There’s nothing particularly fancy about Evgeni Malkin’s new contract.
It’s not frontloaded at all. But it’s not backloaded either.
With a straight up $9.5-million a season over the maximum term of eight years, it’s just plain loaded, with the Pittsburgh Penguins star locked up to the biggest contract signed under the NHL’s new collective bargaining agreement.
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And this one was always predicted to set the standard.
With a lot of the “creative” manoeuvring taken out of the CBA, it’s no longer possible to sign the bizarre 15-year contracts that players like Ilya Kovalchuk did previously, which leaves teams and players with an interesting decision.
Their cap hits cannot be pared down by tacking on extra years, especially for a player as young as Malkin – he turns 27 in July – who can sign another deal when this one expires in 2022 and he’s presumably still a useful player at age 35.
So, with the term capped at eight years, just how high does the number go for one of the best players in the game?
Many of the predictions coming out of the lockout were that stars would get a bigger and bigger slice of the pie – with deals up into the $12- and $13-million a season range – and the so-called middle class of the league forced to take the requisite cut.
But Malkin’s $9.5-million isn’t really that out of line with what others have received in the past, as by the time it kicks in beginning in 2014-15, he will be only the eighth highest paid player out of the deals currently signed.
Now, had Malkin gone to free agency, there’s a good argument to be made he would have received slightly more, and the first superstar that becomes an unrestricted free agent will present the next real test of the new agreement.
But where this all gets interesting is in where the salary cap goes from here.
What we know for sure is that it will dip to $64.3-million for next season, the lowest it is able to go under the terms of the new CBA.
But commissioner Gary Bettman is bullish on future NHL revenues, projecting them to easily reach the mark from 2011-12, when they hit a record $3.3-billion in the last full season played.
“And hopefully beyond,” Bettman told media gathered at the Cup final on Wednesday. “I had an audit, finance and executive committee meeting on Monday, and we’ve told them that’s our view of the world.”
By my estimates, hockey-related revenues will only have to reach $3.4-billion next season in order to have an upward effect on the cap, a 3-per-cent revenue bump that shouldn’t be hard to attain.
Heck, they might sell $100-million more in popcorn at the half dozen outdoor games they’ve scheduled.
From there, however, continued growth will push the cap up more dramatically, with $80-million a very reasonable target by 2018 when Malkin is only halfway through his deal.
By that point, a $9.5-million cap hit will look far more reasonable than it does now, even if it’s dedicated to a 31-year-old player.
And that’s when we could really see the big money begin to be handed out to the younger stars entering their primes.
After all, a $9.5-million salary like Malkin’s under the 2014-15 cap will be equivalent to a $12.3-million salary under the projected cap five years later.
As long as NHL revenues keep going up, star players’ salaries will, too. What they may not do is heavily undercut the middle class, however, as there very well could be more cap room for all down the road.
Where the cap will go
If, as the league expects, next season’s revenues exceed 2011-12’s even by a modest amount, the salary cap will rise slightly from $64.3-million. But if revenues increase at 5 per cent a season after that, the cap will shift upwards at a fairly rapid pace of $3- or $4-million annually.
*- all numbers in millions of U.S. dollars