Breaking Down Potential Ripple Effects of the Mike Richards-LA Kings Dispute

On Monday, the NHLPA announcing that it had filed a grievance against the Los Angeles Kings over the team’s decision to terminate the contract of centre Mike Richards:

This decision on the part of the union has been expected since virtually the moment that the Kings announced they were parting ways with Richards. The process now initiated by the NHLPA’s grievance is one that’s going to be watched by every team in the league, because all 30 member clubs of the NHL are going to be affected by the result.

As Eric Macramalla of Forbes wrote back in June, the players’ association had virtually no choice but to fight the Kings on this:

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You can bet that the NHLPA will not accept the termination of Richards contract and will challenge it by way of arbitration. For the NHLPA, it simply cannot allow this precedent to stand as it could adversely impact its members. By allowing the termination to go unchallenged, the floodgates risk opening with teams terminating problem contracts. ‘He’s fat, cut him. He’s slow, cut him.’

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For NHL teams, the benefits are obvious. In a salary-cap environment, the ability to terminate a contract confers an obvious advantage. If the Kings manage to win this, it would be a major blow to guaranteed contracts and would open the door for other teams in similar situations to avoid the nasty consequences of a buyout and instead go for a straight-out termination.

Larry Saltzman/Associated Press

Macramalla argues that it’s unlikely that the Kings will be successful, and he points to Major League Baseball as an example of why. Among the cases he cites is that of Lamarr Hoyt, who was jailed on drug charges and would seem a more obvious candidate for contract termination. Instead, Macramalla writes, the union “filed a grievance and won.”

Given that history—history which NHLPA executive director Donald Fehr would be intimately familiar with since he he was the executive direct of the MLBPA—it seems improbable that the Kings will win. But while the NHL’s other 29 teams might prefer that Los Angeles set a favourable precedent, they would also benefit from a Kings loss.

Rich Hammond of the Orange County Register explains why:

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If the Kings are ultimately successful in terminating Richards' contract, they will face only a $1.32 million ''recapture'' penalty over the next five seasons. If the NHLPA is successful with its grievance, the Kings could owe Richards $5.75 million in each of the next five seasons.

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That $5.75 million figure is Richards’ cap hit; his actual salary is lower, coming in at a total of $22.0 million over the last five years of his contract. That’s an average of $4.4 million per season, and in the likely event that the Kings would instead perform a regular buyout they would have to pay two-thirds of that figure ($14.67 million) spread out over the next decade.

However, Richards’ deal isn’t uniform over those five years, which means his buyout isn’t either. The Kings would have the following annual cap hits in the event of a buyout:

2015-16	2016-17	2017-18	2018-19	2019-20	2020-2025
$1.22MM	$1.72MM	$2.72MM	$4.22MM	$4.22MM	$1.47MM

Bruce Bennett/Getty Images

That kind of penalty would make it difficult for Los Angeles, one of the best teams in the league over the last half-decade, to keep its roster together. For example, high-profile forwards Anze Kopitar and Milan Lucic are both free agents next summer. Richards’ deal would also make it more difficult to re-sign franchise defenceman Drew Doughty when his deal expires in 2019.

There would also be repercussions for free agents in this summer’s class who have yet to sign deals. The situations of Richards and defenceman Slava Voynov have the Kings in a holding pattern; depending on what happens they might be in a position to bid for some of the players out there. If Richards’ contract stands, that becomes far less likely.

It’s an ugly spot for the Kings, but for the NHL’s other teams there’s really no way this can end badly. If L.A. is successful, it makes it easier to dump ugly contracts. If the Kings fail, one of the NHL’s best teams will be in a terrible cap situation. It’s reasonable to think most of the league is quietly enjoying Los Angeles’ discomfort.

Salary information via generalfanager.com

Jonathan Willis covers the NHL for Bleacher Report. Follow him on Twitter for more of his work.