Why The NHL Owners Are Not The Hypocrites They Are Made Out To Be

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To be clear, the above title refers only to the issue of huge, long-term contracts, not anything else. You see, there is an argument out there that the NHL and its team-owners are hypocrites for wanting to limit contract term in the next Collective Bargaining Agreement. The argument is that they would not need a limit if they weren’t so stupid in the first place as to offer these long-term contracts, and that they are essentially just looking to protect themselves from their own idiocy.

In fact it’s the opposite. Except for one summer every five to ten years during CBA negotiations, these teams are in direct competition with one another to win hockey games. And to win hockey games, you need the best players. And that is why contract terms have been escalating. As long as it is allowed under the CBA, elite players will ask for long contracts, and any team that wants to win the bidding war for a player who has 29 other options has no choice but to offer one of these long-term contracts. Just look at what happened this offseason with Zach Parise and Ryan Suter. If your offer did not start at greater than 10 years in length, you were not even in the conversation.

It’s not that most NHL teams want to offer these long-term deals or don’t see the risk in them. Most teams would want nothing to do with these deals in a perfect world (and a perfect CBA). But if you want to sign the top free agent, or even re-sign your own star player before he gets to unrestricted free agency, you have to make him a competitive offer or someone else will. And in the current marketplace, an offer for a player of Parise or Suter’s calibre is not competitive if it has anywhere near only a five-year term.

Sure, hypothetically all the owners and GMs could get together and make a pact not to offer anyone more than five years in term, and just make the players decide between all the < five-year offers. That would change the marketplace, but it’s a fantasy. That would be like getting every competing tech company to agree not to bid over a certain low-ball price for a start-up they all want to buy. That works just about as long as it takes for one of the CEO’s of those companies to realize that, while all his competitors are busy playing by the pact’s rules, he can swoop in and buy the start-up for only 10% more than the lowball price everyone else is offering, and in doing so still get the valuable start-up at a great deal.

And then next time, with the pact broken, everyone starts their opening bids at 10% higher than the last time, until another CEO realizes if he just bids 10% higher than that, he can win the bidding war. And then it’s 30% higher the next time, and pretty soon you have Zach Parise signed to a 30-year, 200-million-dollar contract to advertise Toshiba phones.

The owners and GMs have actually tried something like this in a capacity where it is much easier to do and works better, but still not very well. Ever wonder why there aren’t more offer sheets? As we speak, Jamie Benn and P.K. Subban are sitting out there on the restricted free agent market, yet with all the teams desperate for elite players, especially young ones, no one has signed either of them to offer sheets.

Why? Obviously signing RFAs means you have to give compensation draft picks to the team that owns the player’s rights, plus most teams will just match the offer sheet, and getting an offer sheet matched–which means you don’t even get the player in the end, is not worth pissing off another GM and risking your own young players getting offer-sheeted in retaliation.

But there’s another reason, which seems to be that the owners have indeed made, if not an iron-clad pact, at least an unspoken agreement that offer-sheets are to be a last resort.

But if you’ve been paying attention this summer, you know how that story ends, too. All it takes is for a team like Philadelphia to lose their top defenseman to injury; they get desperate, feeling like they might not be able to live up to expectations if they don’t find a way to replace him, and that unspoken agreement gets thrown in the trash because in the end, when a team is in a pinch, it is usually going to look out for itself, not the other teams or the league. And if what’s best for that team, in this case the Flyers, is offering Shea Weber a 110-million-dollar offer sheet and screwing over the Nashville Predators in the process, so be it.

It just takes an owner to be worried about his team going bankrupt if he doesn’t turn the franchise around, or a GM to be worried his job in on the line, or even just one who wants to win really badly, as in the Philadelphia Flyers example, and they will do what it takes to help themselves and their team. Their first priority is not to look out for the other teams or even the league, nor should it be. A franchise’s primary responsibility is to winning, to itself, and to its fans.

That’s why a pact between all the owners to limit contract lengths will never work. It has to be in the CBA or elite players will continue to command long-term contracts.

That is why owners and GMs cannot be blamed for the long-term contract epidemic. The market has forced teams that want to sign top players into offering these contracts on many occasions (unless they luck into an elite player who is either so team-first or doesn’t fear injury at all or doesn’t want to have to move his family who is willing to take a shorter term despite his elite level status).

But, you say, what about teams like the Detroit Red Wings who offered their players these long-term contracts before the market even dictated it? They weren’t forced into it by the threat of other teams offering their players long-term contracts, because five years ago they were one of the only teams doing it, unlike now! That’s true. It was about five years ago when the Boston Bruins were able to sign a top unrestricted free agent like Zdeno Chara without offering a long-term contract at all. How things have changed.

So why then did the Red Wings offer long-term contracts to their players, like Henrik Zetterberg?

Well, you’d be right that they weren’t forced into it by the market, like teams are today. But they were, if not forced, persuaded into it by a flawed system which gives teams that offer long-term, front-loaded contracts a competitive advantage in terms of cap-hit. Moreover, sometimes it’s really the only way for the team to avoid an unfair cap-hit that is disadvantageous to them.

Case in point, Brian Campbell. Campbell has been one of the best defensemen in the NHL the last few seasons, yet the Chicago Blackhawks felt like they had to give him away, even agreeing to eat a bad contract in return.

How does a team end up having to basically beg another team to take one of their best and most consistent players? It’s all about the cap-hit. A player is only as good to a team as his ability divided by his cap-hit, so to speak.

In an NHL where the maximum allowed annual salary is in the 12-million-dollar range, and where recent top free-agent signings Ilya Kovalchuk, Brad Richards, Zach Parise, and Ryan Suter are all making nearly 10-million-dollars a year through their prime years, an elite defenseman like Brian Campbell would certainly seem well within his rights asking for a $7.142M per year, which is only about 60% of the league’s maximum allowable salary.

The problem is, what seems reasonable as a percentage of the current CBA’s inflated maximum allowable annual salary is not conducive to winning. Hockey is different from basketball in that a team requires 20 players to actively participate every night (or technically 19 if the backup goaltender stays on the bench). As a result, one player cannot take up 20% of the cap like in basketball (approximately), otherwise the depth of the team will suffer greatly as a result.

That’s why having a maximum-allowable salary of over 12-million-dollars per year, which is indeed nearing 20% of the current salary cap, is a problem. Even spending 10% or so of your cap on one player, such as the Blackhawks did with Brian Campbell, is not conducive to depth.

And that is why some teams, like the Red Wings, front-loaded select contracts a few years before it became a complete necessity to sign any big name player. But that’s the only distinction. Back then, sometimes you had to do it to keep cap-hits manageable. Now, you have to do it just to keep (or sign) the player, period. Both are legitimate reasons because we’ve seen again and again how a bad cap-hit can ruin a good player, so if you can’t sign your guy to a fair cap-hit, that’s almost the same as not signing him at all–in fact in many cases it’s worse; you’re not just left with an empty roster spot, you’re actually left with an albatross contract on your books, weighing down your franchise for years to come.

The Blackhawks actually tried it to the old, “non-hypocritical” way with Campbell. They decided not to front-load Campbell’s contract, but the end result is they probably wish they did. That is the only way teams were able to sign players like the aforementioned quartet of Kovalchuk, Richards, Parise, and Suter to the salaries they demand through their prime years without completely destroying their teams. At their current cap-hits ranging from $6.66M to $7.5M, these players are worth signing, and provide good value to the team. At ten to twelve million? Their teams would be begging for another team to take those contracts off their hands even worse than Chicago did with Campbell.

In closing, the flaws in the current CBA are what is to blame for the ridiculous front-loaded contract-behemoths we’ve seen players receive over the last few seasons, not the owners. In fact, in a sense certain owners deserve credit for being willing to swallow such ridiculous contracts in the service of trying to win the Cup–truly at any cost. (Of course, only a select few owners put winning above all else. Most NHL teams are on an internal budget, which almost guarantees they won’t win a Cup, and more owners than not seem to be just fine with that tradeoff. Not exactly a positive there.)

Written by Shark Circle

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