The new way around the cap

Discussion in 'Fugu's Business of Hockey Forum' started by endlessdream83, Jul 2, 2007.

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  1. endlessdream83

    endlessdream83 Registered User

    Aug 5, 2006
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    Having seen some of the amounts, but more importantly, the duration of the contracts being signed on July 1st, I noticed that just about all of the big signings were made by the usual 'big players' of old - NYR, Detroit, Colorado, Philly, and Toronto. Of course, with a cap in place they can't beat the other teams on the amount of money they can offer (at least they can't go over the maximum), so they beat them by the duration of the deal.
    Can a smaller market team afford to give Daniel Briere an 8-year deal at $52 million? Probably not, because who knows if they'll be able to afford that in eight years if their fanbases are shrinking. But the aforementioned teams know that they'll probably always be making big money, so they can afford to throw a ton of money at the players up front, and then years down the line, they'll throw some more money at them to buy them out of the last year or two of their deal and not even think about it.
    Sure, it's expensive, but those teams will all have that money to burn. They're playing to their advantage, and in the meantime, it doesn't hurt them that the going rate for 'star caliber' players rises due to their extravagance, which will make it even harder for the lower-budget teams to cope on a competitive level. And if by chance salaries SHOULD get out of hand, the escrow payments will be made back to them anyway.
    So to those who think that another CBA will be needed soon, I wouldn't be so sure... the big money teams got their 'spending freedom' (even if it took them two years to start to figure it out), the smaller markets have their revenue sharing and escrow so they should at least be able to turn a small profit, and the players will, soon enough, be back to making $8-10 million a year for the elite level guys. The NHL may have just figured out how to keep everyone happy in their own little world, while the average fan is back to shaking his head at how overpaid all the players are. :p:
  2. Irish Blues

    Irish Blues Present once again

    Dec 15, 2002
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    Sure, those teams can offer 6, 7, or 8-year deals. It'll either mean later in that contract, those teams will

    -- be utterly stuck with an immovable contract as the player's level of performance declines (in some cases, dramatically),
    -- have to execute a buyout that will count $2-3 million toward the cap (or more in the first few years where the contracts are front-loaded),
    -- need to go the New Jersey route from last summer and include picks/prospects to get said player off the roster,
    -- be looking at teams needing to hit the cap floor to take those huge salaries (again, needing to give picks/prospects to entice them), or
    -- needing to pay the player a chunk of money to retire (in which case, that money paid would also count against the cap).

    The interesting part won't be now, when the money is being doled out. It'll be 3-4 years from now, when performance starts to decline, revenue growth slows, and teams suddenly find themselves unable to continue to spend their way out of mistakes. It will happen - it's just a matter of when ... and I think '08-09 will be a rude awakening for a few teams.

    I also think it's just a matter of time before someone tries to make an end-run around Article 26 and gets busted ... but again, that may not be for a few years until someone is slammed against the wall due to cap constraints.
  3. Pepper

    Pepper Registered User

    Aug 30, 2004
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    I guess Milbury was ahead of his time with that 10y Yashin contract, that sure worked out well :sarcasm:

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