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Re-structuring Contracts Pre-CBA

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10-29-2003, 12:06 PM
  #1
discostu
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Re-structuring Contracts Pre-CBA

With a lot of the talk about the problems with Jagr's contract causing problems with dumping him because of potential CBA ramifications, I was thinking that teams may be able to get around this problem by re-structuring contracts.

Jagr is not going to give up any of his money, neither should he have to. He managed to convince Leonis that he's worth the money, and he's entitled to it, however getting 11 million a year under a new CBA will severely limit any team which will holds his contract.

Would the league allow a deal where a lump sum payment is made to Jagr this year in exchange for knocking off some money off his contract annually in future years.

For example, let's say Jagr is willing to knock $3 mil a year for the remainder of his contract, starting in 2004-05, which is 4 years, and adds up to $12 million. In exchange, he receives $10 mil (in addition to his salary this year), which approximates the present value of the $12 million, discounted at approximately 7%. It's a big hit, but it's better to get the money out of the way this year, instead of being forced to limit your payroll moves due to cap restrictions, or pay more into a luxury tax. Jagr also has the benefit of moving money out of a potential lock-out year.

The idea has stemmed from two things. One, is how badly Washington is hurting because of this contract. No teams wants to take that on. The second is Todd Bertuzzi's contract. To me, it was an obvious move by the Canucks to avoid some salary post CBA. Bertuzzi is receiving $24 million in "new money" on this contract, and is committed to the Canucks for an additional 3 years. Instead of giving him $8 mil over three years, they have instead bumped up his salary for this year by $3 million, and are paying him only $7 million per season after the new CBA is implemented. It was a clever move, and one that may turn out to be very helpful for the Canucks in the future.

I'm just wondering if the league would allow a more obvious attempt at doing the same thing. The Bertuzzi move was pretty subtle, and was easily spun as a normal contract, but there's no other way to interpret a $10 million advance to an underperforming player as anythng but money movement for the CBA.

Thoughts?

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10-29-2003, 01:27 PM
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I just don't see the PA agreeing to any deal that wouldn't grandfather in current contracts.

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10-30-2003, 04:15 AM
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Quote:
Originally Posted by degroat
I just don't see the PA agreeing to any deal that wouldn't grandfather in current contracts.
I don't think it's that simple. There's quite a few issues on the table, and given that there are only a handful of really big contracts that extend well into the new CBA, it's quite possible that the grandfathering contracts won't be at the top of their issue lists.

Even if they do grandfather certain contracts, it's quite possible that they limit it until the first year or two of the CBA, which still raises the issue for some of the longer term signed players like Jagr, Yashin, Guerin, etc.

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10-30-2003, 10:23 AM
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Quote:
Originally Posted by discostu
I don't think it's that simple. There's quite a few issues on the table, and given that there are only a handful of really big contracts that extend well into the new CBA, it's quite possible that the grandfathering contracts won't be at the top of their issue lists.

Even if they do grandfather certain contracts, it's quite possible that they limit it until the first year or two of the CBA, which still raises the issue for some of the longer term signed players like Jagr, Yashin, Guerin, etc.
Sorry, but I do think it's that simple. The one thing that the PA has said they absolutely won't budge on is guaranteed contracts. Just like the NBA had to, the NHL will have to grandfather in all existing contracts to get any sort of CBA in place that would come close to making this league stable.

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