Poll: Should Iginla's contract be voided by the NHL as cap circumvention?

[Oling_Roachinen]

Originally Posted by You Need a Thneed

The difference between a contract like Iginla's & Alfredsson's this year to a contract like Kovalchuk's is this - In the case of Iginla's and Alfredsson's, the future cap penalty to the team is guaranteed. In the case of Kovalchuck's (and others), the future cap penalty wasn't guaranteed.

That's why this is not cap circumvention, and Kovalchuk's was. Either way, the hole was closed retroactively, so even if Kovalchuk's contract was allowed to stand, the current cap recapture penalties would cover the difference.

But Kovalchuk's contract broke no rule. That's back to the original comment being made before I commented at all on Iginla.

Now you can say that Iginla's entire cap hit will count, which is correct, but near certain not while he's under that contract. Like Kovachuk, who had a 10 year contract disguised as a 17 year contract, Iginla has a 2 year contract disguised as a 1 year contract.

I'm not saying it's a big enough issue to void, but I think it's hard to say the Bruins weren't circumventing the cap when 10 games into this season they will be on pace to be several million over the cap for this year.

[SilverGS]

No more like Bruins have to pay over 2 years for only 1 year of player service.

Thing is with Kovalchucks contract they were circumventing the cap by having some if it not count in later years upon his retirement. In this case the cap is hit at some point and only for a maximum of 1 year rollover.

[Oling_Roachinen]

Originally Posted by SilverGS

From what getbak says it seems it is for over 35's and 1 year contracts as well to allow teams to bring in a veteran for one year but pay the cap hit the following year.

I can near guarantee that wasn't the intention for the rule. The bonus cushion was to allow for 35+ year olds to get contracts based on performance, think of Fleury coming back. Giving him a contract of league minimum with an extra chance of a couple million if he played half the season and scored 15+ goals. That's what the bonus is more intended for.

Not giving one of the top talents in the league today (at least first line talent) a near guaranteed bonus after playing 10 games. Again, I think it's a rare enough occurrence (both that the Cap will jump so significantly in a year and that there is a 35+ elite player worth having several millions worth of cap space dedicated to the following year) that I doubt they do anything, but I'm sure it turned a few heads in the league.

[Resolute 14]

Originally Posted by Oling_Roachinen

But Kovalchuk's contract broke no rule. That's back to the original comment being made before I commented at all on Iginla.

Kovalchuk's contract did not break a bright line rule, but the language does allow for the commissioner to subjectively decide that a deal is circumvention. In the Kovaclhuk case, it was already well known that those cheat years at the back end of a deal were problematic, and that they were widely considered circumvention. The Devils didn't just inch forward the way other teams had been doing, they did a triple jump past that line, and the league finally felt it had to stop this.

In Iginla's case, the argument for this being circumvention is not as well defined as that was. My interpretation of the clauses is that it is practically written to encourage these kinds of deals. The union had to know that older players would be severely limited by the cap system, and allowed for a way for them to still get paid. The owners limited it by allowing for only 35+ players on one-year deals or those who missed significant time to injury to qualify. So while this may be a technical circumvention, it seems to be one built into the system and severely limited.

[SilverGS]

I don't know. I can't imagine that all those minds spent all that time pouring over this and didn't think of it to put in clauses to not allow it.

They clearly could have added bonus structure has to follow a certain set of rules to be valid along with the 35+ and 1 year rule. Considering the inventiveness of contracts in the old CBA I can't see why they wouldn't have considered all the possibilities for the new rules. Probably why there is the 1 year clause in it. Give them a little bit of leeway by allowing 1 year of deferral. Even if the player retires the following year you are still responsible for it.

[2macinnis2]

This is so stupid on the NHL.

I remember listening to Gil Brandt discuss this with regards to NFL rules. According to him at least, the NFL divides bonuses as 'those likely to be met' (i.e. met in recent past) and 'those less likely to be met' (not met recently or very difficult, i.e. win 2 rounds in playoffs, score 40 goals, score 20 goals if you've never scored more than 15, etc.). Obviously it is somewhat subjective, but if it's a likely met bonus, it goes into cap the year of the contract, meaning Iginla 10 game bonus should count THIS season. Much more rationale approach, I think.

Of course, this isn't the NFL...

[FlamesAddiction]

This is just another example of no matter how idiot-proof you try to make the CBA, you can't protect GMs and owners from themselves. While this one issue isn't likely to create another lockout situation, the NHL needs to police themsleves better and stamp this stuff out as soon as it begins.

Once one team starts exploiting loopholes, it won't be long until the CBA is swiss cheese. And once again, 90% of fans will blame "greedy players".

[Northendzone]

jarmoe should viod regularly. it is not healthy to hold it in.

[Oling_Roachinen]

Originally Posted by Wolven

Right... Considering the Devils are not going to have a 1st round draft pick in the next draft I do not think "being in the room" is a requirement for knowing that they took the "front loaded, retirement assumed" contract too far.

Either way, the difference is that the Devils were penalized for making a contract that would allow them to use the player's retirement to get out of the contract earlier than it was designed for. The Bruins are going to have to pay Iginla his entire contract and eat his entire cap hit.

Sorry, missed your post. Kovalchuk's contract broke the "spirit" of the CBA, not the actual rules of it. That's what the arbitrator agreed.

So while Iginla's contract is perfectly valid based on the written rules of the CBA, so was Kovalchuk's. Now then, the discussion needs to be is the 35+ 1 year contract rule's "spirit" to defer payment and allow a team to spend over the cap for a year? Or is it to give a fair contract to aging and veteran players based on their unsure of performance? I feel like it's easily the latter. Again, probably not enough to actually do anything about, but enough for me to call Iginla's contract cap circumvention.

[You Need a Thneed]

Originally Posted by 2macinnis2

This is so stupid on the NHL.

I remember listening to Gil Brandt discuss this with regards to NFL rules. According to him at least, the NFL divides bonuses as 'those likely to be met' (i.e. met in recent past) and 'those less likely to be met' (not met recently or very difficult, i.e. win 2 rounds in playoffs, score 40 goals, score 20 goals if you've never scored more than 15, etc.). Obviously it is somewhat subjective, but if it's a likely met bonus, it goes into cap the year of the contract, meaning Iginla 10 game bonus should count THIS season. Much more rationale approach, I think.

Of course, this isn't the NFL...

Not very stupid on the NHL at all. The circumstances for which this "loophole" can be given are somewhat rare. It must be on a one year deal for a 35+ player.

Plus, Teams are merely exchanging cap hit one year for cap hit in another. They aren't really circumventing the salary cap.

I'll say it again, The Flames will not be punished for actually circumventing the salary cap - with Kipper's contract (assuming he retires). They aren't going to penalize teams for merely shifting around salary cap to other years.

It really isn't any different than front loaded contracts - those contracts are shifting cap hit to other years too.


As an aside, I just did up a quick spreadsheet that shows what Kovalchuk's recapture penalties could have been if his contract had been allowed to stand.

If he retired after the 10th year of the contract in 2020, the devils would have had a 5 million cap recapture penalty each year for the following 7 years, had he retired in 2021 (after the 3.5 million salary season), the cap recapture penalty would have been $5,416,667 for each of the next 6 years. If he retired in 2022 or later, the cap recapture penalty would have been $5,450,000 for every year that remained in the contract. Any way you look at it, it would have been a steep penalty, and there was no way that Kovalchuk was going to play to the end of that contract.

[Fire]

The Bruins are gambling that the cap will go up, which is likely, but teams are going to get burned eventually if more do it. If the Canadian dollar all of a sudden drops to 80c US the cap could be dropping.

[P-DAZZLE]

It would definitely seem like circumvention if the following happened: Iginla signs this year for 1 year only, with the Bruins structuring the contract so that the Cap hit largely falls to next year in the form of a penalty. Then Iginla signs a second 1-year deal for a lower amount of money. That way the Bruins could say sign him for 1 for 6M then 1 for 1M and have the majority fall under one season's cap hit. They would essentially be getting Iginla on a 2-year, 7M dollar deal, but without having to have the AAV of 3.5.

This of course would require some kind of handshake agreement that could fall apart if Iginla had a great year and decided not to sign the second 1-year for so cheap.

[You Need a Thneed]

Originally Posted by P-DAZZLE

It would definitely seem like circumvention if the following happened: Iginla signs this year for 1 year only, with the Bruins structuring the contract so that the Cap hit largely falls to next year in the form of a penalty. Then Iginla signs a second 1-year deal for a lower amount of money. That way the Bruins could say sign him for 1 for 6M then 1 for 1M and have the majority fall under one season's cap hit. They would essentially be getting Iginla on a 2-year, 7M dollar deal, but without having to have the AAV of 3.5.

This of course would require some kind of handshake agreement that could fall apart if Iginla had a great year and decided not to sign the second 1-year for so cheap.

Why would Iginla agree to sign a deal for the second year at $1 million?

[P-DAZZLE]

Originally Posted by You Need a Thneed

Why would Iginla agree to sign a deal for the second year at $1 million?

I explained that in my post. If it were agreed upon earlier (handshake agreement) so that the team could benefit. I'm not saying he would but it is not entirely implausible he would want to do something beneficial for the team, considering he is at a point in his career where winning is more important than money. It would allow him 2 shots at the cup with a less-weakened team in the 2nd year. Less-weakened because they would have circumvented the cap to their benefit.

[Oling_Roachinen]

P-DAZZLE, if Iginla just signed a 7M, 2 year contract his cap hit would be 3.5M this year and 3.5M next year.

As it stands now, due to the cap situation of Boston and structure of his contract, Iginla's contract this year is going to roughly cost 3.5M this year, and possibly 2.5M next year. Signing him to a 1 year 1M contract next year would be near equivalent of signing him to a 7M/2 year contract.

However, they could keep doing a deferred cap-hit 1year 35+ contract with Iginla like this one :P

[P-DAZZLE]

Originally Posted by Oling_Roachinen

P-DAZZLE, if Iginla just signed a 7M, 2 year contract his cap hit would be 3.5M this year and 3.5M next year.

As it stands now, due to the cap situation of Boston and structure of his contract, Iginla's contract this year is going to roughly cost 3.5M this year, and possibly 2.5M next year. Signing him to a 1 year 1M contract next year would be near equivalent of signing him to a 7M/2 year contract.

However, they could keep doing a deferred cap-hit 1year 35+ contract with Iginla like this one :P

Isn't the Op suggesting just the base 1.8M will count against the cap this year? Where do the 3.5 and 2.5 numbers come from?

[Oling_Roachinen]

Originally Posted by P-DAZZLE

Isn't the Op suggesting just the base 1.8M will count against the cap this year? Where do the 3.5 and 2.5 numbers come from?

Assuming Iginla isn't traded and meets his bonuses, which isn't the case for the last 0.5M.

1.8M will 100% count, there's no way around that.

The bonuses, 4.2M, will split depending on how much of the Cap the Bruins are over.

Right now they are about 2M over, so 2M of his bonuses would count. But teams not set and stuff like that.

[opendoor]

Originally Posted by Oling_Roachinen

Assuming Iginla isn't traded and meets his bonuses, which isn't the case for the last 0.5M.

1.8M will 100% count, there's no way around that.

The bonuses, 4.2M, will split depending on how much of the Cap the Bruins are over.

Right now they are about 2M over, so 2M of his bonuses would count. But teams not set and stuff like that.

The Bruins are $1.3M over the cap after excluding their bonuses. If you include them, then they're $6M over.

Also, if the team uses LTIR all year (which they'll most likely have to given their current situation), then 100% of all attained bonuses get pushed to the next season since there'd automatically be no cap space left in 13-14 to use.

[powderjunkie]

I wonder if Boston thinks Chara is likely to retire next year? It would make sense to push all in if they think their window with him is closing.

His contract is also interesting (http://www.capgeek.com/player/216) ...what's the deal with the 2017-18 cap hit of 4Million? I'm guessing it's something with new CBA and players over 40?

His recapture penalty if he retires next year would be $437 vs. $611 (retire 2015), and $958 (retire 2016)

He would certainly be leaving lots of money on the table, but I wonder how many miles his body has left?

[Resolute 14]

Originally Posted by opendoor

The Bruins are $1.3M over the cap after excluding their bonuses. If you include them, then they're $6M over.

Also, if the team uses LTIR all year (which they'll most likely have to given their current situation), then 100% of all attained bonuses get pushed to the next season since there'd automatically be no cap space left in 13-14 to use.

Hard to believe that they are going to have Savard's $4 million cap hit on LTIR for another four years.