20 July 2010

Room For Improvement: Getting To Know The Salary Cap

                                                                                          Al Bello/Getty Images
Ilya Kovalchuk’s new 17-year contract with the New Jersey Devils has sparked more talk in the NHL than just free agent signings and trades.
This monstrous deal, along with several other recent signings, has reignited the fierce debate over the league’s salary cap and collective bargaining agreement (CBA).
The experts have all had their say, now it’s time for fans to weigh in on one of the NHL’s biggest issues.
Let’s start by examining Mr. Kovalchuk’s long-term agreement with the Devils, which peaks at $11.5 million/year from 2012-2017, before dropping to $550K for the last five years of the contract.
After all is said and done, the Russian sniper’s cap hit is only $6 million/year. If Kovalchuk retires early—you know, before he turns 44—then the Devils will have to pay the remainder of the money but it will not count against the cap.
This type of front-loaded contract has received a lot of criticism from the media, as well as NHL investigations, over the past year. (See Chris Pronger and Marian Hossa)
Basically, the Devils could’ve signed Kovalchuk for 25 years and it wouldn’t have mattered, as long as the league approved the deal. It’s a loophole in the CBA that allows teams to lower the cap hit of elite players without holding them responsible for the ethical implications of these kinds of deals.
In today’s press conference at the Prudential Center in Newark, Kovalchuk declared that he sees himself still playing in the NHL at 44 years of age. That, as you should very well already know, is a complete hoax.
There’s no doubt that he will retire before the contract ends, and per the current NHL regulations, the Devils will see no repercussions for their unethical deal.
Why unethical?
Think of this way: is it still wrong to break the rules when you know you won’t get caught?
Just because there’s a loopholes, it does not give teams the right to take advantage of the system.
Earlier today on Twitter, staff writer for The Globe and Mail James Mirtle posted a link to a debate from January between himself and Puck Daddy writer Greg Wyshynski over long-term contracts and the CBA.
Normally I find myself nodding my head to Wyshynski’s ideas, while involuntarily shrieking and convulsing to Mirtle’s comments.
Today, however, was not a normal day.
In regards to front-loaded contracts, Wyshynski believes “that's a valid, non-destructive cheat around the cap and shouldn't be addressed by the NHL. Teams like the Tampa Bay Lightning are taking a risk in front-loading these deals (usually with NTC provisions as well in the early years) that, to me, counterbalances the creative accounting that brings down the cap hit.”
Forget creative accounting, its plain cheating.
Just because a team has the money to pay a player for ten years after he hangs up his skates doesn’t mean they can dodge what should be their cap hit.
And as for risk, that depends on the deal. As Mirtle pointed out, the gamble is big on young athletes like Mike Richards ($69mil/12yr) and Rick DiPietro ($67.5mil/15yr), the latter who has only played 13 games for the New York Islanders over the past two seasons.
If your player gets hurt early in the contract, you’re out of luck. That's a legitimate roll of the dice for general managers trying to reduce the cap hit of a player.
On the other hand, there’s little risk signing a thirty-something year old to a big contract because he’ll be retiring before you even know it anyway.
What I want to point out is that long-term deals are not the problem; contracts that extend until a player’s forties are the unethical ones.
For a Richards or DiPietro, the length of the commitment is substantial but both players will be a reasonable age when the contract expires, and lowering the cap hit is fair in this case.
If a guy is going to play that long, by all means give him the biggest contract you want to and dodge the cap.
 But Kovalchuk’s pact with the Devils is a prime example of cheating the system and should be banned by the league.
And if Kovy wasn’t kidding about playing until he’s 44, someone should have Chris Chelios give him a wake-up call.

I'm a big fan of the salary cap; it keeps the league competitive and avoids franchises like the Yankees who can buy championships.

That being said, the NHL needs to adjust a couple things.

First, they have to close the Kovalchuk loophole by limiting contract length if and only if the player will be 40 or older by the time it expires.

Second, as Mirtle pointed out, they have to change the cap floor. If a team can sport a full roster and be a contender, it shouldn't matter how little they spend. Leave that to the GM's of the league to figure out.

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