The kind of lengthy, front-loaded contracts signed this summer by Sidney Crosby, Zach Parise and Ryan Suter could become a thing of the past under the next collective bargaining agreement.

Looking back upon the period of the current NHL collective bargaining agreement, it’s interesting to note it spawned a number of lengthy, front-loaded contracts for some of the league’s best players.

The trend began with the New York Islanders signing goaltender in September 2006 to a fifteen-year, $67.5 million contract. Though it wasn’t front-loaded (meaning most of the salary would be paid out in the early years of the deal), it nevertheless locked in DiPietro to a $4.5 million per season salary to the age of forty, making him affordable to carry on their payroll going forward.

From September 2006 to June 2012, twelve other players (Ilya Kovalchuk, Alexander Ovechkin, Duncan Keith, Henrik Zetterberg, Mike Richards, Roberto Luongo, Marian Hossa, Vincent Lecavalier, Jeff Carter, Johan Franzen, Nicklas Backstrom and Christian Ehrhoff) were also signed to deals of ten years or longer. (Source: CapGeek.com)

Over the same period, another 32 players, including such notables as Brad Richards, Rick Nash, Drew Doughty, Eric Staal, Daniel Briere, Jason Spezza, Anze Kopitar, Dany Heatley, Henrik Lundqvist and Miikka Kiprusoff, netted deals between six to nine years in length.

In July, Pittsburgh Penguins captain Sidney Crosby inked a twelve-year, $104.4 million contract extension (effective July 1, 2013), former Penguin Jordan Staal agreed to a $10 year, $60 million deal with the Carolina Hurricanes, while Zach Parise and Ryan Suter both signed 13-year, $98 million contracts with the Minnesota Wild.

With a few exceptions, most of these contracts were heavily front-loaded, with the players earning most of their salaries in the first half of their contracts, after which their actual salaries tapered down in the remaining years of the deal.

The purpose of these contracts was to generate a lower salary cap “hit” for their respective teams, since the average annual salary is calculated against the salary cap, not the actual salary itself.

Duncan Keith’s contract is a good example. In the first seven years of his 13-year contract with the Chicago Blackhawks, he earns $8 million per season in the first three years, $7.65 million in year four, $7.6 million in year five, $7.5 million in year six, and $6 million in year seven. His average cap hit, however, is just over $5.538 million.

That’s because in the final six years of his contract, his real annual salary drops steadily, from $5 million in year eight, to a mere $1.5 million in year 13.

Critics correctly pointed out this constituted circumvention of the salary cap, but in only one instance – the Devils initial re-signing in 2012 of Kovalchuk – was a contract rejected by the league for circumvention.

The original Kovalchuk deal was nullified by the league primarily because it was too long (17 years), taking him well past an age the league considered reasonable to expect him to continue playing.

Front-loading contracts (as well as “back-loading”, where more is paid out in the second half of the contract) is a legal method of cap circumvention. There’s nothing in the current CBA preventing teams from this practice. As long as the length of the deal is reasonable, and the amount of money paid at either the front or back end isn’t ridiculously high, it’s permissible.

That practice, however, might soon be coming to an end.

While there are teams and general managers quite willing to offer up those kind of deals, others frown upon it, consider it cheating, and want the practice abolished. Those particular owners and general managers are expected to push for term limits on players contracts in the next CBA.

If they get their way, all contracts going forward could be no longer than five years, potentially bringing an abrupt end to the practice of front- and back-loading, thus closing off a loophole which has enable teams to get a lower cap hit when signing expensive talent.

As for the current front-loaded contracts, they’ll have to be honored going forward in the next CBA, though if the league gets its way and another salary rollback is implemented, the value of those existing front-loaded contracts could decline, though the length of the deals wouldn’t change.

It’s possible the deals signed this summer by Parise, Suter, Crosby and Staal could be the last of their kind.

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9 Responses to Last of the Long-Term Deals?

  1. Gregg W says:

    As far as I know, only Jordan Staal’s contract is ‘real’ out of all these. He’s getting 6m per year for 10 years. No fron loading, no back loading. Straight-up 6M per… IMO, the way it should be.

  2. Sean says:

    I hope it comes to an end. I’d rather just have no salary cap than this stupid loophole. At least with no salary cap, the teams with large fanbases actually get rewarded for selling out their buildings year after year. You dont get the Phoenix Coyotes coming down to the final 4. Imagine if Phoenix made it to the Cup Final? I would have thrown up in my mouth.

  3. Stan says:

    Although the contracts might be only for 5 years, there might still be a $70,000,000.00, contract (average salary might be for $14,000,000.00 per year)

  4. Innovator says:

    I still don’t understand why they don’t just stop averaging the contract. If player X gets 2 million in year one and 3 million in year two. The cap hit should be 2 million in year 1 and 3 million in year two. Seems to make sense.

  5. gu_obos says:

    Seems to me the simple fix is to not allow any contracts you cannot get insurance for. Making teams only give out contracts where they can find an insurance provider willing to take on the risk of paying out should the player become too injured to play (or worse) provides financial assurance to the health of teams and the league, and indirectly would put a brake on contract length as well.

    Taking DiPietro for example, I read somewhere years ago the Islanders only could get insurance on the first 6 years of the 15 year deal. Under the rule change I suggest, the Islanders would have been prevented for signing the deal and might have reduced it to a 6 year contract instead.

    It would build in independent, 3rd party review to some of these contracts and in my eyes would solve the problem while ruffling a minimum of feathers.

    • FlyersFanInWI says:

      gu_obos…my understanding is that alot if not all of Sidney Crosby’s contract was uninsurable does that mean he shouldn’t be able to play in the NHL? Dont you think most owners look at the risk/reward of the uninsured before signing these contracts?

      • gu_obos says:

        My bet is the NHL has enough clout to “collectively bargain” and get insurance companies to agree to insure contracts of x value for x years, regardless of any mitigating factors. If they want the business, I’m sure they could come up with something, even if it restricts term or salary.

  6. Jay says:

    Definitely the right idea is to use the actual cash outlay as the salary cap number. Then there isn’t any need to interfere any more with the contracts, like limiting the number of years of the contract. Let them do anything they want then, who cares.

    Second option is more intrusive, but mkae it that a salary can’t change more than ‘x’% over the length of a contract. For example if you make $9M the first year your salary can’t drop more than 10% a year.

  7. George Fraser says:

    The problem with the owners is they act all for one in negotiations with the players and the minute that is settled, they ‘circumvent” ways to sstttrrreetch the rules to their benefit. Why does an owner need a CBA to decide if they wish to sign a player to a long term contract or not. It is a business decision, either it is feasible or non-feasible. By limiting the length of contracts, the owners are putting more of a risk to players. Sorry owners you can’t regulate sanity.

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