Tuesday, July 17, 2007

The collective bargaining agreement
The 100-per-cent rule

50.7 "100 Percent Rule" for Multi-Year SPCs. The difference between the stated Player Salary and Bonuses in the first two League Years of an SPC cannot exceed the amount of the lower of the two League Years (or if the same, that "same" amount). Thereafter, in all subsequent League Years of the SPC, the variation in Player Salary and Bonuses from one League Year to another may not exceed that amount.
This is the portion of the CBA Tom Benjamin is referring to when it comes to differing values between years of a multiyear contract, which is illustrated with this example (one of eight provided): "An SPC provides for $2 million in Player Salary in Year 1. In Year 2, the SPC may not provide for less than $1 million, or provide for more than $4 million."

What that means is that many of the various loopholes speculated on over at Sabermetric Research would be invalid. It's also fair to assume that any other type of extreme salary cap circumvention would be frowned upon by the league.

The most extreme cap circumvention possible under the terms of the CBA appears to look something like so (taken from a commenter on Benjamin's site):

1: $10-million
2: $5-million
3: $2.5-million
4: $1.25-million
5: $625,000
6: $500,000
7: $500,000
8: $500,000
9: $500,000
10; $500,000
Cap hit: $2.188-million

Now, let's say the player signed to above contract is in his early 30s, the Chris Drury range, and manages to play four of the 10 years specified on this deal. The cap hit would have been just $2.188-million for those four seasons, but the player in question would have received $18.75-million, or an average of $4.688-million a year, or close to 86 per cent of the total value of the deal.

As far as I can tell, there aren't any provisions in the CBA to prevent a deal like this (although I'm still looking).


At 6:41 p.m., July 17, 2007, Blogger Kel said...

Another point to remember is that all SPC (standard player contracts) must be received and approved by the League before it becomes effective, if I understand the CBA correctly. Therefore, teams aren't going to propose a 100-year contract.

At 10:54 p.m., July 17, 2007, Anonymous Anonymous said...

Question: Why can't a team sign a player to a rigged contract like that?

Like, say, Philly wants to sign someone like Forsberg to a contract that starts at $7 million this season and keeps dropping by half until you get a number of years at the minimum. If I understand this right, a 10-year contract like that would only have about a $1.6 mil cap hit. If they made it a 20- or a 30-year contract, it would get even lower. And Forsberg would sure to be retired, or off to Sweden, or in the minors by the time he's making peanuts.

The CBA doesn't allow for the league to just arbitrarily reject these contracts, does it? That it's an attempt to circumvent the CBA in spirit can't be enough, can it? Or is there some rule I'm not aware of?

At 7:33 a.m., July 18, 2007, Anonymous Anonymous said...

That's the reason why the CBA says that contracts for players aged 35 and above will continue to count towards the cap even if the player retires. So if you want your team to take a cap hit for Forsberg for the next 30 years, sure, go ahead.

At 11:45 a.m., July 18, 2007, Anonymous Anonymous said...

But what if you sign that deal when he's 34?

At 11:47 a.m., July 18, 2007, Anonymous Anonymous said...

Ah, but Forsberg is 33, no? It's only if the player is 35 when the contract begins.

And besides, $550,000 a year, if you can stash it in the minors, isn't probably a huge deal for 30 years if the player is worth it.

At 12:00 p.m., July 18, 2007, Anonymous Anonymous said...

What happens as the league minimum rises over time with the later years of the contract?

At 12:35 p.m., July 18, 2007, Anonymous Anonymous said...

Someone correct me if I'm wrong, but it only has to be kosher with the league min/max at the time of the deal, not at some point in the future.

At 2:24 p.m., July 18, 2007, Anonymous Anonymous said...

Even a 10 year deal the dead money would be an issue.

The way to circumvent the cap (in the short term) is that you give him a ton of money up front, then drop the salary the next couple of years to league minimum(or whatever you can get away with), then have a balloon payments for the final years that you buy out, giving him more than the average salary and minimizing your dead cap space.

Pretty much the opposite of what the Flyers did with Briere.


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