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End of an Era: NHL’s New CBA Closes Player Contract Loophole

In 2006, Rick DiPietro was poised to become the next great American goaltender.  Just six years (and countless injuries) later, his fifteen-year contract has become a sterling example of the type of contract the NHL now forbids.  Aside from absurd duration, under the previous collective bargaining agreement (CBA), teams could also aggressively structure these multi-year deals to circumvent the salary cap. 

A player’s cap hit is calculated by dividing the entire value of the contract by the number of years it covers, and soon after the cap was installed in 2005, crafty GMs quickly realized a loophole by front-loading these contracts. In 2009, Marian Hossa penned a twelve year deal that pays nearly eight million yearly for the first half of the deal, before precipitously dropping to just one million over the last four years. Hossa will be forty-two and likely retired when the contract ends. Yet despite receiving almost eight million dollars annually for most of the contract, the cap hit will be fixed at a modest 5.3million/year.

Under the new Memo of Understanding, however, teams can sign players to a maximum of seven years, and a player’s salary cannot fluctuate more than thirty-five percent from year to year. The closing of this loophole is a welcome provision of the recent agreement. Albatross contracts like those inked by DiPietro are now a ghost of the past; meanwhile the integrity of the salary cap is also restored. Instead of front-loaded contracts being instrumental in creating winning teams, rosters will more accurately represent present value, allowing for a greater balance of elite players across the league. With hockey still attempting to gain a foothold in the United States, more competitive teams can only serve to broaden the fan base and create fans in non-traditional hockey markets.

-Itrusteddrrahmani

Filed in: NHL Talk, | KK Members Blog | Permalink
 

Comments

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I’m not sure how much of the objection was to DiPietro’s contract.  It was 15 years, but it wasn’t front-loaded and wasn’t in any way an attempt at cap circumvention.  His cap hit is $4.5M and his salary for every single year of the deal is $4.5M.

Your example of Marian Hossa’s contract is much more of what they were trying to stop.

Posted by Garth on 02/12/13 at 11:28 PM ET

Itrusteddrrahmani's avatar

I completely agree. I was attempting to, but poorly articulated, that a side effect of closing that loophole also signals the end to excessively long contracts (over 7 years). Thanks for reading!

Posted by Itrusteddrrahmani from Nyc by way of A2 on 02/13/13 at 10:43 AM ET

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Just like Zetterberg’s contract.

Posted by chijim on 02/13/13 at 08:14 PM ET

Itrusteddrrahmani's avatar

There a great deal of k’s that would be invalidated by this rule if they were signed today, Zetterberg’s included.

Posted by Itrusteddrrahmani from Nyc by way of A2 on 02/13/13 at 08:16 PM ET

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