NHL investigates shady contracts

October 29, 2009  
Filed under Sports Archives

By Preston Frey
Round Table editor-in-chief

In professional sports, the salary cap is a franchise’s worst enemy. Restricting the total amount of salary a team can carry at one time, a traditional salary cap is intended to “even the playing field” between teams with a wide disparity in the amount of money available to be spent on players.

Unfortunately, some franchises find the salary cap too restricting, and so, attempt to find “loopholes.” In the NHL, multiple teams have discovered a new way to cheat the salary cap system; adding years to a contract in order to stretch out the “cap hit.”

A cap hit is defined as the amount of money earned by a roster player that counts against a team’s salary cap.

 For example, if an NHL player is signed to a 3-year contract that pays $1 million the first year, $1.25 million the second year, and $1.5 million the last year, the cap hit would be $1.25 million as it is the average amount of money the player earns per year throughout his contract.

Currently, the NHL salary cap is set at $56.8 million. Every player on a team’s active roster (the NHL’s roster limit is 23) counts against the cap.

During the 2009 offseason, many teams found themselves up against the upper limit of the cap, and in need of serious on the field help. Three teams, the Philadelphia Flyers, the Vancouver Canucks, and the Chicago Blackhawks, signed upper echelon players to contracts that were “front-loaded.”

 A “front-loaded” contract pays a player a large amount of money within the first couple years of the deal and less towards the end.

Gary Bettman, the NHL’s much-criticized Commissioner, took offense to the three team’s “front-loaded” contracts, which he believed blatantly cheated the salary cap. Bettman opened an investigation that hopes to further shed light on the ulterior motives of three prominent players’ weirdly structured contracts.

The Blackhawks were the first team to make a major splash in the 2009 Free Agency season, signing All-Star right wing Marian Hossa to a 12-year deal. A deal of such length was once rare, but in the post-lockout NHL, is far more common, and so, the Hossa deal at first glance doesn’t seem too controversial.

But, if Hossa were to play out his contract, he would be 43-years-old, an almost unheard of age in any professional sport. (As of 2007, only six active NHL players were over the age of 40.)

Chris Pronger, currently of the Flyers, was also signed to a deal that would have him playing into his early 40s. Similar to Hossa’s deal, Pronger’s salary would continue to decrease in pay from over $7 million to a “mere” $.525 million his last two years.

While it is hard to dispute that Pronger’s play has been fading off now that he enters his supposed “twilight years,” one can only wonder how little of a chance that he will remain in the league come his 41^st and 42^nd birthdays.

The last contract that came under fire from fans and executives alike was that of Roberto Luongo. Luongo, considered by many as the best overall goaltender in the league, signed a 12-year, $64 million contract with the Vancouver Canucks.

Again similar to Pronger and Hossa, Luongo’s 11^th and 12^th year of his contract would have him suiting up as a 40-plus year-old player. As a result of his new contract, Luongo’s new cap hit comes in at $5.33 million, down from the $6.75 million hit from his previous deal with the ‘Nucks.

While a decrease in pay for a 30 year old player is far from uncommon, Luongo’s new deal sticks out, as he is almost certainly in the prime of his career.

As the goaltending position requires so much flexibility and agility, very few ‘tenders make it into their 40s (currently Dwayne Roloson, 39, is the NHL’s oldest active goalie). For a player like Luongo, who has had some injury problems and is known for playing an almost ridiculous majority of his team’s games, it’s hard to believe he’ll be the exception.  

If Bettman and the NHL are to crackdown on these contracts, they will be met with heavy resistance from the player’s respective clubs, as well as many other teams’ executives who believe that it is for a franchise to decide how it spends its money.

Much like the balance between a free market and a government-controlled economy, the NHL is having a hard time enforcing upon teams that seemingly play by the rules.

Opening a formal investigation is just the first step for the NHL, changes need to be made, and examples need to be set.