NHL Free Agency: Two Fixes To the CBA That'll Deter Ludicrous Contracts

Matt Hutter@mahutter12Analyst IJuly 21, 2010

NEWARK, NJ - JULY 20:  Ilya Kovalchuk of the New Jersey Devils speaks with the media after announcing his contract renewal at the Prudential Center on July 20, 2010 in Newark, New Jersey.  (Photo by Bruce Bennett/Getty Images)
Bruce Bennett/Getty Images

To name names at this point would be both irrelevant and nauseating.

Suffice to say that any team that would submit an idiotic 17-year contract to the NHL for approval and expect anything but incredulity is collectively delusional.

That aside, the fact that such an attempt was made should provide conclusive evidence supporting the fact that the NHL's current salary cap structure is woefully porous and ineffective.

The NHL's Collective Bargaining Agreement is set to expire in September 2011.

If the NHL wishes to avoid the ignoble distinction of being the only professional sports league in North America to shut down an entire season not just once, but twice , now is the time to start thinking about what to include in the next CBA.

The most controversial aspect of the current CBA is of course the hard salary cap.

This was a mechanism designed to "level the playing field" between big and small market teams and increase parity and competition through a more even distribution of talent, and money, throughout the league.

However, over the past few seasons, it has become painfully clear that large market NHL team owners and managers have figured out a way to step around the hard cap and either keep or secure players that, ostensibly, would have been options for smaller market teams.

Alexander Ovechkin, Mike Richards, Henrik Zetterberg, Johan Franzen, Marian Hossa and Duncan Keith have all signed contracts, the length of which would have been unthinkable prior to the salary cap.

Why is this the case?

Well, in every case, with exception of Hossa, these were players drafted by the team with which they signed that had since been identified as essential to the success of that franchise.

Put plainly, they're all "big money" players that their teams did not want to see walk away.

In Hossa's case, he was the prize of the 2009 free-agent pool and then-Chicago GM Dale Tallon constructed a very cap friendly, if not ridiculously long, 12-year deal to land him.

Sticking with these examples, we see there are two distinct issues teams are dealing with while trying to stay under the salary cap.  First, teams want to keep their homegrown talent by paying them what they're worth to stay.  Second, teams want the opportunity to get better by being active in the free-agent market.

Now, to satisfy these needs, teams have come up with the same solution for both—ridiculously long contracts.

Though there is no distinct prohibition to such contracts in the current CBA, they nevertheless act as a circumvent to the salary cap (something the CBA does prohibit).

These contracts are clearly a problem for the NHL.

However, there is a way to virtually eliminate such contracts in the future, while, at the same time, satisfying the aforementioned needs (or wants, as the case may be) of NHL teams.

By including a restricted soft-cap and contract term-limits in the next CBA, the NHL will still have the salary cap they say they need to keep the league competitive and teams will still have the ability to retain their homegrown talent and have a realistic shot at marquee free-agent players.


Well, let's take a look.

Restricted soft-cap applied to players that sign with their original team

Under this system a team may sign a player which they have drafted and developed with only 60 percent of that player's salary counting against the cap.

The restrictions are as follows:

The player must have been drafted by the team with which they sign (a prospect acquired via trade who then enters the NHL with the team that traded for him is exempt).

The player must have played his entire career to date with the same team (a player who is drafted, plays, leaves and then returns to his original team is exempt).

The team is prohibited from trading said player before 50 percent of his contract has been fulfilled as a member of the team (this discourages "sign and trade" scenarios that could be used to circumvent this system).

The restricted soft-cap applies to a player's total salary only (that is, the average over the lifetime of the contract), bonuses are exempt.

Let's use a real-world example to see how this would work.

This past season, the Chicago Blackhawks signed Jonathan Toews to a five-year contract extension with an annual cap hit of $6.3 million.

This contract is only one of the reasons Chicago has had to partially dismantle their Stanley Cup winning roster.

However, since Toews was drafted by Chicago, under this proposed restricted-soft cap, only 60 percent of his salary would count against Chicago's salary cap.

So, instead of a $6.3 million annual cap hit, Toews' salary would only account for $3.9 million of Chicago's total cap space.

Considering the same argument could be made for Patrick Kane, Duncan Keith, Niklas Hjalmarsson, and the now departed Dustin Byfuglien, were this system in place, Chicago wouldn't be nearly as affected by the salary cap as they are now.

The ancillary benefit to this system is that it would clearly encourage and reward good drafting and development without exposing teams that do so to the risk of losing that investment simply because they cannot pay a player what he's worth.

Let's take a look at the second proposal.

Contract term limits determined by player age

Free agency eligibility as it is currently constituted depends almost entirely on a player's age, why not then apply similar age-dependent restrictions on player contracts?

A few things to note before we get into the specifics.

First, the annual salary cap/term limit of $900,000/three years on rookie contracts would remain in place under this system.  Second, the current rules that dictate when a player is eligible for free-agency (seven years in the league or 27 years of age) would also remain.

Here's how the term limits would break down:

               Age                                     Maximum Term of Contract

              18-21                                               three years

              22-27                                              10 years

              28-30                                                eight years

              31-34                                                five years

              35-37                                                two years

              38+                                                   one year

A few things should jump out at you as you look at this.  First, under this system, the maximum term of any contract would not exceed 10 years.  Secondly, once a player reaches age 31, the longest possible contract they could sign would be for five years.

Simply put, these restrictions essentially protect NHL team owners from themselves as they are restricted to signing players to contracts that could conceivably be 100 percent fulfilled by the players to which they apply.

This would avoid questions of a player's ability to, for example, play past his forties as well as allow teams a realistic horizon at which to re-sign or release players once their contract expires.

Taking another real-world example, once again from Chicago, one should be able to see how this would work.

The Blackhawks signed Marian Hossa to a monster 12-year contract last summer that will pay him nearly $8 million per year through 2016, at which time Hossa will be 37-years-old.

The remaining five years of the deal, 2016-2021, will pay him only $7.5 million combined, $400,000 less than his current annual salary.

The result of this is that Hossa's salary only counts as $5.2 million against Chicago's cap.

This is a pretty neat trick to be sure, but there's not a soul in the world that honestly believes Hossa will play until he's 42.

Under the proposed term-limit structure, the maximum Hossa could have signed for last summer, at 30-years-old, would have been eight years.

Now, using the numbers now attached to Hossa's contract, the total contract amount would be $59.3 million.

However, instead of a $5.2 million cap hit, Hossa's salary would account for $7.4 million annually, a number far more representative of Hossa's actual annual salary.

By enacting term limits tied to age, the NHL could still ensure the relevance of the salary cap, and teams could still get creative with regard to the total salary paid over the term of the contract. But, teams with greater cap flexibility would be able to offer more than those with tighter cap restraints, thus achieving the "level playing field" the current salary cap is supposed to provide.

Using Chicago players to illustrate the logic of both of these proposals isn't being done by accident.

Because, even when you consider the fact that they'd be taking a much higher cap hit for Hossa's contract, the salary paid to the players they've drafted and then extended will still be discounted by 40 percent when applied to the total cap.

The result is that Chicago would still have been able to build their 2009-10 Cup-winning roster, but they would also be much more able to keep it intact.

Because, in the end, the best teams in the NHL not only draft and develop extremely well, but make key additions through free-agency.

With these two systems in place, they will not only be able, but encouraged to do both while at the same time doing so within a cap system designed to create parity.

If the NHL really wants to eliminate insane, 17-year contracts, they'd do well to include these two ideas in the next CBA.

I wonder if Gary Bettman reads my stuff...


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