KK Members Blog

KK Members Blog

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

02/12/2013 at 5:41pm EST

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

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