UPDATE: NHL investigating Hossa, Pronger contracts

davetherave wrote:

notch4077 wrote:Or could it be just because it is very clear to every serious hockey fan that the Hossa deal was drawn up as a clear way to circumvent the CBA's salary cap and they should not be allowed to get away with it (in the NHL's eyes)?

You're either being facetious or sarcastic with that statement, my friend...as you conveniently ignore that both the Pronger and Hossa contracts are part of the NHL's inquiry.

You further ignore that no circumvention of the CBA has been found to this point, and yet you rush to make a judgement before you have the evidence.

As James Mirtle, Scott Burnside and Greg Wyshynski, just to name a few prominent hockey writers, have already pointed out--and this is all available for you to read in the above posts on this thread--your presumptions are unfounded.

Furthermore, partisanship is irrelevant in this issue. It doesn't matter if you cheer for the Hawks, Flyers, Wings, Senators or whoever. The decisions made, can impact any, and every team.

And regarding your snide remark about 'serious' hockey fans...you can obviously learn a few things from the many serious hockey fans here.

The first is learning respect for those who have a point of view different from your own.

When you're prepared to do that, we can have a serious and hopefully, mutually respectful, discussion on this topic.

Can a mod move this to the random humour thread please?

This coming from the guy who told me I don't have the right to express my opinion on Don Waddell's tenure in Atlanta. It's more than a little tiresome to see you admonish other posters constantly Dave. Maybe it's just me, but the way you word things sounds very condescending. "You need to do this, you need to do that."

Hey, I guess I shouldn't complain since this post I responded to didn't include a 12000 word article when a simple link would do the trick.

shabbs wrote:

RobbyJ wrote:As far as we know the league may be looking into the Zetterburg contract and a few others as well.

But... but they're THE WINGS... surely the NHL won't question THE WINGS! The Hawks make for a much easier target...

I think this issue will be at the top of the owner's list of things to renegotiate. That and the ridiculous max salary. 20% for one player on a 20+ man roster is ridiculous. If the league is smart they find a way to scale that back. Looking back, the league broke the NHLPA, but the PA still got some nice concessions. The league will definitely need to go for the jugular on certain issues next time around.

I think this is all complete Dung on the NHL's part. They shouldn't interfere with players decisions. It is the player's every right to sign a contract, with whomever he wants, wherever he wants, for as much or little as he wants and for as long or short as he wants. Do you think Hossa is upset? Chicago? Maybe the greedy agents and Buttman, but who gives a Dung what they want.

Dash wrote:I think this is all complete Dung on the NHL's part. They shouldn't interfere with players decisions. It is the player's every right to sign a contract, with whomever he wants, wherever he wants, for as much or little as he wants and for as long or short as he wants. Do you think Hossa is upset? Chicago? Maybe the greedy agents and Buttman, but who gives a Dung what they want.

The point is that the NHL seems to have gotten wind that maybe the Hawks and Hossa had a conversation like this when they drew up the contract...

Hawks: "We really want you, but need to get your cap hit down."
Hossa: "How far down?"
Hawks: "We'll sign you to a 12-year deal to make the cap hit low..."
Hawks: "...but you need to retire after 8-years."
Hossa: "So that you can get the cap hit off the books after that right?"
Hawks: "Yeah."
Hossa: "What about my money?"
Hawks: "We'll front load this contract so huge the last four years will be tiny."
Hossa: "Let's do it."
Hawks: "Deal."

If it went down like that, then the NHL would certainly take issue.

Acrobat wrote:

shabbs wrote:Pronger's 7-year extension is interesting too, but the decrease in salary is no where near as rapid as Hossa's...

The extension will begin in 2010-11. He will make $7.6 million in the first two years, $7.2 million in 2012-13, $7 million in 2013-14, $4 million in 2014-15, and $525,000 in both 2015-16 and 2016-17.

The extension takes him to age 42.

EDIT: And since it's a 35-plus contact, it's on the books no matter what he does.

But if he doesn't have a NTC/NMC, he can still agree to be sent down, then retire. Or (assuming he's is sent to the farm) he can not retire, but sit or be sat - act as a player/coach who doesn't play much. The cost to the organization at that point would be relatively small.

The key is that if he's sent down, he's still off the books.

You guys make it seem so complicated about how the Flyers will get Pronger's cap hit off of their books when he's 40+ when the answer is super easy: buyout. That $1.05-million over four years is negligible to a team like Philadelphia.

Besides, I don't understand why the league wants to be all macho about this nonsense. It's not like it's only a few GMs that are able to structure these contracts like this, while the rest of the GMs sit around and watch. As far as I'm concerned, good on these GMs for exploiting the weaknesses of the CBA to their advantage since the NHL was the one that disadvantaged them in the first place with this crazy salary cap stuff.

If a team can field a payroll of $100-million per season, why not? Let them deal with the repercussions.

Hossa's contract would also have a strong buy-out potential in the last 4 years...

He stands to make $3.5M over the last four years... a buy-out would cost the team 2/3'rds of that spread over 8 years... so, let's do the math...

So $3.5M x 0.66 / 8 years = $289K/year.

So, a cap hit of $289K would be on the books for 8 years.

shabbs wrote:Hossa's contract would also have a strong buy-out potential in the last 4 years...

He stands to make $3.5M over the last four years... a buy-out would cost the team 2/3'rds of that spread over 8 years... so, let's do the math...

So $3.5M x 0.66 / 8 years = $289K/year.

So, a cap hit of $289K would be on the books for 8 years.

Exactly! The reality is, these teams won't exactly be up against a hard spot if their players decided not to retire when they've become of an advanced age. Obviously, it would be easier in Hossa's situation for him to retire, but in Pronger's situation, it's so obviously set up to buy him out of the last two years it's comical.

Should be some interesting CBA negotiations when they get down to it...

PKC wrote:

shabbs wrote:Hossa's contract would also have a strong buy-out potential in the last 4 years...

He stands to make $3.5M over the last four years... a buy-out would cost the team 2/3'rds of that spread over 8 years... so, let's do the math...

So $3.5M x 0.66 / 8 years = $289K/year.

So, a cap hit of $289K would be on the books for 8 years.

Exactly! The reality is, these teams won't exactly be up against a hard spot if their players decided not to retire when they've become of an advanced age. Obviously, it would be easier in Hossa's situation for him to retire, but in Pronger's situation, it's so obviously set up to buy him out of the last two years it's comical.

No, that's not right. That may be how it works out cash-wise, but cap-wise, the figure would be very different.

The buyout formula, which applies to cap hits, is 2/3rds of the full cap hit spread out over twice as many the years remaining on the deal.

Hossa's annual cap hit is $5.23 mil. 2/3rds of that figure is $3.45 mil. Divide that figure in half, and you get $1.73 mil. That would be the annual cap hit for any Hossa buyout.

So, if you bought out the last 4 years of Hossa's deal, the cap hit would be about $1.73 mil for 8 years.

If that's the master plan, everyone in management in CHI ought to be fired. Buyouts stay on your cap; retirements for players who signed before 35 don't. This deal, and deals like it, was designed with the intention of the player retiring to get the cap hit off the books. Buyouts are definitely not part of the plan.

Ahhhh... capgeek.com actually has a page to help out... if they buy out Hossa in 2017 which would be the start of the last 4 years... it generates the following numbers:

MARIAN HOSSA BUYOUT FROM CAPGEEK.COM
2017-2018: $4,525,000
2018-2019: $4,525,000
2019-2020: $4,775,000
2020-2021: $4,775,000
2021-2022: $291,667
2022-2023: $291,667
2023-2024: $291,667
2024-2025: $291,667

I assume it's averaged over the 8 years... that would look to be an average of around $2.5M doing it in my head...

Hmmm... so confused. I think the cap hit calculation is a lot more complex than 2/3rds.

Try it out: http://www.capgeek.com/buyout_calculator.php

shabbs wrote:Ahhhh... capgeek.com actually has a page to help out... if they buy out Hossa in 2017 which would be the start of the last 4 years... it generates the following numbers:

MARIAN HOSSA BUYOUT FROM CAPGEEK.COM
2017-2018: $4,525,000
2018-2019: $4,525,000
2019-2020: $4,775,000
2020-2021: $4,775,000
2021-2022: $291,667
2022-2023: $291,667
2023-2024: $291,667
2024-2025: $291,667

I assume it's averaged over the 8 years... that would look to be an average of around $2.5M doing it in my head...

Hmmm... so confused. I think the cap hit calculation is a lot more complex than 2/3rds.

Try it out: http://www.capgeek.com/buyout_calculator.php

Wow, that's weird. Looks like those fluctuating salaries really screws up the formula. I don't understand that.

The "take 2/3rds of the remaining contract, divide by twice the number of years remaining in the contract" formula works roughly for guys with constant salaries (I did Dan Boyle's for fun, for instance), but the buyouts for guys with fluctuating salaries are all over the map.

To the CBA-mobile, Robin!

When you return in your CBA-mobile... give us a nice concise Coles-notes summary...



Heh heh.

shabbs wrote:When you return in your CBA-mobile... give us a nice concise Coles-notes summary...



Heh heh.

Got it.

It's all laid out pretty clearly in article 50.5.iii. The section there provides 3 examples to show you how it works. It makes sense, but honestly, it's a pretty complicated and can't be summed up in a sentence or two, so sorry in advance....

Figuring out a player's exact buyout cap hit requires 4 distinct steps. I'm using Hossa as my example. I label things "line X, etc." for the purposes of ease.

Step One: Determine the player's

[Line 1] Per-year salary structure for the years you're proposing to buy out (for the last four years of Hossa's deal: $1 mil, $1 mil, $.75 mil, $.75 mil.)
[Line 2] Cap hit per year ($5.233 mil)

Step Two: Add up the total salary to be paid during the years to be bought out ($3.5 mil) and multiple it by .66 ($2.33 mil), and then divide it by the number of years to be bought out (4). This gives you

[Line 3] The base buyout amount ($.583 mil).

Step Three: Divide that number by the amount of years to be bought out, multiplied by 2 (4 x 2 = 8). This gives you

[Line 4] The actual buyout figure ($.292 mil, for 8 years)

Step Four: After this, it becomes simple math.

a) Subtract Line 4 from Line 1. This gives you

[Line 5] Your buyout savings figures ($.708 mil, $.708 mil, $.458 mil, $.458 mil, -$.292 mil. -$.292 mil. -$.292 mil. -$.292 mil)

b) Subtract Line 5 from Line 2. This gives you

[Line 6] The per-year cap hit for the team ($4.522 mil, $4.522 mil, $4.772 mil, $4.772 mil, $.292 mil, $.292 mil, $.292 mil, $.292 mil)

The total amount CHI pays out in this scenario would $2.33 mil, but the total cap hit over the 8 years comes to $19.706 mil. The $17.376 mil difference reflects the savings that the team made over the first 8 years of the deal (i.e., for the first seven years, $7.9 mil - $5.23 mil = $2.67 mil x 7 = $18.69 mil, minus the difference in the 8th year ($5.23 mil - $4 mil = $1.23 mil), = $17.46 mil.

My math isn't perfect here because I was rounding up to the nearest thousand, but you get the picture. The story I'm telling you here explains how CapGeek's buyout calculator is producing for Hossa.

And OMG is that ever an unnecessarily complicated process...

Slick... quite the hoops to go through. Question: is the cap hit fixed or does it vary? ie: do they take the $19.706 and divide by 8 to get an average cap hit, or is it different per year ($4.522 mil, $4.522 mil, $4.772 mil, $4.772 mil, $.292 mil, $.292 mil, $.292 mil, $.292 mil) as per the calculation?

shabbs wrote:Slick... quite the hoops to go through. Question: is the cap hit fixed or does it vary? ie: do they take the $19.706 and divide by 8 to get an average cap hit, or is it different per year ($4.522 mil, $4.522 mil, $4.772 mil, $4.772 mil, $.292 mil, $.292 mil, $.292 mil, $.292 mil) as per the calculation?

The latter. The cap hit for the buyout, at least in this instance and similar instances, would fluctuate instead of being averaged.

The only time when a player's buyout cap hit would be stable (i.e., the same from year to year) is when his per-year salary for the years being bought out was precisely the same as his cap hit. That is, players whose cap hits and per-yer salaries are identical. Dan Boyle is a good example.

Cool. Thanks for clearing that up. Nicely done.

I let the "rounding" go... as I'm sure you give me leeway with English...

shabbs wrote:Cool. Thanks for clearing that up. Nicely done.

I let the "rounding" go... as I'm sure you give me leeway with English...

Thank you.

It's a pisser. Those last two figures ($17.376 mil and $17.46 mil) were supposed to come out identical -- which would have looked impressive and clinched the thing -- but my eyes were starting to hurt following the numbers.

That final figure is really neat, tho'. In the end, the precise amount of money that the team notionally saved in the years previous to the buyout HAS TO equal the amount of the combined cap hit for the years being bought out. Really nicely balanced there, I have to say.

Don't you just love math? YES!!!!