Russian League poised to offer Malkin $12.5 mill/yr

[sixer 37]

How Crazy & Stupid is this!!!!

Toronto Star

Jun 20, 2008 06:46 AM

Rick Westhead

Sports business columnist

Several teams in Russia's revamped pro hockey league want to repatriate NHL all-star Evgeni Malkin by offering him a contract that would make him hockey's highest-paid player – by a wide margin.

In a move that would surely send a shock through the NHL, whose executives are gathered today in Ottawa for the amateur player draft, the Russian teams are poised to offer the Russian-born Pittsburgh Penguins forward a multi-year contract worth at least $12.5 million (all figures U.S.) tax free per season, said a source familiar with the matter.

The offer would be equivalent to at least a $15 million per year in the NHL, where players have to pay state (or provincial) and federal taxes.

By contrast, Washington Capitals star Alex Ovechkin is the top-paid player in the NHL at just under $9.6 million a season.

"Hey, we can afford to pay more than the NHL right now," a high-ranking executive with the Russian league told the Star this morning. "Our economy is commodities-based so we're not going through the same problems that you have in America."

The executive said a $12.5 million offer to Malkin "is not crazy" but conceded, "it's on the edge of crazy."

Malkin is one of the NHL's top young stars. This season, his second in the NHL, he scored 47 goals and added 59 assists in 82 games with the Penguins and was the runner-up to Ovechkin for the most valuable player trophy. The power forward was also an all-star and was paid a base salary of $984,200, a year after winning the NHL's rookie of the year award.

Malkin also has an endorsement contract with Canadian hockey company Bauer, which is negotiating a possible sponsorship agreement with the new Russian league, a source said.

If Malkin decided to return to Russia it would be a move reminiscent of Bobby Hull's defection from the NHL's Chicago Blackhawks in 1972 to the World Hockey Association's Winnipeg Jets. The Jets agreed to pay Hull $1 million over 10 years.

The new Russian league, known as the Continental Hockey League, has turned to the likes of former NHLPA executive director Bob Goodenow to develop a strategy for competing against the NHL. It's a rivalry that seems certain to turn nasty.

The Russian league executive confirmed teams have already started to offer contracts to some players who are already under contract to an NHL club.

And while the Russian league will use a salary cap to control player expenses, the salary of a player who quits an NHL contract to play in Russia won't count against their cap.

A Russian league official brushed off suggestions that the NHL would legally contest such contract offers.

"What happened with Malkin when he came to the NHL?" the official said.

After the Penguins drafted Malkin in 2004, he remained in Russia, where his club team argued he had an existing contract. After Malkin left for North America, his team unsuccessfully filed an antitrust lawsuit against the NHL, arguing he had an existing contract in Russia.

The new Russian league is scheduled to start its season Sept. 2.

http://www.thestar.com/Sports/article/446583

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http://www.tsn.ca/nhl/story/?id=241220&amp...s=secStory_main

Edited June 20, 2008 by sixer

[Majsheppard 203]

Go back to Russia.

[rick zombo 3,739]

Ouch.

[Happy Pancake 6]

He'd be crazy not to take that.

[NeverForgetMac25 483]

The scary thing about this is that if Malkin for some reason or another actually decided to go to Russia it could really change the way the NHL is perceived by Russians. While I don't see the league losing its Swedes, Finns, Czech's, etc., this could definitely be the start of Russians staying home (or going back) rather than coming to the NHL.

Edited June 20, 2008 by Never Forget Mac #25

[Wings_Dynasty 267]

If you'd rather be rich than in teh best league in the world, then go.

[betterREDthandead 58]

If you'd rather be rich than in teh best league in the world, then go.

You do also realize that playing in the home country would also be part of the equation, right? Some people do actually like to do that.

[Anomalously 0]

There went a lot of his trade value until he signs. The Penguins might have cap space if he does decide to return.

[UpperCorner14 0]

If you'd rather be rich than in teh best league in the world, then go.

Easier said than done. Imagine the reverse scenario. Lets say that Russia has the best hockey players in the world, but you're from the US, you speak English, and a US team just offered you a TON of money to come home and play. No right or wrong answer, but what would you do?

[sibiriak 84]

While I'm sure that quite a few Russian teams would like to have Malkin, and a few of them could actually pay him the huge amount reported, I didn't see anything that suggests that Malkin or his agent actually negotiated with any of them. In fact, Malkin walked away from $3 mil. a year contract (almost tax-free) in order to come play for Pittsburgh for the rookie minimum. So I don't see any basis for thinking that Malkin would want to go back. He sacrificed about $2 mil./year for 3 years to play in the NHL and he will get $9-10 mil. as a RFA IN the NHL. Why would he go back for $2-3 mil. per year more?

[seeinred 1,488]

That's a ballsload of money, but I think it's a great idea on the league's part.

Edited June 20, 2008 by SeeinRed

[yzerman&thewings=CUP 0]

You do also realize that playing in the home country would also be part of the equation, right? Some people do actually like to do that.

I agree, its hard to really understand what he is going through. He is halfway around the world away from his home. Of course the NHL is the best hockey league in the world, no one is disputing that. But put yourself in his shoes. He has the option to be in his home country earning a huge salary. He'll have to balance that with living in the US and still making good money while competing with worldwide top talent vs. Russian-only talent. I'm not going to knock on him if he leaves; it will be unfortunate for the league for him to go, but if he has a real competitive spirit, I think he'll stay.

Its really good money/glory in the most talented league in the world vs. insanely good money/competing in your homeland

[adtthosa 5]

Way too many CHLs these days.

I guess we're going to find out if he's really in it to win or if he's in it for the money.

[Wings_Dynasty 267]

Easier said than done. Imagine the reverse scenario. Lets say that Russia has the best hockey players in the world, but you're from the US, you speak English, and a US team just offered you a TON of money to come home and play. No right or wrong answer, but what would you do?

That all depends. Everyone from European and Asian countries all want to come to the NHL to play hockey because the best players are there and North America is the most prosperous place on the planet. IF the RHL was the premiere league (with world media coverage, the best players (most of whom are in the NHL today), and the best hockey being played) that is where I would want to be as a hockey player. As an American, of course I would want to be in America, but if my dream was to be one of the best players in the world I would want to be in the best league, wherever it was.

As for the "he speaks Russian" argument. If he can't learn English than he is lazy. Pavel learned English, the Russian 5 spoke English (except for Kozzy) and all of the other Euros learned English (Lidstrom speaks it better than I do). I could learn Russian, all I would need is the Rosetta Stone program and maybe a tutor to learn specific words, but I think my teammates would help a lot.

But the question is does he want to be a hockey player (and go to the top tiers of his profession) or does he want to be rich in his homeland? It all depends on his personality and where he wants his life to go.

[NeverForgetMac25 483]

While I'm sure that quite a few Russian teams would like to have Malkin, and a few of them could actually pay him the huge amount reported, I didn't see anything that suggests that Malkin or his agent actually negotiated with any of them. In fact, Malkin walked away from $3 mil. a year contract (almost tax-free) in order to come play for Pittsburgh for the rookie minimum. So I don't see any basis for thinking that Malkin would want to go back. He sacrificed about $2 mil./year for 3 years to play in the NHL and he will get $9-10 mil. as a RFA IN the NHL. Why would he go back for $2-3 mil. per year more?

I'm not questioning his motives, rather just answering your question.

It's not $2-3 million per year more. Keep in mind if Malkin makes $9-10 million in the US, that will be taxed and he'll bring home somewhere in the ballpark of $6-7 million. In Russia, he'd be making double that.

[VM1138 1,921]

The scary thing about this is that if Malkin for some reason or another actually decided to go to Russia it could really change the way the NHL is perceived by Russians. While I don't see the league losing its Swedes, Finns, Czech's, etc., this could definitely be the start of Russians staying home (or going back) rather than coming to the NHL.

It might happen, but I doubt it. They may be reforming the Russian league, but it's still a long ways from a competitor with the NHL. the NHL is still the premier league in the world, and the trend is drifting towards cooperation with the NHL instead of pulling away.

[seeinred 1,488]

I haaaaaaate the "If he's a true competitor..." argument. Why do you get to say what trophy he should want to play for? What if it's been his dream since he was little to be a Russian League champion? If he could net an extra 7-8 million per year in Russia, I couldn't fault him for taking it. He's a hockey player, but it's what he does to make a living and that much money makes a huge difference. I don't get why professional athletes get the "competition" and "loyalty" arguments when they take more money. If I got a job offer somewhere else in the same field for more money and better benefits and stuff, you can be sure as s*** I'd take it. I don't get why it's different.

[Turretin 0]

It's not just the 15 mil. You're money goes a lot farther over there. Really, I could criticize him just as much for saying no as saying yes. It's his life and he needs to do what will make him happy.

[UpperCorner14 0]

That all depends. Everyone from European and Asian countries all want to come to the NHL to play hockey because the best players are there and North America is the most prosperous place on the planet. IF the RHL was the premiere league (with world media coverage, the best players (most of whom are in the NHL today), and the best hockey being played) that is where I would want to be as a hockey player. As an American, of course I would want to be in America, but if my dream was to be one of the best players in the world I would want to be in the best league, wherever it was.

As for the "he speaks Russian" argument. If he can't learn English than he is lazy. Pavel learned English, the Russian 5 spoke English (except for Kozzy) and all of the other Euros learned English (Lidstrom speaks it better than I do). I could learn Russian, all I would need is the Rosetta Stone program and maybe a tutor to learn specific words, but I think my teammates would help a lot.

But the question is does he want to be a hockey player (and go to the top tiers of his profession) or does he want to be rich in his homeland? It all depends on his personality and where he wants his life to go.

I agree that if his only motivation is to play with the best (which could easliy be argued that that should be the motivation you need), then the NHL is the way to go. I don't think its that simple though. The language issue is just one of many factors that would weigh into a decision like this - I'm not saying that is a primary reason to go. The kid is 21 and is being offered stupid amounts of money to be back in the comforts of home with friend, family, etc. The level of talent is still very good and I wouldn't blame him one bit if he goes. With that said I hope he does not. Its a pretty nice problem that he has - be an elite player in the best league in the world, or be the elite player and live like a king in his homeland.

[sibiriak 84]

I'm not questioning his motives, rather just answering your question.

It's not $2-3 million per year more. Keep in mind if Malkin makes $9-10 million in the US, that will be taxed and he'll bring home somewhere in the ballpark of $6-7 million. In Russia, he'd be making double that.

There ain't no such thing as a free lunch

$12.5 mil. with 13% income tax in Russia comes out to be net $10.9 mil. BUT, the money is not guaranteed or insured. If the new league doesn't work out as they expect, he may end up with much less cash then the contract specifies with no meaningful recourse.

The oil and gas prices will not keep going up as fast as they do now for very long. Russian current prosperity is not based on very firm foundation. And the Russians (and Malkin's advisors) are aware of this.

And, of course, the competitve instinct that led Malkin to come to the NHL for less money is still there. So once this guy chose to play in the NHL for $900,000 instead of $3,000,000 in Russia (giving up roughly $2 mil. after taxes), I don't see him choosing to go back to Russia for not guaranteed $11 mil. over guaranteed after-tax $7 mil. in the NHL.

[CrossCheck24 2]

Easier said than done. Imagine the reverse scenario. Lets say that Russia has the best hockey players in the world, but you're from the US, you speak English, and a US team just offered you a TON of money to come home and play. No right or wrong answer, but what would you do?

I am a soccer player, and as we all know the european leagues are head and shoulders above the MLS (US soccer). I would definetly go over there for $8mil even if the MLS was going to pay me $12mil. Its better soccer, and any self respecting athlete wants to compete at the highest level possible.

[Probert 5 For Fighting 0]

I haaaaaaate the "If he's a true competitor..." argument. Why do you get to say what trophy he should want to play for? What if it's been his dream since he was little to be a Russian League champion? If he could net an extra 7-8 million per year in Russia, I couldn't fault him for taking it. He's a hockey player, but it's what he does to make a living and that much money makes a huge difference. I don't get why professional athletes get the "competition" and "loyalty" arguments when they take more money. If I got a job offer somewhere else in the same field for more money and better benefits and stuff, you can be sure as s*** I'd take it. I don't get why it's different.

Sweet Jesus it's always good to see somebody who speaks with logic and rational around here! Agreed wholeheartedly.

As for the move itself, I think it would be great. And just think, if Malkin starts a trend of players defecting to play for higher-paying teams across the pond, hockey organizations can put together a World Cup championship or something. The Detroit Redwings vs. HK Moscow for world bragging rights. Live on NBC or something. It'd be awesome. The NHL needs to crosspromote and expand as much as possible.

[NeverForgetMac25 483]

There ain't no such thing as a free lunch

$12.5 mil. with 13% income tax in Russia comes out to be net $10.9 mil. BUT, the money is not guaranteed or insured. If the new league doesn't work out as they expect, he may end up with much less cash then the contract specifies with no meaningful recourse.

The oil and gas prices will not keep going up as fast as they do now for very long. Russian current prosperity is not based on very firm foundation. And the Russians (and Malkin's advisors) are aware of this.

And, of course, the competitve instinct that led Malkin to come to the NHL for less money is still there. So once this guy chose to play in the NHL for $900,000 instead of $3,000,000 in Russia (giving up roughly $2 mil. after taxes), I don't see him choosing to go back to Russia for not guaranteed $11 mil. over guaranteed after-tax $7 mil. in the NHL.

Correct me if I'm wrong, because I'm not too up to date on Russia's income tax policy, but in the article they stated that his salary would be tax free.

I'm not even going to bother comparing Russia's economy to that of America's as this isn't the correct forum for that.

[Probert 5 For Fighting 0]

I am a soccer player, and as we all know the european leagues are head and shoulders above the MLS (US soccer). I would definetly go over there for $8mil even if the MLS was going to pay me $12mil. Its better soccer, and any self respecting athlete wants to compete at the highest level possible.

Who's to say they all come to the NHL because it's better, though? For years, the NHL has proven to be the best economically - which is why so many defected. If Russia or Sweden or Czech Rep or whatever is going to start offering guys more than they make here, you don't think they'd leave - especially if superstars like Malkin start the trend? Euro leagues arent slouches. The Swedish Elite League features far better defense than NHL games. The Russian Super League is a treat. Those league teams can compete with North American talent. I don't think it's a matter of competition all that much.

[sibiriak 84]

Correct me if I'm wrong, because I'm not too up to date on Russia's income tax policy, but in the article they stated that his salary would be tax free.

I'm not even going to bother comparing Russia's economy to that of America's as this isn't the correct forum for that.

Income tax in Russia is a flat 13% with no loopholes (at least for individual taxpayers). The article should have said "almost tax-free".

There are no state or local income taxes. There is a 20% VAT (sales tax on all purchases).

Prices on tradable goods, like food and clothing are the same as in the US. Housing (outside Moscow and St. Petersburg) is cheaper, services (like hairdressers) are cheaper.

But economic stability is the main concern. I would bet money that Malkin will not go back for less than an obscene amount like US$20 mil., including a large up-front sighninhg bonus.