anywhere else to go; this is the only job he is trained for. At a certain point, I’m willing to take these contracts on good faith. They benefit the player even if they do fulfill the terms of the contract, in that they have the money earlier to invest.
My larger point is that, yes, Kovy’s contract is a problem because he could jump ship early. But messing with the CBA to outlaw these type of contracts is like banning cars because people drive drunk. It isn’t directly addressing the problem; people can still skip out on contracts if they are only making 33% of their first year.
I’m not sure I agree with the premise that they are separate, private enterprises. Such enterprises would be capable of standing or falling on their own regardless of the actions of other entities within their industry – if RIM fails tomorrow, Apple and Motorola won’t be destroyed. If half the teams in the NHL declared bankruptcy, the league would very possibly be destroyed. They are interdependent enterprises that rely on a competition within defined boundaries. What we are arguing, to my thinking, is where one of the boundaries should be.
Honor is no substitute for victory.
But that’s why they instituted the cap. Those franchises are not in danger because the Devils have Kovy at a still-big cap hit.
But the intent of the cap is to encourage parity. It’s in the league’s interest and the teams’ interest to have at least some level of parity, to encourage competition that maintains fan interest. As much as we enjoy blowing out rival teams, it’s the fact that the league is generally competitive that grows the sport as a whole, which helps all the teams’ bottom line. That’s the entire reason behind the salary floor. Efforts to evade that attempt to encourage parity should be discouraged by the league, as they are damaging in the long run. Now, perfect parity’s obviously not possible due to individual levels of talent, skill at negotiating, injuries, luck, et cetera. However, something that is intended to grant an advantage and avoid the intent of the CBA’s guidelines should not be permitted. The previous contracts were skirting the limits of permissibility; the Kovalchuk contract went beyond what the Commissioner’s office was willing to accept. My limits would probably have been reached sooner.
Honor is no substitute for victory.
This is what I’m getting at: Parity wasn’t the fucking point. Whether it may be in any number of parties’ interests is separate, debatable issue from the uncontrollable contracts that were an albatross to NHL payrolls.
The idea of the salary floor being for competition is so that fanbases won’t have to put up with a shit product, if their owners decide to tank a few seasons, sell off valuable parts, and grab a handful of lottery picks. It isn’t necessarily so teams will compete; it’s so those owners can’t job their market, make no money on gate, and get funds from the league to stay afloat.
Finally, I don’t disagree about the Kovy contract being questionable, but it is only a problem in so far as people assume he will retire rather than honor the final years. Changing the nature of the CBA will only alter the way teams can front-load their contracts; it’s an indirect and imperfect way to address the issue of people leaving early, which could continue under any circumstances. People can still skip out on their contracts at the end.
People assume, and they are not exactly going out on a thin branch to do so, that he will not honor/play-out the final years of the deal because…
A. He turned down a 10 year/$100M contract
B. He signed a 17 year/$102M contract
So…are we to assume then that he will play in Jersey for an additional 7 years and only earn $2M more than he would playing 10 years in Atlanta?
I think it would be foolish to ‘assume’ that Kovalchuk will play past maybe 36-37 years old. That is the age in which MOST players are ending their NHL playing career (Oh sure, there are a few freaks that differ from the natural order of things (Chelios,Recchi,Lidstrom, etc), but the AVERAGE player is done by 36-37). That would get about 9 years out of him…Hmmn…the BULK of the MONEY…Look for him to jump ship back to Russia around age 35-36, and Jersey to be off the hook for the remainder of his contract because he signed at age 28 so if he retires, they are scott free…
This contract is a complete mockery of the CBA, people keep bringing up Hossa and Pronger and Luongo…Kovalchuk’s “DUMP” years are almost as much as these other guys whole contract length. Jersey CLEARLY tried to ‘Cheat the Cap’ here and the contract should have been and should remain to be void.
And for the record, I would be just as outraged if it were the Kings, the Devils, the Trashers, or yes…even the Flyers that submitted this nonsense…
Cheers,
Fezzy
http://fezzysworld.blogspot.com
Jesus Saves...He Passes, He Shoots...HE SCORES!
Any projection of when Kovy will play until is an assumption, whether you think he’ll stay in the NHL for two years or twenty. Which is why addressing the pay scale of these contracts is a pretty inefficient way of addressing the problem of people retiring while under a contract.
In the History of the NHL, there have been a total of 33 players that have played in the league after age 40…33 out of how many thousands, just since the 1967 expansion there have been what 25,000(+) players to compete in the NHL? And that is just in the last 43 years…and only 33 players played past age 40.
Can you HONESTLY sit there and tell me that Kovalchuk is going to join that group? I highly doubt it…the list has players like Chelios,Plante,Messier,Brett & Bobby Hull, Gordie Howe, Tim Horton,Gump Worsley, Mark Recchi…
If Kovalchuk, at any time, showed that he had HALF the heart of ANY of the players I just mentioned…I would gladly retract my previous statements and concede that he would most likely play out the full contract…
If bullfrogs had wings, they wouldn’t keep bumping their a$$es on the ground…
Cheers,
Fezzy
http://fezzysworld.blogspot.com
Jesus Saves...He Passes, He Shoots...HE SCORES!
Yeah Geoff is pretty much saying what I was thinking. If these players play through their entire contracts I don’t have a problem with a frontloaded type contract at all. Geoff had some good points about Savard and why he won’t finish his, and that was what I was hoping could be prevented by this idea. Plus the players will be earning more money in their contract towards the end in case they do want to play it out until the end and won’t be making below a league minimum.
#1 Flyers Fan in New York
by Lindbergh 31 on Jul 26, 2010 9:32 PM EDT up reply actions
I think it’s going to requires some broader changes that close more than one of the loopholes to be effective, and make sure the newer loopholes the lawyers can find are smaller. For this post I’m just throwing out random ideas, I haven’t sat down and broken down all the implications to them as if I fully support them; I’m merely trying to get discussion going on having a combination of changes rather than trying to close this loophole with just 1.
So let’s say we take this 33% rule as a start, preventing how much the contract can go up and down so the salary isn’t so drastically tapered toward the end. Now maybe add in a change to the LTIR loophole; so for one idea, maybe you only get 1/2 or 2/3rds of the cap room back if a player over a certain age (lets say 40) goes on LTIR for an entire season. Playing with that idea, if this were to hypothetically happen to the Flyers and Pronger goes on LTIR at 41, we only get 2/3rds (3.25M) of the cap space back, and still have 1.3M of it as a penalty against our cap. That would at least deter a GM from counting on that LTIR exemption for the years when a player is over 40, but it would have no effect on a young guy who took a head shot, because he could still come off the cap completely if he goes on LTIR. In Lou’s case with this contract, if Kovalchuck didn’t play those last 4 years, Lou’s got a 2M cap penalty for all those years because he chose to give out this crazy contract. It would make them a little bit more accountable for these long contracts, but still, it’s far from perfect. Last, we would need to change the retirement loophole for a contract like this, since Kovy signed it before 35, knowing that he could retire (or defect to the KHL) and have it disappear completely. So for one possibility, let’s treat contracts longer than 10 years as if they were 35+ contracts (even if the player isn’t 35), and then if the player retires they still count on the team’s cap.
All random ideas, but I’m just throwing them out there. My point was just that I think our proposals need to close multiple loopholes in order to actually lessen the problem.
by DragonGirl0583 on Jul 27, 2010 11:29 AM EDT reply actions
(correction above, in the hypothetical Pronger on LTIR example, the numbers should be that we gets 3.25M in space to use, but have a 1.6M penalty, not 1.3M)
by DragonGirl0583 on Jul 27, 2010 11:31 AM EDT up reply actions
Yeah you’re right about that. I don’t know enough about the CBA to see things like you do, but I’m glad the reception for this idea is positive.
So your idea about closing the LTIR loophole is great, give the teams a penalty which will hopefully prevent that. And also applying it to all types of contracts will be good too, because I can see the NHL doing that to 35+ contracts but not others, so like you said it should be across the board due to the age of the player. Retirement will also be a good one to close exactly like you say.
I think putting all of these ideas together can prevent some extraordinarily long contracts, keep the players on the team or at least counting their salary so teams can still be responsible for some or all of the cap hit, which is what they’re trying to lower and then get rid of in the first place. Close that where else can they go?
#1 Flyers Fan in New York
by Lindbergh 31 on Jul 27, 2010 12:50 PM EDT up reply actions
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