In the wake of the Los Angeles Kings signing Marian Gaborik to a seven-year, $34.125 million contract, I wondered if this was a clever way by the Kings to exploit a loophole in the current collective bargaining agreement.
Under the previous CBA, the Kings could’ve re-signed Gaborik to a heavily front-loaded long-term deal up to nine years (provided they could get away with convincing the league he’d still be playing hockey by age 41) to garner a more cap-friendly deal.
They can’t do that under today’s CBA, but they did work within the rules of the current deal to achieve a lower annual cap hit. Salary variance is limited from year-to-year to no more than 35 percent, and no year can be less than 50% of the highest year.
For Gaborik’s new deal, it pays out $6.075 million in actual salary for the first three seasons, dropping to $5.075 million in year four, $4.575 million in year five, $3.175 million in year six and $3.075 million in the final year. It doesn’t contain performance or signing bonuses. The average cap hit works out to $4.875 million.
In my initial reaction to this deal, I felt the Kings overpaid Gaborik, a 32-year-old winger with a long history of injuries. Indeed, Gaborik missed a significant chunk of this season to a knee injury and a broken collarbone.
When healthy, Gaborik is a dangerous scorer, a former three-time 40-goal scorer who developed strong chemistry with Anze Kopitar upon his acquisition from Columbus at the trade deadline. He led all playoff goalscorers this spring (14 goals) and was a key factor in the Kings march to their second Stanley Cup title in three years.
Given Gaborik’s age and injury history, however, I believed the Kings couldn’t possibly get full value for that contract over its entire term. Upon reflection, however, I believe the Kings management isn’t expecting Gaborik to play out the full term.
If Gaborik were 35, or about to turn 35 when next season began, the Kings would be on the hook for the full remaining amount of his contract if he retired before the term was complete. Because he’s 32, however, that rule doesn’t apply to him. If injuries or other factors force Gaborik to retire, his cap hit comes off the Kings’ books.
Should Gaborik miss any significant time during a season, the Kings will simply place him on long-term injured reserve (LTIR), allowing them if necessary to go over the cap up to the equivalent of his cap hit to bring in a replacement.
In the coming years Gaborik’s deal could become a template for other clubs to re-sign a player in his early-thirties to a long-term, front-loaded deal within six- to eight-years in length (depending upon if it is a re-signing or an unrestricted free agent signing) garnering them a favorable cap hit. It’s not cap circumvention as it works with the strict confines of the new salary variance rules, but it still allows teams to get themselves a lower cap hit over a long-term for players in their early-thirties who likely won’t finish out such contracts.
Over the course of this CBA there could be a number of NHL players under similar deals who end up retiring before their term is completed. It could become an issue during the next round of CBA talks between the NHL and NHLPA. Given that these deals aren’t as obvious an attempt at legalized cap circumvention as those very heavily front-loaded deals of the previous CBA, it could be difficult for the league to make this a serious issue.