Population Statistic: Read. React. Repeat.
Monday, September 06, 2021

labor daze
In observance of Labor Day today, I figured I’d take a brief look at a couple of notable developments during this National Hockey League offseason, as they relate to the free-agent market:

- Most immediately, the Ilya Kovalchuk contract controversy, which precipitated the addition of a major amendment in the collective bargaining to address similar long-term pacts in the future:

First: For long-term contracts extending beyond the age of 40, the contract’s average annual value for the years up to and including 40, are calculated by dividing total value in those years by the number of years up to and including 40. Then for the years covering ages 41 and beyond, the cap charge in each year is equal to the value of the contract in that year…

Secondly, for long-term contracts that include years in which the player is 36, 37, 38, 39 and 40; the amount used for purposes of calculating his average annual value is a minimum of $1 million in each of those years (even if his actual compensation is less during those seasons).

Somewhat convoluted, but essentially, the league is aiming to discourage using the downside of a player’s career as “voidable years” in a front-loaded contract. The presumption has been that, after the player has gotten the bulk of his money in the first few years, he’ll be more inclined to retire or consent to a buyout when the latter portion of the deal kicks in. That would work out for the team as well, as it can work with a lower averaged-out cap number during that player’s most productive seasons, and save a little money further down the line (while not worrying about the future accelerated salary cap hit if the contract is eventually terminated). But now, these new age-specific rules prevent too much stretching-out of the total compensation — basically, contract length can’t really be used as a bidding tactic anymore.

So, barring the discovery of a new loophole, this will mean shorter-length contracts in general in the NHL, for the remainder of this CBA. Annual salaries/cap hits may not correspondingly decrease, although with the smaller window of averaged-out seasons in play, teams will have less room to bid against each other for sought-after players.

The advent of these super-sized contracts was an interesting response to the unique constraints imposed by the NHL’s CBA: A hard salary cap combined with guaranteed contracts. Using contract length as an outlet to level out the per-season cap hit has been used in the NFL since the inauguration of true free agency in that league. The key there, though, was that those player contracts are not guaranteed. Football teams have operated freely by luring prized free agents with long-term big-money deals that easily fit under the NFL hard cap, because the long-term impact could be instantly negated by cutting the player after one or two seasons (again, ignoring the acceleration penalties, which are mostly manageable). In turn, football players learned to negotiate massively front-loaded deals, usually with half or more of the total contract value payable upon signing and/or in the first season; the rest of the contract years are presumed to be optional.

That’s just what the NHL’s “voidable years” emulated. Realistically, you know that most players hit their downside by their mid-30s, so extending a contract into those iffy years was a low-risk proposition. It was obviously cap-circumventing too, so it’s not surprising that the league finally eliminated it (or, at least, made it less workable).

- From Kovalchuk’s 15-year deal, we go to the other end of the spectrum: An apparent increased frequency in extremely short-term deals. A rundown of CapGeek’s free-agent tracker reveals a total of 385 players signing one- or two-year contracts for the coming 2010-11 NHL season (as of this writing). With only 420 players having agreed to free-agent or contract-extension deals this offseason, this points to an extremely soft free-agent market.

But why? Granted, in any given year, there are only a handful of major in-demand free agents to be had, and they generally get scooped up early with big paydays. After that, second-tier players take what’s left, competing for a limited number of roster holes.

Still, I can’t remember the last time so many proven NHL players had to settle for so little. The preponderance of one-year contracts, in particular, brings to my mind the grand strategy of Oakland A’s owner Charlie Finley, at the dawn of Major League Baseball free agency:

Said Finley: “Let Them All Become Free Agents.” What Finley proposed was that after each season every player would become a free agent, free to sign with whatever team wanted his services.

The idea was that, with such a huge pool of talent available each offseason, teams would have far more options, thus driving down the value for each individual player — and this would be the case every year. Certainly, specific needs would lead to some bidding wars: If Team A and Team B really needed a good shortstop, they’d probably target the same couple of players and drive up the signing price. But with no contracts lasting longer than a season, the damage would be short-lived.

In effect, that seems to be what’s being set up for next offseason in the NHL, with most of those players coming loose again (except for a handful that might earn contract extensions). Any time such a large-scale work-status shift materializes in major-pro sports, whispers of collusion surface. They haven’t this time — yet. I’m not sure the owners are conspiring in this case. But it definitely is curious that a flood of the same players will be on the market in 2011, guaranteeing that they won’t be able to command better money/terms than they had last time around.

Overall, it’s been an interesting round of labor pains for the NHL this summer. We’ll see how all this manifests itself when the regular season starts in a month.

by Costa Tsiokos, Mon 09/06/2021 11:00pm
Category: Baseball, Football, History, Hockey, SportsBiz
| Permalink | Trackback | Feedback