The Ever-Increasing Cap, Ridiculous Contracts, and Hitting

[zenway9 1]

After the dust settled yesterday, I got to thinking. Here are two very good players (not superstars, mind you) with enormous contacts. It seems the salary cap increases every year, which gives teams more and more money to dump into inflated contracts. In the future, will so-so players be making undeserved millions? In the near future, I can see a strong push by owners to eliminate hitting in the game because of their major investments. In turn, every "back in my day" sportscaster will say the game has gotten soft and the penalties are unwarranted. This will make for an even larger demand for skilled finesse Europeans into the league.

Just some thoughts. I would like to hear some of your opinions.

[ogreslayer 1,069]

After the dust settled yesterday, I got to thinking. Here are two very good players (not superstars, mind you) with enormous contacts. It seems the salary cap increases every year, which gives teams more and more money to dump into inflated contracts. In the future, will so-so players be making undeserved millions? In the near future, I can see a strong push by owners to eliminate hitting in the game because of their major investments. In turn, every "back in my day" sportscaster will say the game has gotten soft and the penalties are unwarranted. This will make for an even larger demand for skilled finesse Europeans into the league.

Just some thoughts. I would like to hear some of your opinions.

The dust may be settling on the UFA frenzy but it's just beginning on the CBA front. What's really going to be fun is listening to the owners ***** & moan about rising expenses due to players salaries while they completely ignore the fact that they're the ones who are handing out $5m+ contracts to the likes of Denis Widemans & Matt Carles and dropping $24-26m in salary & bonus each to Suter & Parise over a 12 month period.

[Esquire 324]

I may be completely out of my element here, but the players are in a "union" correct? Why isn't there a pay structure set up for all players involved so that nobody's salary is different unless you have more experience? I work in a union that's what I have to deal with. Maybe set up a 5-10 year pay structure with bonus money being awared for performances instead of paying for "potential" up front.

Radical, but just a rambling.

[zenway9 1]

I think that with Parise and Suter being the 2 biggest "names" out there, the teams with money to burn had a "use it or lose it" mentality. It sets a precedence of extremely long contact lengths with the astronomical salaries. There will be a point in 5-6 years that over half of the players in the NHL will have these over-inflated salaries and everyone will be "off limits" (i.e. Cindy) to hit. As far as performance based salaries go, I don't ever think that will happen. I mean, Justin Schultz hasn't logged a second in the NHL and his cap hit is $3.7 mil!!!

By the way, I got a call from Kenny last night. He said they were disappointed that they couldn't get Nash either, but that he wished him luck as a Laker.

[Red Crazy 201]

The owners and players are going to handcuff themselves yet with these huge contracts. I for one think that the league should reject all contracts over 5 years. Players would then have to earn their paychecks based on performance not by ufa class. The owners would also have to use their heads when signing contracts. Suter and Parise are not worth anywhere near the money they got. Crosby signed a long term when one more hit could end his career. Players are greedy and the owners are stupid. have we really gone anywhere since the last lockout?

[Wing Across The Pond 196]

I think that with Parise and Suter being the 2 biggest "names" out there, the teams with money to burn had a "use it or lose it" mentality. It sets a precedence of extremely long contact lengths with the astronomical salaries. There will be a point in 5-6 years that over half of the players in the NHL will have these over-inflated salaries and everyone will be "off limits" (i.e. Cindy) to hit. As far as performance based salaries go, I don't ever think that will happen. I mean, Justin Schultz hasn't logged a second in the NHL and his cap hit is $3.7 mil!!!

By the way, I got a call from Kenny last night. He said they were disappointed that they couldn't get Nash either, but that he wished him luck as a Laker.

What makes this situation worse is that they weren't the the 2 biggest names out there. Crosby and Stamkos probably were. They were simply the 2 biggest names available. With longer contracts such as this becoming more and more frequent for 'big name stars' the s*** will hit the fan when a UFA class comes along with only mid-level talent (say like last year but worse) and they all get $5-6m contracts because they're the biggest names out there... FOR THAT YEAR. It's a downward spiral that needs to be seriously looked into.

On the one hand the NHLPA want to make sure their players are financially stable for life and the NHL may see this sort of thing as an opportunity to promote teams trading rather than simply signing free agents, yet on the other the league are very much risking players not moving at all beyond bottom 6 role players or rookies/prospects. We could end up with a league whereby teams effectively draft their team and have to live with it in the future since there will be no UFAs to sign at the end of the year.

[brandon27 111]

The dust may be settling on the UFA frenzy but it's just beginning on the CBA front. What's really going to be fun is listening to the owners ***** & moan about rising expenses due to players salaries while they completely ignore the fact that they're the ones who are handing out $5m+ contracts to the likes of Denis Widemans & Matt Carles and dropping $24-26m in salary & bonus each to Suter & Parise over a 12 month period.

Problem with that though, the players in a sense force the owners hands in giving out those big contracts. Afterall, if Detroit, Nashville, and Pittsburgh all said Suter... Parise... We're giving you 5 mil a year, for 5 years (which probably would have been an ideal deal for them), you'd still have a GM like Minnesotta, who goes... hmm.. I'll overpay. I need to make a splash to boost our teams awareness through the community, and league, and help revenue streams. You're always going to have that happen. There's no doubt in my mind too, that these players, get these offers, and their agent immediately goes to the next owner/gm in line who's interested and leverage one team/deal against the others, continuing to drive up the salary. Every day that went by since July 1, I guarantee the offers for Parise and Suter were increasing in millions daily.

In that CBA, they've got to set max contract lengths, and make the penalties for trading/cutting a player more severe to a teams current salary cap if they cut, or move a guy. I'm sure it works similar to the NFL where that signing bonus that gets pro-rated over the length becomes a penalty if a player is cut, released, or traded that counts against your cap. It's obvious whats going on with these deals, there's no intent probably for Suter, or Parise to play out those 13 year deals. It's that long simply to spread out the signing bonus over a longer period of time to reduce that annual salary. It's got to change IMO.

[Guest Crymson]

The dust may be settling on the UFA frenzy but it's just beginning on the CBA front. What's really going to be fun is listening to the owners ***** & moan about rising expenses due to players salaries while they completely ignore the fact that they're the ones who are handing out $5m+ contracts to the likes of Denis Widemans & Matt Carles and dropping $24-26m in salary & bonus each to Suter & Parise over a 12 month period.

The dearth of quality UFAs is due to the rising cap, which allows owners to re-sign most of their good players. This, in turn, drives up the asking prices for players. Owners are forced to pay out inflated contracts in order to remain competitive.

[fixxxer 11]

Will these contracts really be that inflated if the cap continues to rise? It may seem over priced contracts now but will it really when the cap reaches 80mil? It will only look bad if the cap lowers or remains the same over the next 5-10yrs.

Edited July 5, 2012 by fixxxer

[Wing Across The Pond 196]

Problem with that though, the players in a sense force the owners hands in giving out those big contracts. Afterall, if Detroit, Nashville, and Pittsburgh all said Suter... Parise... We're giving you 5 mil a year, for 5 years (which probably would have been an ideal deal for them), you'd still have a GM like Minnesotta, who goes... hmm.. I'll overpay. I need to make a splash to boost our teams awareness through the community, and league, and help revenue streams. You're always going to have that happen. There's no doubt in my mind too, that these players, get these offers, and their agent immediately goes to the next owner/gm in line who's interested and leverage one team/deal against the others, continuing to drive up the salary. Every day that went by since July 1, I guarantee the offers for Parise and Suter were increasing in millions daily.

In that CBA, they've got to set max contract lengths, and make the penalties for trading/cutting a player more severe to a teams current salary cap if they cut, or move a guy. I'm sure it works similar to the NFL where that signing bonus that gets pro-rated over the length becomes a penalty if a player is cut, released, or traded that counts against your cap. It's obvious whats going on with these deals, there's no intent probably for Suter, or Parise to play out those 13 year deals. It's that long simply to spread out the signing bonus over a longer period of time to reduce that annual salary. It's got to change IMO.

Indeed. Of course it is. It's a way of circumventing the cap, or in simpler terms, "breaking the rules", at least those set out to govern contracts. Essentially. But because there isn't yet a specific rule about it, it isn't technically against the rules. I know players will claim that they sign these contracts because they truly want to spend the rest of their career at an organisation/love the team/have always had a soft spot for X place since they were a child, but you can simply say "well after your 5 year contract is done (say that's MAX length), just resign. Nothing against that and if you really feel all those things towards this team you can have the opportunity to take a cut and help the team further". Then when they say no we'll all know that they just want the money and the security of not necessarily having to be the best in the league to secure big money contracts. They can take their foot off the gas slightly, in other words.

[dirtydangles 1,328]

I think one way to solve this is to have players' existing cap hits inflate with the cap ceiling so that there is still a slight increase in cap but not enough that you can go blow a butload of money at once on one player. For instance, this offseason Z's cap hit would have increased to like 6.3 or something rather than 6. He still makes the same money he signed for but his cap hit increases. This would deter players from signing huge lifelong contracts because their cap hit can inflate but they still get the money they signed for.

[sibiriak 84]

Why is it a problem, when hockey players make 10 mil instead of, say, 8? If the owners want to shell that much out, that's their money. And if the teams lose money, they shouldn't give out those huge contracts.

But we see that the team franchise values rise, even as the teams are losing money, and that means that the market sees future profit potential there. Let them do what they want. If the franchise values fall, then we can start bitching about financial troubles in the NHL.

P.S. I am waiting to see how Suter and Parise contracts are structured over time. Remember NJ being slammed by the league for an apparently similar contract given to Kovalchuk?

Edited July 5, 2012 by sibiriak

[dirtydangles 1,328]

Why is it a problem, when hockey players make 10 mil instead of, say, 8? If the owners want to shell that much out, that's their money. And if the teams lose money, they shouldn't give out those huge contracts.

But we see that the team franchise values rise, even as the teams are losing money, and that means that the market sees future profit potential there. Let them do what they want. If the franchise values fall, then we can start bitching about financial troubles in the NHL.

P.S. I am waiting to see how Suter and Parise contracts are structured over time. Remember NJ being slammed by the league for an apparently similar contract given to Kovalchuk?

eventually the cap floor won't be affordable for some teams and then we will have issues. this removes the parity that the nhl tried to get towards.

[Wing Across The Pond 196]

eventually the cap floor won't be affordable for some teams and then we will have issues. this removes the parity that the nhl tried to get towards.

This is actually a really good point that I've never even considered. A team like the Preds who from what I know have an internal cap so they don't spend money they physically don't have (correct me if I'm wrong please) will be punished for their sensible structuring by not being able to reach the cap floor without falling into financial crisis. I guess we seem to forget at times that Mike Ilitch is financially flush in comparison to a lot. We can afford to always spend up to the cap ceiling

[dirtydangles 1,328]

This is actually a really good point that I've never even considered. A team like the Preds who from what I know have an internal cap so they don't spend money they physically don't have (correct me if I'm wrong please) will be punished for their sensible structuring by not being able to reach the cap floor without falling into financial crisis. I guess we seem to forget at times that Mike Ilitch is financially flush in comparison to a lot. We can afford to always spend up to the cap ceiling

Preds borrow from the city of Nashville and from the NHL revenue sharing. They don't disclose how much. But ya, we need to start considering this as an option if the cap goes up 7mill every year. Thats why I think player cap hits should inflate too while protecting the dollars on the contract that the player signed for. That way owners don't have to pay more than they intended. The cost of running a successful hockey team will just keep rising.

Edited July 5, 2012 by dirtydangles

[IllinoisRedWingsFan 49]

I do believe the cap is a large problem and it will have to be fixed during the next CBA negotiations. The NHL has a really inflated Cap IMO. They need to do something about it.

Regarding the contracts the NHL needs to look at having a limit of them like 7-8 Years. I know the NBA has a 7 Year limit with the salary being around $120 Million IIRC.

[Pskov Wings Fan 71]

According to the current CBA players salary cannot account for more than a fixed percentage (54%?) of league revenues. So at least theoretically GMs cannot overspend. Bettman claims that league revenues are rising so the cap raises with it. So as long as their accounting is sound teams should not be able to get into too much trouble.

As for the small market teams does not NHL have some kind of revenue sharing scheme?

I do believe the cap is a large problem and it will have to be fixed during the next CBA negotiations. The NHL has a really inflated Cap IMO. They need to do something about it.

Why is the cap inflated? If anything I would rather see more money go to the players rather than to the owners.

[dirtydangles 1,328]

According to the current CBA players salary cannot account for more than a fixed percentage (54%?) of league revenues. So at least theoretically GMs cannot overspend. Bettman claims that league revenues are rising so the cap raises with it. So as long as their accounting is sound teams should not be able to get into too much trouble.

As for the small market teams does not NHL have some kind of revenue sharing scheme?

yes they do have revenue sharing but the owners of these franchises usually have more than one business to run, you can't expect that all their money goes right back into hockey after they make it. revenue sharing is also bulls*** for upper tier teams but I won't get into that.

[Guest Crymson]

The purpose of the salary cap was to encourage parity. It succeeded in this for a few seasons. Now it is ruining the NHL. The cap is giant, and contracts have become absurdly inflated as a result. Teams almost always have the cap space to re-sign their UFAs, so few big-name players ever hit the open market; as a result, those who do go to the open market are given gigantic, ridiculous contracts. What's more, the low-budget teams--those teams to whom the cap was meant to give a legitimate shot at winning--must now dole out ridiculous contracts to remain above the salary floor. Hilarious.

This all needs to be dealt with in the CBA. The cap needs to be fixed or reduced, and contract length needs to be limited. I think that eight years is a decent number, or perhaps less.

Edited July 5, 2012 by Crymson

[dirtydangles 1,328]

The purpose of the salary cap was to encourage parity. It succeeded in this for a few seasons. Now it is ruining the NHL. The cap is giant, and contracts have become absurdly inflated as a result. Teams almost always have the cap space to re-sign their UFAs, so few big-name players ever hit the open market; as a result, those who do go to the open market are given gigantic, ridiculous contracts. What's more, the low-budget teams--those teams to whom the cap was meant to give a legitimate shot at winning--must now dole out ridiculous contracts to remain above the salary floor. Hilarious.

This really needs to be dealt with.

THIS. Well put in one post.

[Guest Crymson]

Why is the cap inflated? If anything I would rather see more money go to the players rather than to the owners.

Salaries are rising in direct correlation with the cap, and they have become ridiculous as a result.

[Seraph 240]

I've always supported the longer contracts because it pins the big name players down to their respective markets. This helps build a team identity and rivalries come out of it with the same cast of players showing up each year. I remember in the 90s if you didn't pay attention during the off season, you'd get back to watching hockey and all the key players would be swapped up across the map. Sure it might make for a more exciting off season when your team simultaneously signs Robitaille, Hasek and Hull, but I think the game loses something if players are always that mobile.

The current system is good because it forces the GM to find the right players in whom to make a big time investment, and then surround them with a strong yet affordable supporting cast. I think a good GM will also leave adequate cap room for the next generation of prospects to develop in case one or two are worthy of a mega contract. It also creates a situation where players will stay with a team through the RFA years, but then make the critical choice to swap or stay once they are UFA eligible. That gives the players the option to move if they are unhappy, but generally preserves the team identity if they end up signing long term contracts.

If GMs are inappropriately overpaying for players that don't deserve it, then that's their problem. They're going to have to live that mistake out for the duration of the contract and the team suffers for it. But overall I think the CBA is bringing parity to the league because each team can only support so many of these mega contracts. Just look at Minnesota. Two big time players joined that team because it was one of the few that could support both of their salaries. Minnesota undoubtedly became a better team and the league just got more competitive.

[haroldsnepsts 4,826]

They should start by just limiting the term. If you can't sign guys for over 10 years, for younger players you're not going to be able to knock down the cap hit with the reduced salary at the end of their career. So hopefully the yearly salary would come down a bit as well.

Otherwise I'm not terribly concerned with how much bank the players make as long as the league is healthy overall (which the owners are about to argue it is not, I'm sure). The significant parts to me are the proportion of the cap each player is taking up no matter the dollar amount, and that the cap is essentially being circumvented by GM's using the long term.

[Pskov Wings Fan 71]

Salaries are rising in direct correlation with the cap, and they have become ridiculous as a result.

Well, as long as rising cap/salaries is the result of league making more money I do not see a problem here. But the fact that number of teams claim to be losing money while cap keeps rising suggests that something is not quite right.

[haroldsnepsts 4,826]

Well, as long as rising cap/salaries is the result of league making more money I do not see a problem here. But the fact that number of teams claim to be losing money while cap keeps rising suggests that something is not quite right.

The trick will be to make sure the league is healthy without punishing smart owners like Illitch because of the owners and GM's out there who can't run a successful franchise. It should be an attempt to get a more level playing field, but the CBA will be too restrictive if it tries to save some of these idiots from themselves. Some franchises and markets should be allowed to fail rather than be propped up by the league.