Every (professional) sport operates under the guidelines of some type of collectively-bargained arrangement. Players and ownership collaborate to usually find a middle ground, where both sides make concessions in order to reap the sizable rewards that come with playing sports in the United States (and Canada).
Each sport has its quirks. MLB sets no maximum on player or team salaries, provided that those teams which spend above a certain threshold pay a sizable penalty. The NFL has the franchise tag, which forces certain players to be paid an exorbitant one-year wage under the mandate that they play for their current team. The NBA has both team and player maximum salaries (in addition to player term limits), which can be bent for certain players, often under the instruction they return to their current team.
The NHL combines certain aspects of all three under its most recent collective bargaining agreement (CBA), signed in the wintry abyss that was January 2012, ending its third lockout in less than two decades at an embarrassing 119 days.
The new CBA instituted term limits for players – no contract could last longer than seven years, except for players returning to their respective teams, they would be allowed eight-year deals. The “hard” salary cap remained – no team can be a penny over the $69 million limit once the season begins (excluding LTIR or other oddities allowed to circumvent the upper limit). The actual cap number itself is subject to intricate calculations with components only the league has access to, so while many believe that each team will be able to spend upwards of $75 million on player salaries by 2017, there’s no definitive measurement to determine this.
Between NBC shelling out $2 billion for ten years of the NHL rights in the United States and Rogers Communications opening its checkbook to the tune of $5.232 billion over 12 years, the league will be flush with cash. Barring unforeseen and catastrophic incidents, the salary cap will increase substantially over the course of the CBA.
What this means is that player salaries will increase as well.
Under the prior CBA, no player earned more than $12 million per year (Brad Richards), but with no term limits, the highest dent to a team’s salary maximum was Alex Ovechkin’s $9.538 million. Some players signed up to 15-year contracts, with many of those deals designed to pay a player more up front , but still keep the perceived economic value of the player lower so the team could sign more (or better) players. How were they able to do this? They tacked on near-league minimum salaries at the end of the contract, even though both the team and the player knew the player would retire before these dummy years kicked in. The lockout happened in part due to these deals, which have since been removed and stiff penalties await the teams that signed these players.
With the new CBA and television rights deals in place, impending star free agents have it substantially better than their predecessors. Competing teams likely know the parameters of the contract demands and while a player’s current team can negotiate with that player a year before free agency, the possibility of top-dollar salary keeps free agency a star-powered affair.
The two best players eligible to be free agents after the 2014-15 season were the Chicago Blackhawks’ Patrick Kane and Jonathan Toews, star players currently 25 and 26 years old, respectively. They’ve won a combined two Stanley Cups and two Olympic gold medals and should only improve as they reach their prime. The NHL does not have a player maximum, so market forces — and incessant owners – often dictate what players earn. Kane and Toews will each count as $6.3 million against the salary cap this upcoming season in the final year of their five-year $31.5 million deals that began in 2010. The Blackhawks, a big market team that’s finally acting like one, aggressively hinted deals for both players would be done before the end of July. There was only one question that remained: how much would they make?
According to the Chicago Blackhawks, the team has signed both Patrick Kane and Jonathan Toews to identical 8-year/$84 million contracts, with an average annual salary (AAV) of $10.5 million (this is the number that will count against the cap for each). These are the largest contracts signed under the new CBA and carry the distinction of the highest AAV in the NHL. Others will make more – Shea Weber and Sidney Crosby will each earn more than $100 million over the life of their contracts – but signing Kane and Toews under the terms of the prior CBA was impossible for general manager Stan Bowman.
The figures look daunting now, but Kane and Toews may not be the top dogs for very long. Steven Stamkos will be just 25 when he’s eligible to sign a long-term extension with the Tampa Bay Lightning next July. Unless Stamkos takes a discount, it’s not inconceivable he’ll ink a larger deal than either Kane or Toews.
For the Blackhawks, signing the star duo was a foregone conclusion. The salary comes in slightly above what most Blackhawk fans would like, but it represents fair market value in a system that virtually mandates it. It’s entirely conceivable they would have fetched larger offers from other teams, with Philadelphia probably trading its entire roster for a chance to see Kane in orange. With discussion focused on LeBron James not wanting to take a discount to remain with the Miami Heat, it should be known that no player should have to sacrifice their limited earning potential because their front office mismanaged the league’s salary structure. Anyone crying foul that Kane and Toews are overpaid fails to understand how a professional sports league functions. The owners already make 50% of all hockey-related revenue, which doesn’t include their stadium agreements or outside investments. While live sports programming may exist in a type of bubble that could eventually pop, the NHL is locked in through at least 2021. The league has its money; the players should have theirs as well.
For the Blackhawks going forward, these contracts represent a shifting dynamic. Conservative estimates put the salary cap at around $73 million for the 2015-16 season, so having 29% of the team’s total salary tied up in two players looks problematic, but the Blackhawks have built a strong core and have supplemented that with excellent draft picks. Duncan Keith and Marian Hossa are significantly underpaid when compared to the value they provide and as long as neither retires anytime soon, the penalties for their contracts won’t derail the team’s hopes at winning a third Stanley Cup within the decade. If it truly becomes dire, Kane and Toews received much of their money up front via signing bonuses, making them easier to trade (if they agree to be traded, of course).
Courtesy of the indispensable capgeek.com, the Blackhawks have nearly $66 million tied up in just 15 players for the 2015-16 season (and $52 million for 9 guys the following year). The team will likely have to trade one or two significant pieces, whether that’s Patrick Sharp (three years remaining on his deal) or Brent Seabrook (two years left). Depending on the agreement Brandon Saad signs – will be a restricted free agent next offseason – both may be expendable.
A rising salary cap tends to shine brightest on deals signed before it jumped. Bryan Bickell’s four-year/$16 million looks like a reach, but it may be downright larceny if he rebounds and similar players are netting $6 million paychecks. Everything’s relative, and relative to the current environment, Kane and Toews certainly got what they deserved. Now, it’s up to them to bring Lord Stanley back to Chicago in 2015.