Monday, January 14, 2008

The art of negotiation
(Whose crystal ball is better?)

First things first: the Caps just got a hell of a deal. They stole a bunch of money from Alex Ovechkin (or, alternatively, Ovechkin, in his limitless good will, saved Ted Leonsis a bunch of money). If the deal truly was six years for $54 million and then an additional seven years for $70 million, Leonsis et. al. is the greatest negotiating team of all time.
The celebration in Washington's been good to see the past few days, if only as a reminder for those who doubt the passion of the hockey fans in D.C. And the bloggers' coverage has certainly been interesting.

To start, however, it's prudent I think to point out one thing if we're going to address the negotiation side of things: The Capitals essentially gave Ovechkin the largest possible contract the CBA allowed them to.

The cap on individual salaries this season sits at $10.06-million, and even if we go by the Rick DiPietro, 15-year standard, that's a $150.9-million deal. Ovechkin signed for 13 years at $124-million, and given where the cap currently sits, it would have been very difficult to give him more without paying out into old age.

The 'value,' then, in this deal comes in the fact Ovechkin will presumably be underpaid down the line, because he certainly won't be next season. In fact, his $9.54-million cap hit will be $2-million higher than every player not named Sidney Crosby or Brad Richards, as there aren't likely to be any free agents who sign for more than $7.5-million per year this off-season.

(Marian Hossa being one potential exception.)

Ovechkin's certainly a terrific player, but I don't think you'd be hard-pressed to name 10 who have been better this season. Along with Crosby, Roberto Luongo, Nick Lidstrom and Jarome Iginla are the Hart Trophy candidates at the midway point.

And all three are signed to deals worth $7.45-million a year (or less) for at least another two seasons.

The real question, to me, is just when Ovechkin's cap hit becomes a bargain at $9.54-million, and how much the NHL's upper limit will have to rise to bring that about. (Vincent Lecavalier's an unrestricted free agent after next season; does he then land the league's richest deal?)

We're probably not far from a $60- to $65-million salary cap — four or five years, at most — which would open the door for a $13-million player close to the time Sidney Crosby's five-year extension expires. If he then signs another five-year pact for, let's say, $60-million, perhaps Capitals owner Ted Leonsis looks all the wiser.

But if you ask me, that's a pretty subtle victory, and not a slam dunk. There's no guarantee that top players' salaries will form a linear line that leads to as high as they can go, not when Jaromir Jagr was making $11-million a season seven years ago.

Barring injury, Ovechkin's deal certainly could be a win for the Capitals in the future — but what they're really saving is a few million a season well down the line.

All we know for sure is that, next season, they overpay.

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At 3:18 a.m., January 14, 2008, Anonymous David Johnson said...

I agree. I don't see this as any exceptional savings on the part of the Washington Capitals. Maybe 10 years from now the salary cap is $80 million and the top players are making $13-14 million and he will come at a bit of a discount but only if he is still a top 10 player then and that is no guarantee.

We all see how the Tampa Bay Lightning are struggling with just 3 (Lecavalier, Richards, St. Louis) players making nearly $20 million and not enough money to field a quality roster around them, well for the next two seasons Ovechkin, Nylander and Semin will have a cap hit of about $19 million. Will the capitals be able to field a competitive team around them? Most importantly, will they have enough money left to go out and get a big time goalie to replace Kolzig when he retires in the not too distant future, (maybe even after this season as he isn't having a great season). A lot will be dependent on how much Leonsis is willing to spend but if the capitals can't field a competitive team with a solid goalie then it won't matter how good Ovechkin is because no forward can lead a team to great success alone.

At 8:02 a.m., January 14, 2008, Anonymous Anonymous said...

I don't know much about the Caps beyond their NHL roster, but how is their farm system and list of prospects/drafted palyers looking?

Is ther a Kolzig replacement that will be ready in 1 or 2 seasons? Maybe some backup around their top line that needs a season or 2 to be NHL ready?

At 11:19 a.m., January 14, 2008, Blogger Jeff J said...

"All we know for sure is that, next season, they overpay."

They need to overpay someone. With Kolzig's big contract coming off the books, they need to give that money to someone else to keep the payroll over the salary floor.

At 11:25 a.m., January 14, 2008, Anonymous Anonymous said...

The Capitals prospects depth is pretty decent (especially on the D side) and they have a nice pipeline going now. They could be a bit thin on their RW side but with Fehr coming back from his long term injury it is looking better.

IMO in this salary cap era the teams that can't or won't have payroll at the cap limit that good drafting that steadily supplies the nhl club with cheaper players will be pretty important and necessary for some teams.

At 11:27 a.m., January 14, 2008, Anonymous Anonymous said...

Caps youth movement - Backstrom, Semin, Green, Alzner (Canada Jr Capt), Fleishman, Varlamov (G - first Round) and an AHL team that won the Calder two season ago.

At 11:37 a.m., January 14, 2008, Blogger saskhab said...

If Varlamov doesn't bust, I'll be shocked. That's the gamble you take with goalies out of the RSL... they are terribly coached. Neuvrith is their real potential future starter in goal.

Still, even with a couple of first round busts (Varlamov and likely Pokoluk), they've had enough quantity of high picks to make those gambles and not be set back.

Everyone talks about Tampa's Big 3, but other teams have similar money invested in 3 players to what Tampa has and they aren't hampered. If Ted wants to spend to the upper limits of the cap, and not to a budget somewhere in the middle of the range like Tampa does, their should be enough money to field a good team around those 3. Heck, Anaheim won a Cup with such a top-heavy budget.


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