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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, NHL revenues, relocation and expansion.

Speculation: will 2009-2010 be the last season for the Bonus Cushion?

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Old
02-04-2010, 03:43 PM
  #1
mouser
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Speculation: will 2009-2010 be the last season for the Bonus Cushion?

The Bonus Cushion is not in effect during the final season of the CBA. If it is undetermined whether the current season will be the final one then the Bonus Cushion will not be in effect at least until such a time as the decision is made, and perhaps for the duration of that season regardless.

This is what happened in 2008-2009 when there was no Bonus Cushion in place. The NHLPA had the option to cancel the CBA following the 2008-2009 season--their deadline date to decide whether to cancel was May 17th 2009 [120 days prior to Sep 15th 2009]. When the 2008-2009 season started, the NHLPA had not yet decided whether to cancel, hence the Bonus Cushion was not in effect. Eventually the players decided in January 2009 not to cancel the CBA, however the league did not afterward reinstate the Bonus Cushion in the middle of that 2008-2009 season.

Following the 2010-2011 season the NHLPA will once again have a unilateral right to cancel the CBA, with a deadline for deciding of May 17th 2011. For the Bonus Cushion to be in place for 2010-2011 would require the NHLPA deciding by at least the beginning of the season [Oct 2010] to extend the CBA to 2011-2012. Given the current state of the NHLPA leadership and grumblings of players over escrow it would seem highly improbable a new leader could be hired and consensus built within the union to extend the CBA before the start of the 2010-2011 season. More likely we'd see a decision made in the midseason like we did in 2008-2009 when the NHLPA could get maximum participation from the players during their midseason meeting.

Assuming the NHLPA does extend the CBA through 2011-2012, every following season afterward both the NHL and the NHLPA have an option to cancel the CBA, again with a deadline of May 17th of that season. Unless the NHLPA and NHL agree up front to "extend" the CBA for a fixed number of years, every season going forward could possibly be the final season of the CBA and hence no Bonus Cushion that season.


Is 2009-2010 the final season we'll see the Bonus Cushion in place under the current CBA? What do you think?

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02-04-2010, 06:05 PM
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I believe the answer is yes.

A lot of people seem to be blissfully unaware of this little detail . For example, everyone keeps telling me the Leafs have tons of space. But they also have a potentially huge bonus component to the cap if they want to play Schenn, Kadri, Bozak et al.

Here are the numbers with bonuses thrown in, even excluding guys like Kaberle and Finger.

Code:
2010-2011 Toronto Maple Leafs 
PLAYER BONUS CAP HIT 
FORWARDS 
Phil Kessel   $5,400,000 
Tyler Bozak  ($2,850,000) $3,725,000 
Mikhail Grabovski   $2,900,000 
Nazem Kadri  ($850,000) $1,750,000 
Colton Orr   $1,000,000 
Fredrik Sjostrom   $750,000 
Jay Rosehill   $512,500 
DEFENSEMEN 
Dion Phaneuf   $6,500,000 
Mike Komisarek   $4,500,000 
Francois Beauchemin   $3,800,000 
Luke Schenn  ($2,100,000) $2,975,000 
GOALTENDERS 
Jean-Sebastien Giguere   $6,000,000 
BUYOUTS 
Darcy Tucker  $1,000,000 

CAPGEEK.COM TOTALS 
ROSTER SIZE 12 
SALARY CAP $56,800,000 
PAYROLL $40,812,500 
BONUSES $5,800,000 
CAP SPACE $20,247,500
Without the bonus cushion the Leafs would have $15M with 10 spots to fill including a contract for the Monster and Kulemin.

My guess is that someone will see a bunch of AHL time because of this.

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02-05-2010, 03:35 AM
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How many more options are there going to be??

I thought the 2011-2012 option was the last one before the current CBA expires on Sept 15,2012.

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02-05-2010, 03:50 AM
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Quote:
Originally Posted by Agent007 View Post
How many more options are there going to be??

I thought the 2011-2012 option was the last one before the current CBA expires on Sept 15,2012.
No, the CBA is scheduled to expire 9/15/2011. Unless the NHLPA extends for a year (to 9/15/2012), at their option. (And given the internal union turmoil and lack of leadership, it's probably in their best interest to extend it and have another year to prepare/negotiate new deal.)

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02-05-2010, 10:31 AM
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Quote:
Originally Posted by Agent007 View Post
How many more options are there going to be??

I thought the 2011-2012 option was the last one before the current CBA expires on Sept 15,2012.
The 2011-2012 is the last unilateral option belonging to the NHLPA. For all following years the CBA will automatically renew on a season-to-season basis until either the NHL or NHLPA choose to terminate it.

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02-05-2010, 11:34 AM
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Originally Posted by mouser View Post
The 2011-2012 is the last unilateral option belonging to the NHLPA. For all following years the CBA will automatically renew on a season-to-season basis until either the NHL or NHLPA choose to terminate it.
Not sure I'm following - that second sentence means the NHLPA has a unilateral right to terminate the agreement anytime they want, as does the NHL after the upcoming season.

?

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02-05-2010, 11:39 AM
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Originally Posted by Dado View Post
Not sure I'm following - that second sentence means the NHLPA has a unilateral right to terminate the agreement anytime they want, as does the NHL after the upcoming season.

?
My bad on the language, you're correct. What I was trying to say is 2011-2012 is the last season that only one party to the CBA [the NHLPA] has a unilateral to cancel. Afterward both the NHLPA and NHL have unilateral cancelation rights.

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02-06-2010, 03:16 PM
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Quote:
Originally Posted by Fourier View Post
I believe the answer is yes.

A lot of people seem to be blissfully unaware of this little detail . For example, everyone keeps telling me the Leafs have tons of space. But they also have a potentially huge bonus component to the cap if they want to play Schenn, Kadri, Bozak et al.

Here are the numbers with bonuses thrown in, even excluding guys like Kaberle and Finger.

Code:
2010-2011 Toronto Maple Leafs 
PLAYER BONUS CAP HIT 
FORWARDS 
Phil Kessel  — $5,400,000 
Tyler Bozak  ($2,850,000) $3,725,000 
Mikhail Grabovski  — $2,900,000 
Nazem Kadri  ($850,000) $1,750,000 
Colton Orr  — $1,000,000 
Fredrik Sjostrom  — $750,000 
Jay Rosehill  — $512,500 
DEFENSEMEN 
Dion Phaneuf  — $6,500,000 
Mike Komisarek  — $4,500,000 
Francois Beauchemin  — $3,800,000 
Luke Schenn  ($2,100,000) $2,975,000 
GOALTENDERS 
Jean-Sebastien Giguere  — $6,000,000 
BUYOUTS 
Darcy Tucker — $1,000,000 

CAPGEEK.COM TOTALS 
ROSTER SIZE 12 
SALARY CAP $56,800,000 
PAYROLL $40,812,500 
BONUSES $5,800,000 
CAP SPACE $20,247,500
Without the bonus cushion the Leafs would have $15M with 10 spots to fill including a contract for the Monster and Kulemin.

My guess is that someone will see a bunch of AHL time because of this.
Looking at the teams likely to spend to the upper limit, I get the following estimates for how much $ they might have tied up in bonus clauses:

Anaheim ~$1m [if several of their prospects make the team]
Boston ~$1.5m [If Jeff Penner and Zach Hamill make the team, also possible Boston gets a 2010 pick that makes team]
Calgary ~$1m
Chicago <$1m
Colorado ~$3m [note: Duchene will probably earn his $850k class A's]
Dallas <$1m
Detroit ~$0m
Edmonton ~$1m currently [could be more if MPS makes the team and/or they get a very early pick in the 2010 draft that makes the team]
Montreal <$1m
New Jersey <$1m
NY Rangers <$1m
Ottawa ~$1m
Philadelphia ~$1m [lots of smaller bonus deals, depends on which ELCs make team]
Pittsburgh <$1m
San Jose ~$1m
Toronto ~$5.5m [if Bozak, Schenn and Kadri make team]
Vancouver ~$2m [if Hodgson and Oberg make team]
Washington ~$1m [Alzner]

Toronto's clearly the most heavily impacted by a loss of the bonus cushion for 2010-2011. Most of the other teams aren't hit by more than $1m.

On a side note, one other consideration a lot of the armchair capologists overlook is that teams utilizing the bonus cushion strongly want to do so only for bonuses that are not going to be earned. If the bonuses end up being earned, causing the team to finish over the cap, then that overage $ is subtracted from the cap space the following season--not desirable.


Last edited by Fourier: 02-07-2010 at 05:55 AM.
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02-07-2010, 05:56 AM
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Quote:
Originally Posted by mouser View Post
Looking at the teams likely to spend to the upper limit, I get the following estimates for how much $ they might have tied up in bonus clauses:

Anaheim ~$1m [if several of their prospects make the team]
Boston ~$1.5m [If Jeff Penner and Zach Hamill make the team, also possible Boston gets a 2010 pick that makes team]
Calgary ~$1m
Chicago <$1m
Colorado ~$3m [note: Duchene will probably earn his $850k class A's]
Dallas <$1m
Detroit ~$0m
Edmonton ~$1m currently [could be more if MPS makes the team and/or they get a very early pick in the 2010 draft that makes the team]
Montreal <$1m
New Jersey <$1m
NY Rangers <$1m
Ottawa ~$1m
Philadelphia ~$1m [lots of smaller bonus deals, depends on which ELCs make team]
Pittsburgh <$1m
San Jose ~$1m
Toronto ~$5.5m [if Bozak, Schenn and Kadri make team]
Vancouver ~$2m [if Hodgson and Oberg make team]
Washington ~$1m [Alzner]

Toronto's clearly the most heavily impacted by a loss of the bonus cushion for 2010-2011. Most of the other teams aren't hit by more than $1m.

On a side note, one other consideration a lot of the armchair capologists overlook is that teams utilizing the bonus cushion strongly want to do so only for bonuses that are not going to be earned. If the bonuses end up being earned, causing the team to finish over the cap, then that overage $ is subtracted from the cap space the following season--not desirable.
If the cap was going up by $5-6M as it was a few years ago, losing the bonus cushion would not be a big deal. (See 2008-2009). But with a flat cap the FA signing season is at best a zero sum game. The loss of the bonus cushion takes $26M out of the system from the teams you have listed above alone. Given that top FA's will get their money, and that there are a lot of expiring ELC's who will be getting big raises, someone has to pay. We saw the consequences last year with guys like Bonk, Peca, Malhotra, etc. This could well be more exaggerated this year.

We may actually see some restraint in bonuses this year. Most bonuses never get earned so teams could in the past load up top picks without much downside. Worst case scenario was that your pick had an incredible year, won the Calder, was a nominee for the Hart etc. But with no cushion, you could see a lot of cap space going for naught. Ask the Leafs. They won't be paying out much of those bonuses but they will have to seal with them.

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02-07-2010, 10:51 AM
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Quote:
Originally Posted by mouser View Post
San Jose ~$1m
I think it's closer to $3m if not more. The Sharks have a lot of bonuses for kids on their ELCs. AFAIK, only Blake has bonuses that are not ELC related. (Not sure on Heatley as he wasn't a Shark when contract was signed.)

McGinn, Couture, Petrecki for sure I know have bonuses. (Now, they've been bouncing between AHL and NHL, but I'm not sure they have or not eliminated bonus $$s for this season as they couldn't reach some of them.)

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02-07-2010, 12:34 PM
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Originally Posted by LadyStanley View Post
I think it's closer to $3m if not more. The Sharks have a lot of bonuses for kids on their ELCs. AFAIK, only Blake has bonuses that are not ELC related. (Not sure on Heatley as he wasn't a Shark when contract was signed.)

McGinn, Couture, Petrecki for sure I know have bonuses. (Now, they've been bouncing between AHL and NHL, but I'm not sure they have or not eliminated bonus $$s for this season as they couldn't reach some of them.)
Couture $425k
McGinn $290k
Petrecki $300k
total = $1.15m

Heatley has no performance bonuses, Blake is not signed for 2010-2011. The other kids with bonuses for 2010-2011 on the SJ reserve list include Henderson $125k, Mashinter $150k, Sexsmith $175k, Stalock $65k.

~$1m seems like a reasonable estimate given not all these guys are going to make the roster in 2010-2011. Doesn't look like SJ has any potentially expensive unsigned draftees either.

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02-07-2010, 02:26 PM
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Quote:
Originally Posted by mouser View Post
Couture $425k
McGinn $290k
Petrecki $300k
total = $1.15m

Heatley has no performance bonuses, Blake is not signed for 2010-2011. The other kids with bonuses for 2010-2011 on the SJ reserve list include Henderson $125k, Mashinter $150k, Sexsmith $175k, Stalock $65k.

~$1m seems like a reasonable estimate given not all these guys are going to make the roster in 2010-2011. Doesn't look like SJ has any potentially expensive unsigned draftees either.
True, but they are ususally active in the undrafted free agent pool and often have (signing and) performance bonuses on those kids.

A couple of kids already signed to ELCes (still playing in juniors or Europe; e.g., Heemersek/WHL, Karlsson/SEL) already have signing bonuses (plus probably performance bonuses) that will hit the cap if assigned to the NHL.

And I'm guessing many of the other ELCs the Sharks have executed have bonuses lurking as well, other than those three.

(If the Sharks do not get to the Finals this off season, there could be some major shake ups in the roster so a lot of kids end up on next season's opening night list. And/or UFA signings. Could be a very different team next season.)

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02-07-2010, 04:11 PM
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Originally Posted by LadyStanley View Post
True, but they are ususally active in the undrafted free agent pool and often have (signing and) performance bonuses on those kids.

A couple of kids already signed to ELCes (still playing in juniors or Europe; e.g., Heemersek/WHL, Karlsson/SEL) already have signing bonuses (plus probably performance bonuses) that will hit the cap if assigned to the NHL.

And I'm guessing many of the other ELCs the Sharks have executed have bonuses lurking as well, other than those three.

(If the Sharks do not get to the Finals this off season, there could be some major shake ups in the roster so a lot of kids end up on next season's opening night list. And/or UFA signings. Could be a very different team next season.)
Heemersek doesn't have any perf bonuses, Karlsson's ELC contract is up after this season. The 2010-2011 list I posted earlier is complete for currently signed contracts--right now SJ has seven players under contract for 2010-2011 with perf bonuses.

SJ players with perf bonuses for 2009-2010 who are in the final year of their contracts:
Blake $500k
Karlsson $425k
Setoguchi $425k
Moore $205k [avg]
Jones $30k [avg]
Zalewski $10k

Looking forward to 2010-2011, for the Sharks to have significantly more than $1m in performance bonuses on the main roster would require one of the following to occur:
- Resigning a veteran like Blake and including a large performance bonus component. fwiw, this season Blake's salary is $3.5m with $500k in potential perf bonuses.
- Signing a new ELC contract with large perf bonuses. There's no unsigned draftees on the SJ reserve list that could command more than ~$150k in perf bonuses as well as reasonably have a chance to make the 2010-2011 roster. In terms of signing an undrafted player, yes the Sharks have signed a few over the years, but if my recollection is correct none of them stuck on the roster their rookie season? e.g. Henrik Karlsson last season.
- Swinging a trade for a player with large ELC bonuses. Never impossible, but trades including ELC players with large bonuses don't happen very often. Have to wait and see on that one.

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