NHL Wants Something for Kovalchuk Deal

It seems like everyday, every hour, there is a tweet or a post or an article about the Ilya Kovalchuk saga. Now, the NHL is set to approve the 15 year, $100 million deal for Kovalchuk, but with a few conditions. As per Larry Brooks, who broke this last night, the NHL has two conditions for approving the Kovalchuk deal, and allowing the Marian Hossa and Roberto Luongo deals to stand.

1. That the cap hit on future multiyear contracts will not count any season that ends with the player over 40 years of age. The cap hit would be based on the average salary of the seasons in the contract up to age 40.

2. That the cap hit on future contracts longer than five years would be calculated by granting additional weight — perhaps the average — to the five consecutive years with the largest average salary.

Should the union not accept these terms, or if a negotiated deal is not reached by the Friday 5pm deadline, the league will reject the Kovalchuk deal, and look to decommission the Hossa and Luongo deals. Should the union agree, the aforementioned contracts, and presumably the other questionable contracts, will be grandfathered into the new agreement.

These two conditions are fair conditions, as it is rare that a player is effective, or even playing, at the age of forty. Sure, there are exceptions, but they are just that: exceptions to the rule. To put numbers to this, if Marc Staal were to sign a 20 year deal for $100 million, a deal expiring when Staal would turn 42, the original cap hit would be $5 million. Under the new stipulation, the cap hit would be $100 million over 18 years ($5.55 million), as the two years after 40 no longer apply to the cap hit.

The second stipulation is a bit more complicated. If the contract is front or back loaded in any way, then the cap hit would fluctuate based on the length and weight of the contract. Based on Brooks’ statement, it appears that the five heaviest years will have a higher cap hit than the rest of the contract. Using the hypothetical Staal example above, if the contract has a first five years of an annual $8 million salary, then the cap hit would be $8 million for the first first years, and $5.55 million for the remainder of the deal.

More analysis after the jump

NHL Playing With Fire

When the NHL rejected the Ilya Kovalchuk contract, it sent shock waves throughout the league. Many saw it as a huge victory in the fight against these enormous contracts, which of course it is. Many others looked deeper into the situation, and noted what could become a very big issue going forward. Rumors are/were abound that the NHL is going to be looking into the contracts of Marian Hossa, Roberto Luongo, Chris Pronger, and any other contract that has the “dummy years” tacked on at the end to lower the cap hit.

Before you can analyze the affects of reviewing other contracts, you have to read the detail as to why the Kovalchuk contract was rejected. Yes, there are the obvious reasons of $98 million paid out over the first 11 years of the contract, with the last 6 years seemingly serving as “dummy years” to drive the cap hit down. However, the Kovalchuk contract has a unique clause that, in my opinion, really was the straw that broke the camel’s back. The text in arbitrator Richard Bloch’s decision states:

The economic incentives are not limited to issues of the Player’s preferences, alone. During the final six years, the comprehensive “No Move” restriction will have been reduced to a “No Trade” clause. This additional flexibility will allow the Club to, for example, place the Player on waivers or send him to the minors. Here again, one may reasonably ask whether this Player would, at that point, accept such repositioning as an alternative to seeking continued employment outside the League or simply retiring. In either of those events, the team would be relieved of any continuing salary cap hit that, in this case, would amount to a $6,000,000 adjustment.

Essentially, the shift from a no-movement clause to a no-trade clause gives the Devils organization another outlet to remove the $6 million contract from the books. By giving the Devils a second way of removing Kovalchuk’s cap hit, Bloch determined that the contract was attempted circumvention of the salary cap. The monetary alignment of the contract was a big issue, but could not be the only issue, seeing as the NHL has previously approved the contracts of Hossa, Luongo, Pronger, etc. This shift from no-movement to no-trade was a clause unique to the Kovalchuk contract, and in my opinion, was the added factor that caused this contract to be voided.

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What If Redden Heeded Tortorella’s Warning?

At the end of the season last year, it became public knowledge that coach John Tortorella warned Wade Redden that he will need to fight for his position on the roster, and nothing will be guaranteed based on the size of his contract. The Rangers moves this offseason, specifically the signing of Alexander Frolov and acquisition of Todd White, have proven that they plan on removing some salary from the roster. Currently, the Rangers sit about $1.5 million over the $59.4 million salary cap, with Marc Staal still waiting to be signed. Although Staal’s case for a large salary was hurt by Erik Johnson signing at under market value, it is safe to assume that Staal will at least want to be compensated more than Dan Girardi and his $3.325 million salary.

If a nice, round number for Staal is set at $4 million, which is $500,000 under where I initially projected his market value, then that leaves the Rangers with very little options for clearing salary cap space. Prior to the Todd White acquisition, the cap space for the Staal deal could have been made by assigning both Mats Zuccarello-Aasen and Matt Gilroy to Hartford. However, with White on the roster, those moves are simply not enough anymore. In short, Wade Redden’s salary is all but a lock to sent to Hartford.

But what if Redden shows up to camp and plays well? Larry Brooks addressed this in a recent article:

And what if Redden, who knows his NHL career is on the line here, who knows that if he is waived through the league in September he will never get back, what if Redden plays assertive, sharp hockey beginning with the first scrimmage and maintains his level? What if Redden outplays just about every defenseman in camp?

Then the Rangers will be in a state of severe stress. Then, incorporating that $6.5 million onto the season cap would mean that Sather would have to slash the roster in order to leave enough space to match on Staal, who at that point would become a very inviting target for an offer sheet.

What if Redden is one of the best defensemen in camp? Brooks hits the nail on the head, the Rangers would then be hard pressed to find the salary cap space to keep him on the roster, while trying to sign Staal. While I have been on record saying that the Rangers will not be waiving Redden, I am starting to believe that there is no other way to get the team under the salary cap ceiling without waiving him. There is simply no way of putting a 20 man (or 22, depending on the need for a 13th forward and 7th defenseman) roster together without clearing Redden’s contract. It is simply a matter of business now. That will come as a cause for celebration for many all Ranger fans. But again, what if Redden is one of the best players in camp? What if he clearly outplays Steve Eminger? Are people going to miss the 2010 training camp Redden? Are people going to boo Eminger because they want Redden? It’s a long shot, but hey, anything’s possible nowadays.

BREAKING: Kovalchuk Contract Ruled Invalid

In relatively stunning news (to me at least), the independent arbitrator has ruled in favor of the NHL, deeming that the Ilya Kovalchuk contract was a blatant attempt to circumvent the CBA and the salary cap. The complex 17 year $102 million deal, which was heavily front-loaded, was initially ruled as invalid by the NHL on July 20. After a grievance was filed by the NHLPA, an independent arbitrator was brought in, and ruled in favor of the NHL. Kovalchuk will remain a free agent, as the Devils will either have to rework the deal, or the Kovalchuk camp will have to field other offers.

With the current CBA ending soon, you can expect this to be an extremely hot topic for both sides. Between this and the rumor of owners wanting a much lower ($48 million) salary cap, the next set of negotiations are going to be heated to say the least.

Erik Johnson Setting the Marc Staal Market?

A few days ago, the St. Louis Blues agreed to terms with RFA defenseman Erik Johnson, locking up the young, promising defenseman for two years at $2.6 million per year (cap hit). In reality, the Blues did more than lock up Johnson. They actually helped the Rangers gauge what the market for Marc Staal would be. Both players are alarmingly similar in many aspects: both are first round picks, both are under the age of 25, both are 6’4 200+ lbs, and both are coming off entry level deals. There is a significant drop in cap number for Johnson, but that is because he earned a ton of money in bonuses (he was a #1 overall pick). The annual salary between the two is within $100,000.

Now let’s look at the stats: Johnson is more of a scorer than Staal, with two straight 30 point seasons. However, both are coming off seasons with career highs in goals, assists, and points, and one can make the argument that if Staal saw the same amount of PP time that Johnson saw, then his offensive numbers would be around the same caliber. At the end of the season, Staal took on a more offensive role, scoring in three straight games. Looking deeper at the metrics, Staal is coming off an amazing year, posting a 10.4 GVT (4.0 OGVT, 6.4 DGVT). Johnson posted a 9.2 GVT (5.6 OGVT, 3.6 DGVT). Meanwhile, the QUALCOMP for Staal is off the charts. Staal had the 3rd highest QUALCOMP amongst players with greater than 60 games played (Patrice Bergeron and Marian Gaborik trump him) at .139. Meanwhile, Johnson posted a measly -.030 QUALCOMP, putting him somewhere in the middle of the pack in QUALCOMP.

When analyzing the numbers, it’s very evident that Staal is better defensive defenseman, but has yet to put up offensive numbers. Powerplay time, or lack thereof, is definitely a contributing factor to Staal’s less-than-favorable offensive number, but unfortunately, that will work against him. What Johnson lacks in overall defensive ability, he makes up for on the offensive side of the puck, which gives him sexier numbers. What the overall GVT numbers show is that the difference between Staal and Johnson as a collective whole is minimal.

The fact that Erik Johnson, who is for all intents and purposes an effective comparison to Marc Staal, signed for $2.6 million should put Ranger fans at ease. It is extremely unlikely that any team is going to give Staal an offer sheet of much more than $2.6 million per year, when the market has been set to such a number (considering the rumors of Staal’s contract demands, he wouldn’t even sign an offer sheet for that little anyway). Luckily for the Rangers, waiting out the situation played into their favor, as Johnson signed for what appears to be well below market value (Dan Girardi got $3.325 million, so Johnson is making less than him). When one player signs for below value, it affects overall value. Staal will be signed, but it will probably be for less than what he originally was aiming for.

The NHL Has No Case Against Kovalchuk

In case you missed it, and if you did, you’ve been living under a rock for the past 24 hours, the NHL rejected Ilya Kovalchuk’s deal with the New Jersey Devils. The 17-year, $102 million deal would have paid Kovalchuk $98.5 million in the first 11 years of the deal, with Kovalchuk earning the league minimum ($550k) for the remaining years, save for one year where he would make $750k. The Devils, in a rare PR slip up, held a press conference to announce the signing before the NHL had approved the deal. Less than 12 hours later, the deal was rejected.

The deal, although clear circumvention of the salary cap, is legal within the verbiage of the CBA. The NHL has decided to make its stand against these long term, front loaded, contracts with Kovalchuk, but in reality, the problem started in 2007 when Mikka Kipprusoff signed his new deal with Calgary. The deal included an extra year at the end of the contract for $1.5 million. Not exactly alarming, but it made the loophole in the CBA very evident to the other 29 NHL GMs.

Contracts like Vinny Lecavalier (11 years, $85 million with one year at $1.5 million and one year at $1 million), Henrik Zetterberg (12 years, $73 million with two years at $1 million), Marian Hossa (12 years, $63.3 million with four years at $1 million), Duncan Keith (13 years, $72 million with three years at < $3 million, including one year at $1.5 million), Roberto Luongo (12 years, $64 million with one year at $1.6 million and two years at $1 million) made the loophole the topic of conversation amongst NHL GMs, and the NHL front office looking to put an end to the contracts. The NHL has had a little success, as they declared the Chris Pronger contract to be a 35+ contract, despite the fact that he signed the deal before he was 35 years old, something that the CBA verbiage is rather ambiguous about. The Chris Pronger contract is a separate issue altogether though.

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Offer Sheets

Something that seems very ‘off limits’ is offer sheets and restricted free agents. But why? Purely because Brian Burke was extremely upset at having the rug pulled from under him when Kevin Lowe signed Dustin Penner? Unlikely.

We regularly hear that its not proper business, unethical in fact to target other clubs’ RFA’s with offer sheets. If this is truly the case why was no foul declared when San Jose Sharks GM Doug Wilson smartly targeted cap victims and cup champion Chicago for their rising talent Niklas Hjalmarsson? Instead, it was lauded how Wilson made such a move, how he targeted a rival for a key cog as the champs were pressed against the cap.  So, considering this, why haven’t other teams been RFA pro active? How come Marc Staal hasn’t been targeted? Given that Sather insisted he’d match any offer why hasn’t a club/GM tried to force a price on the Rangers? Shouldn’t this be a much more frequently used cap tactic?

Since this post was written the The Hawks have stated they’d match the Sharks offer and retain the talented Swedish blueliner. Which has now left this problem for them (from a James Mirtle tweet):

#Blackhawks have about $100,000 in cap space with 5-6 players to sign – big problem for Bowman.

I find the whole RFA topic odd. Personally I see offer sheets as a potentially effective tool. Clearly the actual act of dishing out offer sheets cannot be the issue here (again, refer to Sharks/Hawks). With quality players available through this route I personally would use the tool at my disposal. Is Bobby Ryan worth a 1^st and a 3^rd draft pick to the Rangers for example? He should be.  The Rangers need scoring. The draft next year isn’t projected (at this moment) to be as strong as this years and the next area of need (draft wise) for the Rangers must be a forward.  Trying to nab Bobby Ryan is a no lose situation. If the Ducks were to match no harm done, no? Historically the Rangers have used them. They had Joe Sakic signed to an offer sheet in 1997 only for Colorado to match (oh, if only…..). So why not now? Surely Sather the (ahem) wily veteran wouldn’t be put off by moral codes if he thought he could improve his club?

I wish someone could, would break silence and provide insight into why offer sheets really are so seldom used because sometimes there are players really worth the draft picks. After all; how did retaining Sakic work out for the Avalanche? Would Rangers fans have given up X amount of draft picks for Sakic and a potential Stanley Cup?

A Look at the Staal/Girardi Market

This post has been updated to reflect Dan Girardi’s actual salary of $3.325 million.

The Rangers have two more key moves to set themselves up for the foreseeable future, and that is locking up Marc Staal long term, and locking up Dan Girardi for at least the short term. It is tough to gauge the market on RFAs, as there is very little negotiating power on the player’s side. The only real leverage a RFA has is to file for arbitration, which Girardi did a week ago. By filing, he is guaranteed a one year deal at an arbitrator-decided market value. But, what it also does is prevent him from being offer sheeted. Staal, on the other hand, is clearly the Rangers cornerstone on defense, and someone the Rangers really need to lock up. BSB regular Jeff Sullivan (Section 121) was kind enough to provide a spreadsheet of the key free agents from this year, their average stats from the past three seasons, and what their 2011 salary will be:

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Brashear, Voros, Rissmiller Waived

Several Twitter posts have said the Rangers waived Donald Brashear, Aaron Voros, and Patrick Rissmiller. There are rumors of them being bought out, but the only one that makes sense to buyout from a salary cap perspective would be Voros. Rissmiller hasn’t been with the team since he signed his contract, and a buyout would just add an unnecessary cap hit. A Brashear buyout won’t save any money, as he is on an over-35 contract. A Voros buyout would result in a $400,000 cap hit this season ($600,000 savings), and a $300,000 cap hit next season, when Voros would be off the books.

I do not believe these players were waived for potential buyouts, but waived to create cap room. Waiving Brashear saves the Rangers $100,000, and Voros saves the Rangers $1 million. Waiving Rissmiller is a technicality, as his salary has never counted against the Rangers cap hit. That’s $1.1 million saved by waiving them. It’s a simple matter of clearing cap space, much like what the Rangers did at the trade deadline.

Arthur Staple: Redden “Certain” to be Waived

As per Arthur Staple of Newsday, the discussions about waiving very expensive and underachieving defenseman Wade Redden have begun internally amongst the New York Rangers brass:

There is more room on defense, where Wade Redden is almost certain to be waived and sent to Hartford when training camp ends. “He’s been discussed,” Sather said.

Clearly, we all know what the benefits of waiving Wade Redden would be. It would open a spot on the roster for a young kid, and it would clear $6.5 million in cap space for the Rangers to play with. Considering Glen Sather’s recent non-statements about Ilya Kovalchuk, fearing tampering accusations, it isn’t out of the realm of possibility that this is truly being considered as a viable option for the Rangers.

Fans have talked about this ad nauseum. For a long, long time, I believed this to be just us fans hoping and dreaming that he would get waived. As a matter of fact, I have penned several posts explaining why he won’t get waived, bought out, or traded, and that we were stuck with him for the foreseeable future. Then, this article by Staple comes out in Newsday, which is owned by Cablevision, owned by the same people that own the Rangers. The Dolan’s historically hate the media (kind of ironic, yes), but the fact that this article was published in a Dolan-owned entity speaks volumes.

The Rangers decision to wait until after training camp does serve a purpose. It forces kids to beat out the veteran for his spot on the roster, instead of just handing them the spot. Also, if no kid plays his way on the team, then the Rangers at least have a body to play on the blue line until someone proves themselves in Hartford. This also gives a 12 year veteran one more camp to try and find his game. Despite many fans feelings towards him, Redden is a class act and a nice guy. If just for that, he deserves a chance at camp to try to reclaim him spot, even if he, and we, knows it is for naught.

I still do not believe the Rangers have the cojones to waive Wade Redden. And I will continue to believe that until the day comes that he is actually waived. Maybe it is just a defense mechanism, in that if I believe he will be waived, and he isn’t, I’ll just get angry. But, for what it is worth, Rangers brass is discussing waiving Redden. Now, what to do with all that cap space?