Labor Day Discord: Is the Cap Killing Quality in the NHL?
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It's the dawn of another beautiful Labour Day in North America. The NHL and the NHLPA seem to have agreed on a contract for Ilya Kovalchuk and the New Jersey Devils. Instead of a front loaded 102 million dollar contract over 17 years they've agreed on a front loaded 100 million dollars over 15 years.
This agreement has helped the NHL avoid the embarrassment of having their highest profile unrestricted free agent signed by another league. An agreement has been reached over some other long term contracts that the NHL was threatening to reopen. That would have left the NHL looking like more of mickey mouse operation than it currently does and have players, fans and management alike wondering when is a deal a deal and are NHL contracts worth the paper they're written on.
Going forward long term contracts (five years or longer) that are scheduled to pay a player once he reaches 40 will have their cap hit counted differently. The total salary paid up to and including age forty will be averaged and that will be the Cap hit for the team for that player. The seasons beyond age forty will have a cap hit equal to whatever salary is being paid at that point. Kovalchuk's slary cap hit is now 6.66 million dollars a season. If he plays the final two years of the contract he'll make and his team will charged for the 525,000 dollars a year he's scheduled to make then.
The NHL has also negotiated a proviso that salary to be paid by contract for a player when he's 36 until he's 40 must be counted as at least a million dollars a season for cap purposes even if he's actually scheduled to earn less money in those years.
The NHL has negotiated all these changes with a players association still lead in the interim by Mike Oullet. When and if Donald Fehr becomes Executive Director of the NHLPA he'll be the fourth leader for the organization since August of 2009 when Paul Kelly was ousted in an early morning coup.
Most organizations do poorly when suffering from such organizational chaos. The Roman Empire nearly shook apart when they suffered through 4 emperors in the year 69 AD. Hopefully Donald Fehr can be the PA's Vespasian and bring order out of chaos.
Hopefully this will spell the end of any more NHL assertions of the intention of parties to circumvent the spirit of the collectively bargained agreement. Until the development of some sort of dependable mind-reading technology that's an assertion that most reasonable people are going to see as nebulous at best. Going forward hopefully the NHL will be voiding contracts that violate the actual terms of the existing collective bargaining agreement.
Up and until this point the negotiated agreement was limping along. Players and management were working to make the best of things within the agreement. Where exactly though has the agreement brought the NHL?
The number one stated concern of the NHL before the new agreement was reached in 2005, was cost certainty. They felt upwardly spiraling player costs were going to drive their less successful franchises out of business.
NHL player costs for each team are set in stone every year now. Currently an NHL team may spend no more than 59.6 million dollars on their 22 man roster in a year. They may spend no less than 40 million dollars. That's certainty.
During the 1989-90 season the average team payroll was 6.7 million dollars a year. The Gretzky lead LA Kings had the biggest payroll at 9.5 million dollars a year. Yes Wayne Gretzky the greatest player of all time and the entire NHL roster of LA Kings cost less than Alex Ovechkin does now. This is why franchises in Winnipeg and Quebec City used to be viable. The Minnesota North Stars at 5.3 million that year had the lowest team payroll.
A decade later the average team payroll was five times greater. The spread though was between the New York Rangers paying 59.4 million a year for a team destined to miss the playoffs and the Nashville Predators who were paying 16.6 million for their non-playoff team.
By the 2003-04 season the NHL was averaging 44 million dollars a team in salary, but Detroit and the Rangers were paying in the vicinity of 77 million for their players while the Wild, Florida, Atlanta, Pittsburgh and Nashville were paying barely a third of that.
The NHL has cost certainty now. The average total spent on salaries was 44.4 million in 2007-08. This was higher than any average salary number from the ear before the 2005 agreement.
No team is allowed to sneak along with a minimal salary. The Nashvilles of the world will have to spend at least to the cap floor of 40 million dollars. This floor is higher than the average amount spent by teams in every season except 2002-03, 2003-04 and from 2006-07 and beyond.
The NHL was well on it's way to becoming a two tier league like major league baseball. A group of teams were spending three times what the cheapest teams in the league would spend. Those teams at the bottom could not compete and would not compete for the Stanley Cup.
The cap floor has insured that teams have to spend money on players. The Islanders haven't proved it yet but teams from the bottom like the Flyers were, like the Avalanche last year, like the Coyotes have shown they can compete. They needn't fair that spending 50 million dollars will be useless because the Rangers will just go out and spend 100 million dollars because the Rangers aren't allowed to do that.
It's made it possible for smaller market teams to compete.
It's always been a struggle to hold a roster together especially after winning a cup. This year the Chicago Blackhawks have a core of players under contract lost their goalie and just about any of the mid-talented players they had in place. They've been forced to fill out the roster with whomever they can sign for the NHL minimum. This economic triage is going on throughout the NHL.
The Philadelphia Flyers have gone for years without a legitimate number one goalie. For the longest time it seemed to be a defect in judgement. Now it's become an economic necessity. When the Stanley cup winning Anttii Niemi became available Philadelphia didn't have the cap room to sign him.
The Bruins ran their entire season with no wingers and no cap space to sign them. The Leafs are starting this season with no centers and no money to spend.
The Penguins were lucky enough to win a cup with their star laden line-up. They've signed Mike Comrie for the NHL minimum to be the scoring winger along-side Sidney Crosby or Evgeni Malkin. Does the loser get Comrie.
The Canadiens dealt their playoff hero Jaroslav Halak for prospects and still need to find some salary to hide so they'll be under the cap.
The Flames have signed retreads Jokinen and Tanguay because they need scoring and can't afford anyone else.
Teams have been finding creative ways to hide salary. The Red Wings let Jiri Hudler go to the KHL for a year because they couldn't afford to play him last season. Now he's back and can be shoe-horned into the line-up. Clever but personally I'd rather watch him play in the NHL last year. I'd like the Leafs to be able to sign a first line center. I'd like to see what the Bruins and the Penguins would do with even one top quality winger (say an Ilya Kovalchuk) to play with their world class centers.
NHL teams are getting younger. Players with a track record who aren't stars are getting squeezed out for rookies who will take minimum wage or veterans who are past it and reduced to accepting minimum wage.
The Flyers a veteran free agent heavy group is on average two years younger than the line-up that played for them the season before the lock-out.
Again a player with a track record is more likely to succeed than a fresh face run up from the minors. A lot of the medium talented players in the league seem to be getting squeezed out.
Bad Faith Negotiations
The basis for the NHL's position on the Ilya Kovalchuk contract appears to be that they believe the player, agent and team are attempting to violate the spirit of the collective agreement. By settling on a contract with tail years that are unlikely ever to be played the NHL is suggesting bad faith on the part of well all the other parties.
The problem is of course the NHL originally negotiated an agreement where it was possible to pay a single player up to 20% of a teams available Cap. The consensus at the time was this was of course impossible. A team with a 22 man roster counting against the cap with 19 players expected to play and contribute every night could not afford to have a fifth of their players salaries spent on one player. Hockey is a team game and Gordie Howe, Bobby Orr, Wayne Gretzky don't deserve to earn a fifth of a teams' salary. The thinking at the time was this was bone thrown to the PA that the NHL believed would never be acted upon.
You could say in fact in the same way Ilya Kovalchuk never intended to play the last five or six years of his 17 year contract so too the NHL never intended any NHL team to pay 20% of their total salary cap to one player, any player. Bad Faith.
Unfortunately in any economic situation the major drivers with humans are greed and fear. The players, the best players, want to earn the most they can. The general managers know if they lose their best players they are likely to be fired .What happens to the GM in Pittsburgh who doesn't resign Sidney Crosby. What happens in Washington if Ovechkin goes free?
Thus we've ended up with an NHL where several players have been signed for or near the 20% of salary cap amount. All those teams have cap issues every year and talent issues every year. The Penguins by winning a cup with two players making over 8.5 million dollars a year have only made it worse.
Beyond the greed and fear, players and teams both want to win. They're competitive and winning augments player and franchise value. NHL General Managers and players came up with and negotiated these long term contracts that featured extremely low salaries at the end that allow the team to take a lower cap hit and thus sign more talent and also allow the player to earn the high salary they feel they deserve at the front end of the contract.
The NHL's arbitrator has stated this violates the spirit of the agreement. They've negotiated with the PA an age cap on these contracts stating they can't be continued beyond age forty. This a bizarre situation as the existing collectively bargained contract is being changed in mid-stream. It certainly suggests an NHL not comfortable with the existing agreement or with how the players and teams are using it.
The NHL and PA are set until the end of the 2012 season when a new contract needs to be negotiated. The NHL is the weak sister among pro-sports leagues in North America. Further labour strife is likely to kill the league in a lot of tenuous markets.
Despite this or perhaps because of it the NHL has been taking some pretty aggressive with the headless horseman that is the current NHLPA.
The league and the players have managed to accomplish some things. The Phoenix Coyotes looked to be the first domino in a series of collapsing southern US hockey teams. While no one is rushing to get the hammering Jerry Moyes took in the end in Phoenix none of the other troubled franchises in Nashville, Atlanta, Florida or Tampa Bay or even on Long Island have collapsed or moved. That stability or the illusion of it is a good thing.
There has been downward pressure on salary in the NHL which is probably a good thing. A league salary structure based on what the Rangers, Leafs or the Red Wings can afford won't work throughout the league.
The competitiveness is good. I don't expect my team to be handed anything but I like to believe they at least have a chance to win a Stanley cup. I need to believe every 30 years or so they can win one. If they don't manage that I need to believe it's because management on my team is made up of idiots or because of injury or bad luck, not because they can't afford to win.
The worst part of the salary cap has been the inability of teams to address pressing needs. A great team, a Stanley Cup winning team, needs to be a complete team. They need a good goalie, a competent defense, a power play worthy of the name, good penalty killers and scorers. Too many NHL teams, good teams, competitive teams, lack one or more of those things.
The Chicago Blackhawks had most of those things going for them last year. They managed that because their line-up was still very young and they hadn't had to sign two of their players Toews and Kane to big long term contracts yet. Now they have and the lineup is likely to filled out from the bottom with no-name players making the NHL minimum. That's not a recipe for continued greatness.
Now that Chicago has lost their mid-talented role players and their young starting goalie they may no longer have all those elements that are part of a great team. If they don't have them is there any team in the NHL currently that has all those elements. I don't enjoy watching a team with a sieve for a goalie or who can't kill penalties, or doesn't really have a shut-down defenceman or a power play quarterback. Next year a team like that might win the Stanley Cup.
The NHL and the PA need to work together to come up with a collective agreement that controls costs, but also allows teams to be great and stay great. Collective agreements are almost always some sort of compromise. Hopefully this one will work a little better than the last one.
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