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The Malik Report

Brooks: NHL allowed small markets to spend as ‘evidence’ for tighter cap restrictions

As far as the New York Post’s Larry Brooks is concerned, the NHL very happily witnessed its small-market teams spending money like it was on fire this summer very specifically because it plans to use “small-market insanity” as evidence to bolster its case that the salary cap should be rolled back, front-loaded contracts should be all but banned and the players’ share of revenues are “getting out of hand” and must be reduced (never mind that it’s Gary Bettman’s high cap floor and narrow payroll range that’s thrown the wrench into the sanity proceedings) during the next round of CBA negotiations:

The league opened the door with every intention of slamming it shut next time around and of hoisting the front-loaders on their own gold-plated petards. Bettman and his canny legal team, with aid from unwitting allies or dupes in the NHL Players’ Association office who never once consulted with Kovalchuk before authorizing a collective bargaining agreement amendment in his name, created a perfect storm in which small-minded small-marketers, their uninformed mouthpieces in the media and the GM of the Maple Leafs spent the week throwing around the term, “circumvention,” contrary to the facts.

Forget the nine-year deals both Richards and Bryzgalov signed. The Kovalchuk Amendment not only allows, but encourages an 18-year front-loaded deal for a 21-year-old coming off Entry Level, under which nearly all of the money is packed into the first 10 years as long as the final nine seasons are established at $1M apiece.

That’s the formula that would get Steven Stamkos on an offer sheet. That’s the formula that would get Drew Doughty. That’s the formula (though adjusted for a 13-year deal running through age 40) that most assuredly would have gotten Zach Parise, which is exactly why the Devils filed for salary arbitration and thus removed the winger from the market.

Anyone who thinks this week caught the NHL by surprise is kidding himself or herself. This is what the league wanted to use as evidence that the system is hopelessly broken and tilted in favor of the big markets — the system, of course, that Bettman, counsel Bob Batterman and the Board invented and painted as a utopia the last time around.

Next time, the NHL is going to introduce the ultimate one-size-fits-all cap. Percentage of the gross will be dramatically reduced. The midpoint will essentially become the cap, with the ceiling and floor separated by perhaps $4M-$6M. Deviations of salary within a contract will be kept to a minimum. The cap charge will be defined by the average of the three-to-five highest salaried seasons. Contracts will be kept to a minimum of five-to-seven years. And the calling card, as if one is required in an era where owners in every sport except baseball are in complete command of the labor landscape, will be last week.

The league put out the bait. The Rangers and the Flyers (and the Sabres, who may be a small market team by definition, but have an owner with a big market mentality) took it, as well they should have. Sixth Avenue couldn’t be more gratified.

If the NHL chooses to “save” itself from its general managers by further screwing around with the payroll range, nothing will change for the better as long as the cap’s determined by league-wide revenues. The floor won’t drop and teams will continue to overspend despite Bettman’s further attempts to reach “blessed parity.”

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Comments

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Thanks for posting this, George.  Enjoy the scrimmage this afternoon!

Posted by Alyeska on 07/10/11 at 09:31 AM ET

MsRedWinger's avatar

If this happens, there are a few GM’s out there who will be crying, and Ken Holland will look like the genius he his.

Posted by MsRedWinger from Flori-duh on 07/10/11 at 09:48 AM ET

Evilpens's avatar

Brooks is as senile as ever, Allowed them to spend??? WTF they have to get to the salary floor

Posted by Evilpens on 07/10/11 at 10:51 AM ET

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It’s simple math: ~$6M cap increase time 30 teams = $180M in “new” spending.  If you ignore Buffalo & Miami, how many “ridiculous” deals were really done?

To claim salary inflation & front-loaded deals are part of a grand conspiracy is ridiculous.  The 30 owners can’t agree on much of anything & this especially includes player salaries.  If there is another lock-out & lost season, it will be due to owner’s perceived leverage to renegotiate terms…

Also note, even with this cap increase, Chicago, San Jose, Philly, etc. are moving assets at a discount to create cap room.  Expect more going forward.

The net is the Red Wings are in a buyer’s market.  Similar to the NBA, players with expiring contracts (aka Hudler) are “worth” more.  Holland will have chances to acquire somebody(s) at below-market prices.  I feel confident he won’t make a move just to make a move, but a top 6 forward with a “reasonable” cap hit is probably on the shopping list.

Posted by vfsvfl from FL on 07/10/11 at 11:15 AM ET

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I suspect incompetence in Florida’s case—how could it possibly be a good idea to get to the predictably rising floor in a single free agency? That’s depending on the availability of talent in a situation where the talent available changes drastically from year to year, and is often very low in any case because of teams locking up their stars with long RFA contracts—but I wouldn’t be at all surprised if the other deals were planned with an eye to demonstrating the unsustainability of the ever-rising cap (never mind that the CBA permits and in fact requires a rising cap, and thus a rising floor, when one party opts for the inflator). And when you think about it, the only good reason for Dale Tallon and his fellow free-spending GMs to take on so much future salary in their quest to meet the salary floor this year is because they know, believe, or hope that the new CBA will involve a rollback on existing contracts.


But you know what? It’s not impossible to manage the cap. Look at the Bruins: they were lucky to win the cup, but I don’t think that they were that much luckier than past winners (I wonder how you would test that, by the way). And they didn’t have salary cap casualties from the Stanley Cup-winning roster because of good cap management.

Evilpens—you’re right that teams have to spend to the salary cap. But they don’t have to give out ridiculously front-loaded contracts. That’s what Brooks means when he says that the teams were encouraged to spend: that they were encouraged to spend in improper ways.

Posted by Ken on 07/10/11 at 12:28 PM ET

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Here’s a question: do contracts where yearly salary exceeds AAV cap hit contribute to higher escrow in that particular year? Seems to me that they would, unless escrow is calculated by adding up AAVs, which doesn’t seem like how it would be done.

Posted by steviesteve on 07/10/11 at 03:11 PM ET

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Thanks George for all the hard work. I was wondering if you could find out more about Calle Jarnkroks’ injury, is he going to miss any time this year? Did this set his development back a whole year? Does he still weigh 156 lbs? The hit looked pretty bad, should have been a penalty.
Also wanted to say that Larry Brooks is a complete and utter tool. The stuff that appears in his articles is beyond ridiculous. i don’t even think he writes real stories, i think he just sits on his couch making stuff up. if Gary Bettman gets one tenth of that stuff from the nhlpa he’ll be lucky. League attendance and revenues have climbed impressively since the lockout. Are fans and players supposed to forget this? That would be impressive since they are tied to the cap. There have been six different Stanley cup champs since the lockout. Isn’t that the diversity the league was looking for? What exactly is so untenable about the situation? The fact that its working? Despite the ravings of Ken Campbell and Larry Brooks hockey looks pretty good to me right now. its gonna be a real silly sight watching Gary try to explain why the owners need more money to Donald Fehr. Good luck with that Gary! The anger that wells up when people talk about the front loaded contracts really confuses me because whats the alternative? Thats right letting them go to free agency. You know, where sanity goes to die. Most of the front loaded contracts these buffoons are referring to belong to LARGE market teams. Is that really who Gary is gonna pick a fight with during a labor dispute? Bottomline this is NOT 2004 the league is in great shape and we have more parity(yuck). The nhlpa is not going to roll over an take it. My guess is there will be some kind salary “freeze” for a year or two and the floor will be lowered slightly.

One last thing that i think is not getting enough play from the nhlpa; roster limits. Why can a team only have 23 players this rule seems to have no value what so ever? i miss the days when the wings carried alot more players on the roster.

Posted by From The Hockey Wastelands from Cleveland on 07/10/11 at 03:28 PM ET

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But they don’t have to give out ridiculously front-loaded contracts. That’s what Brooks means when he says that the teams were encouraged to spend: that they were encouraged to spend in improper ways.

The problem with this theory is that it doesn’t take into account who did the spending.

The two biggest, disproportionately front-loaded contracts were by the Rangers and the Sabres.

The Rangers are not, by ANY stretch of the imagination, a “small-market” team.  They are the biggest hockey market in the US.

In the case of the Sabres, they’re a small-market team but the new owner wanted to show that they weren’t going to spend like a small-market team.

In both cases, the players could’ve gotten a higher cap-hit salary, but the teams front loaded the contracts in order to make the signings.

Posted by Garth on 07/10/11 at 05:25 PM ET

SYF's avatar

If this happens, there are a few GM’s out there who will be crying, and Ken Holland will look like the genius he his.

Posted by MsRedWinger from Florida, wishin’ I was back in the Mitten on 07/10/11 at 07:48 AM ET

Tick Tock for Mayor of Detroit.

Posted by SYF from the team that re-signed KFQ and DFC by KFH on 07/10/11 at 06:41 PM ET

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I think a lot of the older media out there don’t understand the cap. The issue isn’t the free agent frenzy at July 1 with inflated Salaries every year. The issue is that teams have to spend to a ridiculously high floor which is driven by spending 57% of league revenues on players which has also caused problems due to the disparity between the big market team revenues and small market team revenues. Maybe a player rollback is in order—but I seriously doubt it will be huge. At most, in the order of 2-3%. I think where the economics really need fixing is the floor and revenue sharing. Bring the floor down to 40% of the ceiling and add a luxury tax on the top $5M of spending near the ceiling which would generate about $30M in additional revenue sharing and those two things would stabilize spending for small market teams.

Posted by bcrt on 07/10/11 at 06:54 PM ET

statelouis26's avatar

What happens to Florida if the cap comes back down, including the floor and ceiling?  What happens to them in say 3 years when all their prospects are looking for deals and spots but you got Kopecky of the roster for what $3mill?  I’m sayin this cuz traditionally florida does not go anywhere near the ceiling.  I understand they have some $14mill in space but that really doesn’t guarantee they’ll be in good financial space.  It’s understandable they had to do it all to get to the floor but the way they did it is risky.  Bergerheim 3, Fleischmann 4.5, Upshall 3.5, Kopecky 3, Acquire Campbell at 7, Jovo 4.
These guys all have questions whether its injury, overpayment, and most have at least 4 years.  Logjam later?  one can only guess, though buyouts were common to get under in 05-06 or 3/4 reduction of salary.

Posted by statelouis26 from Detroit, MI on 07/11/11 at 04:42 AM ET

statelouis26's avatar

Bring the floor down to 40% of the ceiling and add a luxury tax on the top $5M of spending near the ceiling which would generate about $30M in additional revenue sharing and those two things would stabilize spending for small market teams.Posted by bcrt on 07/10/11 at 04:54 PM ET

It would be fine to bring the floor down but to put a luxury tax does not make much sense and not sensible.  Think about it.  The money making teams for the league (big markets) being punished by spending?  Just for the sake of keeping around the small markets its not fair and backwards.  I agree that the big spenders perpetuate the cap and player salary problems, but to punish them when they keep the league largely afloat so some panther fan can stay around doesn’t work.  Why have a ceiling then anyway?

Posted by statelouis26 from Detroit, MI on 07/11/11 at 04:51 AM ET

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The largeGarth—the conspiracy theory that Brooks was suggesting (and that I’m tempted to believe) is that the league made it known to all the teams, not just the small market ones, that the league would not come down hard on contracts that look to the naked eye like cap circumvention. Big market teams have more incentive to indulge in cap circumvention, because the factor limiting their roster is not actual salary payouts, but the cap.
Staying with the conspiracy theory—Brooks is suggesting that the league will use the examples of outrageous cap circumvention and overpayment for mediocre talent to argue, in the next CBA negotiations, for a salary rollback, a lower percentage of revenue allocated to the players, and slower future increases in the cap.
Taking off my tinfoil hat, it seems clear that those actions wouldn’t solve the basic problem: the unwillingness of some small market teams to live up to the salary commitments of their counterparts in large hockey markets, and the inability of GMs almost everywhere to show some restraint in contract negotiations. Unless a new CBA addresses the first problem with some form of revenue sharing (and I don’t see how Toronto, for example, could be persuaded to accept that), I don’t think the players will be very willing to give ground on the second problem.

Posted by Ken on 07/12/11 at 10:51 AM ET

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The Malik Report is a destination for all things Red Wings-related. I offer biased, perhaps unprofessional-at-times and verbose coverage of my favorite team, their prospects and developmental affiliates. I've joined the Kukla's Korner family with five years of blogging under my belt, and I hope you'll find almost everything you need to follow your Red Wings at a place where all opinions are created equal and we're all friends, talking about hockey and the team we love to follow.