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The long contract to lower the cap hit "problem".


JoeLassister
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A friend of mine brought this yesterday.

What the hell about teams who sign players for "too many years" just to lower their cap hit ?

Take Marian Hossa as an example.

Hossa, Marian he's 30yo now and at the end of his contract, he will be something like 42 yo. His cap hit is 5,233M$.

His salary goes like that according to nhlnumbers : 7.900 / 7.900 / 7.900 / 7.900 / 7.900 / 7.900 / 7.900 / 4.000 / 1.000 / 1.000 / 0.750 / 0.750

Are you kidding me that he will still play at 39-40-41-42 years old when he will earn 1M$ and less ??!?!?!?!

The guy will just retire and the Hawks will be having him on their team for 8 years at a cap of 5,33M$ when his real cap would have been 7,1M$ without these 4 last seasons.

Is that a problem the league should look at ???

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A friend of mine brought this yesterday.

What the hell about teams who sign players for "too many years" just to lower their cap hit ?

Take Marian Hossa as an example.

Hossa, Marian he's 30yo now and at the end of his contract, he will be something like 42 yo. His cap hit is 5,233M$.

His salary goes like that according to nhlnumbers : 7.900 / 7.900 / 7.900 / 7.900 / 7.900 / 7.900 / 7.900 / 4.000 / 1.000 / 1.000 / 0.750 / 0.750

Are you kidding me that he will still play at 39-40-41-42 years old when he will earn 1M$ and less ??!?!?!?!

The guy will just retire and the Hawks will be having him on their team for 8 years at a cap of 5,33M$ when his real cap would have been 7,1M$ without these 4 last seasons.

Is that a problem the league should look at ???

The league has already come out and said they're against those types of contracts, as they "go against the spirit of the CBA," but there's nothing preventing teams from doling these out. I'm sure it'll be addressed when the CBA expires in a couple years (NHL Armageddon II).

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A friend of mine brought this yesterday.

What the hell about teams who sign players for "too many years" just to lower their cap hit ?

Take Marian Hossa as an example.

Hossa, Marian he's 30yo now and at the end of his contract, he will be something like 42 yo. His cap hit is 5,233M$.

His salary goes like that according to nhlnumbers : 7.900 / 7.900 / 7.900 / 7.900 / 7.900 / 7.900 / 7.900 / 4.000 / 1.000 / 1.000 / 0.750 / 0.750

Are you kidding me that he will still play at 39-40-41-42 years old when he will earn 1M$ and less ??!?!?!?!

The guy will just retire and the Hawks will be having him on their team for 8 years at a cap of 5,33M$ when his real cap would have been 7,1M$ without these 4 last seasons.

Is that a problem the league should look at ???

This really shouldn't suprise anyone.

If there is a loophole to be found GM's will try it and exploit it until the hole is closed.

The Rangers tried it when they played two goalies in net for part of a game (didn't work and they lost bad)

Another tried to draft Ovechkin in the 7th round a year early because he was born on a leap year (Obviously it didn't work either.)

Where there's a will, there's a way

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This really shouldn't suprise anyone.

If there is a loophole to be found GM's will try it and exploit it until the hole is closed.

The Rangers tried it when they played two goalies in net for part of a game (didn't work and they lost bad)

Another tried to draft Ovechkin in the 7th round a year early because he was born on a leap year (Obviously it didn't work either.)

Where there's a will, there's a way

So the Revvv has been GM in the NHL too?

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This is not a problem at all. The CBA was owner friendly from the start, so if they're finding loopholes, they are going to have to live with the consequences if the player they have to pay HUGE money to doesn't perform in those big salary years. The cap is figured on hockey related revenue, not profits, so if it bites the owners in the hindquarters, they have nobody to blame but themselves for signing such ridiculously long contracts with such huge figures in the prime years.

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When was this?!

When the NHL was in it's infancy. A rule was in place shortly there after

The point I was trying to make is/was, that they have been trying to get around rules in the game since the first rules were introduced.

Edited by Habitforming
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This is a huge problem though and I had heard several months ago that the NHL would be looking into it after the Wings resigned Franzen to yet another one of these contracts. The Wings have to be the biggest exploiter of the cap rules.

The NHL needs to get smarter and treat this like the government does when somebody buys a car for $1. When you a buy a car for $1 and the tax is 15% you dont pay 15 cents tax. You pay the tax on the cars real value.

The Wings truly are circumventing the CBA rules by signing players to way under valued contracts for crazy long contract lengths. While it is true that this will eventually bite them in the ass near the end of these contracts but in the mean time how many times will they get to the Cup finals when they are icing a 80 mil team for 55 mil? Hard to beleive they've been to the Cup finals twice in the last 2 years. For the next 5-8 years the Wings will be icing a team that is worth around 30 mil above and beyond what the cap limit allows.

There needs to be a black book with values for what the players are actually worth and the cap should be based on those valued instead and not based on contracts of players who agree to be under paid for 20 years so it circumvents the cap rules.

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  • 4 weeks later...
  • 2 weeks later...
This is a huge problem though and I had heard several months ago that the NHL would be looking into it after the Wings resigned Franzen to yet another one of these contracts. The Wings have to be the biggest exploiter of the cap rules.

The NHL needs to get smarter and treat this like the government does when somebody buys a car for $1. When you a buy a car for $1 and the tax is 15% you dont pay 15 cents tax. You pay the tax on the cars real value.

The Wings truly are circumventing the CBA rules by signing players to way under valued contracts for crazy long contract lengths. While it is true that this will eventually bite them in the ass near the end of these contracts but in the mean time how many times will they get to the Cup finals when they are icing a 80 mil team for 55 mil? Hard to beleive they've been to the Cup finals twice in the last 2 years. For the next 5-8 years the Wings will be icing a team that is worth around 30 mil above and beyond what the cap limit allows.

There needs to be a black book with values for what the players are actually worth and the cap should be based on those valued instead and not based on contracts of players who agree to be under paid for 20 years so it circumvents the cap rules.

With all due respect, the Wings were not the first team to use this tactic, and they aren't the only team to do it. If you want to get technical about it, the Carolina Hurricanes and New York Rangers were the first to use the front-loaded contract years ago when they made RFA offers to Sergei Fedorov and Joe Sakic.

All that aside, it does go to show one thing. The players aren't the problem and to a degree, neither are the owners. The GMs and the league office are the problem. A lot of people pointed out when the deal was signed that the cap system being put in place would not solve the problems, even though they put in the clause for players signing after they turned 35. The GMs were smart enough to realize that if they signed guys five years longer than they needed them, and paid out a fraction of the beginning of the contract, they not only lowered the overall cap hit, but they also lowered the buyouts at the end, and ideally, freed up money down the road when and if players either retired or found themselves in the minors. What the league office failed to do, and continues to do, is stay one step ahead of the GMs. They don't think like them, and then they handcuff themselves when the GMs find the loopholes that are large enough to get a semi through. And the the owners, who actually pay the bills, let them do it. They were hoping that the cap would be pretty steady as the league came out of the lockout, but it sky-rocketed right out of the gate and, based on economic signs that the global recession may have reached its bottom already, may not plunge as low as previously thought (some were projecting a cap below $50 million again in 2010-2011 or 2012.) If that happens, then the league has to go back to the drawing board and use a little more devious thinking in designing a cap that will actually do what they want it to do. Then the league has to grow a set and enforce the rules properly.

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  • 4 weeks later...
The GM's were the ones who wanted the cap and stuff.. now suddenly they hand out these idiot contracts. Its like a policeman putting up a speedcheck camera and then gets caught by it himself.

The owners wanted the cap. This just goes to show that some big markets can handle a bigger budget than what the cap provides (namely Philly, Detroit, Vancouver, and now Chicago) so they can frontload these deals and pay over $60m for their team on an annual budget.

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So far most of the teams ho did those contracts haven't panned out too well. Briere hurt, I am betting Philly isd kicking themselves for that one.

Hossa injured: Time will tell on that one but the Blackhawks are screwed in trying to resign there young talent.

Pronger looks good now, nut in a few years i imagi

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Don't know what happened but time will tell on Pronger too.

I think those deals won't help teams in the long run, it will prevent them from resigning there core youth.

I am more worried that Directv doesn't carry VS anymore. I have the NHL package which is fine for the season but VS i beleive has exclusive rights to the confrence finals and finals. Hopefully Directv can maybe work something out with TSN or HNIC whoever covers the cup.

Fortunately the habs never make it past the second round.

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The joke may prove to be on these GMs when declining players decide to renege on their nudge-nudge-wink-wink 'promise' to retire at a certain age. Still, buyouts remain an option for GMs hamstrung with these deals, so it may not prove as bad as all that in most cases. You can also sometimes find a buyer for a guy who has an inflated contract (e.g., Gainey-Sather). Finally, you do have the option of sending a guy down to the minors. There's ways to get out of these supposed cap handcuffs.

As far as I'm concerned, the cap is doing its job, in that almost every team is now able to compete in the UFA sweepstakes. It's no longer a question of New York, Colorado, Philadelphia and Toronto vacuuming up every star player in the game. This may even have been a silent contributor to the drift away from paralyzing defensive hockey - teams with some actual talent no longer need to rely on suffocating defence to win.

Fans and analysts have a tendency sometimes to be too conservative when it comes to the cap. I remember when Gainey declined to sign Arnott for what the Preds paid him on the grounds that $4 mil, or whatever it was, was too risky in a cap environment. I praised Bob's prudence at the time, but it turned out to be a huge error - Arnott would have been a tremendous signing for us. Conversely, Markov's deal was ridiculed by many commentators at the time; now it looks terrific. And teams like Philly, Vancouver and the Hawks that are basically 'cap be damned' organizations have thus far thirved in a cap setting despite all the prophecies of doom.

For better or worse, Gainey has now joined the ranks of these 'cap be damned' GMs, having assumed crazy contracts for Gomez, Gionta, and Hamrlik. And I'm not sure that's a bad thing. I've slowly come to the conclusion that I'd prefer to have a GM who gets the talent and juggles crazy cap issues going forward than a GM who passes on opportunities to acquire talent in order to keep 'cap space.' Cap space never won squat. And I can't say I'd be too upset to have seen Bob sign Markov to an 8-year deal instead of wondering what will happen when he becomes a UFA in a couple of seasons. So without denying that you do need to exercise some prudence in a cap setting - Sather's lunacy in the Drury/Gomez deals is just stupid - I'd err on the side of acquiring talent over exercising caution.

And all the NHL needs to do is install another cap, this time on contract length, e.g., an 8-year maximum, something like that. Of course, that would rightly be fervently opposed by the NHLPA, given that hockey players have enough job insecurity as it is. I'd rather things continue on their present course than have the UFA age lowered even more (which would be the likely trade-off for such a concession).

Edited by The Chicoutimi Cucumber
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The contracts look smart right now but we still haven't lived long enough to see the final two seasons of these long contracts. In four seasons, we'll start seeing how the first 8-year contracts ended, and then maybe we<ll change our opinions about them.

(At the moment, they look like smart moves to me).

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The first one, and the one that actually made some sense at the time, was Rick DiPietro's, but his injury problems have made everyone second guess them.

There's a solution to be had to this problem, one that's fair to the players. Basically all these 10, 11, 12-year deals are ways around the end of salary deferral. So, you make a rule which says that the lowest single-year salary of a contract has to be a certain percentage of the total value of the contract, like 5%. So, you take Luongo's deal at $62 million. The least the Canucks could pay him would be 5% of $62 million, or $3.1 million. That would effectively cut the term of the deal almost in half, Luongo still gets market value, and free agency earlier. Even if he takes $6 million per year straight through the life of the deal as opposed to front-loading the first half ($8-9 million over the first 3-5 years), it's appears to be more legitimate, especially when you take into consideration the idea of handshake agreements between both sides that players will retire before the deal lapses, which would wipe the cap amount off the books without costing the player any money. It's either that or limit the term of contracts to 5-7 years (NBA has a six-year contract limit.)

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  • 3 months later...

Simple solution.. cap hit should be the years salary, not an average.

While the GMs are exploiting it, the net effect is to put more money in players hands and it drives up salaries, screwing the poor teams again. Right now there is nothing stopping the rangers or leafs from signing all the top free agents to way more then the cap, but then tail it off with a long contract so they get around it. Net result is that the Leafs have a $80 million payroll while Tampa is at $40. It also screws the other GMs, as they will be forced to play the game to acquire anyone decent.

The contract is their to prevent the self destructive behavior of the owners, so I hope they find a way to close this massive loop hole before they blow up the league again.

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Simple solution.. cap hit should be the years salary, not an average.

That wouldn't really solve the problem. Contracts would still be front loaded. In fact, I think it would be worse because you can give a player all the money in the first 3 years, then pay him nothing after that. He would still be in his prime and with a small cap hit, teams could easily be stacked that way.

The only way I could see this ending is if they made a rule to have the total sum of a contract averaged out of the years, like the actual cap hit.

Edited by ForumGhost
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That wouldn't really solve the problem. Contracts would still be front loaded. In fact, I think it would be worse because you can give a player all the money in the first 3 years, then pay him nothing after that. He would still be in his prime and with a small cap hit, teams could easily be stacked that way.

The only way I could see this ending is if they made a rule to have the total sum of a contract averaged out of the years, like the actual cap hit.

It does solve the problem because to give a guy 10 mill in the first 3 years will actually cost you 10 off our cap for those years. Most teams could not afford that, which would hold down the salaries. If they player is actually playing for you 6 years later for $2M, then that should be your cap hit that year.

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