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The Deal With Long Term Deals

Marian Hossa – 12 years
Henrik Zetterberg – 12 years
Johan Franzen – 11 years
Vincent Lecavalier – 11 years

That’s a whole lotta risk. Why bother?

Well, let’s analyze these contracts a bit more, starting with Lecavalier, 29, and is making $10 million a year for the first 7 years of the deal (he will be 36 when his annual payout drops), but his cap hit is just $7.7 million, over $2 million less than his annual pay. That works because in the new CBA, the average payout of the contract per year is the cap hit, not the actual payout. So Tampa finds the loop hole in the system, and adds an extra three years on the contract ($4 million, $1.5 million, $1 million). That brings the average payout of the contract down to the $7.7 million mentioned above. The beauty of this is that for those three years, he will be 38, 39, and 40 years old. Do you see Vinny Lecavalier playing when he’s 40? I don’t.

So let’s summarize this a bit. Vincent Lecavalier makes $10 million a year, which suits him just fine. His cap hit is just $7.7 million, which suits his GM just fine, as it allows him more cap room to build around. Vinny can retire after these $10 million seasons, and his cap hit is erased from the books (signed before he was 35), which suits both just fine. You think there was a verbal agreement that Vinny will retire after his age 38 season, leaving just $2.5 million on the table, but erasing that cap hit? You can only speculate, but it sure would be the cap-savvy thing to do.

But $7.7 million is a big cap hit regardless. So let’s look at the genius behind the Marian Hossa contract, which was 12 years. Hossa, 30, makes $7.9 million annually for the first 7 years of the deal (when he turns 37), which definitely puts a smile on his face. He makes $4 million in his age 38 season, and then for the final four years makes just $3.5 million ($1 million, $1 million, $750k, $750k). Do you think Marian Hossa continues playing until he is 42? If you answered yes there, then go lay down, take a nap, and rethink that.

Quick summary, Hossa makes $7.9 million until he is 37, which makes him happy. His cap hit is a measly $5.2 million, which makes everyone around him smile, because it leaves enough room to resign all those important RFAs that the Blackhawks will have, and probably will be signing similar deals. And, like with Lecavalier, he can retire and have the cap hit wiped off the books because he signed the deal before he turned 35.

The moral of the story here: this is some very savvy, and borderline shady, cap maneuvering. You have to hand it to these GMs, they know how the cap works and how they can get the most out of it.

Is there risk? Of course there is, what happens if someone gets hurt long term? Or if their game goes to hell? But that’s the risk you take when signing anyone, this is just the same risk over a longer period of time.

So you can laugh all you want at these GMs who are offering these deals, but I ask you this. Would you rather have Player A for 12 years (until he turns 42, which he is more than likely to retire before the contract ends) at a $5 million cap hit, or Player B (who puts up identical numbers as Player A) for 6 years until he is 37 for $7 million on the cap?*

It’s a pretty simple answer, for now.**

*Not an actual comparison, purely hypothetical.
**For now, depending on new provisions when the CBA expires in 2012

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