Dollars and Sense: NHL Salary Cap Shell Game?

Flashback to Summer 2007: Sidney Crosby, the face of the NHL, signs a five-year extension to stay with the Pittsburgh Penguins for $43.5 million or $8.7 million a year. Many around the league applaud Crosby for not maxing out his potential leverage and allowing the Penguins to retain his superstar services for well below the potential $10.8 million maximum salary. As a Penguins fan, I recall local media outlets being thrilled with the "hometown discount" and "mature, big-picture approach" of Crosby and they felt the Penguins now had plenty of flexibility to develop a perennial contender.

Fast forward to a week ago: The 2008 Stanley Cup Champion Detroit Red Wings locked up Henrik Zetterberg, the face of their franchise, with a 12-year $73 million deal, averaging just over $6 million a year. He is one of the league's elite, and though I will not put Zetterberg on the same level as Crosby, something seemed a little fishy to me about this deal.

Zetterberg's current contract was set to expire this summer and at the age of 29, coming off a 92-point season (with a Stanley Cup ring to show for good measure), one would expect he could have easily commanded top dollar on the open market. Did Zetterberg truly make the ultimate hometown sacrifice in an effort to help the organization resign other pending free agents? And from the Red Wings perspective, why sign a 29-year old with a wonky back to a deal that keeps him on the books until the age of 41? Is this a sudden hiccup by a General Manager (Ken Holland) who has built the most successful NHL team of the last decade?

This isn't the first shockingly-long deal in the NHL since the salary cap era began in 2005. In fact, this is a trend that has been picking up steam lately since Rick Dipietro signed a ridiculous 15-year contract to stay with the New York Islanders through 2022 (By the way, in his third season of the deal, the goalie was recently ruled out for the remainder of the season due to persistent knee problems). The Islanders are still reeling as an organization as a result of their buyout following a 10-year deal with the vastly overrated Alexei Yashin. Another mega-flop like Dipietro could doom the franchise.

A year ago, on the heels of signing Danny Briere to a monster free-agent contract, the Philadelphia Flyers locked up the generally unproven Mike Richards to a 12-year, $69 million dollar extension. This summer, Vincent Lecavalier chose to sign an 11-year, $85 million extension to stay with the Tampa Bay Lightning. I've discussed the three-ring circus of the Tampa Bay Lightning on this blog before, but there's an interesting parallel between these extensions and Zetterberg's which may shed some light on the new preference for long-term deals.

According to TSN.ca, Lecavalier's extension (which will take him to the age of 40) will pay him $10 million per season in the first six years of the deal, but drop to an average of $1.5 million over the final four seasons. The average salary cap hit over the course of the deal is $7.72 million. By comparison, Zetterberg will be paid $7.4 million next season but only $1 million per season in each of the final two years of the deal. As I mentioned above, this amounts to a cap hit of only $6.08 million per year for the Red Wings. You won't find this written in many places, but what you are witnessing is a trend that I feel is about to pick up steam and potentially become a huge issue for the league under the current collective bargaining agreement. Call it "creative accounting" or call it blatant manipulation, but some of the league's most savvy general managers have found an interesting way to squeeze more wiggle room out of the current salary cap limitations.

Three potential scenarios could play out for Zetterberg and the Red Wings over the next 12 seasons. Zetterberg could play out the full duration of the deal and with the assumption the salary cap will rise over the next decade (not a sure thing), his $6 million cap hit will be very cheap for a player of his caliber. Or...when Henrik reaches the ripe old age of 39 and the Red Wings decide that his best days are behind him, they can buy out his contract for 2/3 of the remaining value of $2 million. And third, Zetterberg could decide to retire at any point and both sides walk away from the contract with no questions asked.

The biggest potential risk of this contract for Detroit is the Dipietro situation: a series of injuries which don't force retirement but severely impact Zetterberg's ability to dress for more than a handful of games a season. This is a risk the Red Wings are likely more than willing to take in exchange for a few extra million a season to work with. Keep in mind, the Penguins are taking a $17.4 million hit for Crosby and Evgeni Malkin ($8.7M per year) while Detroit only has to deal with $12.7 million for Zetterberg and Pavel Datsyuk ($6.7M per year).

While this sets up the Red Wings nicely heading into contract negotiations with other players (Marian Hossa, Johan Franzen) in the offseason, this trend is only beginning and has the potential to cause a major problem for the league down the road, which commisioner Gary Bettman cannot be thrilled about.

As teams begin to pick up on this strategy, many GM's will attempt to lock up middle-aged talent to extensive contracts in an attempt to free up additional cap space. While players like Crosby and Zetterberg draw countless fans and deserve the big bucks, committing such long-term deals to unproven young talent is potentially dangerous. For example, if the Islanders choose to sign pending-free-agent Mike Comrie to a lucrative extension prior to next season, all of a sudden a precedent is now set which many players of Comrie's caliber will begin to demand in future salary negotiations. What if Comrie's skills drop off dramatically after a few years which we've seen happen so often? Can a cash-strapped team survive with overpaid talent rotting away their senior years in the minor leagues?

In a physical game with more than it's fair share of devastating injuries, what player wouldn't want the job security that comes with a contract that spans multiple decades? On top of that, many GM's across the league are under so much pressure to put a competitive team on the ice this year, they are more than willing to forgo any long-term effects in 2020 in exchange for short-term salary cap relief, success, and a Stanley Cup. This is a game the big-market teams are willing to play, and the small-market teams will be forced to play in order to compete.

It's only a matter of time until an overzealous GM signs a rookie (John Tavares?) to a Magic-Johnson-esque 25 year extension and makes a pharse of the salary cap. What do you think? Should the NHL (and other salary cap leagues) allow for a little creativity when it comes to contracts, or should restrictions be put in place before it gets out of hand? Feel free to weigh in with your opinion in the comments section.

July 30th Follow-Up: Hossa Contract Under Investigation by NHL

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