Cash Explosion: The Real Value of this Summer’s Biggest NHL Signings

By
Updated: July 29, 2012

There have been some controversial dollars handed out this off-season to players. Both fans and the media have been critical of the contracts that some GM’s have handed to players who may or may not have deserved them. This criticism was based on things like offensive production, age, and history of the players. I am guilty of this as well - giving grief to some teams for overpaying to get players that, from the outside, do not seem to be worth it. It is especially true when compared to some other bargains out there.

Some of the contracts that received collective moans from the fans are Jason Garrison (signed a 6-year contract with $4.6 million AAC), Jiri Hudler (signed a 4-year contract with $4 million AAC), Dennis Wideman (signed 5-year contract with $5.2 million AAC), Brandon Prust (signed a 4-year deal with $2.5 million AAC) and Ray Whitney (signed a 2-year deal at $4.5 million AAC). Now all of these contracts seem huge, and the criticisms may very well be justified.

With Garrison being called a one-year wonder, Whitney getting flack for being too old, Hudler being a 40-50 point player at best, Prust being a grinder/fighter, and Dennis Wideman’s questionable defense, the fans and some puck-media have questioned these contracts, rightfully so. We always hear about NHL teams talk about profitability, yet they are giving out these contracts to questionable/high-risk players. I will not even touch the mega $100-million plus deals that were handed out to Parise, Suter, and Weber this off-season.

My question is – should we be complaining, or is that what these players are truly worth?

 

 

 

 

 

 

 

From this table you can clearly see why we have such high salaries given out to such mediocre players. The cap has almost doubled since the 05-06 season.

So now let’s analyze some of these contracts to gain perspective. Recently Hudler signed a contract with a CAP hit of about $4 million. Now you know who makes less than that? – Johan Franzen. Comparisons can be made, but Franzen has a proven playoff record and to me is clearly a better player, even if not by much, than Hudler. What I want to do is to compare their CAP hits. When Franzen was signed to his massive 11-year contract in 09-10 his yearly CAP hit represented around 6.5 % of the total teams value. Today, Hudlers contract represents about 6 % of the $70.2 CAP space. A fair difference, no?

Jason Garrison’s new contract, $4.6 AAC, takes up about 6.4% of the total team salary. Meanwhile Dan Hamuis, who is more proven and maybe a more talented defenseman, signed a similar contract, but in 10-11 season. His contract that year would have grabbed around 7 % of the total team salary. Again, to me, a fair difference.

What is really interesting is a contract like Danny Briere. His 07-08 contract carried AAC of $6.5 million. That would soak up around 13% of the team salary. The latest signing of Jakub Voracek for an AAC of $4.2 million results in only 6% of today’s $70 million salary CAP. Briere’s contract used to be worth twice as much as Voracek’s contract does today. This makes sense, since Briere is a top-tier player, a playoff specialist, while Voracek is yet to really establish himself. Yet today there is only a $2.5 million difference and Briere is not making $8 million a year like he should have due to the inflation.

Sometimes signing a rising star to a long-term deal is for the team’s benefit. The CAP only increases, and if it continues to do so at about $4-5 million a year, we can expect these HUGE deals to become HUGE value for teams. Look at Tavares on Long Island, for example. His contract is signed until 2017-18 at a CAP hit of 5.5 million. If the CAP rises to about 100 million, his contract would be a splash in the massive sea by then. It will be a mere 5% of his team salary. 5%! For Tavares!!

Some of the current AAC bargains include Mike Richards (Remember it was a big deal?) at $5.7 million a year, Duncan Keith at $5.5 million, Henrik Zetterberg at $6 million, Marian Hossa at $5.2 million, Niklas Backstrom at $6.7 million. Remember when a $6.7 a million contract was INSANE money?

Here are some interesting numbers for you to digest:

 

 

 

 

 

 

So now we know that given the reality of today’s NHL and its current alloted CAP space, these players are not overpaid at all. They are getting the market value for their talents. How much talent each player has can be argued all day long, the fact remains that if the salary CAP is to increase next year, these contracts will only become better bargains. The long-term deals, although an incredible gamble (aka Scott Gomez), are actually good for each team long-term. Their value to the team increases with each year the CAP limit goes up. In fact, it seems that players are missing out on money if they sign these long-term deals. The example above would have had Brier make 13 % of the current cap, which would equate to around $9 million cap hit.

To me it seems the salary CAP has been going up way too fast. It needs to go up by maybe $1 million or so each year to counter realistic inflation instead of the league revenue. We cannot have the CBA cut the player’s salary back by 24 % every 8 years to fight the ever-increasing CAP space. The new CBA has to not only put a restriction on the player’s contract length, maybe increase the revenue sharing too, but it has to also put a cap on the growth of the salary CAP.

Agree?

…and that is The Last Word.

Feel free to comment below and follow me on Twitter @maximus91.

3 Comments

  1. Ben Kerr

    July 29, 2012 at 10:43 am

    I agree with everything you say except for the last paragraph.

    The growth of the Salary Cap can NOT be limited and still maintain the players percentage of HRR.

    You have assumed the 24% rollback is again necessary. There is no proof that such a rollback is indeed necessary. Yes the owners are asking for it, but that doesn’t mean its needed.

    In order for the players share of HRR to stay the same each year, the cap must grow at the same rate as revenue.

  2. Jer

    July 29, 2012 at 10:03 pm

    Briere is not a playoff specialist. There’s no such thing. There will be some statistical anomalies brought on by chance, but long term, the best players during the season and the best players in the playoffs are the same people.

    Back to Briere, he was a late bloomer. His first six or so years he wasn’t a consistent scorer. Over those years, he played in hundreds of regular season games, but only 6 playoff games. Over the last 8 years, he’s been a great player, and has played in 102 playoff games. Hence his career regular season stats are much lower because of his early career, but not so much his career playoff stats.

  3. Pingback: NHL Happy Hour: Cheaper side of things. | Last Word On Sports

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