I would think it sure as heck beats paying up to half in bonus per year, or whatever bonus money they are looking for.
Even over those two potential lockout years, to have it heavily bonus laden is just the cost of doing business. As crappy and unfair as it seems.
If you have 4 mil in bonuses every year on an 8.5 mil per year deal , your looking at 90k in debt servicing (at 4%) per year. Total of 720k over the entire term of the contract. If you give 2 years at 8 mil in bonuses and need to borrow to cover them, you're looking at 175k per year, or 350k over the entire contraact (assuming zero bonus in other years). So, to save up to 370k (I suppose if we turn things around and season tickets do really well, or the Cdn Dollar gets to par, we might not need to borrow as much) you're risking up to 4 mil. The break even point would be offering 2 mil per year in bonuses; this would cost the same as 8 mil in just the potential lockout years. In the grand scheme, borrowing to give bonuses to the top tier talent on the team (say 2 or 3 of the best players) is a pretty small fraction of the total player costs.
Perhaps I'm overly pessimistic, I fully expect a lockout, and to miss at least 40% of a season; if I'm right about that, it's a less expensive option to pay them up to 50% of all years in bonuses than 8 mil in just the lockout years, assuming of course, they'd even be interested in that. Also possible that I'm overly optimistic that Duchene would accept a deal with a reasonable bonus structure, and could be convinced to take as little as 25% of his salary as bonus money.
Right.
At the end of the day if the team offers each a year in bonus then they are at risk of losing 16-20 mil are they not? Regardless of where the money comes from, loan, arena rev, etc....at some point you had to hand over 16 mil with no rev coming in to cover the cost. Maybe it's covered off in other years...but it's still revenue that could have been spent elsewhere.
Ideally, we don't offer bonus money, because I don't think we can really afford to pay huge sums of money without the revenue from gates and other sources that dry up during lock-outs, so to me, you minimize the exposure in the lockout years even if it means paying a couple hundred k extra.