Tuesday, June 19, 2007

The new free agency

From an email conversation I had earlier today with an old friend:
James: Why wouldn't every team simply try to trade for other UFAs before they hit the open market?

Pete: Well, I guess the short answer for "why doesn't everybody do this" is "because technically, you could trade for a pending UFA and not be able to sign him." That would suck.
Yes, it would. Which makes you wonder: Did the Flyers somehow get advance knowledge that Kimmo Timonen and Scott Hartnell would be amenable to signing in Philadelphia, and if so, in what way does that breach the negotiating rules?

In other words, would Monday's deal have gone through had there been a chance either player would have balked at signing one of those gaudy, six-year deals? And, more importantly, are more of these deals on the way?

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20 Comments:

At 4:53 AM, June 19, 2007, Blogger J. Michael Neal said...

I can't imagine that there is anything underhanded about this. If you prefer, think of it as Nashville signing these players with the understanding that they would be traded. The effect is the same, and I don't think that anyone is going to complain about it too much phrased that way.

The people who should be most upset about this is the players, not any of the owners, though not for the act, but for what it tells us about the market value of the players. The idea behind free agency is that, after a certain point, a player should have the right to decide where he wants to play, and to collect the full market value of his services. Very clearly, Timmonen and Hartnell did not get the latter; a part of the price that the Flyers paid to get their services went to someone else.

I agree that they probably wouldn't have received any more in free agency, because of the salary cap restrictions. However, they were obviously worth more to the Flyers than that salary, but there was no way that the players could extract that value, since there is no way to compensate them that doesn't count under the cap. So that extra value went to the Predators instead.

The interesting question, and to me still unanswered, is whether this makes sense for the Flyers, and thus how likely we are to see it repeated. Holmgren must think that these two are worth more than the salary it takes to sign them. Are they worth more than some other set of players that he would be able to acquire on the free agent market for the same money, though? If not, then he wasted a draft pick.

If they are, then Holmgren gets credit for being the first GM to figure out how the big market teams can throw their weight around under the cap. Top players are worth more to big market teams, because they can add more revenue there than they can in small markets.

I'm unconvinced. Not that the big market teams won't figure out a way to stay ahead when it comes to free agent signings; I'm dead certain of it. I'm just not sure that this is the way to go about it. Unless this becomes a fairly common practice, then making sure that you can sign these two particular players, rather than some other two players that bring you as much utility, isn't worth the price he paid.

 
At 6:11 AM, June 19, 2007, Anonymous David Johnson said...

This is nothing new. The Flyers pretty much did the same thing when they signed Roenick as a free agent from Phoenix though there was no trade at the time, just Phoenix gave them the right to negotiate with Roenick. On July 2nd after Roenick signed Philadelphia traded Langkow to the Coyotes for future considerations.

I am not sure if we will see a lot of this happen but I think in certain situations it makes sense and this might be one of them. The Flyers had a lot of money to spend this summer and this was a way to ensure they get two players they wanted locked up and now they can focus on Briere or Gomez or Drury. It seems every year there is a mad rush on July first and there are often signing frenzies where a lot of players sign within hours or even minutes of each other. If they can't respond quickly in bidding wars they might lose out on a player. So now instead of having to try to participate in 3 or more bidding wars they can just focus on one or two.

What it also accomplishes is it makes Philadelphia a more viable destination to many players. Would Briere be as interested in signing there if he wasn't sure if they would be able to sign other quality free agents? If he had a choice he might not choose a last place team that may or may not improve themselves. These moves all of a sudden make the Flyers look like a good team again.

There are a few advantages that big market teams can employ. One is front loading contracts like the Leafs did with McCabe. A front loaded contract means they can trade a player in the latter years of his contract to a team with lots of cap space but not the budget to spend to it. Or, if the Leafs had to buy out McCabe's contract, they could do it at a lower salary cap hit than if it was an evenly distributed contract. Players also like front loaded contracts because once the money is in their pocket that money can't be bought out for less.

Of course, the reverse is also true. Rick Nash has a significantly back loaded contract, but what if the Blue Jackets decided they couldn't afford to pay Nash $6.5 million in the final year of his contract? Well, a big market team could trade for him and get a $6.5 million player for a much lower salary cap hit.

Big market teams can also take some added risk knowing that if a player doesn't perform they can demote them to the AHL and get their contract out of their cap calculation. The Leafs have also signed journeymen players and fringe players to one way contracts and gamble that that player can at some point contribute. They gave Erik Westrum a one-way deal last summer and Kronwall a one-way this year but there are no guarantees that either will make the team. Same for Boyd Devereaux. Extra competition for roster spots is always a good thing and might mean your fourth line is just that little bit better than your competitions fourth line or you are better able to fill in for injured players.

Most of these are only minor advantages, but they are advantages none-the-less.

 
At 9:18 AM, June 19, 2007, Anonymous Dennis Prouse said...

This makes a complete mockery of the tampering rules. Are you telling me that Philadelphia had no contact with these players or their agents prior to the trade? Of course they did. That is blatant tampering, yet the League will look the other way.

Michael, I know what you are saying about this being not much different from a sign-and-trade, but I think there is an important distinction. In a sign and trade scenario, the new team has no contact with the players until such time as the trade is made. All discussions and negotiations are handled by their existing club, as it should be. In this scenario, it is painfully obvious that the agents of Hartnell and Timmonen were negotiating directly with the Flyers while their clients were still property of the Predators. That stinks to high heaven, and any League that pretends to be professional should put a stop to it. Can you imagine the NFL allowing this to happen? Me neither.

 
At 9:27 AM, June 19, 2007, Blogger E said...

it seems to me that the real question here is: is a franchise allowed to use it's own 'exclusive' pre-july-1 negotiating rights on behalf of another franchise? we don't know for a fact that the players agents negotiated directly with the flyers, but one way or another, the contracts had clearly been worked out in advance. if hartnell and timonen never talked to anyone but the preds, with the understanding that the eventual contracts being discussed would be signed with philly, is that legal?

 
At 10:13 AM, June 19, 2007, Anonymous Anonymous said...

The fact that the Flyers disclosed that they had spoken directly to the players agents while they were still property of the Preds surprises me. This shouldn't be allowed and the loophole should be closed. However as it currently stands, its hard to consider it tampering because the Predators agreed to allow the Flyers to negotiate. What would have happened if the Flyers negotiated with the players, couldn't come to an agreement, didn't provide the Preds with compensation and then signed them on July 1 based on the conversations that they had previously? Would the Preds have cried foul?

 
At 10:20 AM, June 19, 2007, Anonymous Anshu said...

There's a difference between the spirit of the rule and the letter of the rule.

Does it really matter if it is "sign-and-trade", like what happened in the Hossa for Heatley deal?

In that case, Ottawa signed Hossa for $6M and then traded him immediately for Heatley. There's no way Muckler offered the $6M without having prior knowledge that Atlanta was comfortable with that number, and the trade would go through. There's probably also no way that Hossa signed that deal not knowing that he's going to Atlanta.

Whether the agents talk directly, or indirectly with the future team, the result is the same. If its the spirit of the rule you want enforced, that is, the preservation of the integrity of true free agency, then its going to take a lot of effort to restructure the letter of the rule to close all potential loopholes.

I personally don't believe the situation is dire enough to warrant such a significant change.

 
At 10:23 AM, June 19, 2007, Blogger saskhab said...

This is a loophole that should be closed. Remember pre-lockout all those trades on June 30th that sent players from a big market to a small market? Who could forget Brian Leetch's memorable stint as an Edmonton Oiler? Tie Domi as a Nashville Predator? It's the same thing. The new CBA was supposed to get rid of these compensation picks...

Here's my proposal: Any impending UFA cannot be traded from the regular season trade deadline through to July 1, and a team cannot grant another team the right to negotiate with their pending UFA's. Simple, and it makes tampering very cut and dry.

I don't blame Philly for this, if anyone I blame Nashville. At the trade deadline, they made a decision that they'd rather keep Hartnell and Timmonen for a playoff drive than risk losing them for no compensation. That's supposed to be the deal. They found the loophole, now it should be closed.

 
At 10:29 AM, June 19, 2007, Blogger leanne said...

Barring any backroom conversations (which looks to me to have been covered in detail), I'm not surprised the Flyers thought they had a chance with Timonen at least - remember that his little brother Jussi is in the Flyers' organization as well.

The age difference is a bit larger than for say, the Niedermayer brothers, and I presume they're not quite as close, but I don't doubt it made the Flyers more attractive to Timonen.

 
At 11:01 AM, June 19, 2007, Anonymous Keith said...

Not at all sure why this is a problem. Philly could have waited until July 1 and tried to sign the two, but were willing to pay to have the opportunity in advance.
Nashville, obviously, isn't going to turn down a first rounder in exchange for the right to let the Flyers talk to them.
And obviously, the two players are happy with this deal, otherwise they would not have signed.

Personally, I find it comical that whenever someone comes up with something where everybody wins, it is a "loophole that must be closed." This CBA was designed with the intent of being fair. That nobody got screwed is not a sign of a problem.

 
At 11:38 AM, June 19, 2007, Blogger McLea said...

The idea behind free agency is that, after a certain point, a player should have the right to decide where he wants to play, and to collect the full market value of his services. Very clearly, Timmonen and Hartnell did not get the latter;

If they didn't get the latter, then it was because of a decision they made, not the Predators or Flyers. I think it's important to point that at no point were Timonen's and Hartnell's right to become free agency forefeited by this trade.

However, they were obviously worth more to the Flyers than that salary, but there was no way that the players could extract that value,

Yes there was. They could have refused to sign with the Flyers and became free agents on July 1.

So can we please get off this whole angle that has Hartnell and Timonene being short changed by this deal? They made a voluntary decision to sign with the Flyers and at no point had their right to free agency negotiated away.

 
At 11:50 AM, June 19, 2007, Anonymous Dennis Prouse said...

Hossa was completely floored when he was traded to the Thrashers. He never saw it coming, although in hindsight his agent should have told him it was a possibility.

 
At 11:58 AM, June 19, 2007, Blogger saskhab said...

Keith, if the NHL thought it was neccesarry to do away with those compensation picks of the last CBA, what makes these type of transactions acceptable and those other ones not?

Do you think Nashville would've let Detroit talk to these 2? Chicago? St. Louis? No, they got to help choose where these 2 would go.

To me, Nashville made a choice back in February... they're making a Cup run and damn the future consequences.

 
At 12:39 PM, June 19, 2007, Anonymous David Johnson said...

This makes a complete mockery of the tampering rules. Are you telling me that Philadelphia had no contact with these players or their agents prior to the trade? Of course they did. That is blatant tampering, yet the League will look the other way.

It is not tampering if the Nashville Predators give them permission to talk to the players. This kind of deal happens all the time. One team is interested in another teams player(s), calls up the GM, and they work out a trade on the condition that they can sign the player to a contract extension. The other team then allows them to talk to the players to negotiate a trade and are usually given a window of time to do so. If the player agrees to the contract, the trade is made.

That is how it works and it has been happening in the NHL and other leagues for years and it is not tampering.

 
At 1:11 PM, June 19, 2007, Anonymous pete said...

There's probably also no way that Hossa signed that deal not knowing that he's going to Atlanta.


IIRC, Hossa had no idea. I watched his post-trade press conference where he said he was sad to leave, but looking forward to the opportunity.

AS shocked as I was when that trade happened, in hindsight, it should have been obvious to him and and that this was a possibility. Ottawa balked at his 6.5 price tag for months, then suddenly capitulates? Hossa should have seen that coming.

Like some others, I have no particular problem with this deal. The players had the option of becoming UFA, and opted not to. Nobody robbed them of that. Nashville had an asset (negotiating rights) they were able to trade away and Philly was willing ot pay, essentially, for "first dibs" on these two.

Really, this is a glorified sign and trade. The way it probably happened was Nashville's GM told the two "we can't afford to sign you, but we've been contacted by Philly who are willing to give you X amount over Z years. If that sounds good to you, sign here and we'll trade you."

 
At 1:29 PM, June 19, 2007, Anonymous Matt Gunn said...

Yeah, these contracts were definitely agreed to. Correct me if I'm wrong, but a team can allow another team to negotiate with their players.

As long as both teams are in agreement, I don't see how there is anything wrong or underhanded whatsoever with this deal.

In a way, it's actually the second time it's happened with Philly. They gave a second round pick for Martin Biron, as they hoped to get the inside track on signing him, as he was the guy they would have pursued during the free agent market.

 
At 4:19 PM, June 19, 2007, Anonymous Anshu said...

I guess the related issue is perception. Does it look "above board" to the average fan when a deal like this goes down. And if it doesn't appear fair, even if it actually is completely legal, then does that warrant a change?

As a fan, I could certainly get behind the "no trades between trade deadline and July 1" proposal. That would clear things up, and offer the appearance of fairness.

I'd probably also be inclined to look at the rent-a-player issue (the way Weight and Recchi joined Carolina for the cup run and then went back to their respective teams). Those deals were completely legal, but something about them still feels a little wrong to me.

 
At 4:22 PM, June 19, 2007, Anonymous Baroque said...

I'd probably also be inclined to look at the rent-a-player issue (the way Weight and Recchi joined Carolina for the cup run and then went back to their respective teams). Those deals were completely legal, but something about them still feels a little wrong to me.

You mean something like requiring him to re-sign with any team other than his original team (during that year) for at least one year? There was something like that in the initial buyout period of the CBA, so teams couldn't buy out players and then immediately re-sign them to a lower salary to get around the salary cap.

 
At 5:53 PM, June 19, 2007, Blogger saskhab said...

Actually the buyout clause prevents that with current buyouts, so you can't get them back at a lower rate.

Montreal now can't sign Cullimore as a UFA, although Chicago technically could.

 
At 11:15 PM, June 19, 2007, Blogger J. Michael Neal said...

However, they were obviously worth more to the Flyers than that salary, but there was no way that the players could extract that value,

Yes there was. They could have refused to sign with the Flyers and became free agents on July 1.


No, there isn't. That's because there are two different measures of how much a player is worth to a team: how much money the team has to give them, and what percentage of their cap space they must use to sign them. It is only an illusion that these are the same number; in reality, they never are, and in many cases, that difference can be large.

This is because the first number is dependent upon which team a player signs with, but the second number is not. A good player generates more revenue for a large market team than he does for a small market team, but he absorbs the same percentage of the salary cap for either.

The Flyers aren't willing to commit any greater a percentage of their cap space to sign Timmonen or Hartnell than is any other team that is going to spend up to the cap. They are willing to commit more actual dollars (or other resources that have a financial value, such as a draft pick) to sign them than many of those teams are, though. However, there is no way for the player to receive this extra amount that the team is willing to pay, because any form that that compensation would take would count against the cap, increasing the number that Philadelphia isn't willing to increase. Making that payment to Nashville, though, doesn't count against the cap.

So, there is a gap between the actual financial commitment that Holmgren is willing to make for their services, and the salary cap commitment that he is willing to make. If he is going to pay that difference, he must pay it to someone other than the player. The player only receives the fair market cap commitment rather than his fair market financial commitment, which is a distinction that makes no difference to his bank account whatsoever.

 
At 11:48 PM, June 19, 2007, Anonymous SabreMark said...

I'm not sure that this is tampering as some have said, but what I can say is is when "sources" tell the Philly papers that Philly will go after Vanek. Now, these "sources" know that they can't just pick up the phone and call up Vanek, but they can use the willing lemmings in the media to pass the message to Vanek: "Buddy, we want you! Play hardball with Buffalo!"

James, is it me or are the media willing accomplices in this matter?

 

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