Saturday, July 10, 2010

17 Years for Kovalchuk (and the 100 percent rule)?

Since one of the biggest contract jokes in the NHL is Rick DiPietro's 15-year deal in 2006, I would think that the NHL has evolved into a more civilized group of savvy managers.  Sure, the league has seen it's share of 10, 11, 12, 13-year contract extension since the DiPietro debacle, but everyone can just look at those long-term deals and not laugh quite as hard, especially since DiPietro has 11 years still left on his deal and has done nothing with it.

Now, we're looking at a potential deal, which has been rumoured to be tabled by the New Jersey Devils, which would give Ilya Kovalchuk a 17-year deal, worth $100 million in just the first ten years alone.  Of course, the back end of this deal would likely see the salary numbers drop off significantly to lessen the overall cap hit to something more flexible for the Devils to build around with.

With Kovalchuk already being 27 years old as of April 15th, a 17-year deal would see him conclude this deal at the ripe old age of 44.  The benefit for the Devils is that if Kovalchuk does decide to retire after his 10 years, $100 million, he won't hurt the Devils past his retirement, because the cap hit can be nixed due to retirement processes on a deal that was signed before the age of 35.  The Devils, therefore could have a $10 million salary count as a much smaller number, thanks to not paying him quite as much in the last seven years.

Let's see if I can come up with as a possibility of what the deal may look like...

Article 50.7 in the CBA: "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. Thereafter, in all subsequent League Years of the SPC, (i) any increase in Player Salary and Bonuses from one League Year to another may not exceed the amount of the lower of the first two League Years of the SPC (or, if such amounts are the same, the same amount); and (ii) any decrease in Player Salary and Bonuses from one League Year to another may not exceed 50 percent of the Player Salary and Bonuses of the lower of the first two League Years of the SPC (or, if such amounts are the same, 50 percent of the same amount).

So, with that being said, according to the CBA, Kovalchuk could be down to a $1 million salary (which is the popular finishing number for most deals that are front-loaded) as soon as the 2022 season, where he'd be 39 years old at the end of the year and it would bring down the cap hit significantly, if that was the case.

YearSalaryCap Hit
2010-2011 (age 28)$10 million$6.53 million
2011-2012 (29)$10 million$6.53 million
2012-2013 (30)$10 million$6.53 million
2013-2014 (31)$10 million$6.53 million
2014-2015 (32)$10 million$6.53 million
2015-2016 (33)$10 million$6.53 million
2016-2017 (34)$10 million$6.53 million
2017-2018 (35)$10 million$6.53 million
2018-2019 (36)$10 million$6.53 million
2019-2020 (37)$10 million$6.53 million
2020-2021 (38)$5 million$6.53 million
2021-2022 (39)$1 million$6.53 million
2022-2023 (40)$1 million$6.53 million
2023-2024 (41)$1 million$6.53 million
2024-2025 (42)$1 million$6.53 million
2025-2026 (43)$1 million$6.53 million
2026-2027 (44)$1 million$6.53 million

That is a crazy amount that the Devils could definitely deal with, I'm sure. You could work the back end of the deal, so its a rounder number like $7 million, but frankly, why would you throw that cap space away at this point?

These are just numbers I am throwing out there, I don't have any idea what the deal would actually look like, I'm just gauging this on a deal that needs to get done, with the lowest cap hit possible for $100 million over the first 10 years.  It all makes sense to me.

Hjalmarsson Gets an Offer Sheet

The offer sheet has got a nasty reputation in the NHL, as one of the coldest acts of general managing an NHL GM can do, thanks in large part to the Dustin Penner offer sheet, which happened almost three years ago now.  Personally, I like the offer sheets, as much as restricted free agency gives teams a good hold on top prospects, it also guarantees that team compensation if a team covets that player more.

There is also some added security for teams that are fighting against the salary cap ceiling with fitting all of their players contracts for the year, making sure that if they were to lose them to insufficient cap space or another team putting a little excess pressure on the team having trouble by overpaying, compensation would be granted in futures.

That being said, here is what the compensation chart looks like in 2010:
OFFER                           COMPENSATION
$1,020,348 or below             None
Over $1,020,348 to $1,545,981   3rd round choice
Over $1,545,981 to $3,091,963   2nd round choice
Over $3,091,963 to $4,637,944   1st round and 3rd round choice
Over $4,637,944 to $6,183,925   1st round, 2nd round and 3rd round choice
Over $6,183,925 to $7,729,907   Two 1st round choices, one 2nd and one 3rd round choice
Over $7,729,907                 Four 1st round choices

So, this is where the San Jose Sharks come in.  They have obviously decided to put some more pressure on the Chicago Blackhawks, who are sitting on a couple of top end restricted free agents, in Antti Niemi and Niklas Hjalmarsson, and only $3.7 million in cap space remaining.  The Sharks looked at that situation and didn't want to wait for either one to potentially get snapped up via trade to somewhere else, they got their pen in the ink and signed Hjalmarsson to an offer sheet to try and sway him away from Chicago.

The reported offer sheet is said to be a 4-year deal worth $13 million in total, a $3.25 million cap hit per season.  According to the table above, that cap hit would give the Blackhawks the Sharks' 1st round pick and 3rd round pick in 2011. 

Hjalmarsson's numbers were not exceptional in the regular season for the Blackhawks, only 17 points in 77 games with the team, but played solid minutes with the club and made good use of the time he was given as the 4th or 5th defenseman on the team.  In the playoffs, he was far more effective, 8 points in 22 games and he raised his compete level to those of good historical playoff performers, full of compete and sacrifice for the team.  It's almost fitting that the Sharks are going after him, since that was a lot of what they lacked against the Blackhawks in the Western Conference Finals.

If we were going to talk market value, moreso for the regular season, the Sharks are prepared to overpay for Hjalmarsson.  I think the greatest factors in market value is age, position and regular season scoring, with some added features like potential and x-factor can given taken into account, but the first three are the most tangible.  The Sharks do have the closest deal in this range to what Hjalmarsson has been offered in Marc-Eduoard Vlasic, who is also 23, plays defense and had 16 points in 64 games with the Sharks.  Vlasic has a cap hit of $3.1 million for the next three seasons.  The Sharks GM said in this article that they feel Hjalmarsson is a top-three defenseman on any team and I suppose if he got the minutes of a top three defenseman, he might have the same points as Kristopher Letang, who will make $3.5 million over the next four seasons and had 27 points in 73 games.  That doesn't sound out of the question at all.

I think this is a good deal, if the Sharks are right about Hjalmarsson.  They don't have plenty of room for error, since Letang only had 27 points, so that's only an increase of 11 points, but Hjalmarsson is supposed to bring some extra playoff gusto, so you could justify that if he brings it.