So I’ve been mulling over some ideas on how to improve the NHL’s salary cap. I think we know the NHL’s cap has issues, and this is proven in contracts such as Kovalchuk’s, Luongo’s, Hossa’s and more. As well, I think the guaranteed contracts are a bit of an issue (but I have a pretty simple thought that still keeps the guaranteed funds).
Player cap calculation
Currently, a player’s salary cap is calculated in a fairly simple way. Add up all the salary values of the contract and divide by the number of years the contract is for, and you get your cap hit. Players signed to a contract that starts at age 35 and over have their cap hit stay on the team’s payroll (i.e. cap hit) no matter what (well with some very very unlikely exceptions).
As we’ve seen with Kovalchuk’s rejected contract as well as several other contracts, a team will often be sneaky about lowering the overall cap hit, by simply “front loading” a contract. In the worst sense of front loading a contract, this means that a team will put all the value in the earlier years of the contract, and extend the length of the contract past what the player would be expected to play, and pay the player very little in those years – giving him more incentive to retire. This lowers the overall cap hit of the contract in an unfair manner, as we all know.
So my solution for this (and feel free to tell me if I’m crazy here) is similar to one that I may have mentioned here in the past, I think. It’s to have an average cap hit calculation exist only for the period leading up to age 35. After age 35, your cap hit solely is based on your salary (this is the newer part).
So let’s take an extreme example, Kovalchuk’s initial, rejected contract:
|KOVY’S AGE||SEASON||AHL SALARY||NHL SALARY||OLD CAP HIT|
Let’s pretend that this new contract actually got approved by the league under my suggested system. Under the old system, his overall cap hit for the entire contract would be $6M.
Under this new suggested system, he would have a cap hit of $10M up until age 34. At age 35, his cap hit would be $8.5M, at age 36 it would be $6.5M, at age 37 it would be $3.5M, at age 38 it would be $750K, and for the remainder of his contract, it would be $550K.
Age 35 as a cut off is purely based on the existing cutoff for other determining factors (i.e. 35+ rule for cap hit staying on payroll). This can definitely be bumped up to 36 or higher if it made more sense.
So, the questions with all these CBA changes are “would ownership do it?”, and “would the players do it?”, as they both have to be in agreement over something like this. That, I don’t know the answer to. I think it’s better for the game as it prevents (as far as I can figure) a team from circumventing the cap the way they have, assuming a player will play until 34 (which is a fairly likely scenario).
However, I still have a tough time believing that GMs or players would go for it, unfortunately. So while I think it’s a very good idea, I’m not sure they’d buy into it, and that’s really the key. It is better for the game, yes, but do GMs want to be stuck with heavier cap hits in the beginning of their deals? Not likely…. but do they want to see OTHER GMs stuck with heavier cap hits in the beggining of their deals? Definitely likely. So there is that motivation there.
As far as the players, I haven’t quite figured out how it impacts them. It might result in some more even funds in their 35+ years.. which might be some motivation. But the GMs would be a bit more hesitant to pay up in the early, pre-35 years. Basically from what I could tell, it would balance out the dollars over the entire term, but with a player not necessarily wanting to spend their late 30s/early 40s playing hockey, it might deter them to sign a contract into those years.
So, hey, it’s a thought and one that I think should be put on the table. I can’t see it going through, but you never know. What do you guys think about that?
The next idea has to do with “guaranteed player contracts”.
Due for a change to guaranteed player contracts?
Now I for one believe that GMs SHOULD have some accountability when it comes to signing contracts, but there are times where even their foresight, as well as the market demand makes it very difficult to know what to pay a player. It’s a tough job that I wouldn’t want to do. So my next suggestion has to do with guaranteed player contracts and buyouts.
“Guaranteed player contracts” are something that the NHL was the first to cut its teeth on. The NHL’s CBA currently ensures that a player gets at least a percentage of the funds written out in the contract. Pretty much the only way that a player won’t get his entire money owed is through a buyout, which still provides a pretty damn nice chunk of change and could even result in the player getting more money (i.e. if they’re bought out and another team signs them after). So really when a player signs a contract, he is almost guaranteed to get what he was promised to him. I won’t go into the complicated rules of buyouts, you can research that on your own.
I have no problems with trying to keep GMs accountable, but I think with the current set up, the player doesn’t hold enough accountability. A player can perform their best at the tail end of their contract, in hopes of a raise, and then go into more of a coast mode once the season starts. Certain players have been known to perform bigger in contract years. I don’t think it’s an epidemic or anything, but I’d like to see the NHL re-consider guaranteed player contracts a bit.
In the NFL, the standard contract is not a guaranteed contract (they do have a method of providing salary up front for guaranteed salary). A player can be cut from a team, releasing the team of a possible bad contract. This ensures player accountability. In that league, you have to bus your ass all season or you could be gone. I really like that from the player’s accountability perspective.. however, I’m not big on general managers being able to get out of every contract in such an easy way.
So what’s the answer here? I unfortunately don’t have any solid answer on what to do. I’ve got one suggestion that Steve-O refuted because he doesn’t feel there is enough accountability from the GMs, but to “spitball” ideas, I’ll throw it out there.
Contract buyouts currently allow a team to pay out a portion of a players salary, and the cap hit is restructured and spread out over twice the contract length. Again, I don’t want to get into the intricacies of buyouts, but to sum up, it is the most convenient (but still very unconvenient) way for a GM to end a bad contract where a player didn’t perform to expectations. The average cap hit is lowered significantly for the player, they don’t have to pay them their full salary, but the cap hit is spread over 2x the normal term.
What I’m suggesting might be open for discussion / fine tuning is maintaining those guaranteed players funds (to keep the players “on board” with the idea) and lowering the cap hit the team suffers from a buyout. Suggestions are to lower it to ZERO cap hit, to even the same sort of cap hit there is now for a buyout, but for a shorter term (perhaps just the normal term). It lowers GM accountability, but still holds them accountable to an extent (in that they will have to pay the salaries still and perhaps have some cap hit), and it holds the players a bit more accountable (as there would be an increased motivation from GMs now to buy out a bad player contract).
Now the downside to this idea, as Steve-O has pointed out, is that there are going to be teams out there like the Leafs and the Rangers that can afford buyouts more readily (and removes that parity the league once had). To that, all I can really say is that perhaps for buyouts the league should penalize teams, a la Luxury Tax of other leagues, and have that money be spread out to struggling teams (note: this means the teams that are losing revenue, not the teams that are in last place but still earning revenue). This would in turn also result in the GMs/owners having to dole out more cash, however. But perhaps that again results in more accountability.
“Well, teams in the bottom are just going to sit on the luxury cash, aren’t they? It decreases incentive for them to be competitive, doesn’t it?” Well, perhaps the NHL needs to figure something out there to prevent a team from bottom feeding and living on life support. That problem exists regardless, if you ask me. And perhaps there is a way to threaten these teams into competing properly, especially if they’ve been given extra cash via other teams’ buyouts (“compete or we’ll sell/move your team”).
So as before, the question… will the players buy into this? Yes, I think they will. It might be a little harder of a sell though given that there is increased risk of them being dropped by a team, but they still have their guaranteed contracts, which is something that they know the owners would love to do away with… this is a little thing called compromising. Will the owners/GMs buy into this? I think they would, as they now have a method of relieving cap from contracts that not only they signed in good faith with a player (and said player fell short of expectations), but contracts that previous GMs have left as their legacy (a la Horcoff contract by Lowe onto Tambellini, if you would).
I don’t think my idea here is the perfect idea… I think it works a bit better than the existing one though, but as I mentioned before, I’m trying to spitball some ideas in the comments that would help make things a bit better. I believe the NFL is scheduled for an update to their CBA right quick, so perhaps there are some things around their methods for guaranteed contracts that the NHL can learn from too.
Anyways, food for thought. /endrant
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