How NHL Lockout Will Change Long-Term Future of Free Agents

Nicholas Goss@@NicholasGoss35Correspondent IDecember 25, 2012

The impact that the next collective bargaining agreement (CBA) will have on the long-term future of NHL free agents will be substantial.

The changes made to player contract rights, along with the salary cap ceiling decreasing, will change the free-agent landscape over the life of the next agreement in a major way.

If the NHL is able to reach a deal that includes five or six-year term-limits on new contracts and seven or eight-year term-limits on players re-signing with their current team, players will no longer be able to get the long-term security of signing a contract of 10 years or more in length.

The 13-year, $98 million contracts that Zach Parise and Ryan Suter signed with the Minnesota Wild on July 4 would no longer exist in the "new era of free agency."

With a lower salary cap ceiling, which could be as low as $60 million in the first full year of the new CBA (2013-14 season), player salaries will go down in the first few years of the agreement.

Teams will have less money to spend on player salaries, which means a lot of the players who aren't top-tier stars will likely receive a lot less on the free-agent market than they did over the last seven years.

Over time, when hockey-related revenue (HRR) continues to grow to record heights, the players will start earning more money. Since their share of HRR will be 50 percent throughout the life of the new deal, don't expect many long-term contracts worth over $90 million to be signed in the near future.

Another part of the next CBA that will change free agency is yearly salary variance. Salary variance prevents contracts from being front-loaded, which helps lower the deal's salary cap hit.

If the owners get the five percent salary variance they are demanding right now, new contracts won't be able to include years where the player's salary changes by more than five percent from year-to-year.

Contracts like the one Brad Richards signed last year with the New York Rangers, which included multiple years at the end of the deal where the salary is very low compared to the rest of the contract, won't be allowed.

Here is a breakdown of Richards' salary (excluding bonuses) courtesy of Capgeek.

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18
$12 million $12 million $9 million $8.5 million $8.5 million $7 million $1 million
2018-19 2019-20          
$1 million $1 million          

The owners are trying to eliminate contracts being able to pay a player $7 million one season, then $1 million the next year by having a five percent variance.

These front-loaded contracts have helped players make a lot of money in free agency since the 2005 lockout, and teams weren't forced to pay them a high salary throughout the entire deal because it was front-loaded.

It was a win-win for both sides in that regard, but these deals are not good for the owners' pursuit of lower player salaries and a fair salary cap system for all 30 teams.

The next CBA will likely eliminate these contracts, and force teams to pay players the same, or close to the same yearly salary throughout the deal.

This means that general managers will have to be smarter than they were with their available free-agent money because bad contracts will likely be even more burdensome under this agreement than the previous one.

Veteran players like Brad Richards really benefited from these front-loaded contracts because it allowed them to make a lot of money, but not force the team they signed with to commit a lot of money in salary at the end of the deal when these players are 40 years old (or older) and aren't top-tier stars anymore.

Without these types of contracts in the next agreement, it's going to be harder for veterans over 30 years old to get a long-term deal with a salary over $6.0 million.

Free agency will still be great for superstar players over the life of the next CBA, but for middle-tier players hoping that a team will overpay to sign them, they will not benefit from free agency as much as they did since the previous lockout.

Players often look to free agency to earn the biggest contract of their careers. This could change in the next CBA if players are able to earn more money and a longer contract by re-signing with their own teams.

Not only that, the money that teams have to spend in free agency should be less under the new agreement with the salary cap lower.

The NHL could become the most restrictive league for free-agent players in all of sports if the owners get the large majority of their demands regarding player contract rights in the next agreement.

The owners are the ones to blame for the rise in player salaries over the last 20 years. After every CBA expires, they try to find new ways to control themselves from signing players to absurd contracts that hurt the financial health of their franchises.

This lockout has been no different.


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