2020 NHL Lockout

2020 NHL Lockout: Why the NHLPA is already planning to opt out of the CBA.

This week’s breaking news in the world of sport has been the ludicrous four-year contracts awarded to Stephen Curry (Golden State Warriors) and James Harden (Houston Rockets) for $201 and $228 million respectively. Those salaries are considered insanely high for the NBA and has many fans questioning how the Warriors and Rockets are going to fit their rosters under the salary cap for next season. Yet, in the hockey world, everyone was losing their minds at Connor McDavid’s 8-year $100-million contract, and that seems like peanuts compared to the two aforementioned basketball superstars. Many will state that the NBA has a very convoluted set of rules around their salary cap that complicates that equation, but the NHL has a hard salary cap that, since the last lockout in 2012-2013, cannot be circumvented in any way. Between the 2005-2006 season and the 2012-2013 season, NHL teams could sign a player for as many years as they saw fit. Contracts like those signed by Duncan Keith or Jeff Carter, which were a total of 13 and 11 years respectively, still paled in comparison to the 17-year contract handed out to then 27-year-old Ilya Kovalchuk. For those of you wondering how anyone thought Kovalchuk would play until 44, he wasn’t supposed to and the Devils, the lucky team who offered him that contract, didn’t think he would either. Those “lifetime” contracts were meant to circumvent the cap by front-loading the deals with $7-13 million salaries in the first 3-7 years, and then rapidly decrease the yearly salary to a meager $550K per year in the final years. The annual average value would come out to 6-9 million because only half of the contract length (the player’s prime) would be high in actual salary, while the salary awarded in the second half (the player’s decline) would subsequently drop as the player becomes least likely to finish out their contract.

Therefore, during the most previous lockout of 2012-2013, the NHL and NHLPA agreed that the maximum number of years a team could offer their players would be reduced to 8 years, while an unrestricted free agent could only be signed to a maximum number of 7 years. This monumental wrench thrown by the league toward salary cap evading GMs like Stan Bowman, Paul Holmgren and others  who had made habit out of handing out long-term contracts. Stan Bowman, unlike his fellow GMs, quickly bit the bullet and signed his two superstars in Jonathan Toews and Patrick Kane to 8-year $10.5 million contracts; making these the two richest contracts in the Salary Cap Era. Since the lockout of 2012-2013, the first major contract dispute came at the hands of PK Subban and the Montreal Canadiens, when the Norris trophy winner squeezed a 9-year $72 million out of Marc Bergevin and the Canadiens and this created a precedence in terms of term, average salary and signing bonuses. Many of these new contracts were filled with signing bonuses for quick July 1st payouts and possible lockout protection in case the NHL Players’ Association decided to opt out of the current Collective Bargaining Agreement (CBA) in 2020.

In the last calendar year, Anze Kopitar, Carey Price, Connor McDavid, have joined the 10 million club, but what is more alarming is the surging amount of contracts with yearly averages of 6-8 million per year.  Overpaying for a player is nothing new and is very common come July 1st, but, with third line players starting to receive similar term to that of their superstar peers, the talk of another lockout became very real. A great example of this worrysome trend are the 6 year contracts handed out to veterans Andrew Shaw, Andrew Ladd, Kyle Okposo during last year’s offseason. These contracts created a sense of fear among fans that the terms offered to these secondary players would destabilize the free agent market norms. As we saw during this year’s free agency period, the players didn’t pull out max-term 7-year contracts, but the average length of free agent contracts were longer than those of similarly ranked players in previous free agent markets.

In an even more worrying trend, 8 year contracts were happily handed out this summer to McDavid, Carey Price and Evgeny Kuznetsov, while Tyler Johnson and Nikita Zaitsev received 7 years and 6-year deals handed out to the likes of Jonathan Drouin, Dimitri Orlov and Shane Gostisbehere. The common theme is, other than Carey Price, that each of these players were restricted free-agents, which meant they didn’t have access to the free agent market like Kevin Shattenkirk (4 years) and Alexander Radulov (5 years). The fact that restricted free agents have begun commanding this type of term and salary has many seeing a collision course where the free agent market would become weak and totally unattractive for a team looking to make big additions. With the number of trades already at an all-time low, it is unlikely that the weakening of quality free-agent pools will change that trend. In the past years, names like Ryan Sutter, Zdeno Chara, Marian Hossa and Zach Parise have highlighted free agent classes, with Suter and Parise being the last of the lifetime contracts handed out before the last lockout. Gone are those days.

Ultimately, with most of the contracts handed out over the last 4 years providing wealthy signing bonuses on July 1st, 2020, it seems that even the players’ agents have witnessed the trend in the market and have sought to protect the financial interests of their client. The major mistake during the last two lockouts was the lack of player salary protection during the work stoppage, but, with signing bonuses being paid out on July 1st, they would not be inhibited by any impending work stoppage. NHL GMs have also caught on, as they have begun handing out these long-term contracts pre-emptively for their most coveted players whom are seeking financial security before the word lockout begins to make the news. During the 2017 NHL free agency, all contracts which last longer than 2020 were all straddled with front-loaded signing bonuses and $1 million salaries. In as such, players like Alexander Radulov  and Carey Price will collect most of their salaries on July 1st, regardless of if there’s a work stoppage or not. How is that possible? Signing bonuses are not a form of labor, nor is the bonus payment stalled by any kind of work stoppage whatsoever. As insane as that sounds, the potential bidding war for quality players has made it so that star players make 8 or 9 times their salary in signing bonuses. A great example was the Radulov sweepstakes between Montreal and Dallas.  Radulov,  who’s contract sees him rake in nearly $7 million in signing bonuses next year,   was said to be offered the exact same contract by the Montreal Canadiens, which is indicative of the lack of quality free agents available and how desperate NHL GMs are essentially worsening contract negotiation trends for the rest of the league once again. Not only is a player like Radulov not expected to finish out his 5-year $6.25 million contract, but he, along with Price, McDavid and Kuznetsov, is one of the first recipients of the lockout protected contract. Will this trend continue next year? I predict that, not only will it continue, it will become even worse. Many players will see the dark clouds coming and will most likely demand these lockout-protected contracts or threaten to sign with a team that will. This, coupled with guaranteed Olympic participation, is the reson we will have another lockout for the 2020-2021 season.

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