Thursday, September 02, 2010
   
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Buyer's Remorse?

 

The recent saga regarding the New Jersey Devils proposed contract for Ilya Kovalchuk prompted one of my readers to suggest not only could the Devils regret that deal by, say, 2015 under a new collective bargaining agreement but so could other teams which signed notable stars to lengthy, front-loaded contracts.

Of course that remains to be seen. We don’t know what the next CBA will look like, though it’s a safe bet the loophole which has allowed teams like the Devils, Philadelphia Flyers (Chris Pronger), Detroit Red Wings (Henrik Zetterberg, Johan Franzen), Tampa Bay Lightning (Vincent Lecavalier), Chicago Blackhawks (Marian Hossa), Boston Bruins (Marc Savard) and Vancouver Canucks (Roberto Luongo) to sign players to “cheat contracts” designed to make the salaries for those star players more “cap friendly” will be closed.

No question teams take a risk when they sign players to these contracts.  

Flyers GM Paul Holmgren doesn’t regret having Daniel Briere on his roster but perhaps he regrets inking him to an eight-year deal which paid him $10 million in its first season and will pay him $2 million for 2014-15, with an average cap hit of $6.5 million.

The NY Rangers signed center Scott Gomez to a seven-year deal paying him $10 million in the first season and dropping to $4.5 million by 2013-14, for a cap hit of over $7.357 million per season. They got out from under than one by shipping him to the Montreal Canadiens, where he’s done little to dispel the opinion he’s grossly overpaid.

Lecavalier struggled last season through the first year of his expensive, 11-year contract which pays him an average of over $7 million per season. Injuries and uncertainty over the team’s ownership situation was cited as reasons for his decline and new ownership and management, which inherited his contract, are hopeful he’ll return to form this season and for many more. If he doesn’t it could certainly become burdensome for many years.

Of course there’s a risk signing a player to any kind of long-term, expensive contract, even those which aren’t heavily front-loaded.

If Briere’s, Lecavalier’s and Gomez’s deals weren’t frontloaded but paid a straight average salary they would still be considered overpaid.

So if any of those other aforementioned players end up not performing up to the raised expectations of their salaries and past performances, then yes, their teams – whether it’s the general manager who signed them to those contracts, acquired for them via trade, or their successors – could end up having buyer’s remorse.

But nobody forced the general managers who signed those players to those lengthy, expensive contracts into doing so.  They did it willingly, without a gun to their heads.

Sure, some might’ve had pressure from ownership to make the deals but all that does then is absolve the general manager.

 The team owner wanted it and he’d be the one who’ll have to live with saddling his club to an expensive lengthy deal he cannot get rid of, just as he’d be to blame if it were the general manager’s idea and he approved it.

As for those new owners and general managers who inherited those deals, they’ll have to live with the mistakes of their predecessors unless the league offers up another one-time, penalty-free buyout in the next CBA.

Those expensive, lengthy deals, be they front-loaded or not, aren’t going to go away under the next CBA.  The best players will always be paid top dollar for their services, and there will always be a general manager or team owner who’ll overrate a free agent and offer that player far more than his true value.

Nobody forced the Devils front office from making those expensive pitches to Ilya Kovalchuk. Whether he’s worth that kind of money is certainly debatable but that particular team, for whatever reason, believed he was, and for good or ill will have to live with the consequences. 

 

NHL's Farcical Contract "Investigations".

 

Ever since arbiter Richard Bloch in early August ruled in favor of the NHL’s rejection of Ilya Kovalchuk’s 17-year, $102 million contract with the New Jersey Devils there’ve been a seemingly steady stream of reports noting the contracts of four notable NHL stars remain under investigation for possible salary cap circumvention.

The contracts of Vancouver’s Roberto Luongo, Philadelphia’s Chris Pronger, Chicago’s Marian Hossa and Boston’s Marc Savard – signed between July and December 2009 –had reportedly been scrutinized by the league since last year.

They were also singled out by Bloch in his ruling on the Kovalchuk contract dispute giving rise to rumors the NHL could retroactively reject one or all of those contracts.

League officials, notably deputy commissioner Bill Daly, when questioned persist in their claim those contracts remain under review, which of course only stokes the speculation.

If anything however it appears the league is merely using their “investigations” in the wake of their arbitration victory in the Kovalchuk case as a means of warning teams from signing players to similar lengthy, front-loaded contracts between now and the end of the current CBA, set to expire in September 2012.

The league has been “investigating” all but Savard’s contract for over a year now. If there was anything in those contracts (and Savard’s) which constituted salary cap circumvention or any other violation of the current CBA they’d have found it by now.

Rejecting those contracts would also create more headaches for the league.

The biggest would come from the Philadelphia Flyers, whose front office considers Pronger’s contract, set to begin this October, to be in compliance with league rules and therefore not an issue.

Daly recently suggested otherwise but it’s doubtful they’ll reject the Pronger deal especially since the Flyers would fight such a move.

The last thing the league needs is to antagonize the Flyers ownership, led by Ed Snider, considered an ally of NHL commissioner Gary Bettman as well as one of the most influential team owners in the league.

It’s been suggested the Canucks ownership might be happy to get out from under Luongo’s contract but reports out of Vancouver in recent weeks suggest otherwise, meaning they too would likely seek to fight such a move via pleading with the NHLPA to file a grievance.

The Bruins, who are owned by Jeremy Jacobs, a Bettman loyalist, were reportedly trying to shop Savard this summer. They’ve given little indication as to their opinion.

As for Hossa, he’s already played one year under his contract, and while the CBA does indicate the league can revisit a contract at any time it could prove to be a nasty legal nightmare to do so.

What could possibly be staying the league’s hand? If salary cap circumvention is the issue, why didn’t the league reject those contracts when they were signed?  Why haven’t they made a move by now?

If the NHL truly has issues with those aforementioned contracts it should’ve actioned them by now.

This kind of open-ended investigation has to date revealed nothing which the league could act upon to reject those contracts.

To repeat: It merely gives the impression the league is using these “investigations” as a means of warning teams away from attempting to sign star players to similar deals.

Of course it remains to be seen between now and the summer of 2012 if that warning will be heeded. 

 

NHL Expansion into Europe? Don't Hold Your Breath.

 

International Ice Hockey Federation (IIHF) president Rene Fasel apparently doesn’t like the idea of the NHL possibly expanding into European countries.

During the recent World Hockey Summit in Toronto Fasel had this to say about it (Hat tip to Puck Daddy Greg Wyshynski):

"Try to come. Good luck. This is our territory and I will fight like hell and not allow anybody to come from abroad. I think in Europe we are strong enough to do something on our own, and then have the competition between Europe and North America. That makes the fan happy. That's really what we should do.

"Having the North American side and the European side ... this is the old story. The '72 series. For sure it was Canada and [the Soviet Union] at that time, but it was Europe against North America. That makes the fan happy.

"I don't think an NHL division in Europe would fly. If they have a lot of money to invest, they can try. But as long as I'm sitting in my chair I wouldn't allow it."

 Fasel instead envisions the following:

“(A) European league, where we have five, six teams from Sweden and the KHL together with the Finns, the Germans, the Swiss and then try to have a European champion and having this European champion play the Stanley Cup winner. That would be, for the hockey fans, music.”

Fasell’s comments would suggest he’s concerned about the world’s biggest pro league expanding into the European markets.

That however is something many years, perhaps a couple of decades or more, into the future, if it happens at all. 

NHL expansion into Europe popped up as a serious topic of discussion following the famous 1972 Summit Series between Canada and the then-Soviet Union.

While a steady supply of top European talent has migrated to the NHL since the 1970s and the NHL has increased in recent years the number of pre-season games between its teams in select European cities, don’t expect to see new NHL franchises popping up in Europe anytime soon.

If the NHL were however to seriously look at having a “European division” one would assume those teams would end up playing themselves more often than playing in North America, let alone most of the North American-based franchises travelling to Europe given the high travel costs and physical toll of such lengthy road trips.

Furthermore one has to believe most NHL team owners wouldn't like the idea of European teams having a better chance of signing and retaining the best European free agent talent, potentially robbing North American-based franchises of a chance to have most if not all the best European talent playing on this continent.

An NHL division would certainly be a novelty for European fans but the league might face a difficult establishing itself in countries where there are already long-established leagues with rich histories which have had fanatical followings for decades.

The same goes for the Kontinental Hockey League’s dream of a European “super league”. That was an idea floated by some pundits (before the formation of the KHL) during the NHL lockout.At the time I spoke with several folks who follow European hockey as fans, bloggers and pundits and they told me such a notion would be very difficult to achieve, given fan loyalty toward the current established leagues, the difficulty in attracting commercial sponsors and broadcasting revenue necessary to keep such a league afloat plus the lack of NHL capacity arenas and the ownership willing to invest in such a league, as well as the high cost to European fans used to a more affordable product.

Packing arenas for a few NHL pre-season games is one thing, but attracting hockey fans to a considerably more expensive NHL division or European super league won’t be easy regardless of the quality of the product or the presence of star players.

That would probably explain Fasel’s “fighting words” over NHL European expansion. 

   

A Couple of Thoughts on Possible NHL Rule Changes.

 

I certainly appreciate what former NHL star-turned-VP of hockey and business affairs Brendan Shanahan is attempting to do with the recent  research, development and orientation camp and the considerations of several modifications of its rules.

It’s certainly never a bad idea to give some consideration to possible changes to improve the pacing of the game. After all, it was the now-famous “Shanahan Summit” during the lockout – the only positive news which came out of the lockout - which instituted many of the rule changes following the lockout which had a positive impact.

That being said I don’t hold out much hope for any significant changes to come out of this.

The league was willing to implement many of the suggested changes from the “Shanahan Summit” as a means of wooing back disillusioned hockey fans following the lockout. It has no such worries now.

I hope I’m proven wrong.

If so, I hope no-touch icing – not a hybrid, but no-touch icing as used in European and international play – is implemented. It only makes sense, it protects the players, helps speed up the game, has the support of noted hockey purist Don Cherry, and is long overdue.

Most of the last set of rules changes implemented following the lockout did a great job in improving the league’s on-ice product, except for one:  calling a two-minute “delay of game” penalty for shooting the puck over the glass.

I understand the rationale that was behind it at the time, as the idea was to prevent players from getting a stoppage in play by deliberately shooting or flipping the puck into the crowd, but it’s been apparent since its implementation that it’s done more harm than good and has done nothing to speed up the game's pacing.

Too often it’s a defenseman under pressure, usually in a short-handed situation, attempting to clear the puck out of the zone by banking it off the glass accidentally shooting it into the crowd. It’s not a deliberate attempt to garner a stoppage in play but ends up penalizing the player for an honest mistake, as well as slows the game by bringing about a stoppage of play to penalize the player. 

More importantly, shooting the puck into the crowd did very little to slow the game in the past, certainly not to the level uncalled obstruction masquerading as defensive hockey did in the so-called “Dead Puck Era” from 1996 to 2004.

It’s a stupid rule, it serves no real purpose, does nothing to speed up the game and one of these days could end up costing a team the Stanley Cup, which would give the league an embarrassing situation similar to the infamous non-call on Brett Hull when he clearly had his foot in the crease – a clear-cut violation of another stupid rule when scoring the Cup winning goal for Dallas over Buffalo in the 1999 Final. 

 

Some Key Issues in Next Round of NHL Labor Talks.

 

This summer has seen an increase in the speculation from some pundits and bloggers over what the future holds in the next round of collective bargaining between the National Hockey League and the NHL Players Association.

The NHLPA’s ongoing search for new leadership, rumors the league could attempt to lower the salary cap and the recent arbiter’s ruling in favor of the league’s rejection of Ilya Kovalchuk’s front-loaded contract with the New Jersey Devils has led to suggestions the next round of NHL labor negotiations, slated for 2012, could be every bit as contentious as the previous ones.

New leadership for the PA will certainly play a significant role in determining the course of negotiations, though over the last two rounds of collective bargaining it was essentially the league making draconian demands which the PA rightfully refused to accept.

That led to the league locking out the players, and part or all of a season being lost to the consternation of fans and media while the two sides engage in a labor war which ultimately only resulted in a continuation of bad blood between the two sides.

It appeared the PA had taken a significant step toward cooling potential tensions with the hiring of Paul Kelly as their executive director but a coup launched by an influential group of hard-line players and agents for reasons which to this day have never been fully explained ousted Kelly and resulted in several of the PA brain trust quitting in protest or disgust.

The presence of former MLB players’ union head Donald Fehr at recent PA meetings has some observers skittish over the possibility he’ll become head of the NHLPA and thus force another lockout or perhaps a strike (something last staged by the PA in 1992).

Fehr however appears only to be active in a consultant role with the PA and it still remains to be seen who will lead the PA in the next round of collective bargaining.

Kovalchuk’s contract rejection is considered a “warning shot” by the league to their anticipated efforts to close the loophole in the next CBA which currently allows teams to sign star players to “cheat contracts”, those which are heavily front-loaded over a significantly long period thus ensuring a lower average hit to a team’s salary cap.

It’s been suggested this could become a serious sticking point in negotiations between the two sides but given how few players are getting these deals and the perception such contracts lead to higher escrow payments it’s doubtful the PA will make these contracts a serious issue, certainly not one which could derail negotiations.

Movement clauses are more likely to be a potential problem area between the two sides.

The league will argue these clauses significantly reduce player movement and could try to eliminate all no-movement or no-trade clauses, or eliminate only the no-movement clause, limit the number of years such clauses can be in effect or set an age limit on the eligibility for such clauses.

For the PA this could be a problem as they’ll likely want to ensure the players maintain the right to retain some measure of control over where they play to negotiate such clauses in their contracts.

The potential problem area in this one is the movement clause since that prevents teams from demoting players to the minors but like the “cheat contracts” that particular clause applies only to a small number of players and on its own isn’t enough to drive the membership into rejecting a possible agreement.

This could become a compromise issue whereby players of a certain age or number of years in the league can have the right to negotiate (something they currently have) but limited by the number of years such a clause is in effect. 

For the players the key issues which could prove galvanizing are escrow and the league’s rumored desire to lower the salary cap possibly resulting in rolling back their salaries and abolishing guaranteed contracts.

Escrow became a serious issue last summer when league revenue slowed following three robust years of growth resulting in the players not only having a larger percentage of their paycheques withheld by the league but they didn’t get any of that money back as they had in previous years.

Just as the league won’t give up the salary cap it won’t give up escrow so it would be folly on the PA’s part to fight to abolish it. What the PA will likely seek is a cap on escrow similar to that of the NBA, topping out at between 8-10 percent of the players’ salaries withheld.

Escrow could be an issue where a compromise could be reached provided the league is willing to do so. Inflexibility on the league’s part has the potential to be a serious threat to a productive round of collective bargaining.

It’s assumed the PA’s current problems, particularly involving its leadership, is a weakness the league will attempt to exploit in order to squeeze the players for more concessions.

Still, if the league pushes too hard – attempting to lower the cap and roll back salaries – that could blow up in the owners’ faces as it could give the players a reason to fight back.

Finally, the key factor which cannot be overlooked will be the will of either side to stage another potentially protracted labor dispute coming only seven years after a lockout which killed a season, disillusioned a fan base and threatened the NHL’s visibility in the eyes of American sports fans and media.

The perception is the players overwhelmingly lack the stomach for another labor war, one that appears justified given their leadership woes, reports of low attendance at PA meetings and apathy toward association issues.

While the league could and probably will attempt to exploit this for their own gains there also might not be as much stomach for a fight this time around from the team owners as there was during the last lockout, when they were united by their distaste for then-PA director Bob Goodenow and a desire to crush the militant element of the PA.

The league also shouldn’t assume it can count on the same unity amongst the ownership this time around, particularly if there’s a push to lower the cap, which has the potential to create a rift amongst team owners willing to keep pace with a rising cap and those which for whatever reason cannot.

Ultimately no one, not the fans, not the pundits, not the bloggers, knows for sure what will transpire over the next two years and when collective bargaining starts up in two years time.

It’s easy to assume the worst, understandably given the battles between the league and the PA since 1992, but a lot can happen in two years time. It’s possible another lockout or strike won’t happen. It’s possible things could go far smoothly than most anticipate.

The dialogue between the two sides over the next two years as well as their public statements plus who takes over as the PA’s new executive director will hopefully give us a clearer picture of what to expect. 

   

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