Like my last post about the CBA, this one is a good bit longer than you're used to seeing here on the Chronicle. If you take the time to read it, however, I hope that you'll come away with a better understanding of the issues we all watched play out between Kovalchuk, the Devils, the NHL, and the NHLPA over the past few months.
Since I am still hearing pundits (and Jay Grossman and Alan Walsh) complain about the league's decision to sanction New Jersey for circumventing the salary cap, I thought I'd demonstrate exactly why this happened. The penalty has been levied for the first contract submitted and it's attempt to circumvent the cap. The league acknowledged that the new contract also circumvents the cap, but agreed to "grandfather it in" in exchange for the NHLPA's cooperation in instituting new rule changes to prevent future contracts of the sort.
That in itself is very odd. If it really was a one for one deal of "the league will let the Devils circumvent the cap with Kovy" for "the union will agree to a rule clarification preventing future circivention," it doesn't make sense. Why does a single team benefit in a negotiation between the union and league? If instead it was "the league will let the Devils circumvent the cap with Kovy AND we will agree not to go back and look closer at the Hossa, Luongo, Savard, and Lecavalier deals," then it makes much more sense that the NHLPA would go for it.
Now, Walsh and Grossman have both been saying that Kovy's new deal is not cap circumvention. That is plain fiction. The league said as much when it made it's "grandfathering in" deal.
Let's be clear about this. IF YOUR DEAL IS STRUCTURED SO THAT YOUR PLAYER IS BEING PAID SIGNIFICANTLY MORE THEN HIS CAP HIT, YOU ARE CIRCUMVENTING THE CAP.
There of course are legitimate reasons for frontloading a contract. You can honestly believe that a player's value is going to diminish down the road. Now normally what you would do in that situation is structure a contract to end at the point when you think the value is going to start declining, then negotiate a new, lower contract at that point. There can be two reasons you wouldn't do that. First, the player may demand a longer term contract because he wants to make sure he stays put for the rest of his career. Second, the team could want to make sure that the player stays put as a face of the franchise rather than going to a higher bidder for the last few years of his career.
Several recent NHL contracts have used those two bits of reasoning as excuses to frontload contracts. But make no mistake, the real motivation there is to circumvent the cap. Does anyone believe that Vinny Lecavalier, who has already won a Cup, is going to keep playing at 38 years old for $1.5 million? Roberto Luongo might play at 39 years old for $3.382 million, but do you think he'll play into his 40's for $1 million per year?
Professional sports are about drama. The drama of players and fans passionately yearning for victory. That drama becomes watered down in a league of haves and have-nots. When only a handful of teams have real hope of winning the Stanley Cup, then the drama dies down and the passion dies down. We saw that over the past thirty years in the NHL.
Take for example the 1990's and early 2000's. Detroit, Colorado, and the Rangers used their natural economic advantages to throw money at the best players in the league and stack their teams. The Rangers did this in futility, missing the playoffs over and over again. Detroit and Colorado, however, built powerhouse franchises that won multiple Cups. New Jersey was able to do so as well without quite so many superstars but with Brodeur, Neidermeyer, and Stevens keeping pucks out of their net.
Edmonton, Calgary, Vancouver, Ottawa, and many other teams could never dream of being able to pay Joe Sakic, Patrick Roy, Peter Forsberg, Rob Blake, Ray Bourque, Milan Hejduk, and Chris Drury all at the same time. Neither could they shell out for a roster boasting Steve Yzerman, Sergei Federov, Slava Kozlov, Slava Fetisiov, Vladamir Konstantinov, Igor Larionov, and Mike Vernon before later saying, "hey, Luke Robataille, Brett Hull, Chris Chelios, and Brendan Shannahan would look good in our jerseys, too!"
A salary cap makes sure that talent is fairly evenly distributed around the league without wealthier teams able to stockpile superstars. Yes, it's a socaialist system which kills economies in the real world, but in the world of manufactured drama (which professional sports is) it is the only sustainable system.
When teams are able to circumvent the cap, wealthier teams are still able to throw their extra money at multiple high caliber players while staying under the salary cap.
Under his new contract, Ilya Kovalchuk will play for the next two seasons making $6 million per year, which is a bargain for a proven 50 goal scorer in this market. However, after that, his salary goes up to 11 million, then 11.3 for two years, then 11.6 and 11.8 before dropping down to 10 million in 2017 and 7 million in 2018 when Kovy is 35 years old. The final three years of his contract, when he is 36-38 years old, will pay him six million total. In every year of that contract, his cap hit is $6.666 million dollars. (All figured here and afterward come from NHLNumbers.com)
Grossman and the Devils point out that for the next two years Kovy's cap hit is .666 million per year MORE than they are paying him. Then in the final two years of the contract the cap hit is 5.666 million more than Kovalchuk is being paid, so this really can't be a boon do the Devils at all, right?
In the 2012-2013 season when Kovy's salary jumps from 6 million to 11 million, he will be getting paid 4.333 million more than his cap hit. That deficit goes up to 4.634 for two seasons, grows to 4.934 in 2015 then 5.134 in 2016. Over those five seasons, Kovalchuk will be paid $23.669 million dollars more than his cap hit.
Here is a list of all the players in the NHL who will have a higher cap hit than Ilya Kovalchuk in the upcoming season:
*- indicates their contract runs at least through 2012-2013 season when Kovy's salary goes up to $11 million.
Now here is a list of the players who will be making more money than Kovy in the 2012-2013 season:
The next five highest salaries in the NHL behind Kovy in the 2012-2013 season (keep in mind his salary goes up for the next four seasons after 2013):
Vinny L-10 million
Cap hits on those players (salary vs. cap deficit in parenthesis):
Staal- 8.25 (-.5)
Spezza- 7 (-1)
Malkin- 8.7 (-.3)
Vinny- 7.727 (-2.283)
Ovechkin- 9.538 (+.538)
Looking at those numbers, you can see why Jasper's Rink gets torqued when people point to Ovechkin's contract as being similar to Kovy's. Ovi's contract is actually backloaded, with the first half paying him 9 million per year and the second half paying him 10 million a season.
I would argue that Spezza's contract circumvents the cap by allowing $1 million in extra cap room and Lecavalier's contract certainly constitutes circumvention. Cap-wise, Tampa basically gets their goalie Mike Smith for free with the savings they get from Vinny.
At the height of his contract, the Devils will save $5.134 million under the cap offset from what they are paying Kovalchuk. Hypothetically speaking, the Devils could be paying out salary cap-ceiling dollars and still trade for Bobby Ryan with their fictional cap space.
The league should have stepped in much earlier on these circumvention contracts. I would speculate that the reason they didn't is because they were afraid that a more marginal contract such as Hossa's (very similar to Kovy's new contract, but far less egregious than the first Kovy/Devils contract) might be approved by an arbitrator and establish bad law.
The next CBA must be more carefully crafted to make sure that the "haves" cannot work loopholes to their advantage and harm parity. Parity is what makes sure that every fan of every team can have hope that their team has a chance to hoist the cup if not this season, then very soon. Cap circumvention circumvents parity and weakens our sport.
For the Blueland Chronicle, I'm Razor Catch Prey.