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The Business of Hockey Discuss the financial and business aspects of the NHL. Topics may include the CBA, work stoppages, broadcast contracts, franchise sales, and NHL revenues.

5 Year Contract Limits

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Old
11-24-2012, 02:48 PM
  #26
Scurr
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Originally Posted by Riptide View Post
Also, it doesn't really help the league. Parise, Suter and Weber are making 14m plus over the next few years. So yes the cap hit is 7.5, but what teams actually have to pay these guys is a lot more. The only way they actually see any benefit is that they can fit more players under the cap
The choice is not back diving, 10+ year deals or 5 year deals. I'm not advocating for those deals to continue.

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11-24-2012, 02:50 PM
  #27
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Originally Posted by SJeasy View Post
Would it be better for Crosby to take to 5 year deals as $11.1mil/year rather than a 10 year deal at $8.7mil/year? The answer is not clear cut, but there is significant weight to the 2 deals at 5 years side.
The choice is not unlimited contracts or 5 year contracts. You're also talking about more than 11.1m per for Crosby on a 5 year deal imo.

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11-24-2012, 02:53 PM
  #28
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Originally Posted by Scurr View Post
The choice is not unlimited contracts or 5 year contracts. You're also talking about more than 11.1m per for Crosby on a 5 year deal imo.
No. But surpassing 5 invokes the insurance penalty. I was just creating an example based on one player for whom I had numbers.

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11-24-2012, 02:53 PM
  #29
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Front loading the deals in the first 5 years then would minimize insurance risk would it not? But if contracts cant get insured beyond 5 years, why the need for a rule to prevent it? Seems there is already one.

I cant help but notice that in previous lockouts, fan desire was to find a way to prevent them from losing their ufas to big markets when they became older players. Now we are looking for a way to ensure they go up for auction far more often. Fans can be idealistic about either side of that issue it appears, depending on which side at the time helps the owners win a money battle.

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11-24-2012, 02:54 PM
  #30
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The NBA has had contract term limits for a while. At least 3 CBAs. The players association has drawn the line on free agency and salary arbitration. The NHLPA proposal didn't mention anything about term limits or contract structure. The reports from Pierre LeBrun,Elliotte Friedman and Larry Brooks have indicated the PA is willing to negotiate restrictions on contract term/structure. Maybe they will discuss it when the NHL indicates they will back off free agency and arbitration rights. The PA offer dealt with back diving contracts nine years or longer when the player retires before the SPC expires. They proposed it for new SPCs and not existing SPCs which is what the NHL wants.

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Note that the NHLPA is proposing these measures only for contracts of at least nine years in duration that are signed under the new CBA (so existing contracts would be "grandfathered" and not subject to the new rules).

What the players offered was a rule that would require teams to take any "cap benefit" gained and charge it against their own cap. (There is also an option for clubs to spread it over twice the number of remaining seasons in the offending contract. So, if the player retires with two years left, the proposal allows the team to apply the penalty over four.)
http://www.cbc.ca/sports/hockey/opin...contracts.html

The NHL embraced that proposal with modifications

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embraced Union's Cap Advantage Recapture concept subject to several minor modifications and application to existing long-term contracts
The NHL backed off their 5% but they still want 5 years MAX

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suggested willingness to be flexible of 5% contract variability proposal but maintained request for 5 year term limits on contracts.
http://espn.go.com/blog/nhl/post/_/i...er-contracting

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Old
11-24-2012, 02:56 PM
  #31
NJDevs26
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Originally Posted by billybudd View Post
Okay, well, if that's why the league is pushing this, they aren't likely to move off of it under any circumstances.
I think the insurance thing is just an excuse personally. When insurance was seven years long, teams were still throwing out contracts that went beyond that. Teams weren't in a rush to throw out 10+ year contracts except for the fact they helped the cap number. If you close the cap loopholes (variance, backdiving contracts, limit signing bonuses) you don't need a term limit on top of all that. If the Leipolds of the world want to give out flat 10-85 deals to Parise and Suter, buona fortuna.

This is as much the NHL being gunshy about leaving loopholes as anything else after teams found a way to take advantage of the previous system, they're double and triple protecting themselves. Plus owners like Leonsis and of course Wang feel burned by the multi-multi year deals now and have buyers' remorse.

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11-24-2012, 03:03 PM
  #32
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Originally Posted by SJeasy View Post
No. But surpassing 5 invokes the insurance penalty. I was just creating an example based on one player for whom I had numbers.
I just don't see why you have to limit contracts to 5 years. Teams will know about the added insurance costs and will have to weight that against the benefit of signing that player to a longer term. Players will continue to sacrifice some money per for longterm security. I don't see a huge problem with that.

People are pointing out that the NBA already has that cap, how has that helped them? It looks to me like a lot of their current issues with stars moving teams and the lack of competitive balance stem from this.

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11-24-2012, 03:05 PM
  #33
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Maybe I'm stupid but I just don't get how this would be BAD for players. In my mind, this would be worst for the owners than it would be for the players.

Example :

Let's say -

Ryan Getzlaf becomes a UFA and signs a 10 year - $70M contract ($7M/yr)

instead, with the proposed 'restrictions', he signs a 5 year - $35M contract ($7M/yr)

At the END of that 5 year deal, with the supposed 5-7% increase in HRR and consequent salary cap increase, combined with the fact that Getzlaf is still only around 32 years old, wouldn't he be potentially signing for MORE than $7M per year and somewhere near $8 or $8.5M if his value stays relatively the same???

Obviously, this is just an example with round figures but in theory it works with any player.

Now I'm no 'mathamagician' but I really don't get how players would be upset about this and why owners would actually WANT this (except to get rid of the backdiving deals, that part I get)...

Please, enlightened me...cuz I just don't get it.
Like others have already said, it doesn't always work out that way. In fact, for every guy who would be helped with contract limits in hindsight there would be at least a handful that wouldn't benefit from it in the end.

Plus factor in the owners want to push the FA age back to 28. You sign a 10-year deal at 28 (assuming none of the backdiving that has taken place the last few years), that takes you pretty much to the end of your career making good money each year.

Now, if you have to sign a five-year deal at 28, then you next become a FA at 33. What are the odds you're getting the same contract (or better) at 33 or better than you did at 28? Unless you're a star player that's going to get paid full freight regardless of age. Teams aren't going to want to pay full freight for non-stars' past their prime years. Especially if an injury occurs or a guy's play falls off a cliff.

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11-24-2012, 03:30 PM
  #34
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Originally Posted by Scurr View Post
I just don't see why you have to limit contracts to 5 years. Teams will know about the added insurance costs and will have to weight that against the benefit of signing that player to a longer term. Players will continue to sacrifice some money per for longterm security. I don't see a huge problem with that.

People are pointing out that the NBA already has that cap, how has that helped them? It looks to me like a lot of their current issues with stars moving teams and the lack of competitive balance stem from this.
You need to incorporate the cost to all entities, owners and players, of spending money that neither will access. I am trying to get you to incorporate that into your cost/benefit analysis. It isn't just teams paying it. Ultimately the players will pay for it as it will make owners less inclined to strike a deal for higher pay knowing that they have to pay out higher insurance costs. Less money in the pool to pay wages. Then you have to add the analysis done on the effects of contract inflation. For some players, going five years at a time will net a higher total dollar value on contracts than signing a single ten year deal.

It is not a simple answer or analysis.

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Old
11-24-2012, 04:37 PM
  #35
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Quote:
Originally Posted by Scurr View Post
I just don't see why you have to limit contracts to 5 years. Teams will know about the added insurance costs and will have to weight that against the benefit of signing that player to a longer term. Players will continue to sacrifice some money per for longterm security. I don't see a huge problem with that.

People are pointing out that the NBA already has that cap, how has that helped them? It looks to me like a lot of their current issues with stars moving teams and the lack of competitive balance stem from this.
Yes, but now you're saying that the team has complete control over that (and they do in the sense that they can walk away), but don't be naive. The players/agents push for these contracts, leaving the GM with the choice of trying to better their team and paying a premium to do so, or walking away - and dealing with the impact of not having on-ice success.

Limiting this to something reasonable, removes this from the equation. Now it would come down to location, team/players/staff and money. So while it still might be who has the biggest pocket, now that's taking the cap more into account than it did previously.

As for the PA's offer, I like it. However it's not enough. Change it to 6-7 years, AND make it count towards every existing contract. Otherwise I don't blame the NHL for not really liking it - however it is something that they should be able to negotiate around.

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11-24-2012, 11:06 PM
  #36
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Originally Posted by Fugu View Post
If you believe it's worse for owners, why is the NHL asking for the limit-- in your opinion?
I don't know, that's why I was asking the question. As I illustrated, I believe that by trying to close one loophole, they may have created another that would in the long-run, be actually BENEFICIAL for the players.

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Originally Posted by NJDevs26 View Post
Like others have already said, it doesn't always work out that way. In fact, for every guy who would be helped with contract limits in hindsight there would be at least a handful that wouldn't benefit from it in the end.

Plus factor in the owners want to push the FA age back to 28. You sign a 10-year deal at 28 (assuming none of the backdiving that has taken place the last few years), that takes you pretty much to the end of your career making good money each year.

Now, if you have to sign a five-year deal at 28, then you next become a FA at 33. What are the odds you're getting the same contract (or better) at 33 or better than you did at 28? Unless you're a star player that's going to get paid full freight regardless of age. Teams aren't going to want to pay full freight for non-stars' past their prime years. Especially if an injury occurs or a guy's play falls off a cliff.
Well, firstly, you need to look at WHO exactly is signing deals of over 6 years in length and I challenge you to find even ONE that wasn't considered a 'star' player when it happened. Nobody's signing no Cody McLeod to no 10 year contract, I can assure you of that.

I get what you're saying about when the player becomes a UFA at 33 but you ALSO need to take into consideration that it's five years later and the economics can change greatly as they have the past 5 years.

Shane Doan just got a RAISE at age 36.

Based on THAT and a whole lot more MADNESS that we've witnessed the past 5-6 years, can you honestly say that you think a 33 year old, STAR player is going to take a pay cut??? The theory of what you're saying is accurate but generally when it comes to practice, some insane GM goes out and throws logic out the window and overpays greatly for any kind of perceived advantage. Even if that means overpaying for a veteran star player with hopes that he can recapture former glory.

I mean, isn't Tim Connolly a perfect example of this? He actually got a RAISE from the Leafs after his worse NHL season in 4 years with the Sabres. Do you think Burke really wanted to pay him $4.75M per season? I'm pretty sure the answer is no but because of competition, that's what was needed for him to become a Maple Leaf.

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Old
11-25-2012, 11:17 AM
  #37
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Originally Posted by Riptide View Post
Limiting this to something reasonable, removes this from the equation.
I'm all for something reasonable, going from unlimited to 5 years isn't reasonable.

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Old
11-25-2012, 12:40 PM
  #38
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Quote:
Originally Posted by Scurr View Post
I'm all for something reasonable, going from unlimited to 5 years isn't reasonable.
Says you.

Well the contracts aren't unlimited now. Best case is the player is a star player at 21 needing a contract (started at 18 years old). So in theory 19-20 years would likely be the longest contract... as I don't see the league approving many deals that go past 40. So yes, while 5 years seems low, when you consider the financial aspect of insurance, it does make sense.

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