Salary Cap loop-hole

[CatScrap]

The only way I can think to prevent the salary cap from being circumnavigated by GMs who can get players to sign long front loaded contracts and owners willing to spend way above the cap on actual salary every year would be to institute a flat pay clause in contracts.

For example if you sign a 7 year $35 million deal, you won't get paid different amounts each year. Your cap hit will be $5 million a year and so will your salary. Obviously you can make a few rules to acknowledge rookies and elders, but this would prevent the 25-30 year olds from signing 12-17 year front loaded contracts that they are never going to play out.

 

[ELYEAH82]

Or just make all cap hits mandatory. All contracts will be treated as +35 deals.

 

[IPostedWhat]

 

[CatScrap]

Or just make all cap hits mandatory. All contracts will be treated as +35 deals.

Yeah, but this won't fix the problem so much as make it hurt less. for example, If you were to sign Kovy to a 115 Million deal for 30 years, I know never gonna happen but pretend, in which he is paid $95 million the first 10 years and $1 million the next 20, his cap hit will be 3.83 million a season. Obviously that is a cheap hit. Lets say he retires 17 years into the contract. the team is effectively going to keep 3.83 million on the books, not huge, but not great either.

However, if you wanted to make the same 30 year deal to Kovy worth the same amount, instead of front loading it and having him retire, he would simply get 3.83 million a season. This would never happen.

I think a system which only allows contract that change in payroll year to year to veterans, 35+ at the signing of the contract, and RFA, will accomplish 2 things. First you will see an end to the front loaded, salary cap dodging, crap contracts. And also, I think you will see players getting paid closer to what they are worth and not demanding huge front end salaries. Teams will have to think more before they hand out the big dough if it's going to count against the cap the same way every year.

 

[mattola]

dont have a problem with it really. its a death sentence if you do too many of them. I would consider this to the equivalent of the NFL Franchise Player Tag. you give it to one player and build around that said player.

Im not partial to teh length at all on any of these contracts even luongos. but I love the way around the salary cap hit

 

[puckhead]

dont have a problem with it really. its a death sentence if you do too many of them. I would consider this to the equivalent of the NFL Franchise Player Tag. you give it to one player and build around that said player.

Im not partial to teh length at all on any of these contracts even luongos. but I love the way around the salary cap hit

yup. caveat emptor.

league will probably try to close it at the next CBA meetings (protecting the owners from themselves yet again). It doesn't have t be flat-pay across the length of the contract, but probably within some band (lowest year must be at least 50%, 60%, 70% (or whatever) of the maximum salary year.

Philly will be paying $4.9m cap hit for a 42 year old Pronger, Vancouver could be paying $5.3 mill cap hit for a 43 year old Luongo. that's the risk the teams knew (or ought to have known in the Flyers' case) when they signed the deals.

 

[mattola]

Philly will be paying $4.9m cap hit for a 42 year old Pronger, Vancouver could be paying $5.3 mill cap hit for a 43 year old Luongo. that's the risk the teams knew (or ought to have known in the Flyers' case) when they signed the deals.

should Pronger retire before his contract ends the flyers will still get hit with the cap. vancouver will not since pronger was over 35 when he signed

 

[mattola]

should Pronger retire before his contract ends the flyers will still get hit with the cap. vancouver will not since pronger was over 35 when he signed

or is this still in translation since he signed the extension AFTER his 35 bday?

 

[Destroydacre]

yup. caveat emptor.

league will probably try to close it at the next CBA meetings (protecting the owners from themselves yet again). It doesn't have t be flat-pay across the length of the contract, but probably within some band (lowest year must be at least 50%, 60%, 70% (or whatever) of the maximum salary year.

Philly will be paying $4.9m cap hit for a 42 year old Pronger, Vancouver could be paying $5.3 mill cap hit for a 43 year old Luongo. that's the risk the teams knew (or ought to have known in the Flyers' case) when they signed the deals.

This is the kind of thing I'd like to see. To be perfectly honest, I think the dollar amount for every year should be within 20% of the amount for the first year if that amount is over say $3M. After all you never see guys signing 15 year, $13M contracts.

 

[puckhead]

or is this still in translation since he signed the extension AFTER his 35 bday?

I haven't followed it incredibly closely, but my understanding is:

- he signed it at age 34, so Philly thought they were OK
- the contract did not take effect until a certain date closer to the season however (like all NHL contracts), by which time he was 35, and it was deemed an overage contract.

 

[Darkstone42]

These deals do not guarantee that the team will make out in the positive. Teams cannot negotiate with players about when they'll retire, and they certainly cannot force a player to retire. So the teams could end up saddled with a really bad contract late in these players' careers. I don't think it's really a loophole because there are potential consequences. It's more of a long-term risk teams can take in order to reap an immediate benefit.

 

[ELYEAH82]

These deals do not guarantee that the team will make out in the positive. Teams cannot negotiate with players about when they'll retire, and they certainly cannot force a player to retire. So the teams could end up saddled with a really bad contract late in these players' careers. I don't think it's really a loophole because there are potential consequences. It's more of a long-term risk teams can take in order to reap an immediate benefit.

Yeah but I doubt anyone sticks around for the league min after making over 10 mill a season. I hope to see it but I doubt it happens

 

[pixburgher66]

the thing is...like the hossa deal, though it's not ALWAYS said, players go into these deals fully understanding they aren't going to play it out. i mean, when you get into the later years it's harder to play, and there's less incentive in the salary they're getting. the whole thing just ticks me off, and i'm just waiting for someone to get completely BURNT on one of these. they make the players nearly un-tradeable and will eventually weigh down rosters. i guess my biggest worry is that they will continue to gain popularity as more and more GMs attempt to mortgage their futures and we'll end up with another lockout. no one wants that.

 

[dare2be]

I think the easiest solution and formula is that the highest paid year minus the lowest paid year cannot be > than the cap hit.

So in Kovy's case, a 6m cap hit could mean high/low salaries of 9m/3m, or 10m/4m, etc. Gives the team enough wiggle room for front-loading during the player's prime production years and not allow contracts to be ridiculously extended out past their playable years.

 

[Dacks]

I don't like the idea of the cap hit throughout the contract, because then you are also screwing over the GM's who signed normal contracts with a player who retired early. But, money paid should show up in your cap hit eventually, so what about this:

Over the length of the contract, the cap hit has to equal the amount paid, regardless of retirement. Up until retirement, cap hit = average salary. (That's the system we have now.) After retirement, you calculate the difference between total salary paid, and total cap hit, and spread the difference over the remaining years.

Example: Kovalchuk has a 17 year deal worth 102 million, or an average of 6 million per year. He plays the first eleven and then retires. Over those first eleven, he's due to be paid 98.5 million at a cumulative cap hit of only 66 million. Once he retires, that 32.5 million in "cap savings" has to be paid back over the remaining part of his contract, which works out to be approx 5.42 million per year.

On the other hand, take Elias, who had a slightly front-loaded contract. He has a cap hit of 6 million over seven years. Suppose he retired right now, with three years left on his contract. Over the first four, he was paid 27 million at a cap hit of only 24 million. That difference has to be paid back over the last three years, but NJ only gets dinged with a 1 million cap hit after he retires, not the full 6 million.

 

[Eddie_Shack]

I say if the GMs and owners want to take these risks, let them. Look at how the DP deal has turned out in NY, and they weren't even trying to circumvent the cap. When Franzen has concussion issues, Zetterberg has back problem's, Hossa becomes a shell of a player because of his shoulder, and Kovalchuk decides to have attitude problems in three years, none of these signings will look like "cheats" or "steals", they will be horrible mistakes.

Give the GMs enough rope, and they will hang themselves.

 

[awaz]

couple of things to add that i've read in random places, dont have any sources.. but i believe contract buyouts only take into account the money still owed to the player, so in these deals, when the player retires, they can simply buy out the player without taking such a big hit, you still get a hit for buying them out, but since there will be very little money left on the contract, the buyout punishment wont be nearly as severe as keeping the cap hit

i could be wrong on that, but at some point i got that impression

other thing i heard is that there is some talk of a 'free buyout period' when the new CBA comes around.. just because the restrictions might limit teams more and if there is some kind of cut into the salary cap (doubtful the way things are going) teams would need a way to get under the cap.. allowing teams to buyout players without taking a cap penalty would help get teams to fit the salary structure..

i agree though, these contracts need to stop.. the flyers are going to get slaughtered if they're stuck paying a 4.9 cap hit to an empty roster spot for a year, let alone multiple seasons, just look at the problems chicago is having with their cap penalties

 

[awaz]

I don't like the idea of the cap hit throughout the contract, because then you are also screwing over the GM's who signed normal contracts with a player who retired early. But, money paid should show up in your cap hit eventually, so what about this:

Over the length of the contract, the cap hit has to equal the amount paid, regardless of retirement. Up until retirement, cap hit = average salary. (That's the system we have now.) After retirement, you calculate the difference between total salary paid, and total cap hit, and spread the difference over the remaining years.

Example: Kovalchuk has a 17 year deal worth 102 million, or an average of 6 million per year. He plays the first eleven and then retires. Over those first eleven, he's due to be paid 98.5 million at a cumulative cap hit of only 66 million. Once he retires, that 32.5 million in "cap savings" has to be paid back over the remaining part of his contract, which works out to be approx 5.42 million per year.

On the other hand, take Elias, who had a slightly front-loaded contract. He has a cap hit of 6 million over seven years. Suppose he retired right now, with three years left on his contract. Over the first four, he was paid 27 million at a cap hit of only 24 million. That difference has to be paid back over the last three years, but NJ only gets dinged with a 1 million cap hit after he retires, not the full 6 million.

i think this is a good solution.. well explained too dacks.. nicely done