History behind the NHL’s salary cap woes

Anthony Lopopolo
July 11, 2011

The salary cap era has added a new dimension to roster management in the NHL and, as a result, fans and journalists have never been as eager to crunch numbers as they are today. Over the course of the past half decade, general managers have discovered clever ways to circumvent the predetermined limit and ease cap hits by extending the contracts of their star players until they are 40 years old and sometimes older.

Comparatively, in the pre-lockout era, players agreed to deals that would pay them much more money than they were sensibly worth. In the post-lockout era, GMs still overpay for players, but to the organization’s own benefit. Now franchises are able to reel in a big fish without paying them more than 20 percent of their cap, which the current Collective Bargaining Agreement (CBA) stipulates, all by signing players to elongated contracts that lessen in salary over time.

Before the work stoppage, there was little difference between a financially-crippling deal and a poorly-structured one. In today’s NHL, the difference is significant. But, the salary cap era hasn’t exactly invented the notion of what look like unconscionable, eternal deals with the devil (in the case of Ilya Kolvachuk, that’s no metaphor).

Nowadays there’s an emphasis on the future of long-term contracts and how the new CBA will be structured. Will GMs be able to slither around the cap in 2013? Should they be able to?

But the history of the long-term contract is just as important. Who are the harbingers of these farcical deals? Its history runs through the years before the NHL’s first work stoppage in 1994, during the turn of the century and after 2004.

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Its history doesn’t start with the New York Islanders and their goaltender Rick DiPietro, who signed what many regard as the ill-fated deal that pioneered the modern-day protracted contract at $67.7 million over 15 years in 2006, but before then. He and the Islanders took as many shots from fans and media as a gun-wounded victim, but all the criticism fixed on the 29-year-old hasn’t been fair.

“The whole thing for me is stopping the puck and winning hockey games, and if those two things happen, the rest will take care of itself,” an optimistic DiPietro told USA Today at the time of the deal.

Unfortunately, injuries have kept him glued to the sidelines, reducing him to 39 starts in the past three seasons and preventing him from having any chance to justify his contract. The deal, though, wasn’t wholeheartedly foolish; his time under that contract simply demonstrated the risks involved in such a long-standing agreement.

The NHL’s contractual predicament can also be traced back to 2002 when the NHL approved one of the most expensive and reprehensible contracts ever signed. A hot commodity and one of the league’s premier two-way forwards, long-time New Jersey Devils center Bobby Holiksigned with the New York Rangers for $45 million over five years.

While the Rangers invested $9 million a year, plus millions of dollars in bonuses for a player with a spectacular scoring stature, CBC referred to the signing as “a symbol of everything that was wrong with the old collective bargaining agreement.”

Grinders like Darius Kasparaitis were paid like top-end defenseman. The same year the Rangers secured the overpaid services of Holik, they also signed Kasparaitis to a six-year, $25.5 million deal. Kasparatis was also slated to make millions in bonuses, which would normally go against today’s cap as they did when Jonathan Toews and Patrick Kane cashed in after their Stanley Cup-winning season with the Chicago Blackhawks.

Even a year before that, Alexei Yashin signed the first traditional double-digit term in the NHL’s history, a 10-year contract that bound him to the Islanders for $87.5 million.

These are all deals that inevitably fuelled the full-season lockout in 2004-05, but they weren’t handed out as regularly as they are today, with the intention to circumvent a salary cap. Yashin wasn’t only the first Islanders player to sign a 10-plus-year deal and fail to justify its length, but the first one to ever do so in the NHL (Wayne Gretzky signed a 21-year personal services contract, not a traditional one, with the WHA’s Edmonton Oilers as a teenager).

Back in 1992, too, Pittsburgh Penguins owner Howard Baldwin juggled with the notion of signing Mario Lemieux to a lifetime contract. Twenty years earlier, Bobby Hull signed a contract with the WHA’s Winnipeg Jets worth $2.75 million over 10 years, according toAbout.com. Reports suggest something around $1 million of that contract was paid up-front, making Hull one of the first hockey players thought to have made a million dollars in one year – an early sign of the much-maligned front-loaded contract.

In the post-lockout era, there’s a big difference between a financially crippling deal and a poorly structured one. These long-term deals don’t look good, but they’re structured to benefit the team signing the player in question. Kovalchuk’s 17-year, $102 million deal with the Devils challenged the NHL’s tolerance for and acceptance of long-term deals, but not enough across the NHL have done the same.

Most recently, the Philadelphia Flyers and forward Maxim Talbot were reported to have irritated the NHL with his new five-year, $9 million deal. At a relatively low term and salary, Talbot’s contract caught the attention of the league’s Sauron eye because his salary in its final year drops too much from his first year.

At least 10 notable players – including three goalies and excluding a 12-year contract like that of Los Angeles Kings forward Mike Richards, who signed his mega deal with the Flyers as a 23-year-old – will be 39 or older when their seven-plus-year deal expires.

In the final years of their deals, Marian Hossa, Henrik Zetterberg, Roberto Luongo and Chris Pronger see their earnings plummet like a stock market crash. Comparing the beginning of their contracts to the end, each of their salaries drop anywhere between $6.75 million and $9 million, a declination in salary more like a Black Diamond ski hill to Talbot’s bunny run.

Funny, too, that the salary cap was widely and accurately projected to deflate as early as three years ago and yet these deals still occur defiantly. In 2008, Devils GM Lou Lamiorello told theToronto Sun that he was shocked to see $400 million in contracts handed out in one day. He committed slightly more than a quarter of that total to Kovalchuk two years later.

As Penguins GM Ray Shero demonstrated, however, a franchise player, let alone a face of the NHL like Sidney Crosby, doesn’t need to engage in a decade-long marriage with a team. A five-year contract is just fine.

But the league’s Bermuda Triangle of financial mismanagement between New York City, Nassau County and Rutherford, N.J., continues to attract a flock of franchise players for an nth amount of money and time. The salary cap era didn’t exactly initiate a culture of spending, though. These types of deals occurred before the NHL entered a lockout, even before the turn of the century.

But like the dead-puck era, these past six seasons will be the ones stigmatized.

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The Author:

Anthony Lopopolo

Anthony Lopopolo is a sports writer based out of Toronto, Ontario who writes about a variety of topics for The Good Point. Lopopolo has been featured on The Good Point since March, 2009. A fourth-year journalism student at Ryerson University, Lopopolo's main sport is hockey but he frequently dips into European football as well as tennis. Lopopolo fetched stats as an intern for The Hockey News and served as sports editor of Ryerson University's student newspaper, The Eyeopener. He's written for The National, an Abu Dhabi-based newspaper and Ryerson's other weekly newspaper, The Ryersonian. He also runs his own football website called The Footy Pie, and tweets @sportscaddy.