June 18, 2011; Boston, MA, USA; Boston Bruins owner Jeremy Jacobs, left, and team president Cam Neely, right, during the victory parade and celebration in downtown Boston after winning the 2011 Stanley Cup. Mandatory Credit: Greg M. Cooper-US PRESSWIRE

Did NHL Owners Sign Contracts In Good Faith?


There is a popular belief among the NHLPA and their backers that NHL owners who signed contracts with players this past off-season did so knowing that they would not be paying the full value of the deals.  Craig Leipold’s name is often brought up when this is mentioned.  Leipold made the biggest splash in NHL free agency signing Zach Parise and Ryan Suter to identical 13 year, $98 million deals.  But when the CBA expired, Leopold was right there beside Gary Bettman asking the players for major concessions.

The first deal the owners proposed to the players included a reduction of hockey related revenue (HRR) from 57% to 43%.  This equates to a 24% reduction in player salaries from the previous season.  The league has since come off that initial stance, but it is clear that the players will be receiving a reduced share of HRR.

Although Leipold is the poster child for these deals, he certainly is not alone.  The NHL CBA expired on September 15, 2012 at 11:59pm and leading up to the expiry, there were a number of deals that were signed.  Below is a list of deals courtesy of Capgeek:

Name

Team

Date

Yrs

Cap Hit

Kane, Evander WIN

15-Sep-12

6

$5,250,000

Smith, Craig NAS

15-Sep-12

2

$2,000,000

Klein, Kevin NAS

15-Sep-12

5

$2,900,000

Fowler, Cam ANA

15-Sep-12

5

$4,000,000

Ennis, Tyler BUF

15-Sep-12

2

$2,812,500

Lucic, Milan BOS

15-Sep-12

3

$6,000,000

Bourque, Gabriel NAS

14-Sep-12

2

$775,000

Doan, Shane PHO

14-Sep-12

4

$5,300,000

Burrows, A. VAN

14-Sep-12

4

$4,500,000

Carlson, John WAS

14-Sep-12

6

$3,966,667

Lehtonen, Kari DAL

14-Sep-12

5

$5,900,000

Colaiacovo, Carlo DET

14-Sep-12

2

$2,500,000

Abdelkader, J. DET

14-Sep-12

4

$1,800,000

Brouwer, Troy WAS

12-Sep-12

3

$3,666,667

Seguin, Tyler BOS

11-Sep-12

6

$5,750,000

Marchand, Brad BOS

7-Sep-12

4

$4,500,000

Dwyer, Patrick CAR

5-Sep-12

2

$900,000

Smith, Zack OTT

5-Sep-12

4

$1,887,500

Eberle, Jordan EDM

30-Aug-12

6

$6,000,000

Turris, Kyle OTT

29-Aug-12

5

$3,500,000

Hall, Taylor EDM

22-Aug-12

7

$6,000,000

 

In the NHL’s latest offer to the players they included a five year limit on contracts.  As you can see in the table above, there are a number of significant players who signed deals longer than five years in length.

Jeremy Jacobs of the Boston Bruins has long been thought of as one of the most hard lined NHL owners and he continues to be through this negotiation.  But Jacobs signed three of his core young players only a week before the CBA expired and two of those contracts were for six years in length.  Someone as connected to the CBA negotiations as Jacobs certainly knew that the league proposal would include a cap on contract length.  So why would he sign two of his players to the type of deal that the league is trying to eliminate right before the expiry of the CBA?

In the owners defense, all players contracts are tied to league revenues and are subject to the terms of the CBA.  So if the new CBA included a reduction in the players share of HRR and a rollback in players salaries then the players would be subject to that.

Although the owners are taking the brunt of the blame for signing these deals, one has to wonder why the players and their agents would agree to them right before the CBA expired.  They had to expect that a salary rollback could be a real possibility given the fact that they went through this only seven years earlier.

With the latest round of negotiations between the NHL and the NHLPA appearing to make some progress toward a deal, I can’t help but wonder if the players and owners who signed these contracts knew a little more about what the new CBA would look like than anyone has let on.  The latest proposal from the NHL was centered around a 50-50 split of HRR with a “make whole” provision.  The make whole provision is a bit of a mystery, but the premise is that the NHL would honor the value of existing contracts in some way.

There is no way for sure to know if the owners who signed these deals had any ill intentions, but surely they did not foresee any downside with signing their players right before the old CBA expired.  At worst the deals would hold up as consummated.  At best they would be some roll back on players salaries, which would reduce the value of the contracts.

 

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Tags: Craig Leipold Jeremy Jacobs NHL Lockout