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Where Do You Draw The Line?

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The same contracts are being trotted out by the mainstream media and blog community as examples of salary cap circumvention - basically, there’s the sketchy-factor in the deals of Zetterberg, Franzen, Hossa and yes, even Pronger.  There’s Marc Savard and to a lesser extent, Mikka Kiprusoff as well.

Those previous deals, combined with the rejection of Ilya Kovalchuk’s agreement with the New Jersey Devils has brought up two 100% valid arguments:

Yay, let it pass!

The Contract is Legit

In short form, if you let the aforementioned contracts slide by, you have to let this one go too.  It’s the exact same concept.  There’s next to zero footing for the NHL to stand on based on the precedent they’ve set for themselves, so sorry guys, but you’ll have to wait until the upcoming CBA negotiations to close the loophole we can only assume you just want to just go. a-vay.

You Have To Draw The Line Somewhere

Basically, you have to clot the wound eventually, or you’ll die.  These deals have bled toward ridiculous since the Kiprusoff camp made the cut, and the other deals were on the edge of feasible.  You could talk yourself into maybe there could possibly be a slight chance that the earlier deals would be played out.

YOU SHALL NOT PASS! (Hey, a double entendre for Kovy)

They won’t be, of course - the league was getting full-on screwed, but agents and General Managers fed the NHL Skittles and convinced them that they were 99% effective against pregnancy.  Now here they are dealing with this absolute abortion of a contract, realizing they probably shouldn’t have let somewhat dishonest men push them as far as they would go in the first place. 

While the others were ridiculous as all get-out too, you simply couldn’t muster any “maybe’s” about the Kovalchuk deal - it was written to circumvent a rule.  So the league has to stand up for itself somewhere, right?

(Is there a Webby for “most muddled analogies”?  I gotta be up for that one, right?)

*****

Admit it, those jersey's are SICK.

I think even supporters of camp “what’s good for the goose is good for the gander” (group A) would agree that there has to be a line somewhere.  I mean, if Marc Recchi signed a fourteen-year deal tomorrow, both groups would be like “oooohhhkay, that’s just a tad TOO silly“.  If John Tavares signed a 30-year deal with the last ten years at league minimum, there’s no way any clear-thinking fan could tolerate it. 

So to the “The Contract is Legit” group: you agree, there is a line somewhere, right?  Or do I need to make a stupid 100 year contract example?

There is a line.

So then!  The league decided it had been crossed.  At least they’re paying attention.

I agree with the Wyshynski’s of the world coming out guns-a-blazing about other players contracts that do the “nah, I’m not really gunna play those years” dip.  They’re shady, they were a touch “too creative” at the time, and they were designed to circumvent the cap. 

But they just weren’t so insulting.

The first contract that should've been denied was his.

And I don’t think it goes much beyond that.  Lamoriello, as great as he’s been, just happened to overestimate how far he could push things. 

It’s fun that there’s some news to follow going forward, and will be interesting to see what happens next.  But the league was put in a tough position here, and I support them not getting rolled over for the umpteenth time, since they were already pretty much pancake-flat from the previous bulldozer-crushings they permitted.

Devils fans can complain that the alarm only went off when they broke in, but “other people already robbed this place” isn’t the best defense for your actions.

*****

I’m gonna leave it there for now, because I have a feeling there’ll be plenty of comment-discussion.  Great job yesterday, some readers had some nice insight on the deal.

If you REALLY love this topic and want some more information and discussion, I’ll be participating in a live chat with the boys over at Yahoo! today, so stop on by:

Puck Daddy Live Chat

Comments

43 Responses to “Where Do You Draw The Line?”
  1. Alex O says:

    Here is the thing. If you look at the contract structure compared to the others the Devils lowered the first 2 years of the contract because the rules say that the contract cannot go down on any year by more than the average salary of the first 2 years. (then it spikes up to 11.5) if you still disagree they were line steppers, He wil earn 95 million of the 102 in the first 10 years of the contract. And since we all believe he is so not interested in $ we buy he will play past the 10 year mark.

  2. jtbourne says:

    Yeah, good point – “Hmm, only six mill. the first couple years huh, what’s with tha-ohhhhhhhh”.

  3. mclea says:

    Isn’t Ilya’s contract differentiated by the fact it commits him to earn a salary, over a period of 6 years, that almost certainly will be less than the salary minimum?

    The salary floor is $500K this year. What do you imagine it will be in 17 years from now? He has committed to a yearly salary over a period of 6 years that won’t be permitted by the NHL. If this isn’t an abusive contract, then I don’t know what is.

    As well, Hossa’s agent was on the Team 1260 this morning and he said he ran the contract by the NHL before submitted it for approval. He went on to say how he justified the yearly salaries through comparisons to contracts granted to players of a similar age for each year of the contract (like Recchi’s 40 something contract). So it appears the agents were aware that there was a line where these cynical contracts would get nuked.

  4. Alex O says:

    Lou basically tea bagged the CBA with this contract, the others just crapped on it.

  5. mclea says:

    Kovalchuk’s contract is also differentiated by the fact that you can carve off the last 6 years of the contract, and nothing materially changes. 97% of the total contract is earned by the end of the 11th year. The extra 6 years do not serve any purpose other than to deflate the cap hit.

  6. Alex O says:

    Oh sorry on my first point its by half of the average salary of the first 2 years. 3 million vs a possible 5 1/2 million lowering per year which one offers him a way to get his $ up front the quickest???

  7. Casey says:

    I think it’s important to look at how much more extreme this contract is than Hossa’s. Are they qualitatively the exact same thing? Sure; however, the degree to which the Kovalchuk contract “cheats” the system is much more extreme. When Hossa is making his yearly maximum ($7.9m) he’ll be pulling in $2.625m more than his cap hit ($5.275m). Kovalchuk maxes out at $11.5m, which is $5.5m more than his cap hit ($6m). That discrepancy is more than double the gap on Hossa’s contract.

    Sure, it’s a slippery-slope argument (it’s hard to argue otherwise) but I don’t think the contracts are as analogous as a lot of people are saying.

  8. jtbourne says:

    Ooo, I’m using that in today’s Puck Daddy chat. Great point.

  9. Kennedy says:

    I think we should think about this like speeding. Generally you are safe at 10 miles over the speed limit. At 11, you get pulled over. You are both speeding but the enforcement is different. The wings, flyers, and hawks were doing 8 miles over the limit. Lou decided to drive 70 in a school zone.

  10. Kennedy says:

    Is the issue here really the length of the contract? What if a 34 year old signed a 3 year deal.

    2010-11 – $13MM
    2011-12 – $1MM
    2012-13 – $1MM

    Average cap hit, $5 million. Would this deal be ok?

  11. Sandwiches1123 says:

    There is only one thing I don’t agree with JB on this topic: Lamoriello. I think he went into this debacle with his eyes open wider than anyone else in the process. Think about this a different way: You’ve committed $98.5 million to a guy for the next 11 years. The last 6 years of the contract level it out to be around $6 million per year. Could Kovalchuk play for another 11 years? probably yes. That would make him 38ish when he retires, which is probably the age Kovalchuk and his agent were actually thinking about when they signed this deal. Kovalchuk was reportedly offered a few deals including one from NYI for 10 years for $100 million. If you consider the NJ deal, its pretty much the same in terms of projected playing time and funds committed to the player. I think Lamoriello looked at this deal and said, “I really disagree with this deal in principle. What would be the best way of getting the league to stop this deal? I know, I’ll come out against these types of deals”. Lamoriello is not a dumb man, don’t forget that. Otherwise, I’m glad the NHL stepped in. I’ve read on twitter that the next CBA will take an average of the top 5 years of the contract and will make that the cap hit, which would be interesting: How could it apply to the contracts already signed like the Hossa, Pronger, Kipper, and potentially Kovalchuk deals?

    I’d be more interested in the NHL simply taking its medicine for the time being and introducing a 6 year max for resigning and 5 year max for signing from outside the team. There should also be max $ associated with the 6 and 5 year term…wait…just like basketball.

  12. jason says:

    Kennedy, I think what the Wings did was actually worse. The Devils, regardless of the absurdity of the contract, are just overpaying for a star in a manner that can still backfire spectacularly (They’re stuck with him until 2017).

    The Wings had two key players that they couldn’t afford to keep, and signed them both to long and fictitious contracts. Is the salary cap there to keep teams from over-spending on one star player, or to prevent dynastic teams from stockpiling highly paid guys with whom they’ve been very successful? If the whole point of a salary cap is parity, then it’s gotta be the second. Of course, the NHL has had no problem making arbitrary decisions to the detriment of the Devils in the past (I’m looking at you, trapezoid).

    I just posted something similar over at Puck Daddy, but who knows what the signal-to-noise ratio is over there…

  13. jtbourne says:

    Kennedy – I heart the speeding analogy. Have to draw the line somewhere, even when letting some stuff go. 12 over? Oops, too fast bud.

  14. Marc says:

    I’m interested in what the everyone’s reaction to the contract Kennedy proposed there; seems just as illegitimate, I mean hell you could take his example of getting 13million$ the first year and then make the league min the next two to reduce the average even further.

  15. bluliner says:

    This is the problem with convoluted laws/rules; they’re too complex for the people who wrote them and eventually get circumvented. All the ‘masterminds’ cannot possibly forecast the unintended consequences no matter fancy their magic 8-ball is.

    So, to save face, the masterminds essentially pick winners & losers of their screw-up. Chicago wins (a Cup!) and NJ loses.

    This happens is every sport. The best examples would be the rules in motor racing & how the engineers break them while being legal. Happens every year. So they make more rules…and more rules get bent.

    This is human nature. Many of us are intelligent creatures…while some of us (Sean Avery) are just creatures looking for the next leg to hump.

    Best way to deal with this now and going forward is to liberate the system. Unions want their members to make as much as possible. Fans want to watch/follow the best talent possible. Owners, should, want to field the best team possible – a capitalistic model would fix most problems. This also means some teams will go bye-bye or find new homes in places they do not say ‘ice’ in front of the word ‘hockey’.

    Teams, like anything else, should be allowed to flourish and to fail. Instead; it’s the players and the on-ice product that is taking a hit. Players getting waived, bought-out, or shipped to Siberia b/c of the ‘cap’ is not what the masterminds envisioned. Players can have their careers ruined b/c of this draconian regulation.

    Why should teams like Toronto, Montreal, Detroit, Chicago, and Pitt be forced into a budget despite selling out every night, putting on a good show, and running a good business -when- you have teams in Atlanta, Florida, (gulp) Arizona, etc. who cannot give tickets away, have shit teams, and generally hemorrhage cash?

    Are they, dare I say, too big to fail? I think Americans have had enough with that.

    Let the GMs fight just like the players do. If a team goes away…so be it.

  16. Kennedy says:

    I think this all comes down to optics. The Kovy deal just looks worse. It feels worse. And it embarassed the NHL. The NHL does not like to be embarassed – see Avery, Steve – so they reacted.

  17. jtbourne says:

    Hey Kennedy, I just googled Steve Avery – did you mean the rapist or the baseball player? That’s all I could dig up. :)

  18. minnesotagirl71 says:

    I don’t think anyone has mentioned this yet, and maybe nobody but me cares…but while these types of contracts might be “legal” they certainly don’t seem ethical.

    Things like this change my view of a player. I can’t cheer for people who may be fantastic players if they have shown evidence of being poor human beings.

  19. Kennedy says:

    I think teams like Toronto and Montreal LOVE the cap. LOVE IT. They sell out, tell their fans we tried, we spend to the limit, and make tons of money – everyone is happy. (Except the fans in Toronto.)

    The people who should be pissed are the players. I don’t get how the NHLPA hasn’t taken the NHL to court over the refusal to give Balsillie a team. You take team in Phoenix losing $30 million a year and move it to Hamilton, where it now makes money and has much larger revenues. More revenue = more money for the players = higher salary cap = everyone wins – except Atlanta, Nashville, Florida, Tampa Bay and Carolina.

  20. Kennedy says:

    Mea Culpa – Sean Avery. He just always looked like a Steve to me.

  21. KarenfromRochester says:

    The NHLPA is so messed up they couldn’t figure out how to get out of a paper bag, much less have the wherewithal to figure out they are losing money in Phoenix!

  22. Christianson says:

    You know what this ultimately reminds me of justin? NHL Dynasty mode for like NHL 96. Back when you tried to do a trade for Gretzky with some gongshow minor leaguer. It said the trade has been denied but you could still overturn it. It might not be the best explanation of what im going for here but when it comes down it, its exactly like that. It’s cheating and we all know it but teams are finding a way to build dynastys because of the loop holes. Just imagine if blackhawks didnt need to make roster cuts this year. Can you say hello repeat 1x 2x 3x 4x?

  23. Christianson says:

    That would be my version of your incoherent rambling LOL.

  24. Jason says:

    Kennedy, the contract you propose would be illegal under the current CBA. As I understand it, I believe the maximum year-to-year salary drop is limited to 1/2 of the average of the first two years. This means you can’t take the salary cut of $12M from year one to year two.

  25. JIllian says:

    I am right there with Minnesottagirl!

  26. SDC says:

    @Christianson not sure if you’re for or against dynasty teams, but dude, I’d love to see another one. The Oilers days, the Isles days, and of course the Habs waaaaay back…. those teams built some major permanent cred by dominating for a good chunk of time. You don’t even have to be a fan of those teams to admit stringing that number of titles together is impressive. If teams have a chance to stack themselves with a bunch of dynamos through a CBA loophole, then WHY THE HECK WOULDN’T THEY? What if former Kings owner Bruce McNall have a chance to weasel Lemieux out of Pittsburgh and pair him with Gretzky in the 90′s due to some unforseen CBA loophole? You know he would’ve done it in a heartbeat, and they would probably have been successful for a long time. That’s an extreme case of course, but even with your example of Chicago picking up their young studs early at having them all peak together at the right time — I mean, again, if an owner has the foresight and opportunity to land guys like that, they’d be nuts not to. The game (and their employment) is about winning, so if there’s an exploitable loophole, build those dynasties and win those Cups!

  27. Pat says:

    Once again solid tag

  28. Rob says:

    In the next CBA maybe they can make a provision that would penalize a player for not playing out the length of their contract (obviously it would negate this penalty if an injury resulted). If I can’t get out of my cellphone contract, why should a player be able to screw the system like this?

    Also, I think “Sandwiches1123″ was on to something – maybe Lou though Kovi was asking for too much so he constructed this monster of a contract that he thought would get rejected. Now he has a reason for signing him for less.

  29. James says:

    The Kovalchuk & Hossa deals are close, but not the same.

    Hossa has 4 “cap reducing” years. Kovy has 6.

    Hossa will be 42 at the end of the deal. Kovy will be 44.

    The salary over the last 4 years of the Hossa deal is $1M per. Kovy has 1 year @$750k and 5 years at the minimum of $550k.

    The extra years on Hossa’s deal reduces the cap hit by roughly $2.2M. The extra years on the Kovy deal reduce it by roughly $2.9M.

    Zetterberg – 40yo at the end, 2 years @ $1M per, and a cap hit reduction of a little over $1M.

    Franzen – 40yo at the end, last 3 yrs: $2M, $1M, $1M, and a cap hit reduction of around $1M depending if you take off the last 2 or 3 years.

    The Kovalchuk deal took these other deals as a starting point and then went overboard with regards to overall length, how many “add on” years there were, and how low the salaries were in those “add on” years.

    Another difference between the Hossa & Kovy deals:

    The Hossa deal didn’t immediately put Chicago over the cap. The Kovy deal would have put the Devils over the cap had the NHL accepted it.

    It’s kind of like when exactly does skirt length move from questionable to over the line?

  30. Aces Arbitrage says:

    Russians have a different view of ethics, I learned this at UAA where all the Russians cheat like crazy. If it’s worth having, it’s worth cheating for?

  31. neil says:

    That’s a great breakdown James. This whole thread has been really interesting to read.
    It may not sound like the most likely thing in the world, but it is certainly possible that a 40-year-old Zetterberg plays a couple years at around $1 million, or that Franzen will do the same, or Hossa. Is Kovalchuck seriously committing to playing from 40 to 44 for the league minimum? Of course not.
    The league obviously has to drawn a line somewhere and I think they’ve done it in a good place: they could have gone to war over the Hossa deal or Zetterberg deal but they would have had a tough argument to sell. Instead they waited until someone went well over the line instead of just over a little bit, and now they have the vast majority of the hockey world nodding their head in agreement. Well played, imho.

  32. neil says:

    haha ok doing some reading and “vast majority” might be a bit strong ;)

  33. crushasaurus says:

    I think this deal is the one that took it too far. I think people understood with Pronger’s deal that his yearly salary correlated with his value to the team for every year of his contract. Kovalchuk’s, although still legal, is just ridiculous. There’s a better way of doing this, and I’m not gonna bore anyone by telling them.

  34. crushasaurus says:

    I think this deal is the one that took it too far. I think people understood with Pronger’s deal that his yearly salary correlated with his value to the team for every year of his contract. Kovalchuk’s, although still legal, is just ridiculous. There’s a better way of doing this, and I’m not gonna bore anyone by telling them, ever.

  35. neil says:

    I think one thing a lot of people are forgetting/ignoring is that the league is within its rights to object to this deal. From Dobberhockey —
    CBA § 26.3: (a) No Club or Club Actor, directly or indirectly, may: (i) enter into any agreements, promises, undertakings, representations, commitments, inducements, assurances of intent, or understandings of any kind, whether express, implied, oral or written, including without limitation, any SPC, Qualifying Offer, Offer Sheet or other transaction, or (ii) take or fail to take any action whatsoever, if either (i) or (ii) is intended to or has the effect of defeating or Circumventing the provisions of this Agreement or the intention of the parties as reflected by the provisions of this Agreement, including without limitation, provisions with respect to the financial and other reporting obligations of the Clubs and the League, Team Payroll Range, Player Compensation Cost Redistribution System, the Entry Level System and/or Free Agency.

    It is one thing to argue they are applying this rule unfairly, but another thing to suggest they do not have legal justification for opposing the contract. Obviously the wording in (ii) places power in the hands of the league to make a judgement call, which, as Bourne has pointed out, requires drawing a line in the sand (judging from the live chat on Puck Daddy, this is a point Wyshnyski is unaware of?)

  36. KForbes says:

    Enough with the Kovalchuk talk!

    The more important thing is that Paul ‘BizNasty’ Bissonnette no longer has a Twitter account.

    He will be missed.

  37. Deirdre says:

    Hey I’ve got a shocker of a thought – how ’bout your cap hit being whatever you made *that* year? Radical, I know.

    @KForbes – what happened to Paul? That’s sad, I was totally enjoying reading those…plus just gave him a 140 character primer on communism and was curious what his thoughts were gonna be.

  38. James says:

    The reason the NHL was OK with the Pronger deal is that it was a 35yo+ contract and if Pronger retires, the cap hit doesn’t come off the books for the Flyers.

    If the Kovy deal had been approved and he retired at 38yo, those last 6 years of $6M cap hits against the Devils would go away (IF the current CBA holds or gets grandfathered along into future ones for contracts that span multiple CBAs…….) at that time because Kovy wasn’t 35yo yet when the contract went into effect.

    That’s another reason why this is similiar, but not exactly the same.

  39. James.P says:

    Deirdre-

    Radical, but not a good idea overall… you would run the risk of stupid GM’s signing superstars to silly contracts like, 1M for the first 2 years, then 10M for the last 2. They could ‘stockpile’ star players for a Cup run, then be in cap hell for the later parts of the contracts. So instead of frontloaded contracts like now, you’d end up with backloaded contracts.
    GM’s are so much in ‘win-now’ mode these days, you can be sure many would gladly amputate the team’s future to get a shot now.

  40. KForbes says:

    @Deirdre – I think that would just encourage oddly structured long-term contracts and thus almost-but-not-quite-cap-circumvention. Imagine if the Blackhawks had signed Kane and Toews to interlocking contracts that rotated back and forth between paying one of them $8 million a season and the other $2 million, so each year, the combined cap hit of their two players in any one season is $10 million, while they both end up with the big paydays in the end.

    Or a team with plenty of upcoming free agents like Boston could plan for a “make or break” year, maybe offering Kovalchuk a contract to join the team for only $1 million salary this year, but then jumping to $11 million/ year for the rest of the contract after Bergeron, Ryder, Sturm and Chara are off the books (or renegotiated).

  41. Travelchic59 says:

    A little late to the party here. My thought is the FIRST contract to be rejected should have been Rick DiPietro’s 15 year debacle. And this is from an Islander fan. That contract kind of set the table for the rest of this nonsense. Can’t blame the rest of the league for trying to get one by the head office since the NHL barely blinked when Wang gave DP that rediculous contract. I know DP’s contract is not set up exactly like the rest of these contracts, but the 15 years itself should have set off alarm bells.

  42. Travelchic59 says:

    One more thing to add. This contract is so totally not in Lou Lam’s wheelhouse. He just does not operate this way. My theory is that Lou tried to tell VanDerBeek (Dev’s owner – not sure of spelling) this was not a good idea, but owner insisted and Lou just went along for the ride knowing this would be a problem. Lou is a very smart guy, but sometime’s when the owner speaks you have to suck it up and go along for the ride. I am sure Lou is quite relieved the league rejected this contract if only to prove to the owner that Lou was right. Just my theory.

    I will be quite interested to see just how Jersey is able to rework this contract and get it in under the cap now that it has been rejected.

  43. KForbes says:

    @Travelchic59

    I almost wonder if at least part of this is Lamoriello trying to prove a point. He was one of the original architects of this CBA and was very vocal about how he didn’t like the Pronger/Zetterberg/Hossa deals when they were announced. Was this contract a way for Lamoriello to push the envelope and paint the league into the corner? If they approved it, then fine, he’s paying Kovalchuk 11.5 million with a cap hit of 6.5 million. If the league didn’t approve it, he steps back, says he’s done nothing wrong and waits for the ensuing NHLPA/NHL fight.

    Fast forward to this week and that’s exactly what Lamoriello did. He’s come out and said he’s not interested in restructuring the contract and pretty much has called out the NHLPA to fight this fight for Kovalchuk. It puts the NHLPA in an uncomfortable situation, because these deals really only benefit their top-tier members while continuing to squeeze their “middle-class” out of existence.

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