The Business of HockeyDiscuss the financial and business aspects of the NHL. Franchise sales, valuations, TV contracts, ratings, expansion, relocation, the CBA and work stoppage discussion goes here.
How does the NFL prevent front loaded contracts in cap years? I know this past season the redskins and another team were punished harshly for front loading contracts in a non cap year. Is it just something the NFL judges on its own? Or is front loading contracts in the NFL actually a bad thing because putting the money in the back end is more lucrative to a franchise since contracts are not guaranteed?
How does the NFL prevent front loaded contracts in cap years? I know this past season the redskins and another team were punished harshly for front loading contracts in a non cap year. Is it just something the NFL judges on its own? Or is front loading contracts in the NFL actually a bad thing because putting the money in the back end is more lucrative to a franchise since contracts are not guaranteed?
Since contracts are not guaranteed and salary counts directly against the cap (and is not averaged) - there is no advantage for front loading salary.
Signing Bonuses (the only real guaranteed NFL money) are averaged out over the term of the contract - however if the non-guaranteed contract is terminated early, all remaining Signing Bonus cap hit becomes immediately due.
The issue for the Redskins and Cowboys was that they restructured existing contracts to reclassify signing bonuses as salary and to move salary due in later years into the uncapped 2010 season. The League had warned teams since 2007 that that would not be permitted - and later penalized them $36M and $10M in cap space respectively. The teams appealed the Leagues decision, but an arbiter sided with the NFL and upheld the penalties.
Since contracts are not guaranteed and salary counts directly against the cap (and is not averaged) - there is no advantage for front loading salary.
Signing Bonuses (the only real guaranteed NFL money) are averaged out over the term of the contract - however if the non-guaranteed contract is terminated early, all remaining Signing Bonus cap hit becomes immediately due.
The issue for the Redskins and Cowboys was that they restructured existing contracts to reclassify signing bonuses as salary and to move salary due in later years into the uncapped 2010 season. The League had warned teams since 2007 that that would not be permitted - and later penalized them $36M and $10M in cap space respectively. The teams appealed the Leagues decision, but an arbiter sided with the NFL and upheld the penalties.
Aaaaaand we're done here.
__________________
“The most terrifying fact about the universe is not that it is hostile, but that it is indifferent. If we can come to terms with this indifference and accept the challenges of life within the boundaries of death, our existence as a species can have genuine meaning and fulfillment. However vast the darkness, we must supply our own light.” - Stanley Kubrick
Would that model help the NHL at all or would the rich teams just throw out big signing bonuses instead? It seems like it might be a riskier venture if you are messing with cap for possibly years down the road.
Would that model help the NHL at all or would the rich teams just throw out big signing bonuses instead? It seems like it might be a riskier venture if you are messing with cap for possibly years down the road.
If there is a way for the rich teams to :
A) Screw the rest of the league and
B) Screw themselves worse in the process
Then you can be guaranteed they will do it .......
Since contracts are not guaranteed and salary counts directly against the cap (and is not averaged) - there is no advantage for front loading salary.
My understanding is that teams CAN give out guaranteed contracts, in whole or in part, and that star players routinely do get them, along with front-loading, bonuses, etc.
My understanding is that teams CAN give out guaranteed contracts, in whole or in part, and that star players routinely do get them, along with front-loading, bonuses, etc.
Am I wrong?
That is correct.
The guaranteed portion of contracts is often one of the biggest pieces of negotiation in NFL contracts.
By most reports, Drew Brees and the Saints had agreed he was going to be paid $100 million over 5 years, but spent a good while in negotiation of how much of it would be guaranteed. Ultimately he gets $60 million guaranteed meaning that even if the Saints decide to cut Brees in training camp this year, they still owe him that much.
__________________
2013 NHL suspensions tracker - Here
2013 Maple Leafs Regular Season Prediction Contest Winner - Phion Keneuf
2013 Maple Leafs Playoff Prediction Contest Winner - Mess
As I mentioned in another thread, the combo of front-loading plus cap-averaging can allow a team to get away with not only cap-circumvention but RFA-compensation-circumvention. E.g. the top 2 categories for RFA compsation are...
2x1st + 2nd + 3rd rounder: $6,268,176 to $7,835,219
4x1st rounders: $7,835,220 or more
Shea Weber's offer sheet has $26 million in the first year, but would've just barely triggered the 4x1st rounders compensation. It's 14 years long, and $110 million / 14 yrs = $7,857,143 per year, only approx $22,000 per year above the threshold. If it had been $109 million over 14 years, it would've come to $7,785,714 per year, ond only required 2x1st + 2nd + 3rd rounder compensation.
As I mentioned in another thread, the combo of front-loading plus cap-averaging can allow a team to get away with not only cap-circumvention but RFA-compensation-circumvention. E.g. the top 2 categories for RFA compsation are...
2x1st + 2nd + 3rd rounder: $6,268,176 to $7,835,219
4x1st rounders: $7,835,220 or more
Shea Weber's offer sheet has $26 million in the first year, but would've just barely triggered the 4x1st rounders compensation. It's 14 years long, and $110 million / 14 yrs = $7,857,143 per year, only approx $22,000 per year above the threshold. If it had been $109 million over 14 years, it would've come to $7,785,714 per year, ond only required 2x1st + 2nd + 3rd rounder compensation.
If it was figured off AAV yes, but since it goes by 5 years no matter the term no.
As I mentioned in another thread, the combo of front-loading plus cap-averaging can allow a team to get away with not only cap-circumvention but RFA-compensation-circumvention. E.g. the top 2 categories for RFA compsation are...
2x1st + 2nd + 3rd rounder: $6,268,176 to $7,835,219
4x1st rounders: $7,835,220 or more
Shea Weber's offer sheet has $26 million in the first year, but would've just barely triggered the 4x1st rounders compensation. It's 14 years long, and $110 million / 14 yrs = $7,857,143 per year, only approx $22,000 per year above the threshold. If it had been $109 million over 14 years, it would've come to $7,785,714 per year, ond only required 2x1st + 2nd + 3rd rounder compensation.
Nope. The Average Salary for RFA compensation is the total of all salary and bonuses (signing, roster & reporting bonuses) divided by the length of the contract offer OR 5 YEARS, whichever is smaller.
Any Offer Sheet for longer than 5 years with total salary/bonuses > ~$39.2M would trigger the max 4 1st rounders as compensation.
The guaranteed portion of contracts is often one of the biggest pieces of negotiation in NFL contracts.
By most reports, Drew Brees and the Saints had agreed he was going to be paid $100 million over 5 years, but spent a good while in negotiation of how much of it would be guaranteed. Ultimately he gets $60 million guaranteed meaning that even if the Saints decide to cut Brees in training camp this year, they still owe him that much.
So Drew Brees gets 2/3rds of this contract guaranteed in signing bonus. But his team can still go - you're cut! Cause there's no guaranteed contracts.
In the NHL they have to go - "you're bought out!" and then buy him out for 2/3rds of his contract cause its guaranteed.
Its obviously just not the same thing. As fans, you can see why we would be hoping the owners get rid of guaranteed contracts - this is a big nuance worth losing a year of hockey for. Well other than those 2 way contract things which i guess arent guaranteed. And one third buy outs for young players. And offering short term contracts.
So Drew Brees gets 2/3rds of this contract guaranteed in signing bonus. But his team can still go - you're cut! Cause there's no guaranteed contracts.
In the NHL they have to go - "you're bought out!" and then buy him out for 2/3rds of his contract cause its guaranteed.
Its obviously just not the same thing. As fans, you can see why we would be hoping the owners get rid of guaranteed contracts - this is a big nuance worth losing a year of hockey for. Well other than those 2 way contract things which i guess arent guaranteed. And one third buy outs for young players. And offering short term contracts.
Guaranteed contracts work both ways though. Significantly less 'holdouts' in the NHL. You regularly see players in the NBA and NFL demanding their contract to be restructured after a big season.
Personally I'm fine with frontloaded contracts, and with average salary being the cap hit. The biggest issue recently come to light I think is the way the 'signing bonuses' work. That is the part I think that needs to be redone, just have a salary as a salary -- there's no reason for the signing bonus because the money's guaranteed anyway. And that the richer owners can't try to run the cheaper owners out of town in the first couple seasons of a contract (or players forcing owners to work under deadlines to try to move before having to pay large sums of money... ie Heatley/Ottawa)
Actually I just thought of a potential solution to the issue with signing bonuses.
Have signing bonuses count the same way any other contract bonus is (ie performance bonuses in ELC and 35+ contracts). So it would modify the cap hit for that year only that it applies in... and the average cap hit actually would end up reduced over the term as a result. It would limit how much in terms of bonuses a player can get though, but I think would make contract structures look a touch more reasonable.
Nope. The Average Salary for RFA compensation is the total of all salary and bonuses (signing, roster & reporting bonuses) divided by the length of the contract offer OR 5 YEARS, whichever is smaller.
Any Offer Sheet for longer than 5 years with total salary/bonuses > ~$39.2M would trigger the max 4 1st rounders as compensation.
Glad to see somebody's lawyers checking for loopholes. I suppose that a 5-year front-loaded offer sheet is still possible
$13 million bonus plus $1 million salary
$13 million bonus plus $1 million salary
$8 million bonus plus $1 million salary
$1 million salary
$1 million salary
Question. Is there something similar for UFA offers?
