August 04, 2009
When news broke last week that the NHL was investigating the validity of the long-term contracts signed by Marian Hossa(notes) of the Chicago Blackhawks and Chris Pronger(notes) of the Philadelphia Flyers, we asked a fundamental question: Why were the contracts approved by the League in the first place?
Ask a simple question, get whatever the heck NHL VP Bill Daly was trying to tell the Chicago Sun-Times recently:
Asked by the Sun-Times about the league's approval of the contract, Daly said it "was approved because there was no basis to reject it on the face of the contract. ... The decision to investigate was made simultaneously with the registration of the contract (and I so informed Dale Tallon personally), so it is not an after-the-fact decision."
So the NHL basically told the Blackhawks, "Look, we think this unusual (Daly's word) contract is structured in a way that might circumvent that salary cap and violate the terms of the Collecting Bargaining Agreement, and we're going to hire an outside firm to investigate it. That said ... here's a giant green stamp that says 'approved,' so please hold your press conference and order some extra balloons for the Fan Fest ..."
Daly and the League can try to save face by claiming that the investigation began "simultaneously with the registration of the contract," but it actually makes this CSI: Bettman nonsense appear even more like a toothless scare tactic aimed to prevent similar deals in the future. Otherwise, the notion that a professional contract can be approved by a professional league while, at the same time, triggering an investigation about the legality of said contract is a mindboggling contradiction.
But the NHL isn't really all that concerned with invalidating these contracts -- it's sending a message. As a few prominent hockey writers have pointed out, the battle over the loophole is going to be a bloody one.
NHLPA chief Paul Kelly addressed the investigation with Craig Custance of The Sporting News:
NHLPA executive director Paul Kelly said the players' association is not participating in the investigations and sees the Pronger and Hossa investigations as a scare tactic by the NHL to prevent similar, long-term contracts by other teams.
If the league is looking to prevent more of these deals, they'll be in for a fight."This is an obvious effort by the League to attempt to chill the market for long-term contracts," Kelly wrote in an e-mail to SportingNews.com. "Deals with structures such as Hossa and Pronger are perfectly proper and permissible. The NHLPA will take whatever steps are necessary to insure that players continue to have unfettered ability to negotiate contracts that are compliant with existing CBA rules."
Translation: There's a loophole, and the players and their teams are exploiting it until it's closed. Which is how Tim Sassone of the Daily Herald defended the Hossa contract:
This is a whole lot of nothing. So what if these players retire before their contracts run out? If this is a loophole in the collective bargaining agreement, maybe the Hawks just are smarter than everyone else.
Tim Panaccio of Comcast Sportsnet Philadelphia believes there's nothing to the investigation of the Pronger deal, either:
the inference from the league's point of view is that Pronger would have retired by then, having earned most of his money up front. Still, the Flyers are liable for the $5 million cap hit because Pronger wasn't 35 when his contract went into effect.
So why is the NHL questioning the Pronger deal? On the surface, it would appear as though the NHL will have a tough time arguing that the Flyers tried to circumvent the CBA, since they've already admitted they can't void a cap hit in any remaining years in the deal if Pronger decided to retire early.
What this all comes back to is the looming fight between the players and the NHL, as Al Cimaglia of ESPN Chicago believes the long-term contracts tie in with Gary Bettman's pleas for parity:
Both the Hossa signing and the Pronger contract extension could turn out to be poor business decisions. But trying to limit those types of signings will not help the NHL's weakest franchises flourish. The NHL apparently wants to stop the most profitable teams from loading up on high-priced players, at least under the current CBA. Bettman's focus should be on growing the revenue-sharing pool and finding more financially stable ownership.
More than anything else, the NHL may be trying to duplicate other major sports without the necessary revenue sharing to assist the franchises in financial need.
Larry Brooks of the New York Post examines what the NHL might ask for in the next CBA to close the loophole:
If the NHL doesn't like it, the league has the next round of collective bargaining to try to do something about it, which, of course, Gary Bettman and the Board will most certainly do. Not only will the owners come with a term limit expected to be six years, but the league can propose instituting a retroactive limit on contracts, say, negating every existing deal after eight years, just the way every existing contract's value was discounted by 24 percent last time around.
Interestingly, while dramatically front-loaded contracts benefit the individual players signing them, they are detrimental to the Players' Association as a whole because they enlarge total actual payroll, chew up the players' collective percentage of the gross, and thus increase escrow withholdings, which probably will begin at 25 percent this coming season.
Brooks's last point is a good one, although immaterial when it comes to the CBA: The players and agents signing those long-term deals are going to push harder than those on lower rungs on the power ladder to make this fight part of the NHLPA platform for the next negotiation.
But Brooks's earlier speculation about term limits is, perhaps, where the real fight will take place. What's interesting is that while most owners are against the frontloaded, Hossa-esque contracts that lessen the cap hit, there is potentially much less opposition for long-term deals in general.
For example, someone like Ted Leonsis might argue against the Flyers signing Pronger to that end-with-a-whimper deal; but why would the Capitals protest the sort of long-term contract that's going to keep their marquee player in D.C. until 2021?
They drafted him, they built their franchise around him ... who the hell is the NHL to tell them that they shouldn't be allowed to sign him for more than six years at a time? It may be the nation's capital, but not everyone needs a mandated term limit.
Even if you think the NHL is right in going after these "retirement" loopholes, the elimination of "lifetime" deals that don't seek to monkey with the salary cap isn't good for the League.