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How to make long-term contracts more tradeable

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06-24-2013, 01:01 PM
  #1
Vankiller Whale
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How to make long-term contracts more tradeable

So there are a number of long-term contracts in the league, signed with the intent of "win now, worry about the consequences later". Now the problem is that if a team wants to move a player like this(e.g. Luongo, Lecavalier), it is very hard for them to get an equivalent impact player back, as most teams aren't willing to shoulder the long-term risk.

So here is what I propose. For the sake of example, I will use Luongo. He has a 5.3m cap hit for 9 more years. The assumption is he will not play out his contract until the end, but there is still some element of risk. Now suppose Luongo's cap hit were to drop to 2.65m when he becomes 38/39. Would that not seem a fair price to pay for a veteran backup?(assuming he doesn't retire)

Now you might ask, how is it possible to change his cap hit partway through his contract?

The answer, is that if you trade Luongo for a player on, say, a 4-6 year contract.(let's say, for example, Scott Hartnell). If both teams retained half the players salary, the total cap hit taken by each team would be about the same(300k less for Philly, 300k more for Vancouver) than if they had been traded regularly, but only for the duration of the shorter contract(in this case, Hartnell). As soon as Hartnell's contract is up, Philly no longer retains the salary from him anymore, and is left with Luongo at a 2.65m cap hit, which coincides exactly with when his play is expected to decline or he retires.

So, in effect, Vancouver would get Hartnell for 6 years at a 5m cap hit, Philly would get Luongo for 6 years at a 5m cap hit, and 3 years at a 2.65m cap hit. And if Luongo retires early then Philly would only be hit with around 800k in cap penalties.

Now this wasn't necessarily a proposal, more just an example of how a deal could be structured so that a player signed on a retirement contract could be traded with the team that's trading him still shouldering all the risk.

Do you think that it's possible we could see some deals structured like this in the future?

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06-24-2013, 01:04 PM
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Easiest solution: don't make offers like these.

Love him or hate him Brian Burke is laughing right now.

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06-24-2013, 01:07 PM
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Originally Posted by jmart21 View Post
Easiest solution: don't make offers like these.

Love him or hate him Brian Burke is laughing right now.
Do you think Chicago would be one game up in the finals right now without Hossa? Or that they regret giving him his contract seeing as they might have won 2 cups because of him?

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06-24-2013, 01:09 PM
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Do you think Chicago would be one game up in the finals right now without Hossa? Or that they regret giving him his contract seeing as they might have won 2 cups because of him?
It's quite possible they could be.

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06-24-2013, 01:12 PM
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Do you think Chicago would be one game up in the finals right now without Hossa? Or that they regret giving him his contract seeing as they might have won 2 cups because of him?
Hossa with a cap hit of $5.33m is well worth it his length in years is way to long, But there on the verge of winning there 2nd cup with him so you have to ask yourself that he's more then worth it.

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06-24-2013, 01:13 PM
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Do you think Chicago would be one game up in the finals right now without Hossa? Or that they regret giving him his contract seeing as they might have won 2 cups because of him?
That's one contract out of a lot that were given and really the only one that has proven even moderately worthwhile thus far to my recollection. It's still likely to give them problems down the line though and they would definitely still have an elite team without him.

It's possible to see deals like this but the easiest and smartest thing to do now with the new CBA is to just not give out stupid contracts like that. In my mind, teams were trying to circumvent the previous CBA by front-loading contracts and although it wasn't "cheating" per se it was definitely not highly regarded by people. Now teams are paying for it to an extent and I'm personally happy about that.

Also, how does your idea deal with the premise of having a guy like Luongo or Kovalchuk on the books till they're pretty far gone from the age of 40? It deals with it to some extent by lowering the cap hit but it doesn't deal with the fact that these guys aren't likely to be able to sustain good enough play for that long.

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06-24-2013, 01:13 PM
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Originally Posted by Vankiller Whale View Post
Do you think Chicago would be one game up in the finals right now without Hossa? Or that they regret giving him his contract seeing as they might have won 2 cups because of him?
Well instead of Hossa, they might've kept Ladd, Versteeg or Byfuglien instead on shorter term contracts.

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06-24-2013, 01:15 PM
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Easier solution. Just use a compliance buyout on Luongo.

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06-24-2013, 01:18 PM
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That's one contract out of a lot that were given and really the only one that has proven even moderately worthwhile thus far to my recollection. It's still likely to give them problems down the line though and they would definitely still have an elite team without him.

It's possible to see deals like this but the easiest and smartest thing to do now with the new CBA is to just not give out stupid contracts like that. In my mind, teams were trying to circumvent the previous CBA by front-loading contracts and although it wasn't "cheating" per se it was definitely not highly regarded by people. Now teams are paying for it to an extent and I'm personally happy about that.

Also, how does your idea deal with the premise of having a guy like Luongo or Kovalchuk on the books till they're pretty far gone from the age of 40? It deals with it to some extent by lowering the cap hit but it doesn't deal with the fact that these guys aren't likely to be able to sustain good enough play for that long.
It's not possible to give out any more retirement contracts anyways with the new CBA. It would only apply to players who already have one.

And it deals with it because I think it's fairly unlikely that Kovalchuk or Luongo or whoever continue to play when they're worth less than 2-3m in cap space. If they play for a few years as a backup/3rd liner, that cap hit is reasonable. If they retire the cap penalty is negligible.

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06-24-2013, 01:23 PM
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Originally Posted by Kershaw View Post
Well instead of Hossa, they might've kept Ladd, Versteeg or Byfuglien instead on shorter term contracts.
But they may not have won in 2010. They had the cap room then.

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06-24-2013, 01:23 PM
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Originally Posted by Vankiller Whale View Post
It's not possible to give out any more retirement contracts anyways with the new CBA. It would only apply to players who already have one.

And it deals with it because I think it's fairly unlikely that Kovalchuk or Luongo or whoever continue to play when they're worth less than 2-3m in cap space. If they play for a few years as a backup/3rd liner, that cap hit is reasonable. If they retire the cap penalty is negligible.
I just don't see the incentive for the teams in your scenario. They're having roughly the same cap hits on the books with the retained salaries so it doesn't really fix any of the problems with these contracts short term. Long term Philly wouldn't want to deal with that Luongo contract and I doubt Vancouver would want to have to retain half his salary for that long.

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06-24-2013, 01:24 PM
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Easier solution. Just use a compliance buyout on Luongo.
Pretty much. The league gave teams an out. If they don't want to use it, that's not the league's fault

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06-24-2013, 01:25 PM
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Originally Posted by Vankiller Whale View Post
It's not possible to give out any more retirement contracts anyways with the new CBA. It would only apply to players who already have one.

And it deals with it because I think it's fairly unlikely that Kovalchuk or Luongo or whoever continue to play when they're worth less than 2-3m in cap space. If they play for a few years as a backup/3rd liner, that cap hit is reasonable. If they retire the cap penalty is negligible.
Depends when they retire. If Kovalchuk retires when he's 39 the penalty is pretty big - $4 million a year for three years.

If Zach Parise retires when he has three years left on his contract the penalty will be a whopping $6.2 million a year.

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06-24-2013, 01:27 PM
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Originally Posted by Number1RedWingsFan52 View Post
Hossa with a cap hit of $5.33m is well worth it his length in years is way to long, But there on the verge of winning there 2nd cup with him so you have to ask yourself that he's more then worth it.
For every Hossa there's a Richards/Redden/Gomez/Dipietro and the list continues.

The answer is to not sign these contracts in the first place. If nobody offered ridiculous terms then players would have to accept shorter contracts. I hope these GMs have learned their lessons and use the two get out of jail free cards wisely.

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06-24-2013, 01:32 PM
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Originally Posted by Curufinwe View Post
Depends when they retire. If Kovalchuk retires when he's 39 the penalty is pretty big - $4 million a year for three years.

If Zach Parise retires when he has three years left on his contract the penalty will be a whopping $6.2 million a year.
What you aren't taking into account is that if a player is traded the team that gets him has the cap penalty approximately halved(depending on how much of his contract is played out when he gets traded). And that if the other team is retaining 50% then it gets halved again.

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06-24-2013, 01:34 PM
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What you aren't taking into account is that if a player is traded the team that gets him has the cap penalty approximately halved(depending on how much of his contract is played out when he gets traded). And that if the other team is retaining 50% then it gets halved again.
You're just spreading the cap pain around if you do that in my mind. Still don't see the incentive for teams to do this.

This is why teams got compliance buyouts.

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06-24-2013, 01:35 PM
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Originally Posted by jmart21 View Post
Easiest solution: don't make offers like these.

Love him or hate him Brian Burke is laughing right now.
Quote:
Originally Posted by GAGLine View Post
Easier solution. Just use a compliance buyout on Luongo.
Quote:
Originally Posted by The Nuge View Post
Pretty much. The league gave teams an out. If they don't want to use it, that's not the league's fault
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Originally Posted by SuperJayMann View Post
For every Hossa there's a Richards/Redden/Gomez/Dipietro and the list continues.

The answer is to not sign these contracts in the first place. If nobody offered ridiculous terms then players would have to accept shorter contracts. I hope these GMs have learned their lessons and use the two get out of jail free cards wisely.
The point is that these players are still very valuable now. No team wants to just waste money and assets on a compliance buyout. The method I outlined leaves all the risk with the team that originally signed them to the retirement contract, while still allowing the player to be moved if it helps benefit the team.

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06-24-2013, 01:36 PM
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You're just spreading the cap pain around if you do that in my mind. Still don't see the incentive for teams to do this.
It would allow players to be traded while keeping the "cap pain" with the team that originally signed him, as opposed to the team trading for him.

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06-24-2013, 01:37 PM
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For every Hossa there's a Richards/Redden/Gomez/Dipietro and the list continues.

The answer is to not sign these contracts in the first place. If nobody offered ridiculous terms then players would have to accept shorter contracts. I hope these GMs have learned their lessons and use the two get out of jail free cards wisely.
Exactly these whopping long term contracts are getting way out of hand, Last summer the owners were telling their GMs to take it up to the full cap knowing full well that the cap was going to drop and now teams that are up against the cap. Have to buy out contracts just so they can resign the players they need.

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06-24-2013, 01:37 PM
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Teams don't really want to trade for players on these deals, though. That's why Luongo is still in Vancouver.

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06-24-2013, 01:39 PM
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I feel like no one is even bothering to read my post, and because they're TL;DR, it must obviously just be easier to throw millions of dollars down the toilet in a compliance buyout.

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06-24-2013, 01:42 PM
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Originally Posted by Vankiller Whale View Post
I feel like no one is even bothering to read my post, and because they're TL;DR, it must obviously just be easier to throw millions of dollars down the toilet in a compliance buyout.
I doubt billionaires and people who are as well off as owners are care that much about throwing millions down the toilet for the betterment of the franchise. Most of these hilarious contracts belong to big market teams (Vancouver, NJ, Chicago, Philly, etc.).

I just don't see why Vancouver would want to pay for a player for that long when he's not playing for them. I also doubt Philly would want to deal with that kind of contract either. You're not eliminating any of the cap hit, you're just spreading it around.

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06-24-2013, 01:46 PM
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I doubt billionaires and people who are as well off as owners are care that much about throwing millions down the toilet for the betterment of the franchise. Most of these hilarious contracts belong to big market teams (Vancouver, NJ, Chicago, Philly, etc.).

I just don't see why Vancouver would want to pay for a player for that long when he's not playing for them. I also doubt Philly would want to deal with that kind of contract either. You're not eliminating any of the cap hit, you're just spreading it around.
Because it's essentially taking the Luongo(or whichever player it is) contract and applying it to a different player that they feel will help them more. We've already signed Luongo to a long-term contract, so we should be the ones to deal with the ramifications. A deal like I outlined allows us to move Luongo for a player that helps us while still keeping the long-term effects on us instead of the team that trades for him.

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06-24-2013, 01:56 PM
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Because it's essentially taking the Luongo(or whichever player it is) contract and applying it to a different player that they feel will help them more. We've already signed Luongo to a long-term contract, so we should be the ones to deal with the ramifications. A deal like I outlined allows us to move Luongo for a player that helps us while still keeping the long-term effects on us instead of the team that trades for him.
It is probably the best idea you've had on these forums!

I'd hope that is how it would work, I think it's fair for both teams in your example, I think GMMG's ego will get in the way more than Luo's contract will tbh. That however is a discussion for another thread. It really is to bad when other fan base come in here to **** on other peoples ideas just because they are from a certain fan base, trolls will be trolls though.

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06-24-2013, 03:52 PM
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At first, I didn't quite understand the OP's numbers and was going to shoot the idea down, but, the more that I analyzed it and crunched the numbers, the more that it added up and made some sense.

What he's saying, for those (like me) who find it initially hard to follow, is that Vancouver would take on half of Luongo's cap hit for the duration of his contract (all 9 years) and Philly would take on half of Hartnell's for his (all 6 years). Each team's total cap hit for those first 6 years would be identical ($5.04M). After the 6 years (and Hartnell's contract) are up, they would continue to split Luongo's cap hit. Because Philly is no longer paying for half of Hartnell's contract, though, they get that cap space back, which means that they're truly getting Luongo for half price ($2.665M) for the final 3 years.

The key to understanding it is that the cap hit would never actually change (despite the OP phrasing it otherwise). Luongo's cap hit would still be the same $5.33M in the final years. It's just that half would be counted against Vancouver, so only half would count against Philly. It's really quite a simple solution that only looks complicated at first.

It seems to technically work, but would it work for the two teams? Vancouver would end up absorbing $300K more cap hit for 6 years and then $2.665M for 3 years after that. It's the latter that's the bigger pill, but that could be easier to swallow, especially now, when you consider that the cap could be $20M higher by then. For Philly, the bitter pill is having to give up a player (Hartnell) that you've signed long-term, especially for a player that you'd be doing someone a favor by taking. Is giving up a good player worth getting a discount on another 6 years from now, when the latter might not even be on the team anymore or worth even half his cap hit? That could be the harder pill. It might work in this case, since Philly needs Luongo badly and Hartnell is a rare case of a player who managed a 6-year contract despite his age suggesting that he'll decline soon (meaning that Philly might actually be OK with the swap, especially after his recent, subpar season). I'm not sure if the factors would align as well for other teams to engage in this sort of trade.


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