This isn’t a brand new idea, but it could be more important now that it appears on its way into the next collective agreement.
The NHL is obviously out to get what it calls “long-term front-loaded back-diving contracts,” with deputy commissioner Bill Daly calling a term limit “the hill we will die on” and the league proposing a heavily punitive system on existing deals that met that criteria back in October.
As per the league’s release now nearly two months ago on the controversial potential rule change:
“We are proposing that all years of existing long-term contracts in excess of five (5) years be counted against a Club's Cap regardless of whether or where a Player is playing. While such contracts (and Cap charges) can be traded during their terms, in the event a Player subsequently retires or ceases to play, the effective Cap charge would revert to the Club that originally entered into the contract.”
That passage drew a lot of attention when the proposal came out, as it would do things like apply Roberto Luongo’s cap hit to the Vancouver Canucks if he retired five years from now - even if he’d played for three different teams in the interim.
Or punish the Philadelphia Flyers should Jeff Carter retire early.
This idea has fallen to the back burner as other topics have come forward, but it was discussed last week and penalizing existing long-term deals (when players retire early for any reason other than injury) remains a key part of Item No. 2 on the league's three main outstanding issues list.
(Those being: 1. CBA length, 2. Getting rid of long-term deals that circumvent the cap and 3. Having no compliance buyouts or other means of “off the cap” transition measures.)
In response to the league’s call for such an alteration, the NHLPA devised something called a “cap benefit recapture formula,” which would punish teams with players who retired early on long-term deals by putting the money they saved over the term of the deal on their cap after they’ve retired.
This notion has been around for a while, but the change that came last week was that the PA offered to apply this formula to any new contracts that are seven years or longer OR existing deals with seven years or more remaining.
Another change to the PA's previous proposal is that instead of allowing the post-retirement cap penalty to be spread over twice the length remaining on the deal it can only be spread over the number of years that the player didn't play.
And there’s not an insignificant number of those existing deals out there.
According to Tyler Dellow, who has done some interesting work on the subject of long-term deals, as many as 32 players are on contracts with seven or more years remaining,
That, of course, includes the identical 13-year deals signed by Zach Parise and Ryan Suter by the Minnesota Wild this summer in free agency.
The CBRF, as I like to call it, is a bit complicated, so it calls for an example here just to give a better idea of how it’d function. Let’s say Parise and Suter both retire three years early (and not due to injury), which isn’t unreasonable given they’ll be in their late 30s by that point.
Those deals are structured with a ton of money at the front, with $12-million in the first two years, $11-million in the third, $9-million over the next five years, $8-million in the ninth year and $6-million in the 10th.
The final three years pay just $4-million total.
That means that Parise and Suter, if they retire after the 10th year of the deal, will have been paid $94-million in that span - which averages out to $9.4-million.
Their cap hit, however, for the length of the deal is just $7.538-million because of the low final years.
The CBRF would take the difference between $9.4-million and $7.538-million over the first 10 years of the deal – $18.6-million – divide it by three and charge that $6.2-million to the cap the next three seasons.
So there could, in theory, be a couple anchors on Minnesota’s cap in 2022.
After Year 9
$5-mil x 4
After Year 10
$6.2-mil x 3
After Year 11
$6.5-mil x 2
After Year 12
$6.5-mil x 1
Now, the thing is, the NHL will likely be under a new CBA by that point, and who knows how that agreement will treat these deals. And who knows if a $6.2-million cap penalty in 2022-25 will be considered a significant punishment for having benefited for the 10 previous years from a lower cap hit under a lower cap.
The formula also doesn’t yet address what would happen if a player is traded and much of that cap benefit went to a team other than the one the player was on when he retired.
But what is clear is that there’s likely to be some sort of punishment on existing long-term contracts whenever an agreement is signed, as the PA has put such a measure on the table, at least in the sense I’ve outlined above.
So what the CBRF will look like in its final iteration isn’t certain. That it’ll exist in some form certainly seems to be.Report Typo/Error