There is a growing epidemic within the NHL; with the current collective bargaining agreement, teams are able to circumvent the newly placed salary cap by creating “mega deals”, or deals that last more than 7 years and generally depend on the player retiring before the end of them.

After the 2004-05 NHL Lockout, the league instituted a salary cap. The salary cap was a percentage of the revenue made by the league in the previous season, and no team could go over it (it is a hard cap, as opposed to the NBAs soft cap). In addition, no single player could be signed for more than 20% of that year’s cap. In general, this has led to more parity in the NHL with teams like the Red Wings, Avalanche, Stars, Rangers, etc. unable to spend lavish amounts on free agents every season.

However, it led to craft GMs using a loophole to create long, expensive contracts that did not fully count against the cap. The current CBA makes the salary hit of a contract the same very year, so a 4 year, $20 million contract would count against the cap for $5 million a year no matter how it is structured.

This has been problematic. Ken Holland, often considered one of the best GMs in professional sports, realized the loophole when he signed Henrik Zetterberg to a mega deal in January. The first of its kind, the 12 year, $72 million deal is structured oddly: The first 10 years will see him making $7 million each year with the final two years worth only $1 million each. The cap hit is $6 million a season under the current CBA, whereas if they hadn’t added on the extra 2 years, it would have been $7 million a season.

This is one hell of a loophole. If taken to the extreme, a team could really circumvent the cap. For example, Niklas Lidstrom is a free agent at the end of this season. This year, he is making $7.45 million, and the Wings have repeatedly said that their captain will be the highest paid player on the team, no matter what. Now, Lidstrom is near the end of his career. He only has a few seasons left, perhaps less. If a team were to want to sign him, they could offer him a contract worth something like $9.5 million and then add on three years of $1 million to bring their cap hit down from $9.5 million to just $2.875 million. This would allow them to sign another superstar and make a run at the Cup next season without even thinking about it. And, most likely, Lidstrom would end up retiring at the end of next season or the season after, so it is really beneficial for the team to do.

Getting back to the Mega Deals, however, is the real problem. The following contracts are contracts that have been signed in the last decade for 7 years or more each:

• Henrik Zetterberg (Detroit) - 12 years/$72 million - Signed in 2009
  
• Pavel Datsyuk (Detroit) - 7 years/$46.9 million - Signed in 2007
  
• Johan Franzen (Detroit) - 11 years/$44 million - Signed in 2009
  
• Rick DiPietro (Islanders) - 15 years/$67.5 million - Signed in 2006
  
• Alexei Yashin (Islanders) - 10 years/$87.5 million - Signed in 2001
  
• Dunan Keith (Chicago) - 13 years/$72.02 million - Signed in 2009
  
• Marian Hossa (Chicago) - 12 years/$62.8 million - Signed in 2009
  
• Chris Pronger (Philadelphia) - 7 years/$34.9 million - Signed in 2009
  

A few interesting notes:
Franzen will be paid more than $38 million of his $44 million in the first six years of his contract
Hossa will make $59.3 million in the first eight years of his contract, and only $3 million in the final 4 years
Pronger will only be paid $525,000 each in the final two years of his contract and will be 42 by the time the contract is over

Now, contracts like these are a real problem. Yashin underperformed remarkably and missed 15% of the games in the five seasons he played of his contract before being bought out from it. DiPietro got injured last season, only playing 5 games. He may very well miss all of this season as well meaning he would have only played in 70% of the games by the end of the season. Both of these contracts weren’t undeserved: Yashin had been playing like a future superstar with the Senators prior to being signed and DiPietro was looking more and more like he would become one of the greatest goalies of all time when he signed his, drawing comparisons to Brodeur and Fuhr.

A long term Mega Deal can be incredibly detrimental to a team if the player becomes injured. They lock up a large portion of the cap, even if the team uses the loop hole to save on cap space, so it is unlikely a replacement player can be found. In addition, it allows other teams to lure stars away from their teams, something that is detrimental to the league on a whole; fans of the game love it when a player is a “life long” member of the team, like Joe Sakic, Mario Lemieux, or Steve Yzerman.

There are two things that need to be done: the loop hole needs to be plugged and mega deals need to be regulated. There are a few options for regulating mega deals:
Option A: Eliminating them altogether
This is the easy option. Just limit contracts to 5 years in length, 7 years for team players (players who have spent a certain number of years with the team). This is the way the NBA does it, and it seems to work really well.

Option B: Allow only “team players” to sign Mega Deals
This option would mean that only players who have spent a certain number of years with the team (4 or 5 consecutive, perhaps) or, perhaps, only players that were drafted by that team can sign Mega Deals. This would prevent teams from being able to lure marquee free agents away and still allow fans to see players play their entire career with a single team.

Option C: Allow incentives for teams to sign their own players
This is an option I saw suggested on AOL Fanhouse by a commenter. Basically, after a certain number of years with the team, any deal signed would only count against the cap for 75% of its total worth. So a $10 million contract would only count against the cap for $7.5 million. If Team A and Team B both had $7.5 million in cap space to sign Team A’s player, Team A could actually offer $2.5 million more than Team B.

Personally, I feel that Option C is best. It allows GMs to have the freedom to run their teams the way they wish, and for teams to retain franchise players easily.

No matter how you look at it, though, Mega Deals are problematic and need to be addressed in 2012 when the CBA is over. In addition, the current loop hole needs to be plugged because it is skewing NHL contracts as a whole. Without fail, there will be major changes coming to the NHL in the next two seasons. As fans, let’s just hope that the right changes are made.

EDIT: Looks like DiPietro played a rehab game in the minors tonight. Was not aware he was so close to returning. Bad timing on my part. lol


Last Edit: Dec 6, 2009 4:24:31 GMT by Josh