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07-31-2009, 07:32 PM
  #51
ph
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Interesting that it is Detroit's huge rival and perhaps Pittsburgh's biggest threat in the east this year that are suddenly being investigated after making a move to greatly improve their team. Not that I believe in the conspiracy theories...

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07-31-2009, 07:47 PM
  #52
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I won't pretend to know how the whole process works but I would have to think the NHLPA (or a judge) would have to approve any changes in the CBA, even to close loopholes. I highly doubt they would allow that without a fight.

That said, this screams of the NHL's continued problems with reacting to situations after the fact, rather than having the foresight to prevent what they see as problems before they happen.

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07-31-2009, 07:51 PM
  #53
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Quote:
Originally Posted by Jester View Post
Well, there are loopholes, and then there is knowingly circumventing the salary cap. If both parties signed the contract with the understanding that the player would not play out the contract, then the team essentially wrote years into the contract that are there purely to lower the salary cap hit in order to circumvent the cap hit for the years they intend to pay, and the player intends to play.

In an absolute sense they are allowed to give out that contract, but if neither party actually intends to fulfill the contract...then there's a problem there. That's dirty pool.
Every contract that is front loaded is circumventing the cap whether a team is stuck paying dead cap after retirement or not. By front loading the contract you intentionally defer a cap hit to the later years when you aren't paying as much as you are actually being hit in cap. For example: You convince Player A he is actually worth about $5M a season. You offer him $7M a season the first 2 years and $3M the last 2 (I know this doesn't work in the current CBA, just an example). You are still paying him the $5M a season he is worth but you are paying more up front presumably to gain a competitive advantage.

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07-31-2009, 08:01 PM
  #54
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Quote:
Originally Posted by Jester View Post
Well, there are loopholes, and then there is knowingly circumventing the salary cap. If both parties signed the contract with the understanding that the player would not play out the contract, then the team essentially wrote years into the contract that are there purely to lower the salary cap hit in order to circumvent the cap hit for the years they intend to pay, and the player intends to play.

In an absolute sense they are allowed to give out that contract, but if neither party actually intends to fulfill the contract...then there's a problem there. That's dirty pool.
I agree... But if the player says that he will make every attempt to fulfill his end of the contract; he intends to, if at all possible... and the team says they want him to play that long, if he is able to do so up to an NHL level... They sign a contract in good faith; they are NOT circumventing the Salary Cap, and the loop hole provides them to be rid of his Cap hit if he retires due to his not being able to perform up to an NHL level; he can't 'make' the roster. Hossa could conceivably play until that age, but the odds are not with him... no matter his intention, or stated intention.

The problem arises when the player or team say something stupid... thus proving that the intention was to circumvent the process. I am not saying that teams should lie; I am saying that they should not be stupid, and all be on the same page... and keep their mouth shut, unless they have something that HAS to be said.

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07-31-2009, 08:06 PM
  #55
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Quote:
Originally Posted by ph View Post
Every contract that is front loaded is circumventing the cap whether a team is stuck paying dead cap after retirement or not. By front loading the contract you intentionally defer a cap hit to the later years when you aren't paying as much as you are actually being hit in cap. For example: You convince Player A he is actually worth about $5M a season. You offer him $7M a season the first 2 years and $3M the last 2 (I know this doesn't work in the current CBA, just an example). You are still paying him the $5M a season he is worth but you are paying more up front presumably to gain a competitive advantage.
To a minor extent. But the CBA is designed with an average for cap hit, so it's not really that big of a deal. When you front-load it and the player can retire and the team is off the hook, then you've paid like $50 mil of a $55 mil contract with a tiny cap hit. If I sign someone to a 20 year contract where the first five years are 8 million and the next fifteen are league minimum or something and they retire after the 5 years, I've had a tiny cap hit and then it's gone. That's real circumvention of the cap. That's not possible with Pronger because the Flyers are on the hook for the duration.

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07-31-2009, 08:19 PM
  #56
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Quote:
Originally Posted by might2mash View Post
To a minor extent. But the CBA is designed with an average for cap hit, so it's not really that big of a deal. When you front-load it and the player can retire and the team is off the hook, then you've paid like $50 mil of a $55 mil contract with a tiny cap hit. If I sign someone to a 20 year contract where the first five years are 8 million and the next fifteen are league minimum or something and they retire after the 5 years, I've had a tiny cap hit and then it's gone. That's real circumvention of the cap. That's not possible with Pronger because the Flyers are on the hook for the duration.
I agree. The system was clearly designed to allow for teams to circumvent the cap and now when teams are starting to push the envelope further and further the league is shocked? I don't see how Hossa's contract being to 42 vs Zetterberg and Franzen contracts being to 40 is so much more obvious. Obvious circumventions like a 20 year contract that takes a player to 55 Ok. But a 12 year deal to 42? The league is reacting as if it is impossible for Hossa to play in the league at 42.

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07-31-2009, 09:40 PM
  #57
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Quote:
Originally Posted by ph View Post
Every contract that is front loaded is circumventing the cap whether a team is stuck paying dead cap after retirement or not. By front loading the contract you intentionally defer a cap hit to the later years when you aren't paying as much as you are actually being hit in cap. For example: You convince Player A he is actually worth about $5M a season. You offer him $7M a season the first 2 years and $3M the last 2 (I know this doesn't work in the current CBA, just an example). You are still paying him the $5M a season he is worth but you are paying more up front presumably to gain a competitive advantage.
Erm...how is that "circumventing" the cap?

The salary cap is a mathematical equation, and the cap hit of a contract is a mathematical equation. "Circumvention" involves circumventing those rules...which no one under discussion here is doing in how they calculate the numbers within the contract: the rules for contracts are the rules...and they are following them.

The issue here is if the parties involved agreed to Contract A for X years, after which the player stated a desire to retire, and then actually signed Contract B with X+Y years to lower the cap hit on Contract A.

Now, it's difficult (and should be impossible) to prove that such a discussion took place, but that's effectively circumventing the mathematical equation of the salary cap because neither party intends for years Y to be paid by the team, and the cap hit will disappear then.

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07-31-2009, 09:42 PM
  #58
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Quote:
Originally Posted by FlyersJunky View Post
I agree... But if the player says that he will make every attempt to fulfill his end of the contract; he intends to, if at all possible... and the team says they want him to play that long, if he is able to do so up to an NHL level... They sign a contract in good faith; they are NOT circumventing the Salary Cap, and the loop hole provides them to be rid of his Cap hit if he retires due to his not being able to perform up to an NHL level; he can't 'make' the roster. Hossa could conceivably play until that age, but the odds are not with him... no matter his intention, or stated intention.

The problem arises when the player or team say something stupid... thus proving that the intention was to circumvent the process. I am not saying that teams should lie; I am saying that they should not be stupid, and all be on the same page... and keep their mouth shut, unless they have something that HAS to be said.
Right, it's a loophole, which they should probably close either by changing how the 35+ rule works, or by simply imposing a term length limit if they want to get rid of it...however, the contract itself is not circumventing the rules of the CBA. The issue is the understanding about that contract that may or may not exist between the two parties that signed it.

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07-31-2009, 11:13 PM
  #59
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Originally Posted by go kim johnsson 514 View Post
I call BS. This is what you're supposed to do before the contract is done. The NHL has to approve ALL contracts.
Ding, ding, ding. Da winner. If the league approved the contracts, why are they investigating them now?

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07-31-2009, 11:15 PM
  #60
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Originally Posted by Larry44 View Post
Ding, ding, ding. Da winner. If the league approved the contracts, why are they investigating them now?
Because they're incompetent morons...it's not like their stupidity is a new development.

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08-01-2009, 11:57 AM
  #61
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The one thing I don't understand is how a frontloaded contract works with the cap hit after a player retires. I understand that while he is active the salary is averaged for a cap hit (7 yrs/35M=5M cap hit) regardless of how the deal is structured, but let's say the Flyers pay out 25M in four years, does the cap hit go to 3.3M for the remaining three if he retires with three years left on the deal?

I am pretty confused about how this contract will affect the Flyers' financial dealings and why a 1.25 or 1.5M annual savings over his cap hit with Anaheim is worth all this headache.

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08-01-2009, 12:10 PM
  #62
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Quote:
Originally Posted by Ignatius J Reilly View Post
The one thing I don't understand is how a frontloaded contract works with the cap hit after a player retires. I understand that while he is active the salary is averaged for a cap hit (7 yrs/35M=5M cap hit) regardless of how the deal is structured, but let's say the Flyers pay out 25M in four years, does the cap hit go to 3.3M for the remaining three if he retires with three years left on the deal?

I am pretty confused about how this contract will affect the Flyers' financial dealings and why a 1.25 or 1.5M annual savings over his cap hit with Anaheim is worth all this headache.
No, a contract is frontloaded to lower the contract average.
If you have a 5 year contract worth 25 million, you can spread out the millions pretty much how you want to (not really, but anyway). The average salary (25mm in 5 years) is 5 million. The average salary is also the cap hit. And the cap hit is written in stone, it wont change for anything.
And for a team with little or no cap flexibility 1.5mm is certainly a lot

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08-01-2009, 12:15 PM
  #63
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Quote:
Originally Posted by Ignatius J Reilly View Post
The one thing I don't understand is how a frontloaded contract works with the cap hit after a player retires. I understand that while he is active the salary is averaged for a cap hit (7 yrs/35M=5M cap hit) regardless of how the deal is structured, but let's say the Flyers pay out 25M in four years, does the cap hit go to 3.3M for the remaining three if he retires with three years left on the deal?

I am pretty confused about how this contract will affect the Flyers' financial dealings and why a 1.25 or 1.5M annual savings over his cap hit with Anaheim is worth all this headache.
First off there are certain guidelines as to how a contract can be structured with decreasing increments... But that is a discussion for another time.

If a contract is structured within the guidelines and take effect before the player turns 35 years of age -- going by the League Year... again another topic for another day -- the team is only obligated for the Cap hits up until his retirement... The salary is averaged and the Cap hit is that average... If the player turns 35 (in accordance to the League Year) prior to the new contract taking effect, the team signing him will have to account for the Cap throughout the life of the contract.

How the $1.25M or $1.5M annual savings you stated effects the team is that in the Cap Era of the NHL, Cap space is a very precious commodity... and every dollar saved allows Cap dollars to be used on additional roster spots and assets.

HTH

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08-01-2009, 04:49 PM
  #64
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Prongers contract beying investigated.

NO if and or but's.

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08-01-2009, 05:06 PM
  #65
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From Tim P.:
Quote:

Both the Pronger and Hossa deals were approved by the NHL before being filed, so this appears to be an attempt by the league to send a message to fellow clubs about further long-term signings in which teams attempt to “void” remaining cap hits on deals after a player turns 35 and may have retired.

NHL Deputy Commissioner Bill Daly declined comment.

However, a league source told CSNPhilly.com that the NHL wants to understand how the Pronger contract was negotiated. Were the “extra years” added simply for the purpose of lowering the AAV (average annual value) of Pronger’s deal?

Pronger will be 42 years old by the end of his contract. Various sources say the NHL seriously doubts Pronger will play to that age. So, as one source suggested, why did the Flyers sign him for that long unless they wanted to reduce their annual cap hit?

The NHL will ask an outside law firm to handle the investigation, ESPN reported.

Flyers team president Peter Luukko said in a statement:

"We firmly believe that we have complied with the CBA in every respect. We understand why the League would investigate a contract like this one, but again we are confident that we handled this one properly. We will refrain from discussing any particulars of the investigation as well as the contents of the contract."

Flyers general manager Paul Holmgren also could not be reached for comment.

Curiously, the Flyers have already acknowledged that because Pronger will turn 35 before his seven-year contract extension begins, even if he were to retire before the terms expired, the club would still be subject to a $5 million annual cap hit.
Quote:
So why is the NHL questioning the Pronger deal?

On the surface, it would appear as though the NHL will have a tough time arguing that the Flyers tried to circumvent the CBA, since they’ve already admitted they can’t void a cap hit in any remaining years in the deal if Pronger decided to retire early.

At some point, you can expect the NHLPA to weigh in on this issue, as well. If this is a scare tactic by the league against other clubs, it is equally a scare tactic to the players themselves – as to their rights regarding earning capacity during their prime years, versus the end of the careers, and so forth.
http://csnphilly.com/pages/landing_0...038&feedID=704


Last edited by MiamiScreamingEagles: 08-01-2009 at 05:15 PM.
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Old
08-01-2009, 05:18 PM
  #66
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Quote:
Originally Posted by FlyersJunky View Post
First off there are certain guidelines as to how a contract can be structured with decreasing increments... But that is a discussion for another time.

If a contract is structured within the guidelines and take effect before the player turns 35 years of age -- going by the League Year... again another topic for another day -- the team is only obligated for the Cap hits up until his retirement... The salary is averaged and the Cap hit is that average... If the player turns 35 (in accordance to the League Year) prior to the new contract taking effect, the team signing him will have to account for the Cap throughout the life of the contract.

How the $1.25M or $1.5M annual savings you stated effects the team is that in the Cap Era of the NHL, Cap space is a very precious commodity... and every dollar saved allows Cap dollars to be used on additional roster spots and assets.

HTH
I understand the way the cap hit is calculated-- by dividing the total dollars by the number of years--what i dont understand then is the benefit of frontloading a deal given that the cap hit is averaged, apart from buyout reasons possibly (and even then it seems like a marginal advantage if any).

I also understand the over 35 rule and the value of cap space, what I dont understand is why you'd put a player under contract until they were 42 to "save" if they may very well retire and still count as $5M against the cap ... seems to negate the savings. The Hossa and Richards deals, for example, I understand completely, this one I don't really get.

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08-02-2009, 02:33 AM
  #67
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Quote:
Originally Posted by Ignatius J Reilly View Post
I understand the way the cap hit is calculated-- by dividing the total dollars by the number of years--what i dont understand then is the benefit of frontloading a deal given that the cap hit is averaged, apart from buyout reasons possibly (and even then it seems like a marginal advantage if any).

I also understand the over 35 rule and the value of cap space, what I dont understand is why you'd put a player under contract until they were 42 to "save" if they may very well retire and still count as $5M against the cap ... seems to negate the savings. The Hossa and Richards deals, for example, I understand completely, this one I don't really get.
Sorry if I didn't understand your question(s)... Thus the over detailed response, on what I believed was your concern.

IMO, the contract was front loaded to allow Pronger to get what he probably thought he deserved... and also what he most likely deserved, and would have received on the Open Market. My guess is that Homer was successful in convincing Pronger that his worth would diminish after a certain point, and that other teams would only offer him a contract for a few seasons, and then go from there, or not resign him... Homer than possibly said that the Flyers were willing to commit to him for seven seasons, even if his play ebbed... Also that he wanted to project the lesser salary that Pronger would be worth and guarantee him that he would be employed until he was 42, if he liked, BUT needed to lower the Cap hit for the seven years... and that would occur with inserting the lower salary at the end of his contract; win-win for both sides... and if Pronger decides to retire, the Flyers would eat those later smaller salaries, and the Cap hit they would be obligated to account for.

The advantage for the Flyers would be having a $7.9M D-man for $5.something... and hope that he plays all the years, or that the Cap rises and they can eat the remaining Cap years without the services of the player. It is a bargain basement Cap hit for such a player, and they can afford the actual salary.

IMO, that is what signing such a player for years that they will be responsible, even if he retires and leaves them on the hook... And I really believe that both side feel that Pronger can play that long, based on his condition and style of play, along with his injury history, so the odds aren't as bad as some may believe them to be.

I hope that comes closer to your concern than my other post did.

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08-02-2009, 01:22 PM
  #68
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I have skimmed over most of the posts in this thread, maybe I have missed this point, but if not here goes:

What the NHL is investigating is wether the teams involved, Chicago and Philly discussed the idea of the player retiring before the contract was up. An example would be if Chicago goes to Hossa, says at what age do you think you will want to retire, Hossa says about 38, so the team says ok, we front load the contract and have the years the salary drops take place after you retire, that way you never have to play for the lower salary.

Now we all know this is probably implied in other deals, but what the NHL is investigating is wether this was specifically part of the contract negotiations. If the team brought up retirement years in negotiating then they may well have broken the rule about cap circumvention.

I have heard rumors that other teams asked the NHL to investigate after the contracts were registered because of what they were told by agents. That is why it is taking place after the fact.

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08-02-2009, 01:25 PM
  #69
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Originally Posted by The Pucks View Post
I have skimmed over most of the posts in this thread, maybe I have missed this point, but if not here goes:

What the NHL is investigating is wether the teams involved, Chicago and Philly discussed the idea of the player retiring before the contract was up. An example would be if Chicago goes to Hossa, says at what age do you think you will want to retire, Hossa says about 38, so the team says ok, we front load the contract and have the years the salary drops take place after you retire, that way you never have to play for the lower salary.

Now we all know this is probably implied in other deals, but what the NHL is investigating is wether this was specifically part of the contract negotiations. If the team brought up retirement years in negotiating then they may well have broken the rule about cap circumvention.

I have heard rumors that other teams asked the NHL to investigate after the contracts were registered because of what they were told by agents. That is why it is taking place after the fact.
Everyone understands that.

The problem with investigating Pronger along those lines is asinine because of the 35+ rule. There is literally no way to avoid the cap hit on that contract (outside of LTIR).

Personally, I have no doubts that Hossa and the Hawks talked about retirement when signing that contract, but would be shocked if they managed to prove a "plan" for him to retire at some point.

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08-02-2009, 01:36 PM
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The most infuriating part of this investigation is that has Zetterberg's contract with Detroit hasn't been scrutinized at all.

It's a 12 year, 73 million dollar deal. 6 mill per year essentially, well below market value considering he was coming off a 92 point season and is one of the best 2-way guys in the game.

The last year of the deal, he'll be 40 the entire year (Oct. 9 birthday).

Furthermore, the last 3 years of the deal, he makes 5,350,000 total.

So that means his cap hit over the first 9 years is 7.52 million which is much more in line with his market value and there is a possibility that he retires before his 39 and 40 seasons (when he gets paid 1 mill per year).

Has the NHL investigated this at all? Of course not.

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08-02-2009, 01:57 PM
  #71
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08-02-2009, 02:43 PM
  #72
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Quote:
Originally Posted by FlyHigh View Post
The most infuriating part of this investigation is that has Zetterberg's contract with Detroit hasn't been scrutinized at all.

It's a 12 year, 73 million dollar deal. 6 mill per year essentially, well below market value considering he was coming off a 92 point season and is one of the best 2-way guys in the game.

The last year of the deal, he'll be 40 the entire year (Oct. 9 birthday).

Furthermore, the last 3 years of the deal, he makes 5,350,000 total.

So that means his cap hit over the first 9 years is 7.52 million which is much more in line with his market value and there is a possibility that he retires before his 39 and 40 seasons (when he gets paid 1 mill per year).

Has the NHL investigated this at all? Of course not.
In all reality in life, if there were no such thing as a AAV (Average Annual Value), there could be a series of contract as there were in the past... or a contract that takes int account anticipated worth based on players age age experience. It would make total sense for a player to start lower and work up to an apex ins salary, at which time the salary would begin to tail off -- I believe that Richards 12 year contract was constructed in such fashion.

If there were no Cap and average Cap hit, there would be no problem with such contract structure... As it is, the nature of the beast led the powers to be to draft the CBA so teams wouldn't build contracts that are favorable to them in selected seasons, either early or late, and then possibly move the player when the salary does not favor the team... BUT with that, they have left open the problem of averaging the life of the contract, and therefore chances of circumvention... and subsequent accusation of such.

The NHL and NHLPA dug their own grave in that one point in the CBA, and loopholes were discovered... as loopholes always are, given enough time and need for them. I do think that the loopholes can and must be closed... But how they can sanction teams that are abiding by the guidelines given, to me is just flat out wrong.

All that said, if Hossa releases the fact that there was talk of retirement and an attempted circumvention by the Hawks, they are subject to the non-circumvent portion of the CBA's Cap rules... BUT, in the Pronger case, how can there be a circumvention when they are not circumvention anything? All the Flyers did was project what Pronger should be worth at given years, and he agreed to such... The result is a lower Cap hit per season, but that is what the CBA put forth in the rules and guidelines.





BTW: Panaccio has added in his CSN report that the NHLPA has backed both Pronger and Hossa... as we all expected.

http://csnphilly.com/pages/landing_0...038&feedID=704

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08-02-2009, 02:54 PM
  #73
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Well, the NHLPA is backing them signing these types of contracts...I very much doubt the NHLPA would fight if it came to light that there was an agreement that the player would retire before the conclusion of the contract.

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08-02-2009, 03:09 PM
  #74
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Well, the NHLPA is backing them signing these types of contracts...I very much doubt the NHLPA would fight if it came to light that there was an agreement that the player would retire before the conclusion of the contract.
That's a bridge they will cross if and when a hand is found in the cookie jar... or when the smoke is coming from the barrel of the weapon in their hand -- I could decide on which old analogy to call up here, so I used both, LOL -- You can't argue with an flat out admission... If Hossa did openly state that it was discussed, as was posted here the other day, the NHLPA would have to tap dance their way off stage.

BUT, I can't see them not supporting Pronger, even if the broached the subject of his retirement... if it were was known going in that the 35+ rule would be in effect. Even if they were ignorant to the timing of it taking effect, the results would still hold true and, IMO, all the League could do is slap the Flyers gently on wrist because they ineptly TRIED to circumvent.

Personally, I think that this is all a face saving endeavor until they close the loophole... and scare the teams to not take advantage of it, being on notice that they won't hear of such deals.

What the have to do, again IMO, is to not approve the contracts when they are presented to the League, rather than await another team to cry foul play... if they do in fact believe that they are circumventions... Put the deal in limbo, and get a correct ruling BEFORE approval.

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08-02-2009, 03:43 PM
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BernieParent
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Various sources say the NHL seriously doubts Pronger will play to that age.
I guess it is true that Bettman and Daly have crystal balls.

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