Cap change could hamstring NHL's big spenders

The fallout from Ilya Kovalchuk's contract could reach into the current CBA talks. Jerry Lai/US Presswire

When Ilya Kovalchuk's contract was finally approved in the summer of 2010, the decision also meant the NHL dropped investigations into the long-term contracts for Roberto Luongo, Marian Hossa, Marc Savard and Chris Pronger. It also provided teams and players a blueprint for how long-term contracts could be structured and earn the approval of the league.

The Devils were punished for their attempt to circumvent the salary cap by losing a first-round pick, but other teams that negotiated similar deals went unpunished. The blueprint led to similarly structured long-term deals for players like Brad Richards, Zach Parise and Ryan Suter.

But those teams could still end up paying a price for taking on long-term deals, as well as paying out the huge signing bonuses that have become increasingly common.

Highlighted by Buffalo GM Darcy Regier's spending spree last summer -- in which Christian Ehrhoff received $13 million in signing bonuses the first two years of his contract and forward Ville Leino got $9 million in signing bonuses for two years -- these long-term deals are now often paired with huge lump sums early in the contract. The big motivation for players is that a bonus provides insurance against a potential lockout and salary rollback. Parise and Suter received huge signing bonuses to play in Minnesota and, according to the Pioneer Press, the Wild's limited partners agreed to a total capital call of $10 million to go with Craig Leipold's $10 million contribution just to cover this year's signing bonuses for the two newest Minnesota stars.

Right now, all those contracts are structured in a way that makes the average salary manageable under the current salary-cap system. But under the new CBA, it's possible those deals won't be cap friendly at all and could cause serious difficulty for the Wild and several other NHL teams that owe outsized sums to recent signees.

It's still fairly early in CBA negotiations, but some teams are pushing for a restructuring of the way salary-cap totals are calculated. Part of the motivation is to limit future Kovalchuk-like contracts. However, a desire to punish the teams that pushed the limits with past massive long-term contracts must also be fueling the drive.

One suggested solution is that annual salary-cap hits become the actual salary in that season rather than the average salary over the life of the contract. Another solution would be to average the first five seasons or five highest-salaried seasons of these long-term deals to come up with their salary-cap number.

"There are teams nervous this is going to happen," said one NHL source.

In it's purest form, calculating salary-cap totals using actual salaries would create a cap crisis for so many teams that it doesn't seem realistic. For starters, consider that Shea Weber's front-loaded new contract with the Predators -- by itself -- would account for nearly 20 percent of the current projected cap of $70.2 million. And that projected cap ceiling will almost certainly decline under the new CBA.

Said one agent, "The fallout from it would be so draconian, it wouldn't make sense."

But if it happened, the new CBA would likely come with rules to help ease the transition in the short term. It's been suggested that amnesty would be a solution, similar to what the NBA and its players agreed to. In that case, a team like the Flyers would have an opportunity to buy out a player like Ilya Bryzgalov without a salary-cap penalty.

The more likely solution would be a transition rule in which salaries are only counted at 75 percent (or a similar figure) of their actual salary if there's a significant difference between the actual salary and the average salary.

If there's another salary rollback like the one after the last lockout, that would also help protect teams from huge cap issues that would otherwise present themselves.

Let's say on the extreme end, somehow the players and owners agree to the NHL's initial offer that called for a revenue split that gave the players 47 percent of the cut. Jonathan Willis at the Edmonton Journal did the math and figured that would mean a salary cap next season of $54 million and a floor of $42 million. Now let's say the salary-cap hit for those long-term deals isn't the average annual salary but instead the actual salary. It would make for drastic changes for the 2012-13 season:

Buffalo Sabres

(numbers per CapGeek.com)

Actual salary for 2012-13: $72.76 million

Amount over proposed NHL cap: $18.76 million

Salary saved by 20 percent rollback: $14.6 million

Notes: Tyler Myers is slated to earn $12 million next season, so his salary alone would count for 22 percent of the salary-cap hit. Myers' contract drops in half, to $6 million the following season, so he'd be a transition-rule candidate if a form of that is enacted. Ehrhoff's salary is also cut in half, from $8 million next season to $4 million the following season, so he would be eligible too.

Minnesota Wild

Actual salary for 2012-13: $70.37 million

Amount over proposed NHL cap: $16.37 million

Salary saved by 20 percent rollback: $14 million

Notes: The Wild structured Mikko Koivu's contract in a way that is back-end loaded, which helps in this situation to balance against huge early salaries and bonuses for Suter and Parise. Koivu's actual salary next season is $5.4 million and it climbs to $9.18 million in 2017-18. By then, Suter and Parise's actual salary declines to $9 million from $12 million.

New York Rangers

Actual salary for 2012-13: $67.1 million

Amount over proposed NHL cap: $13.1 million

Salary saved by 20 percent rollback: $13.4 million

Notes: The Rangers' total includes salary for Wade Redden and Chris Drury's buyout. Many believe the option to bury a player in the AHL won't exist in the new CBA. The Rangers back-loaded Marc Staal's contract, which helps balance the heavily front-loaded deal given to Brad Richards. Richards is slated to earn $12 million next year, which would be the Rangers' highest cap hit under this system and a candidate for a transition-rule decrease. The Rangers still need to sign Michael Del Zotto, a restricted free agent.

None of the above factors in the idea of a luxury tax, a provision that would potentially help big-market teams manage any recalculated cap hits while providing much-needed revenue sharing for smaller-market teams. And the players' proposal to the league earlier this week did not include a restructuring of salary-cap calculations. It's likely this is an initiative that would have to come from ownership.

At this point in CBA talks, it's too early to judge how realistic the possibility of something like this would be.

"Impossible to say," said an NHL source.

If enacted, it would mean that teams that have managed their rosters without Kovalchuk-like long-term deals would be in position to take advantage by acquiring players from those looking to slash payroll or by signing players bought out in an attempt to get under the cap.

The question becomes: Who would push for such a change? If enacted, this measure would negatively affect some of the league's most influential owners. Would those teams go along with that? And is the other side of the negotiating table receptive to it?

"I'm not sure that it's as big a problem as people are making it out to be," said one agent. "The signing bonuses have really been driven by the potential lockout. It may very well be that [players] would prefer to spread that money out over time tax-wise. And talk to any team president in the NHL and they will tell you one of the lifelines in their business is their credit line. They just throw that [stuff] into a line of credit."

It's one of the reasons that it may be premature to judge rosters heading into next season. Some teams that have been quiet this summer are perfectly poised to take advantage of a situation like this. Others might have to slash payroll to get under the cap next season, making the post-CBA fallout potentially more interesting than the negotiations themselves.