NHL Could Be Shortsighted With Entry-Level Contracts.

The NHL’s proposal to extend entry-level contracts from three to five years could reduce its European talent pool, becoming a potential boon for European leagues.

Washington Capitals star Alexander Ovechkin’s recent comments hinting he and other Russian players might consider staying in the KHL if the next CBA reduces their salaries set tongues wagging over the legality of following through with that threat.

I don’t believe Ovechkin or any other Russian or European players currently contractually bound to NHL clubs could follow through with that threat. Beyond the obvious legalities, I don’t believe the KHL intends to get into another lengthy squabble with the NHL over the “poaching” of players under existing contracts, nor does any of the other European leagues.

Ovechkin’s remarks did, however, get me thinking about the implication of the NHL’s desire to extend entry-level contracts from three to five years.

I touched briefly on this following the NHL’s initial CBA proposal to the NHLPA, and have discussed it at length with the crew on The Face Off Hockey on a couple of occasions.

In the past two CBAs, players on entry-level contracts faced the most restrictive contract rules.

A cap was placed upon entry-level salaries in the 1995 CBA, which teams subsequently skirted by signing rookies to bonus-laden contracts.

The league closed that loophole in the 2005 CBA, in which entry-level basic salaries and bonuses were capped, while contract lengths were limited to three years.

Under the rules of the recently-expired CBA, and using the contract of 2012 first overall pick Nail Yakupov as an example, basic salaries per season for entry level players for 2012-13 were capped at $925K, though they could earn up to $3.775 million total if they achieved all their bonuses.

Most entry-level players, however, won’t reach most of those bonuses, meaning their average annual salaries will be closer to the base level.

Almost all European draft picks who made the jump to the NHL over the course of the recent CBA did so with the knowledge that, in three years (two, if they were 22-23 when they signed; one year if 24), they could parlay whatever measure of success they achieved into longer, richer contracts.

Still, there were a few recent signs that some Europeans – specifically, Russian players – were willing to forgo their NHL debuts until they were eligible to join the league as “mature players”, ensuring shorter terms under NHL entry-level contracts.

Dmitry Chesnokov pointed this out back in May, suggesting it was one factor (the 2014 Sochi Olympics being another) in Washington Capitals 20-year-old prospect Evgeni Kuznetsov’s decision to re-sign with the KHL for two more years.

Montreal Canadiens defenseman Alexei Emelin was another who put off his NHL debut until he was older (24), ensuring he’d only have to play one season under an entry-level contract.

Though the trend involved only a handful of players under the recently-expired CBA, it’s one which could grow, perhaps substantially, if the NHL succeeds in implementing longer terms for entry-level contracts.

It could prove a boon for European leagues in retaining their best young talent. Why would those players jump to the NHL at 18, 19 or 20, only to be bound to a five-year entry level contract paying less than fair market value – especially if they should blossom quickly into stars – when they could earn considerably more at home?

Of the European leagues, the KHL would benefit the most. The expanding Russian league has been fighting to prove itself a viable alternative to the NHL, but over the past four years served mainly as a dumping ground for fading NHL veterans and younger Russian players unable to make the cut in North America.

It’s been unable to woo established NHL stars, but the implementation of longer-term, perhaps even more restrictive entry-level contracts by the NHL could make it easier for KHL teams to convince their young stars to stay home.

The more xenophobic among NHL fans in North America would likely dismiss this as no big deal, but it could have an adverse effect upon the NHL talent pool.

When the KHL came into existence, some North American pundits and bloggers suggested it would pose a threat to the NHL’s talent pool. The previous four years have shown that concern was unfounded, as the KHL couldn’t match the NHL’s level of competition, superior playing conditions, strong markets, and of course, the security of lucrative long-term contracts.

Extending the length of NHL entry-level deals, along with other restrictions, could prove the KHL with the edge it’s been seeking, becoming a viable market for rising young talent to compete at a level superior to that found in Canadian Junior, US college and minor league levels.

That raises the possibility of young talent comparable to stars like Alexander Ovechkin and Evgeni Malkin (whom the NHL marketed heavily over the course of the previous CBA) opting to remain in the KHL during their formative professional years, where they could earn more money, with fewer restrictions, than they could in the NHL.

While the KHL still consists predominantly of Russian teams, it has begun expanding into Central Europe, specifically the Czech Republic and Slovakia. If they establish a strong foothold in those markets, they could attract more young talent from those countries.

Of course, if the NHL maintains that staggered age system for entry-level deals, it could result in more European players opting to join the league between the ages of 22 and 25.

That might not be a bad idea for most, but the notion of a youngster comparable to Ovechkin and Malkin remaining in Europe until he turned 22 to ensure a shorter NHL entry-level contract gives the NHL one less young superstar to market itself around.

One also has to wonder what impact five-year entry level contracts could have upon young North American rookies.

Yes, their dream is to make the NHL, but if they see an opportunity to make considerably more overseas during the formative years of their pro careers whilst building up their game against better competition than that found in Junior A, college or the AHL, it could prove tempting.

Sure, it’s easy to dismiss that notion, but remember, the last CBA has entry level deals at only three years. Top prospects who went on to become superstars like Sidney Crosby, Patrick Kane, Jonathan Toews, John Tavares and Jeff Skinner had little trouble reaching most or all of their bonuses, earning the upper level of the annual average rookie salary.

Facing the prospect of having to do that for five years, earning perhaps less than those under entry-level contracts under the previous CBA, when there is bigger bucks awaiting from an expanding KHL, could be a significant factor.

All it would take is one top North American prospect to say, “Sorry, but I’m going to spend the next three or four or five years overseas because I won’t earn my true market value in the NHL”, and the repercussions would be felt throughout the league, sending general managers to seek loopholes in the CBA to make entry-level deals more lucrative.

Sound far-fetched? Perhaps, but then again, the notion of teams front-and back-loading contracts as a means of legalized salary cap circumvention was dismissed as far-fetched when the previous CBA was implemented in 2005, and we all saw what happened.

If the NHL gets short-sighted with entry-level contracts in the next CBA, they risk a growing number of top European prospect postponing their NHL debuts to earn more money overseas during their entry-level years, as well as the possibility of some of North America’s promising talent following that example.

3 Comments

  1. Another solid article. Kind of wonder if the NHL and PA have ever sat down and chewed over a topic like this with open minds. I guess it could only happen if the bigwigs weren’t in the room. Lots of speculation and questions. The more I read about the lockout, the more I side with the players. Both groups are dug in, and it could drag on for a while.
    It is interesting that these entry level contract rules could be changed with the intent to lower salaries or have some sort of cost certainty and longer term, but the changes could have the opposite effect. It is almost like the CBA should have a set of regulations that explains the intent of clauses and brings more ground rules. It isn’t the players that messed up, it is the owners offering the players crazy contracts and the owners finding ways around the salary cap rules. Maybe the different team managements are stuck on the notion, if you aren’t cheating than you aren’t trying hard enough. We are here today because of teams ignoring the intent of the previous cba. The proposed roll back in player salaries is not a little tweaking, the cba is still broke, and the NHL isn’t about to fix it, they just want a reset which means we will back in this same predicament in another 7 years.

  2. This article opened my eyes. I never even thought about how the change from 3 to 5 years could negatively affect the league. And it’s not far fetched at all. It’s common sense to me. Also ad the added 2 years of a possible career ending injury assuring that they never get the big deal that could set them up for life. It’s just smarter for them to take that big euro deal and get set up. This is just another way for owners to bleed players of there talent without having to pay them. There like sweat shop owners. There the ones setting the bar for contracts. If they would stop signing guys to these overblown contracts in the first place then they wouldn’t be in this position in the first place. Look at kovalchuk’s deal. If the teams that were over bidding for him would have just said we can’t afford that type of contract and let him go to the khl it would have lowered the players expectations of what they could get instead of raising it. But they all signed these deals knowing that they were going to get 25% back come CBS bargaining time. And that’s the type of short sighted thinking that got us were we are now. NO HOCKY

    • I always wondered what happened to having a relatively bargain contract after their entry level. It used to be they were an rfa and if they held out, they didn’t get paid and were not eating up a year of rfa. So instead of a Hall, Seguin or Tavares getting around 6 million, they would only be getting 3-4 million. Now these big contracts are signed and they are comparable to unrestricted free agents with similar stats? (If they were ufa’s, would they be making little more?). Am I missing inflation or are owners more afraid of offer sheets or something?
      The salaries are high, but the owners, who are crying poor, are the ones offering these crazy contracts.
      Is a team like the Devils crazy for signing Kovalchuk to that big contract or does he give the franchise a better chance for survival in New Jersey as a big name draw? Part of the problem or solution?

      If players are expected to eat a percentage of their contracts because of the mismanagement of owners, they should have some influence or a say in correcting that mismanagement. Bargaining is give and take, if the owners don’t think so, the players will resist taking a cut- maybe they will eventually give in, but it might not be until we lose a season.