The problem with the Pronger contract

by James Mirtle on Jul 9, 2009 12:21 AM CDT Comment 69 comments

My very first question, voiced on Twitter, when I'd heard that Chris Pronger had received a seven-year, $34.45-million contract from the Flyers, was "Is this a 35-and-over contract?"

Because that, and that alone, is what separates a decent deal from a silly one.

The answer seemed obvious — especially in light of Tim Thomas signing a deal at 34 that applies under the 35-and-over rule because of when his birth date was — given that Pronger turns 35 this fall and the deal kicks in next summer. And after some consideration around the blogosphere and media, we've got our answer:

... the spirit of the provision is that it governs contracts that kick in when a player turns 35, not when it is signed.

"The league has sent out memo after memo after memo alerting teams about this," said one former NHL executive. "If this is what they’re doing, they’re trying to drive a 747 through a loophole."

The league has yet to hear from the Flyers about this and considers it to be unambiguous. And given that Holmgren has said the Flyers are willing to live with the negative ramifications of signing Pronger to a seven-year deal, it might not be an issue.

Other takes on all this are out there by Tyler Dellow, Darren Dreger and Broad Street Hockey, but the Ken Campbell piece quoted above is the most interesting one to this point given we get the GM's perspective. And with that, I think it's clear the Flyers have taken a big gamble here, perhaps unwittingly.

As hard as that is to believe.

Here's Campbell on the structure of the deal:

Pronger will make $7.6 million in each of the first two seasons of the deal, then is scheduled to make $7.2 million, $7 million and $4 million in the next three seasons before dropping to just $525,000 in Years 6 and 7 of the deal, which are the 2015-16 and ’16-17 seasons.

That's all fine. Sure it's a lot of money up front, but Philadelphia's a well-moneyed club and Pronger's still a top player, good enough to make the Flyers one of the league's best teams over the next couple seasons. Even his dropoff in performance isn't that big a deal in the later years as long as he's still contributing.

No, the biggest problem is that he turns 35 this October and not a year from now.

Think about it: Henrik Zetterberg can sign a contract that extends until he's 40 in 2021 but retire to be a goat herder tomorrow and it doesn't hurt the Red Wings a whit. If Pronger does the same, however, Philadelphia's in a heap of trouble, stuck living with a nearly $5-million a season cap hit until 2017 and without a star player on the blueline.

By my count, there are really only four different ways for a player to end his NHL career while under contract. Either (a) he retires, (b) he is injured long-term, (c) he is bought out, or (d) he defects to a European league. With a 35-and-over deal, voluntary retirement and buyouts don't provide cap relief, while it's incredibly unlikely that, at age 40, someone like Pronger will head to whatever form the KHL is at that point.

Some form of long-term injury to cap his career, then, would be the only way for Pronger to still retire and not impact the Flyers' ability to spend. Philadelphia would be able to claim a long-term injury exemption for his salary, keep it on the books, and then spend over the cap to fill out the roster. (As they did last season with Mike Rathje and Derian Hatcher.)

The collective bargaining agreement is structured in such a way that multiyear 35-and-over contracts are supposed to be so punitive in the case of retirement as to be completely unreasonable, but this year alone we've seen three high-profile players — Pronger, Thomas and Nikolai Khabibulin — get four or more year contracts that could easily be albatrosses down the line.

Now, this CBA ends in 2011, and there could potentially be changes to the agreement to make these deals easier to do away with, but the real spirit of the language in the current contract is aimed at idiot proofing the thing by protecting teams from (a) signing brutal deals and (b) circumventing the cap with throwaway years at the end of contracts.

And it's not working.

Who's to say then, in the event of a change, there won't be some other silly way to bungle things? And is it even possible to idiot proof something when those at the top are so willing to gamble big on the long term for short-term gain?

Probably not. And we won't even have our cautionary tale until one of these contracts goes sour in 2013.

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thing is

as you point out, the Flyers have already been able to make two bad contracts go away magically (Rathje and Hatcher) I could see them pulling the same trick with Pronger. He’s a physical defenseman, I’m sure there will be some sort of “injury” towards the end of Proger’s career.

"Life is just a place where we spend time between games. Hockey is where we live, where we can best meet and overcome pain and wrong and death." - Fred Shero

by Karina on Jul 9, 2009 12:30 AM CDT reply actions 0 recs

Absolutely. But that’s their only out, really.

Blogging on hockey at fromtherink.com

by James Mirtle on Jul 9, 2009 12:31 AM CDT up reply actions 0 recs

I think that we already have our cautionary tales with the Islanders and Rick DiPietro and Alexei Yashin. One will work out since it’s injury related while the other was bought out, but in both cases it’s a long-term deal gone sour with long-term consequences. I don’t think general managers are unaware of the risks, only that the potential reward seems to outweigh them.

by Scott Reynolds on Jul 9, 2009 1:23 AM CDT reply actions 0 recs

Couple of points:

Post by Gospel of Hockey: I think that we already have our cautionary tales with the Islanders and Rick DiPietro and Alexei Yashin. One will work out since it’s injury related while the other was bought out, but in both cases it’s a long-term deal gone sour with long-term consequences. I don’t think general managers are unaware of the risks, only that the potential reward seems to outweigh them.
-———-
Two points: One, Yashins contract was from the pre-cap era so it was not structured with any of these things in mind. It really isnt comparable to compare that contract to contracts given out during the cap era. Two, you might have Rick already retired due to injury in your mind but the truth is that you are jumping the gun.

Lets go Islanders...

by TheMetalChick on Jul 9, 2009 9:34 AM CDT up reply actions 0 recs

My grandmother always figured it was a waste of time and effort to try to idiot-proof anything because nothing is more ingenious than an idiot. :-)

If those who hand out the contracts are determined to not take advantage of clauses intended to help them, I don’t see what else the league can do short of assigning a babysitter to smack their hands each time they reach for a cell phone to make a crazy offer. You can’t help those who refuse the supposed help.

"Be kind, for everyone you meet is fighting a great battle." -- Philo of Alexandria

by Baroque on Jul 9, 2009 6:14 AM CDT reply actions 0 recs

…By my count, there are really only four different ways for a player to end his NHL career while under contract. Either (a) he retires, (b) he is injured long-term, © he is bought out, or (d) he defects to a European league. With a 35-and-over deal, voluntary retirement and buyouts don’t provide cap relief, while it’s incredibly unlikely that, at age 40, someone like Pronger will head to whatever form the KHL is at that point. …

LOL, no

another scenario:

If a 35+ yo player is loaned to the AHL, his cap hit is not “normal cap hit minus $100k”, it is “actual salary minus $100k”.

CBA Article 50.5(d)(i)(B)

(5) All Player Salary and Bonuses earned in a League
Year by a Player who is in the second or later year
of a multi-year SPC which was signed when the
Player was age 35 or older (as of June 30 prior to
the League Year in which the SPC is to be
effective), but which Player is not on the Club’s
Active Roster, Injured Reserve, Injured Non Roster
or Non Roster, and regardless of whether, or where,
the Player is playing, except to the extent the Player
is playing under his SPC in the minor leagues, in
which case only the Player Salary and Bonuses in
excess of $100,000 shall count towards the
calculation of Averaged Club Salary; plus

if Pronger is in the AHL (final two years of his contract) = his salary: $525k, his NHL cap hit: $425k

41 & 42 yo Pronger would potential only cost 425k on the cap if loaned to the AHL. but Pronger has a NMC, so i doubt that he would agree to be sent to the AHL.

by prEGnant__tEEns on Jul 9, 2009 6:16 AM CDT reply actions 0 recs

glad you mentioned the NMC. just another inexplicable component of this contract, IMO. prevents him from being sent to the AHL or (possibly) from having his rights traded to a team near the cap basement. this element is what really limits the flyers to just LTIR.

and can someone correct me if i’m wrong here…all LTIR decisions are made by NHL doctors, not team doctors, correct? the NHL has an incentive to prevent teams from circumventing the cap. LTIR should be the last-resort option for teams, not the only option. with that in mind, and with the salary so frontloaded, my only conclusion is that the flyers misunderstood the ramifications of their own deal.

refer back to the darren dreger blog post:

The seven-year, $35 million extension Pronger agreed to on Tuesday doesn’t commence until after June 30, 2010. Pronger will be 35 at that point and any remaining salary will remain on the cap.

The Flyers disagree and interpret the CBA language governing the “over 35” clause differently.

Sources say the Flyers’ lawyers are now aware of the league’s stance and are debating this issue.

who were darren dreger’s sources inside the flyers? this came before campbell was able to reach holmgren directly. but as of 11:20am EDT yesterday, the flyers “disagreed” with the league assessment that pronger was an over-35 signing. i was transfixed by this story yesterday, largely because the contract is structured in such a way that the flyers must have thought it was an under-35 deal.

btw, more discussion from yesterday (including some great legal work by budding cap-fan capologists) can be found over at japers’ rink.

by Natty Bumppo on Jul 9, 2009 8:29 AM CDT up reply actions 0 recs

I would guess

Paul Holmgren would rather announce that he structured the contract this way on purpose than admit he made a rather glaring blunder.

I've been looking at the sky

by Back In Black on Jul 9, 2009 8:42 AM CDT up reply actions 0 recs

yup.

by Natty Bumppo on Jul 9, 2009 8:42 AM CDT up reply actions 0 recs

if Pronger is in the AHL (final two years of his contract) = his salary: $525k, his NHL cap hit: $425k

Correct me if I’m wrong, but isn’t the cap hit the average yearly value of the salary? That being the case, his cap hit would be 100k below 5 million.

As another poster mentions, it really doesn’t matter. Teams seem to find a way to make these contracts disappear. I hope they don’t. I personally can’t wait for these teams who jump through the cap loophole to get handcuffed.

by Gusinabox on Jul 9, 2009 9:56 AM CDT up reply actions 0 recs

Per CBA:

the Player is playing under his SPC in the minor leagues, in
which case only the Player Salary and Bonuses in
excess of $100,000 shall count towards the
calculation of Averaged Club Salary

twitter.com/kaner88

by Original Six on Jul 9, 2009 10:35 AM CDT up reply actions 0 recs

Sure. The question is, how is “Player Salary and Bonuses” defined? It isn’t readily apparent from what you posted that this means that only the salary and bonuses actually paid during that year count against the cap, rather than the salary and bonuses as they are defined under the cap system counting. If the phrase “Player Salary and Bonuses” is defined in a consistent way, then you are wrong.

by J. Michael Neal on Jul 10, 2009 2:35 AM CDT up reply actions 0 recs

I think almost every player in the over 35 scenario is going to choose retirement over an AHL demotion.

Blogging on hockey at fromtherink.com

by James Mirtle on Jul 9, 2009 11:36 AM CDT up reply actions 0 recs

changing the CBA

Should the owner’s focus really be changing the CBA to make it idiot-proof, or filling out their front office with people who can figure out the CBA in the first place?

by Hansmoleman on Jul 9, 2009 6:52 AM CDT reply actions 0 recs

“Figuring out the CBA” is easier when you have the financial wherewithal to do so.

Philly can tuck away Pronger’s contract if need be because their revenues far outpace the cap. Same thing with Toronto, Montreal, the Rangers…

They can’t afford to try something like this in Buffalo or Carolina or Nashville because their “cap” is their cash, not the actual salary cap. The cap is just a number to the biggest revenue teams.

by Afino on Jul 9, 2009 7:48 AM CDT up reply actions 0 recs

That’s true, and in that sense, the CBA is favoring rich teams. Not sure this is the result they were intending by locking out a full season…

by Habs on Jul 9, 2009 11:06 AM CDT up reply actions 0 recs

It’s still more difficult for the rich teams than the absence of any cap at all.

I've been looking at the sky

by Back In Black on Jul 9, 2009 1:31 PM CDT up reply actions 0 recs

It’s a point I didn’t make, but it’s absolutely true. Teams willing to spend well over the cap can do all sorts of crazy things like this and not be punished for it.

Blogging on hockey at fromtherink.com

by James Mirtle on Jul 9, 2009 11:15 AM CDT up reply actions 0 recs

One of the points I’ve tried to make every time something like this comes up is that there isn’t any way to make a salary cap workable that isn’t also going to have big loopholes. There are three cap systems in place in major US sports. All of them operate in completely different ways, and all of them have very large loopholes.

The NBA uses a soft cap. I think that the loopholes here are well known, and I don’t need to go into them.

The NFL has a hard cap, but it is possible to roll money from one year into a different year through the use of signing bonuses. Even so, the only way that the NFL system works is because, per the CBA, all contracts are non-guaranteed. Some of them may be guaranteed for 2-3 years, but no longer. Most don’t even have that protection. If a league isn’t going to be able to force its players to accept a model in which all contracts are non-guaranteed, then it can’t base its cap on the NFL system. Quite aside from the fact that I’m insulted by the whole idea of not being able to sign a guaranteed contract (in which case, I don’t really consider it a contract), this produces its own ridiculous distortions.

Then we have the NHL system, which everyone is banging their heads about. Sure, it took teams a few years to figure out what the loopholes are, but they have done so with a vengeance. Good luck changing that.

One thing I find very amusing is the rather large overlap of people (not necessarily here) who scream the loudest about wanting a cap, and then complain that the news is dominated by minutia of accounting and contract negotiations. Once again, they got what they wanted, and refuse to be happy with it.

by J. Michael Neal on Jul 10, 2009 2:45 AM CDT up reply actions 1 recs

Quite aside from the fact that I’m insulted by the whole idea of not being able to sign a guaranteed contract (in which case, I don’t really consider it a contract)

Groan.

by Gerald on Jul 10, 2009 7:24 AM CDT up reply actions 0 recs

Sure, it’s legally a contract. I just find an agreement that one side can walk away from whenever it likes (and only one side has that option) to be something less than ethically satisfying. If it were okay for the player to void the rest of the contract and demand a renegotiation whenever it suited them, I’d feel differently.

by J. Michael Neal on Jul 10, 2009 10:53 AM CDT up reply actions 0 recs

“Ethically satisfying”??

How can anyone have an “ethical” problem with two bargaining entities mutually agreeing with each other to have their contract contain any particular term of this nature? A contract is only “ethically satisfying” if each party has mirror image rights? It cannot be “ethically satisfying” if one party has a more favourable right in one area and the other party has the edge in a different area?

What an odd statement.

by Gerald on Jul 10, 2009 3:34 PM CDT up reply actions 0 recs

You really can’t see what J. Michael’s getting at here?

by yrmom on Jul 10, 2009 7:20 PM CDT up reply actions 0 recs

In respect of the parts I have specified? No, I guess I don’t. I got the rest of it, which is why I did not reference it.

by Gerald on Jul 11, 2009 10:38 AM CDT up reply actions 0 recs

In what area does an NFL football player have an edge? I mean, even before the league tells him to get hit in the head a bunch of times?

by J. Michael Neal on Jul 11, 2009 8:02 AM CDT up reply actions 0 recs

In what area does an NFL football player have an edge?

Those numbers on his contract with all the zeros that he gets when he does his job.

No league “tells” any athlete to get hit in the head. Last time I checked, participation in pro sports was a voluntary endeavour.

by Gerald on Jul 11, 2009 10:36 AM CDT up reply actions 0 recs

So, you’d be okay with all of the law firms in Canada getting together, telling you which one you could work for, and signing you to a contract they could void, and you couldn’t?

by J. Michael Neal on Jul 11, 2009 5:29 PM CDT up reply actions 0 recs

Regarding the “all the law firms” comment, that is apples and oranges and you know it. It is a specious comparison.

As for “signing you to a contract they can void”, that is of course effectively the way it is for all employed persons in North America. At least we get legal notice in Canada, but in many US states it is employment at will.

Also, sports teams do not “void” the contract by any stretch of the imagination. They exercise their rights to terminate it pursuant to that very contract. “Voiding” implies that something was not valid from the beginning. I presume you use the term “void” because it sounds more heinous and unfair.

by Gerald on Jul 13, 2009 6:42 AM CDT up reply actions 0 recs

those final two years

the way that contract is structured, there’s almost no incentive for Pronger NOT to retire at 40 and leave the Flyers (or whatever team they trade him to) on the hook with a bunch of dead cap space

Hyphens cause writers more trouble than any other form of punctuation, except perhaps commas.

by David Driscoll-Carignan on Jul 9, 2009 8:39 AM CDT reply actions 0 recs

yup. 40-year-old HOFers are usually asking for extraordinary big-$$, part-time deals (roger clemens), not putting their bodies through the rigmarole of a full NHL season at a salary just above the league minimum.

by Natty Bumppo on Jul 9, 2009 8:46 AM CDT up reply actions 0 recs

I don’t really think that’s true at all. It’s completely dependent on the player. Chelios is an obvious counter-example.

Of course, even Chelios wouldn’t have agreed to a $500K salary 7 years in advance unless he was pretty sure he wouldn’t want to play then, so I do agree that there’s no way Pronger plays those last two years.

by RyanV on Jul 9, 2009 4:57 PM CDT up reply actions 0 recs

Much Ado About Nothing

Thus far, rich teams have not found it problematic to make big contracts disappear. The only thing wrong with Rathje and Hatcher was a terminal case of pylonitis. Why would the Flyers be any different with Pronger?

by garth the hoser on Jul 9, 2009 8:46 AM CDT reply actions 0 recs

wouldn’t it be cool if Pronger retires at 40, the Flyers find a team to trade his contract to…and his wife won’t let him waive his NMC?

Hyphens cause writers more trouble than any other form of punctuation, except perhaps commas.

by David Driscoll-Carignan on Jul 9, 2009 8:53 AM CDT up reply actions 0 recs

The idiocy of some supposedly intelligent NHL GM’s constantly astounds me.

Being a Leaf fan here requires one to be sufficiently lubricated... and truculent!

by stucky on Jul 9, 2009 10:05 AM CDT reply actions 0 recs

The Malakhov approach

is probably the best way out of this one. Find a small-market team in 2015 with $7M of cap space, and make it worth their while to take on Pronger’s contract before he retires.

I wouldn’t count on the LTIR exception. It’s not quite the same as making the cap hit ‘disappear’; and I suspect the league was more sympathetic with contracts like Hatcher’s and Rathje’s that were signed before the cap existed.

I've been looking at the sky

by Back In Black on Jul 9, 2009 10:06 AM CDT reply actions 0 recs

The Flyers would be dealing from an extremely weak position as any small market team would want a boat load of prospects along with Pronger because the leverage they possess in knowing that the Flyers have to deal him or accept 7M in dead weight on the cap.

twitter.com/kaner88

by Original Six on Jul 9, 2009 10:39 AM CDT up reply actions 0 recs

$5M dead weight, but you’re right…the flyers would need to ship a big-time prospect and/or picks.

by Natty Bumppo on Jul 9, 2009 11:25 AM CDT up reply actions 0 recs

It's not that much leverage

Whenever you’re getting something for nothing, there’s a limit to how much you can hold out for. Presumably there will be more than one team able to meet the Flyers’ needs.

IIRC Malakhov netted the Sharks a low end first rounder, and he had a similar cap hit to Pronger. I doubt Philly will have to give up more than that.

I've been looking at the sky

by Back In Black on Jul 9, 2009 1:42 PM CDT up reply actions 0 recs

I agree … I should have brought up the Malakhov Option, as that’d likely be what happens.

Blogging on hockey at fromtherink.com

by James Mirtle on Jul 9, 2009 11:18 AM CDT up reply actions 0 recs

The collective bargaining agreement is structured in such a way that multiyear 35-and-over contracts are supposed to be so punitive in the case of retirement as to be completely unreasonable, but this year alone we’ve seen three high-profile players — Pronger, Thomas and Nikolai Khabibulin — get four or more year contracts that could easily be albatrosses down the line….

And it’s not working.

(1) Of course its not working. The NHL didn’t push the CBA cap system to prevent teams from entering into unreasonable contracts. The NHL pushed the CBA cap system to ensure that the players would only get a capped amount of revenues. If the teams sign players to contracts that are too “expensive”, that comes out of the players in the end through the escrow process, doesnt it?

(2) Here’s where we see another disconnect between the “NHL” and the teams that make up the NHL. The NHL is sending “memo after memo after memo” about this to teams? Why would the teams WANT the league’s interpretation to be the correct one? This is one case where the NHL and the NHLPA should be in total alingment – teams and players alike should want to have the flexibility to sign long-term extensions in a way that gives the team the ability to take advantage of the "retirement loophole". If enough teams want this flexibility, how can the NHL “office” deny it in the next round of CBA discussions?

(3) As far as any Homlgren comment about this not being an attempt to take advantage of the retirement loophole, I don’t buy it. Because the deal is front-loaded. And for cap purposes, a front-loaded deal is bad in one key respect – trying to get out if without a retirement later. If you read page 205 of the CBA, there’s a formula for determining the amount of a "cap hit" on a buyout, and its structured to protect against a situation where a team paid more in actual cash salary in a year than it was charged against the cap in that year. So a front-loaded contract allows a team to delay the cap hit, but it doesnt allow it to ignore the cap hit.

I did some quick math on Marian Gaborik’s NYR contract – which is spread evenly over the 5 years vs. one where the contract was front-loaded ($10 M, $10 M, $10 M, $3.75M, $3.75). In that case, if he were bought out after year 3, you’d have two different Cap implications under the Buy Out rules. I put up a picture of that analysis here. The bottom line is that in the front-loaded scenario, you get more of a cap hit than you do in the evenly-spread contract.

In other words, if this analysis is right (and Im not 100% confident it is), and Holmgren wasn’t trying to take advantage of the retirement loophole and spreading the cap hit over 2 more years, he should have structured the payments evenly. That way, if he had to buy out Pronger at the end, he would have a lesser cap hit to deal with.

Glen Sather is a Hockey Genius.

http://glensathersucks.com/
http://twitter.com/ThGeneralissimo

by poploser on Jul 9, 2009 10:19 AM CDT reply actions 2 recs

Well said.

And as James said in the initial post, somebody’s going to get nailed eventually taking a chance like this. We’ll just have to wait 4 or 5 years for it to happen.

by Afino on Jul 9, 2009 11:53 AM CDT up reply actions 0 recs

FYI – a specific comparison of Pronger’s contract is here

Glen Sather is a Hockey Genius.

http://glensathersucks.com/
http://twitter.com/ThGeneralissimo

by poploser on Jul 9, 2009 12:13 PM CDT up reply actions 0 recs

Can you trade a retired player’s contract? That’s probably the best solution. Malakhov didn’t technically retire, did he?

Hockey blogging can't get any flatter.

by saskhab on Jul 9, 2009 10:34 AM CDT reply actions 0 recs

You know what strikes me as interesting?

It is how willing – EAGER, even – the current crop of NHL players are to effectively steal cap space from the future generations of NHL players.

One of the most critical parts of the MLBPA’s success was the sense that the union was able to inculcate into the union members’ DNA that they were doing things that would benefit the players coming after.

It appears that the NHLPA’s DNA is being structured in the opposite way.

by Gerald on Jul 9, 2009 10:37 AM CDT reply actions 0 recs

This is fairly common isn’t it Gerald? I think for every player/worker in any league/job you’ll have those who worry about the state of the collective and those who don’t see anything as “big picture”.
It reminds me of the Safeway grocery stores here in BC where current workers voted to accept a contract that called for new workers to be hired with considerably lower wages and benefits. Rather than " bad for everybody" the workers chose " good for me" and ignored any collective goal.

by yrmom on Jul 9, 2009 11:34 AM CDT up reply actions 0 recs

I don’t know how common it is (it may be), but certainly it is not the hallmark of a successful union, at least to the extent that one regards member unity as a hallmark of a successful union. Unions also frequently go to the mat to avoid the type of thing that you mention aboutt he Safeway workers.

by Gerald on Jul 9, 2009 11:40 AM CDT up reply actions 0 recs

Maybe “common” overstates it a bit- I completely agree with you in that this is not what successful unions should do but the whole “I got mine” mentality does raise its head from time to time.
Also I wonder if in the case of NHL players there is a belief that the dollars are always going to be there?

by yrmom on Jul 9, 2009 12:00 PM CDT up reply actions 0 recs

I think you are right about the “I got mine” thing. This underscores my problem with the entire concept at this point in time of there being players’ unions. Players are much more akin to individual contractors than “employees” in any event. As well, sports in general is much more of a meritocracy than the union concept is comfortable bearing.

by Gerald on Jul 9, 2009 12:10 PM CDT up reply actions 0 recs

Without the players' union

there’s a lot of thing that would also be impossible, such as a team’s exclusive rights or matching rights, arbitration, salary cap, linkage, trades, etc.

by SJKel on Jul 9, 2009 4:32 PM CDT up reply actions 0 recs

At the risk of this thread spinning completely out of control, I think that it’s important to distinguish between a craft union and a labor union. The players’ associations in all sports are examples of the former, not the latter. If you look at how contracts with, say, the electricians’ union (IBEW) works, then the players’ unions don’t look out of line. They bear no resemblance at all to what the UAW does.

What you are saying is one of the reasons that it was so hard for the AFL and the CIO to merge, and why their interests in the first half of the 20th century were so divergent.

by J. Michael Neal on Jul 10, 2009 2:59 AM CDT up reply actions 0 recs

I don’t know if the Safeway negotiations in Canada were the same as the ones here in the States, but the contract the workers finally accepted here had somewhat different implications than this. Essentially, Safeway broke the union. The union workers were opposed to the sort of contract they ended up agreeing to, but the company made it clear that the two alternatives to it were a contract that shafted the current workers, too*, and the company going out of business. The moral of the story is how weak American unions are, not current employees selling out their future brethren.

In this particular instance, it’s even hard to blame Safeway management, because they were up against it just as hard. The company actually had a long history of treating its employees well, probably paying them more than it really needed to. Then Wal-Mart decided to add groceries to its stores in Safeway’s markets, which meant that Safeway was facing competition that had much lower operating costs. Frankly, Safeway was facing the choice of screwing its workers over, or going out of business.

*Well, shafting current workers worse than they were as is. From the perspective of labor, it was a horrible contract all around.

by J. Michael Neal on Jul 10, 2009 2:54 AM CDT up reply actions 0 recs

Union negotiations require both sides to actually negotiate. If the labor force is willing to give up something, but the company just says no to any request and wants the union to accept deeper cuts … if the only choice for the workers is to shaft only the newer hires or lose existing jobs and many of the benefits for those who are still employed, what kind of choice is that?

Principles are nice but they don’t pay the mortgage if your position is the one downsized in an economy that is shedding jobs like a golder retriever in the summer. If a union barely has the power to maintain what it has, it is in no position to push for anything more for its members.

"Be kind, for everyone you meet is fighting a great battle." -- Philo of Alexandria

by Baroque on Jul 10, 2009 7:32 AM CDT up reply actions 0 recs

Nobody cares about cap space, they care about money. Escrow ensures that salary paid to the players is equal to a fixed percentage of league revenues. When salary > cap hit, that player is effectively stealing money from other players in that year. When cap hit > salary, the opposite happens. Here’s a simple example with two players in two years. Suppose total paid salary and total cap space are $10m in each year. Player 1 signs a two year contract paying $5m in each year, and player 2 signs a two year contract paying $7.5m in the first year and $2.5m in the second. Since cap hit is averaged over the length of the contract, Player 2’s cap hit is the same as Player 1’s in each year. But since actual salary paid is proportional to the salary on your contract, not your average cap hit, they don’t make the same money each year. Here’s how it works out:

First year: the total salary obligation for the league is $12.5m, but the league will only pay out $10m. Total salary paid ($10m) is 20% less than total obligation ($12.5m), so escrow will withold 20% of each player’s salary. Player 1 will be paid $4m and Player 2 will be paid $6m. Total amount paid is $10m, and Player 2 “effectively stole” $1m from Player 1.

Second year: the total salary obligation for the league is $7.5m, but the league will pay out $10m. Total salary paid is 33% more than total obligation, so each player will receive an extra 33% of their salary. Player 1 will be paid $6.67m and Player 2 will be paid $3.33m. Total amoutn paid is still $10m, but Player 2 “effectively paid back” $1.67m to Player 1.

Frontloaded contracts steal money from current players and give money back to future players. Backloaded contracts do the opposite. The case where a player retires in the middle of an over-35 contract is the same as frontloading.

by RyanV on Jul 9, 2009 5:22 PM CDT up reply actions 0 recs

If you cannot see the direct and tangible connection between cap space and the amounts at which free agents sign, then I don’t really know what to say. You are kind of completely missing the point that not everyone’s contract comes up for renegotiation or free agency. For the ones whose contracts expire, they have less space available to sign. Less space = less salary. Your point is taken regarding the impact of escrow and the like, but the players who will lose out in the future because of tons of unused cap space will lose far more.

by Gerald on Jul 10, 2009 7:21 AM CDT up reply actions 0 recs

You know what strikes me as interesting, is how willing the current crop of GM’s are willing to steal flexibility from the future management of the team. And that the league approves these contracts.

Interesting that one of the premises in support of the salary cap was that it would save the GM’s from themselves. Or as Ron MacLean put it, have the GM’s eating with plastic cutlery. That cutlery is still looking sharp to me.

If Pronger still wants to play at 42 but the team is hoping his cap hit will dissapear, Pronger may feel a lot of pressure to help. Is that enough to balance the risk that he may retire leaving the team on the hook for his cap hit?

I wouldnt think the NHLPA is really going to be fighting to close this seeming purposefully written aspect of the CBA, not loophole. And im not sure how many teams will vote to limit their flexibilty either. So who would be representing this commonly heard fan opinion that this rule needs to be amended in the next cba?

by thinkwild on Jul 9, 2009 10:59 AM CDT reply actions 0 recs

From my understanding of CBA negotiations, which is rather slim, the teams are represented by their respective owners. I would imagine the owners would be interested in limiting long term, front loaded contracts of all age because in the end, they are the ones paying for it.

Teams like Philly, NYR, TO or MTL don’t really care that much because they make tons of money (though I’m sure no owner in the league would say no to saving a few millions dollars, no matter how much money his team makes), but over 75% of the league can’t afford these deals.

I’d say the owners would vote some sort of provision to counter this in the next CBA.

by Habs on Jul 9, 2009 11:16 AM CDT up reply actions 0 recs

I guess it depends if the owners want some version of parity or just to make money. I think at the end of the lockout most of the teams saw the cap as a way to help them make money, with parity being an afterthought(or as a way to sell the cap to the fans). However since the salary floor has since bit low revenue teams on the ass and the various ways that high revenue teams can use loopholes to their advantage I wonder if a luxury tax might have been a better idea.

by yrmom on Jul 9, 2009 11:40 AM CDT up reply actions 0 recs

I’m saying the owners will vote to increase their flexibility by allowing these 35 and older contracts to be bought out or otherwise done away with.

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by James Mirtle on Jul 9, 2009 11:23 AM CDT up reply actions 0 recs

I’m sure the poorer owners will love it when their richer compatriots find new and fun ways to exploit that for all its worth as well. They’re doing a fine job of it now as it is already.

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by HockeyJoe on Jul 9, 2009 12:29 PM CDT up reply actions 0 recs

The poorer owners might not mind this as much – especially if they are living in a system where the Cap “floor” is above what the Cap “ceiling”. These tricks can actually help a cash-poor owner who needs to fill up Cap space to get to the floor (though, it would be tougher for a cash-poor owner to actually have to pay out cash in that type of environment)

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by poploser on Jul 9, 2009 3:01 PM CDT up reply actions 0 recs

Perhaps, but those poorer owners don’t want the floor to be going up either. The cap and floor sliding down in the coming years is something those guys are looking forward to.

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by HockeyJoe on Jul 11, 2009 3:03 AM CDT up reply actions 0 recs

I believe that the PA can always take the league’s refusal to approve a contract to an arbitrator. The league office can’t just decide to void any contract it doesn’t like. It has to be able to defend that decision by appealing to the CBA.

by J. Michael Neal on Jul 10, 2009 3:02 AM CDT up reply actions 0 recs

Does anyone actually think the CBA will be completely unchanged seven years from now? All this speculation is based entirely on the cap and CBA being completely unchanged 7 years from now. There’s no chance on earth it isn’t significantly altered or entirely re-written by then.

This “over 35” contract business will likely be one of the first things to go. Especially if enough teams hand out these contracts.

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by JasonB on Jul 13, 2009 4:27 PM CDT reply actions 0 recs

That caveat’s included there, though. Based on the current agreement, this is a horrible contract.

We’re all just speculating if we want to somehow infer what the two sides will bargain out of it.

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by James Mirtle on Jul 13, 2009 5:25 PM CDT up reply actions 0 recs

and the flyers management team would be speculating if they assumed a change in their favor.

by Natty Bumppo on Jul 13, 2009 8:49 PM CDT up reply actions 0 recs

James, just out of interest, in your view what WOULD have been a good contract for Pronger (ignoring cap hits and all that)? What is the value of a Chris Pronger for each of 3, 4 and 5 years, purely on a value-for-service basis?

by Gerald on Jul 15, 2009 6:23 PM CDT up reply actions 0 recs

If he would have signed something like a five year deal for $25-million (6, 6, 5, 4, 4) that would have been entirely fine. A bit long for an over-35 deal, but still acceptable given the cap hit’s on the books for two fewer years and the cap hit is the exact same.

Even if it was five years at $30-million, that’s fine. The dollars paid out aren’t an issue — how the cap hit is drug out until past his likely retirement age is.

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by James Mirtle on Jul 15, 2009 7:06 PM CDT up reply actions 0 recs

So i guess you are saying that it is better to take the extra mil or two mil hit in each of the first 5 years than spread it over 6 or 7 years and lose $4-5 mil in cap space in years 6 and 7.

i say this because if you took the $30 mil that you would be prepared to pay Pronger and spread it over 7 years instead of 5, your cap hits are $4.3 mil for 7 instead of $6 mil for 5. It amounts to the same overall compensation, so that aspect is a wash.

That actually raises an interesting point in my mind. What constitutes more valuable cap space: $1.7 mil over 5 years or $4.3 mil in two years? I think you might be able to cobble together a better argument that the 4.3 mil in years 6 and 7 is more valuable. You can get a pretty good player for 4.3 mil, instead of having it as a fair chunk of dead cap space.

by Gerald on Jul 16, 2009 4:39 PM CDT reply actions 0 recs