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Death to salary cap cheaters! NHL proposal targets circumvention, punishes teams

Greg Wyshynski

It's been predestined since the start of negotiations: The next NHL Collective Bargaining Agreement is going to outlaw long-term contracts with creative, salary cap circumventing accounting.

For every team that has dabbled in the dark arts of front-loaded deals, there's another team (hi, Brian Burke) that despises them. But most importantly, Gary Bettman isn't a fan: These contracts helped subvert the rules that the NHL closed down a season to establish, and frankly that's an embarrassment for the commissioner.

The NHL's latest proposal to the players features a 5-year maximum for any non-rookie contract, and that the "maximum increase or decrease in total compensation (salary and bonuses) year-over-year limited to 5 percent of the value of the first year of the contract."

What does that mean? Well, if a player earns $10 million in total compensation in Year 1 of his deal, his compensation cannot increase or decrease by more than $500,000 in any subsequent year of his SPC. No giant peaks or valleys.

This would effectively kill the cap-circumventing contract, going forward. No more Marian Hossa deals that have salary dips from $7.9 million in 2015-16 to $4 million in 2016-17. No more Roberto Luongo contracts that go from $6.714 million in 2017-18 to $3.382 million the following season. Conversely, no more Ilya Kovalchuk deals that rise from $6 million to $11 million in Years 2-3.

But the NHL's CBA proposal doesn't end The War On Cap Circumvention there. Oh no sir (and/or ma'am) it does not. The NHL intends to also go after the teams that were handing out these cap-cheating megadeals under the terms of the previous CBA. Including some close friends of the commissioner …

One of our major gripes with the NHL's decision to go after Kovalchuk's (admittedly preposterous) 17-year contract with the New Jersey Devils was that it was selective enforcement. There was tacit endorsement of clear cap circumvention when the NHL looked the other way on Hossa, Luongo and others.

Retroactively punishing the teams that abused the system has been a facet of these NHL proposals since the CBA talks began. Damien Cox reported in September that the new CBA could punish the Devils for Kovalchuk and other cap-circumventing deals:

It's not just Kovalchuk, of course. All the long-term deals that conclude with much smaller salaries would theoretically be impacted. Like Marian Hossa's with Chicago, which has a $5.25 million cap hit but pays out only $1 million in each of the final four years.

Or Henrik Zetterberg's deal with Detroit, which pays out a total of $5.25 million in the final three years. Or Roberto Luongo's arrangement with Vancouver, which pays a total of $7 million for the final four years when Luongo is between the ages of 39 and 43. If there's no takers for Luongo's contract now, imagine how the market will freeze up if teams know that they'll also be liable for the full $5.33 million cap hit even after Luongo is almost certainly retired.

The answer: The team that trades for Luongo won't be liable for his cap hit when he retires before his contract terms ends.

According to the owners' proposal, the Vancouver Canucks will be the ones paying for it.

From the NHL's latest CBA proposal:

All years of existing SPCs with terms in excess of five (5) years will be accounted for and charged against a team's Cap (at full AAV) regardless of whether or where the Player is playing. In the event any such contract is traded during its term, the related Cap charge will travel with the Player, but only for the year(s) in which the Player remains active and is being paid under his NHL SPC. If, at some subsequent point in time the Player retires or ceases to play and/or receive pay under his NHL SPC, the Cap charge will automatically revert (at full AAV) to the Club that initially entered into the contract for the balance of its term.

This provision has been labeled the "Wade Redden Rule" in honor of the banished New York Rangers defenseman, collecting millions off the cap in the AHL. But it also affects players on long-term deals in the NHL.

To use Luongo as an example: He makes $5,333,333 against the cap. Let's say he's traded to the Toronto Maple Leafs, and then retires in 2019 with three years left on his deal. Under the terms of this CBA, that $5,333,333 cap hit would then be reapplied to the Canucks for the next three years.

(Keeping in mind that by 2019, we might not even had a salary cap if the players take a run at the system in the next CBA … or, gulp, this one.)

What this provision does is punish not only the teams that circumvented the cap during the "hey, EVERYONE'S doing it" days, but also the teams that tried to sneak in under the wire before the CBA expired: Shea Weber's 14-year contract, matched by the Nashville Predators after it was handed out by Ed Snider; Zach Parise and Ryan Suter's 13-year deals that drop significantly in 2022; and going back to last summer, Christian Ehrhoff's preposterous contract with the Buffalo Sabres in which he earns $6 million in the last four years and $34 million in the first six.

Again, this could just be one of those planks in the NHL's CBA platform that's there so Donald Fehr can negotiate it out in the players' counterproposal.

Or perhaps the NHL is serious about punishing some of its most important owners — Rocky Wirtz, Mike Illitch, Ed Snider (if he's on the hook for the Jeff Carter deal, as Travis Hughes suspects) — for helping to circumvent the rules they put in place seven years ago.