NHL Needs to Put Foot Down on Retirement Contracts
Retirement contracts are by no means a new phenomenon in the National Hockey League. These contracts, where players are essentially tenured for years far below their expected playing time, are generally a means of circumventing the salary cap through manipulating a loophole in the NHL’s collective bargaining agreement.
The NHL finally put its foot down regarding these deals when it rejected Ilya Kovalchuk’s 17-year deal with the New Jersey Devils. However, it is curious to see why it is just now that the NHL has decided to take action against deals that have been happening for years. This may be the tip of the iceberg regarding reforms in the NHL, but the true winners are the players who have already gotten away with these front-loaded deals, and there are plenty of them.
Kovalchuk’s deal was for $102 million but was heavily front-loaded, so much so that Devils general manager Lou Lamoriello himself expressed concern. The deal has years of $11.5 million earnings for Kovalchuk, which is greater than the sum of the last seven seasons on the contract.
However, the previous deals of this manner the NHL has let slide have been fairly blatant as well. The problem stems from a clause in the CBA which states that teams use the average salary of a player when calculating salary cap hits rather than annual wage.
That means that if a player signs a two-year, $20 million deal, the cap is affected $10 million regardless of how much the player earns in either year. He could earn $5 million in his first and $15 in his second, or $19 million in his first and $1 million after that. It makes no difference.
This loophole has allowed the Detroit Red Wings to establish their Swedish forward duo of Henrik Zetterberg and Johan Franzen for long-term deals that are extremely cap friendly. The NHL reviewed the deals as well, but allowed them to go through.
Both the Swedes were signed to double-digit year contracts that would make them Red Wings until each is 40-years-old. To put this in perspective, in NHL history only 14 forward have played into their forties yet Detroit expects to add two more to the list. The front-loaded deals of the pair have Franzen making just $4 million the last three years of his deal, while Zetterberg makes $5.35 million during the same span.
Goalie Roberto Luongo’s contract with the Vancouver Canucks was perhaps even more preposterous, though not quite on the Kovalchuk level. Luongo is to be with the Canucks until he is 43. The NHL currently has just one goaltender who is 40, the New York Islanders’ Dwayne Roloson. Luongo is slated to make $10 million this year at age 31. However, his total contract average is just $6 million as he is set to make only $7 million over the last four years of the deal.
It is silly to question why the NHL rejected Kovalchuk’s current deal. It is more pertinent to ask why the NHL have just started putting their foot down now? It is important for the NHL to address this in explaining the deal, and to also set down more rigid guidelines for the future.
The League’s administrators look like hypocrites when acting in this manner, and it would be much easier to save face by fixing the cap rules rather than having to intervene and catch front-loaded retirement deals.
Abuses of the CBA are never going to stop as teams will do anything they can to gain an edge in a salary capped NHL. League officials must fix the system or they'll continue seeing abuses.
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