flyercanuck Posted July 11, 2014 Share Posted July 11, 2014 FWIW, Crosby makes $4,000,000 per year in endorsements. (Per Forbes. 2012). http://www.forbes.com/sites/kurtbadenhausen/2012/11/28/sidney-crosby-tops-list-of-the-nhls-highest-paid-players/ This includes Reebok, Gatorade, Tim Hortons and Bell Canada. This is the most of any NHL player. Nothing to shake a stick at but not "OMG". Crosby is widely considered the "face" of the NHL and one of it's most marketable players. Comparable players in other leagues... Peyton Manning: $10,000,000LeBron: $42,000,000Kobe: $34,000,000 Even Carmelo Anthony ($9,000,000) and Amar'e Stoudamire ($6,500,000) make more in endorsements. Think he's with UnderArmor too. And something like Frito Lay (that's the "punching bag" Crosby) Verizon, Kellogs. Walk through a supermarket in Canada, he's everywhere. Oh and CoverGirl lipstick too. Or is that just a "should have" one? Quote Link to comment Share on other sites More sharing options...
brelic Posted July 11, 2014 Author Share Posted July 11, 2014 This is a timely article:http://www.thehockeynews.com/blog/long-term-deals-great-if-you-give-them-to-the-right-players/ There's a lot in there to discuss. The first issue I would raise is the author stating that Kane and Toews signed for "substantially under market value". Here's the full quote: This will be a great deal for Chicago. Not only do they keep two of the best young players in the game for eight additional years for substantially under market value – had they elected to go to unrestricted free agency – but it will be great for business for the Hawks, who have two very good, marketable players that will continue to fill the building and enhance the value of TV deals and merchandising. And as every year passes and the cap increases, those deals will occupy a lower percentage of the Blackhawks cap space. I find that statement a bit puzzling. As UFAs, they would have gotten shorter contracts by one year or more. That's a rule-based certainty. The other part of it is whether or not you believe the FA market next year would have given them - individually - more than $10.5M per season. I have a hard time believing that, because Kane and Toews - together - are worth more to the Hawks than they are to other teams individually. We'll never know I guess. The other aspect of the article that is weird is this guy is judging these new long-term contracts - Kane, Toews, and Bergeron (8 years, $52M) - right now and pronouncing them great deals. I think he completely misses the boat on this entire debate - a long-term contract can only be judged as a success or failure at the end of the term, or close to it (or if it starts out poorly right from the get-go, e.g. VLC). How he can say that the Bergeron deal as one of the "biggest bargains in the NHL" when it has not even started is puzzling. Will a 35-year old Bergeron be 'worth' $6.5M to a Bruins team that is likely to look very different than what it does now? No one knows... but other similar long-term contracts that I have seen have not worked out well precisely because they overcommit and there's no easy way out. He's right on one point though - it's important to give long-term contracts to the right players, and quality management teams can identify that more than mediocre management. Look at the Flyers long-term contracts: ProngerBriereTimonenHartnell (6 years the first time, 6 years the second time)BryzgalovCarterRichardsJVRGiroux (starts this year)VLC (only one year in) How many of those do you think worked out for the Flyers? Quote Link to comment Share on other sites More sharing options...
B21 Posted July 11, 2014 Share Posted July 11, 2014 Think he's with UnderArmor too. And something like Frito Lay (that's the "punching bag" Crosby) Verizon, Kellogs. Walk through a supermarket in Canada, he's everywhere. Oh and CoverGirl lipstick too. Or is that just a "should have" one? It's L'Oreal. Not cover girl. Though I doubt he is with Reebok and Under Armour. That's like being a spokesman for Coke and Pepsi. Makes sense he'd be on more in Canada. Quote Link to comment Share on other sites More sharing options...
brelic Posted July 11, 2014 Author Share Posted July 11, 2014 That's like being a spokesman for Coke and Pepsi. That's just how he rolls... he goes both ways Quote Link to comment Share on other sites More sharing options...
B21 Posted July 11, 2014 Share Posted July 11, 2014 This is a timely article:http://www.thehockeynews.com/blog/long-term-deals-great-if-you-give-them-to-the-right-players/ There's a lot in there to discuss. The first issue I would raise is the author stating that Kane and Toews signed for "substantially under market value". Here's the full quote: I find that statement a bit puzzling. As UFAs, they would have gotten shorter contracts by one year or more. That's a rule-based certainty. The other part of it is whether or not you believe the FA market next year would have given them - individually - more than $10.5M per season. I have a hard time believing that, because Kane and Toews - together - are worth more to the Hawks than they are to other teams individually. We'll never know I guess. The other aspect of the article that is weird is this guy is judging these new long-term contracts - Kane, Toews, and Bergeron (8 years, $52M) - right now and pronouncing them great deals. I think he completely misses the boat on this entire debate - a long-term contract can only be judged as a success or failure at the end of the term, or close to it (or if it starts out poorly right from the get-go, e.g. VLC). How he can say that the Bergeron deal as one of the "biggest bargains in the NHL" when it has not even started is puzzling. Will a 35-year old Bergeron be 'worth' $6.5M to a Bruins team that is likely to look very different than what it does now? No one knows... but other similar long-term contracts that I have seen have not worked out well precisely because they overcommit and there's no easy way out. He's right on one point though - it's important to give long-term contracts to the right players, and quality management teams can identify that more than mediocre management. Look at the Flyers long-term contracts: ProngerBriereTimonenHartnell (6 years the first time, 6 years the second time)BryzgalovCarterRichardsJVRGiroux (starts this year)VLC (only one year in) How many of those do you think worked out for the Flyers? He makes a good point about how the annual cap hit stays the same relative to a cap that will (likely) increase each year. Those deals may seem like to much now but what if (and I know it's an "if") the cap is at $90,000,000 in 5 years? I think that's part of the reason why the Crosby and Giroux deals look like such bargains right now. He's some food for thought, too. All of the players who - if they were free agents right now - would command at least $8,000,000(ish) per year are signed to deals that take them well into the end of the decade and often beyond. Crosby - 2025Malkin - 2022Giroux - 2022Getzlaf - 2021Perry - 2021Datsyuk - 2017OV - 2021Suter - 2025Weber - 2026Doughty - 2019Keith - 2023Quick - 2023Rask - 2021 The next free agents to be "worthy" (i/m/h/o) of a lengthy $8,000,000+ will be Stamkos and Kopitar after the 2016 season then Tavares after the 2018 season. Quote Link to comment Share on other sites More sharing options...
B21 Posted July 11, 2014 Share Posted July 11, 2014 That's just how he rolls... he goes both ways Hey - I drink Coke and Pepsi. It's all about whatever is on sale. Quote Link to comment Share on other sites More sharing options...
brelic Posted July 11, 2014 Author Share Posted July 11, 2014 He makes a good point about how the annual cap hit stays the same relative to a cap that will (likely) increase each year. Those deals may seem like to much now but what if (and I know it's an "if") the cap is at $90,000,000 in 5 years? I think that's part of the reason why the Crosby and Giroux deals look like such bargains right now. Absolutely. I agree on that point. I don't know that the cap will rise $20M in 5 years, but it could certainly happen. At the end of the day, though, my personal beef has never been about the average annual value of contracts - it is with the length and the fact that there's no way out of them for most teams. I understand that the GMs are the ones handing these out, but shouldn't you, as an employer, be able to shed an employee after X number of years who simply isn't performing? As it stands right now, there is absolutely no incentive for any of these 'employees' to continue their performance or to even get better once that contract is signed - their money is guaranteed. Intrinsic motivation is not enough, and any other business in the real world knows that. There needs to be sane exit clauses. 1 Quote Link to comment Share on other sites More sharing options...
flyercanuck Posted July 11, 2014 Share Posted July 11, 2014 This is a timely article:http://www.thehockeynews.com/blog/long-term-deals-great-if-you-give-them-to-the-right-players/ There's a lot in there to discuss. The first issue I would raise is the author stating that Kane and Toews signed for "substantially under market value". Here's the full quote: I find that statement a bit puzzling. As UFAs, they would have gotten shorter contracts by one year or more. That's a rule-based certainty. The other part of it is whether or not you believe the FA market next year would have given them - individually - more than $10.5M per season. I have a hard time believing that, because Kane and Toews - together - are worth more to the Hawks than they are to other teams individually. We'll never know I guess. The other aspect of the article that is weird is this guy is judging these new long-term contracts - Kane, Toews, and Bergeron (8 years, $52M) - right now and pronouncing them great deals. I think he completely misses the boat on this entire debate - a long-term contract can only be judged as a success or failure at the end of the term, or close to it (or if it starts out poorly right from the get-go, e.g. VLC). How he can say that the Bergeron deal as one of the "biggest bargains in the NHL" when it has not even started is puzzling. Will a 35-year old Bergeron be 'worth' $6.5M to a Bruins team that is likely to look very different than what it does now? No one knows... but other similar long-term contracts that I have seen have not worked out well precisely because they overcommit and there's no easy way out. He's right on one point though - it's important to give long-term contracts to the right players, and quality management teams can identify that more than mediocre management. Look at the Flyers long-term contracts: ProngerBriereTimonenHartnell (6 years the first time, 6 years the second time)BryzgalovCarterRichardsJVRGiroux (starts this year)VLC (only one year in) How many of those do you think worked out for the Flyers? Timonen, Hartnell (first time) and hopefully, HOPEFULLY Giroux works out. None of the rest worked out for the duration. Out of 11 that's 3...maybe. Bergeron gets paid for what he's done and what he'll do for a good part of his deal. 30 goals and one of THE best defensive forwards in the game for 6.5? I'd be OK with that as a Bruins fan. 2 Quote Link to comment Share on other sites More sharing options...
flyercanuck Posted July 11, 2014 Share Posted July 11, 2014 It's L'Oreal. Not cover girl. Though I doubt he is with Reebok and Under Armour. That's like being a spokesman for Coke and Pepsi. Makes sense he'd be on more in Canada. Thanks for the correction. It's important. Maybe the UnderArmour is expired? And ya, it makes sense...but I'm still sick of seeing his face everywhere. Quote Link to comment Share on other sites More sharing options...
brelic Posted July 11, 2014 Author Share Posted July 11, 2014 Timonen, Hartnell (first time) and hopefully, HOPEFULLY Giroux works out. None of the rest worked out for the duration. Out of 11 that's 3...maybe. Sounds about right! Crazy, huh? It would be interesting to see how this compares to other teams. Bergeron gets paid for what he's done and what he'll do for a good part of his deal. 30 goals and one of THE best defensive forwards in the game for 6.5? I'd be OK with that as a Bruins fan. This is exactly the point, though. He *was* good in the past. A GM can probably count on Bergeron being very similar in the near future... but 8 years from now? That's a lifetime in hockey years. I can't think of any other industry where a guaranteed contract for that kind of length doesn't have some sort of sane exit clause. Mutual termination, 30 days notice for termination, 3-month severance pay, etc. On the other hand, the league specifically designed these to cripple teams that make bad decisions. That seems like a poor business model, IMO of course. Quote Link to comment Share on other sites More sharing options...
B21 Posted July 11, 2014 Share Posted July 11, 2014 Absolutely. I agree on that point. I don't know that the cap will rise $20M in 5 years, but it could certainly happen. At the end of the day, though, my personal beef has never been about the average annual value of contracts - it is with the length and the fact that there's no way out of them for most teams. I understand that the GMs are the ones handing these out, but shouldn't you, as an employer, be able to shed an employee after X number of years who simply isn't performing? As it stands right now, there is absolutely no incentive for any of these 'employees' to continue their performance or to even get better once that contract is signed - their money is guaranteed. Intrinsic motivation is not enough, and any other business in the real world knows that. There needs to be sane exit clauses. I agree...to a point. The exit clause should be punitive as well though. Or else the Paul Holgrems of the world are going to keep handing out long-term deals to star players until they get one right. In that regard, I like that the NFL does with the signing bonuses. The bonus is a pro-rated hit over the life of the deal but if you cut the guy you have the option to eat the balance for the next 1 or 1-2 seasons. Quote Link to comment Share on other sites More sharing options...
brelic Posted July 11, 2014 Author Share Posted July 11, 2014 The exit clause should be punitive as well though. Or else the Paul Holgrems of the world are going to keep handing out long-term deals to star players until they get one right. But he does that now. I wonder if it might actually have the perverse effect of helping small market teams. If they were reluctant before to commit 7-years and that much money to a UFA, the fact that they could get out of it halfway through for non-performance and no (or minimal) penalty might make them more likely to open the purse strings. Does that make sense? In that regard, I like that the NFL does with the signing bonuses. The bonus is a pro-rated hit over the life of the deal but if you cut the guy you have the option to eat the balance for the next 1 or 1-2 seasons. I don't know anything about the NFL. So how do their contract structures work? They are non-guaranteed, right? Do they have length restrictions? Do large signing bonuses seem to affect smaller market teams (if such a thing exists in football)? Do they have a salary cap? Quote Link to comment Share on other sites More sharing options...
B21 Posted July 11, 2014 Share Posted July 11, 2014 But he does that now. I wonder if it might actually have the perverse effect of helping small market teams. If they were reluctant before to commit 7-years and that much money to a UFA, the fact that they could get out of it halfway through for non-performance and no (or minimal) penalty might make them more likely to open the purse strings. Does that make sense? It does. It might work but if the punitive end of a failed long term deal is not enough I can see larger markets just outbidding the smaller markets. Holmgren does/did that now because he's had outs...and gotten lucky. He found takers for Carter and Richards and was able to buy our Bryz and Briere. Your stuck with VLC, Streit and Pronger. I don't know anything about the NFL. So how do their contract structures work? They are non-guaranteed, right? Do they have length restrictions? Do large signing bonuses seem to affect smaller market teams (if such a thing exists in football)? Do they have a salary cap? Yes - the annual base salary is not always guaranteed. Only the signing bonus is along with whatever base salary the team and player agree is guaranteed. I'm not sure about length restrictions but the punitive nature of the deals keeps teams from signing absurdly long contracts to lessen the cap hits (yes on their being a cap as well). When you hear a player has signed a 5 year, $60,000,000 deal with a $11,000,000 signing bonus and $30,000,000 guaranteed you take it with a grain of salt. That deal was the deal Mike Wallace signed w/ Miami. http://www.spotrac.com/nfl/miami-dolphins/mike-wallace/ You see how "punitive" the deal is if the Dolphins decide to get out of the deal early ("dead" money). The cap hit is what the player is actually being paid plus the pro-rated signing bonus. The "dead" money is taking whatever is left of the "guaranteed" money hitting the cap...all at once. The Dolphins were smart. They had a lot of cap space for 2014 so a large amount of the guaranteed money hits the cap this season. If they had cut Wallace after 2013 (the first year of the deal) he would have counted $26,800,000 (!!!) against their cap (or about 20%). Hence, the guaranteed base salary was all of 2013, 2014 and part of 2015. Since none of the 2016 or 2017 base salary is guaranteed you'll see that the only "dead" money if they cut Wallace is what is left of the pro-rated signing bonues. In other words - if Mike Wallace underperforms from 2013 - 2015 he's not a Miami Dolphin in 2016. Makes sense, no? Quote Link to comment Share on other sites More sharing options...
B21 Posted July 11, 2014 Share Posted July 11, 2014 @brelic Here's where it gets fun. You can "restructure" deals at any point. The Steelers have done it with Big Ben several times. He's a rare example of a long-term deal where you are almost assured of him playing out the contract. Example: Say Ben's cap hit for 2014 is $20,000,000. $18,000,000 base (doesn't matter if it's guaranteed or not - he's playing so he gets paid) and $2,000,000 of pro-rated signing bonus. The total bonus was $20,000,000 over the life of a 10 year deal. 2 years are left on the deal after 2014. The Steelers can take part of that $18,000,000 base and turn it into a "signing bonus". That means it gets pro-rated over the remaining years of the contract. It's a short term fix if a team is up against the cap but...it can (and often does) cause cap issues down the road. Example: $10,000,000 of that base gets moved to a signing bonus. The base for 2014 is now $8,000,000. That $10,000,000 gets added to the balance of the signing bonus. The balance was $6,000,000 - or a $2,000,000 cap hit for 2014, 2015 and 2016. Now it's $16,000,000 or just over $5,333,000 cap hit for 2014, 2015 and 2016. Tack that onto Ben's cap hit for 2014 and it's now $13,333,000 and not $20,000,000. But you added $3,333,333 to his hit in 2015 and 2016 and added to that "dead" money if you cut him (not likely but still). Quote Link to comment Share on other sites More sharing options...
brelic Posted July 11, 2014 Author Share Posted July 11, 2014 You see how "punitive" the deal is if the Dolphins decide to get out of the deal early ("dead" money). The cap hit is what the player is actually being paid plus the pro-rated signing bonus. The "dead" money is taking whatever is left of the "guaranteed" money hitting the cap...all at once. Ok, I think I get it. What is the guaranteed money (i.e. how is it calculated)? Has it been considered pretty punitive/harsh to walk away from contracts? What's been the players' take on that? Quote Link to comment Share on other sites More sharing options...
brelic Posted July 11, 2014 Author Share Posted July 11, 2014 @brelic Here's where it gets fun. You can "restructure" deals at any point. The Steelers have done it with Big Ben several times. He's a rare example of a long-term deal where you are almost assured of him playing out the contract. Example: Say Ben's cap hit for 2014 is $20,000,000. $18,000,000 base (doesn't matter if it's guaranteed or not - he's playing so he gets paid) and $2,000,000 of pro-rated signing bonus. The total bonus was $20,000,000 over the life of a 10 year deal. 2 years are left on the deal after 2014. The Steelers can take part of that $18,000,000 base and turn it into a "signing bonus". That means it gets pro-rated over the remaining years of the contract. It's a short term fix if a team is up against the cap but...it can (and often does) cause cap issues down the road. Example: $10,000,000 of that base gets moved to a signing bonus. The base for 2014 is now $8,000,000. That $10,000,000 gets added to the balance of the signing bonus. The balance was $6,000,000 - or a $2,000,000 cap hit for 2014, 2015 and 2016. Now it's $16,000,000 or just over $5,333,000 cap hit for 2014, 2015 and 2016. Tack that onto Ben's cap hit for 2014 and it's now $13,333,000 and not $20,000,000. But you added $3,333,333 to his hit in 2015 and 2016 and added to that "dead" money if you cut him (not likely but still). Whew. That's really confusing! I honestly know nothing about football, so this is all completely new to me. I really like the idea of restructuring though - makes it more relevant to the player's and team's actual situations. It would have allowed us, for example, to keep Briere if we could have a sane restructuring mechanism. In your opinion, does an 'ideal' cap/contract structure exist in a professional sports league? Quote Link to comment Share on other sites More sharing options...
B21 Posted July 11, 2014 Share Posted July 11, 2014 Ok, I think I get it. What is the guaranteed money (i.e. how is it calculated)? Has it been considered pretty punitive/harsh to walk away from contracts? What's been the players' take on that? Well the signing bonus - agreed to by the team and player - is all guaranteed. I don't think there is a formula for the rest of the guaranteed money. It's up to the team and player to come to terms on that. The players agree to all of the in the last round of collective bargaining but the NFLPA is probably the weakest of the 4 major sports unions, too. They may have conceded a lot of this in order to get a rookie wage scale in place during the last CBA. Quote Link to comment Share on other sites More sharing options...
B21 Posted July 11, 2014 Share Posted July 11, 2014 Whew. That's really confusing! I honestly know nothing about football, so this is all completely new to me. I really like the idea of restructuring though - makes it more relevant to the player's and team's actual situations. It would have allowed us, for example, to keep Briere if we could have a sane restructuring mechanism. In your opinion, does an 'ideal' cap/contract structure exist in a professional sports league? I like the restructuring, too. It allows you to keep a good team together longer though it eventually will catch up with you. The money owed/cap hit doesn't go away - it's just deferred really. You need the two-pronged approach to salaries, too. Base salary and signing bonus...have to be able to move salary from one to another. Is there an ideal system now? No. But something combining elements of the NFL, NHL and NBA would work for me. I like a hard cap - no luxury tax if you go over (like the NBA and MLB do). I like the "Larry Bird Rule" and the mid-leven exception in the NBA. I like the system the NFL set up as far as how the guaranteed money works. You have to guarentee something. If that system were in place in the NHL, for example, maybe only half of VLC's salary is guaranteed. But - the NFL system only works because the NFL has - by far - the best revenue sharing system. There is still an advantage for larger markets but when your (arguably) most successful franchise of all time is based in Green Bay, WI (Population 107,000 / Metro 306,000) you are doing something right. According to Forbes, in 2013, all of the NFL's franchises were among the 53 most valuable franchises in the world. Says a lot. Quote Link to comment Share on other sites More sharing options...
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