The NHL’s “cap recapture” bothered me, which is why I sat down with NHL Deputy Commissioner Bill Daly in New York last Monday, to have him explain why this concept is kosher.
Cap recapture is a punishment clause jammed into the 2013 NHL/NHLPA collective bargaining agreement. Basically, teams that operated under the rules of the 2005 CBA are punished in the new CBA for what was an otherwise legal activity — back-diving a contract.
Wild fans might one day become all too familiar with this. If Zach Parise and/or Ryan Suter retire before their contracts expire in 2025, the Wild is in trouble.
Let’s say one retired in 2020: The team would be charged a $3.938 million salary cap penalty in each of the next five seasons. Let’s say the other retired in 2021: The Wild would be charged a $5.038 million cap penalty in each of the next four seasons. It gets much higher in 2022-25.
There are several scenarios (even if traded) that force teams to pay back the cap advantage they received if a player with this type of contract retires prematurely (see www.capgeek.com). It affects about 20 players.
This was the NHL’s way of punishing teams it felt designed contracts meant to circumvent the cap. To lower their cap hits to $7.5-plus million the Wild, which is paying Parise and Suter between $8 million and $12 million annually through 2021, structured a contract that drops their salaries to $6 million in 2021-22, $2 million in 2022-23 and $1 million in 2023-24 and 2024-25. Other teams offered Parise and Suter almost identically structured contracts.
Daly acknowledges the Parise and Suter contracts were “legal” and “not improper” in the old CBA. But in later collective bargaining with the union, Daly said, “the judgment was made that it was not consistent with the spirit of the CBA and there should be a cost associated with getting competitive benefits theoretically by seriously frontloading deals.”
The players whose contracts are affected by the recapture include Sidney Crosby, Roberto Luongo, Shea Weber, Duncan Keith and Marian Hossa. They all have what the NHL fears are phony, low-paying years tacked on with the player having no intention of fulfilling.
In 2004-05, the NHL missed an entire year so teams could get cost certainty and a level playing field through a cap system. Then, teams figured out loopholes to circumvent the cap they fought for.
“It worked exactly the way the system wasn’t supposed to work,” Daly said. “It gave clubs with the resources and ability to front-load so significantly a competitive advantage over clubs that didn’t.
“We started to see strange structures. We went through a process of investigating them to see if there was any specific negotiation with the player about not playing in the out years. That was always going to be difficult to prove, even though we assumed there was no way certain players would play for ridiculously low salaries.”
Daly brought up three examples: Calgary’s Miikka Kiprusoff walked away from his last year of $1.5 million and later admitted “both sides were comfortable with that.” Chris Pronger, who now works for the NHL even though he’s still getting paid by the Philadelphia Flyers, has since told the league he wanted a four-year deal and the club wanted seven “to lower the cap charge.”
“And last year in Ottawa with Daniel Alfredsson,” Daly said. “He left Ottawa because they wouldn’t extend him. He felt like, ‘I’m playing at a ridiculous below-market value [of $1 million] to get you favorable cap treatment, so now you should help me.’ That’s where they fell out of love with each other, I think.”
Finally, in 2010, the New Jersey Devils signed Ilya Kovalchuk to a 17-year, $102 million deal.
“It was so ridiculous, it gave us an opportunity to challenge,” Daly said. “An arbitrator ruled the effect of the contract was to circumvent the CBA, so it gave us the opportunity to put the genie back in the bottle a little bit.”
The NHL tinkered with rules to govern these contracts the rest of the CBA (which the Wild abided by with Parise and Suter) and in the next CBA negotiated term limits (seven-year max deals; eight if you’re re-signing your own player), how much a contract can back-dive, and that cap recapture system.
But why should it be allowed when the Wild and others didn’t break the rules?
“We were very up front with the clubs,” Daly said. “We told them we’re going to seek provisions in this CBA that will extract a cost for pushing the boundaries in this area, which is clearly inconsistent with the purpose of the original system.
“So all the clubs were on notice for probably two years in advance of bargaining. This was covered in our general manager workshops, and the owners were told numerous times in board meetings. To suggest that anybody was really surprised by the fact that we negotiated that provision would be very unfair.”
NHL Short Takes
No Olympics possible
There’s a chance the NHL won’t participate in the 2018 Winter Olympics. There’s not a large appetite to halt the season again and have its players participate on the other side of the planet. Owners are tired of watching players risk injury, like the Islanders losing captain John Tavares last season because of a knee injury sustained while playing for Canada in Russia.
In addition, Deputy Commissioner Bill Daly said: “An Olympics in South Korea is probably a lower priority just simply because they don’t play the game, it’s not endemic there, it’s a long way away, it’s a lot of travel, it’s a big hole in the season. I’m not even sure the appetite is the same from the South Korea organizing committee to make hockey a big deal.”
A decision will be made sooner rather than later, “but there’s still too much we don’t know right now,” Daly said.
Hat’s off to Murray
In a powerful, courageous TV interview with TSN’s Michael Farber, Ottawa Senators GM Bryan Murray, who has Stage 4 colon cancer that has spread into his liver and lungs, advised people to get a colonoscopy. He never did, a procedure the 71-year-old said probably would have caught the cancer early enough.
“There is no cure for me at this point,” Murray told Farber. “The word is we’ll keep doing chemo and, hopefully, reduce the tumors and the effect and I’ll get some time out of that.”
One of the most powerful moments came when Murray, at the hospital, said, “When you see the young people who haven’t really had their life or haven’t really had the time they need or deserve, how can you really feel sorry for yourself?”
Murray was the first GM I covered back in my Florida Panthers beat-writing days. He was instrumental to the start of my career and is one of the greatest people I know. My thoughts and prayers always to BM the GM.
WIld's Week Ahead
Sunday: 4 p.m. vs. Winnipeg (FSN)
Thursday: 6 p.m. at Philadelphia (FSN)
Saturday: 6 p.m. at T.B. (FSN+)
Player to watch: Claude Giroux, Flyers
The Flyers captain was nominated for the Hart and Ted Lindsay trophies last year and was tied for seventh in NHL scoring this year heading into the weekend.
« We’ve forgotten how hard it is to win in this league, and I think we’re getting a bit of a reminder. »
Coach Mike Yeo after a fourth straight loss at New Jersey on Tuesday.