Thursday, September 20, 2012
Here's why we should care about back-diving
By Pierre LeBrun
There has been so much focus on the Big One on the NHL labor front, the percentage of the pie the players and owners eventually agree to share, that you almost forget other thorny issues need to be addressed before we have labor peace again one day.
And perhaps the most combustible of them all won’t even pit the league versus the players as much as owners against owners.
We’re confident NHL commissioner Gary Bettman -- given his track record -- will be able to keep his owners in line (publicly) on this issue, but behind closed doors it has the potential to be a doozy.
It has to do with how the NHL hopes and plans to deal with "back-diving" contracts, the so-called cheat deals signed by the likes of Marian Hossa, Roberto Luongo and a legion of other players who did nothing technically wrong in using a loophole in the expired CBA to sign long, front-loaded contracts with extra, low-salaried years added at the back of them to bring down the cap hit. (The cap hit is calculated by dividing total salary -- bonuses included -- by the number of seasons in the term.)
My colleague Craig Custance at ESPN The Magazine wrote about this very subject back in August. The first back-diving deal is generally believed to be when Miikka Kiprusoff and agent Larry Kelly cleverly found a loophole in the system and signed a six-year, $35 million extension in October 2007, a deal that pays him $1.5 million for the 2013-14 season. Hey, who knows, maybe Kipper will play that season, but the widely held belief from the get-go was that Kiprusoff would retire before the last season, his contract would no longer count on the books for the Flames because he was under 35 when he signed it, and adding that extra season was only to bring the cap hit down to $5.83 million. He made $8.5 million in 2008-09, $7 million a year the next two seasons, $6 million last season and is due to make $5 million this season, if there’s a season. The average of the first five years of his deal is $6.7 million. That $5.83 million cap hit sure looks good.
Well, you get the drift. Soon, other teams and agents got into the act and the next thing you knew, back-diving deals were in vogue. The league was furious. It warned owners and GMs over and over again to stop doing them and, in fact, according to various sources over the past few years, made it clear in board of governors meetings that teams doing these types of deals could be penalized in some shape or form in the new CBA.
And of course the teams that didn’t do these type of deals, gambling that they would be better for it in the next CBA for not doing so, are keenly awaiting what’s next. No one has been more vocal about his dislike for back-diving deals than Toronto Maple Leafs GM Brian Burke. So much so that Burke testified against his longtime friend/mentor Lou Lamoriello over the contract handed by the New Jersey Devils to free agent Ilya Kovalchuk. The league ruled against that contract (which was back-diving) and made the Devils restructure it while also punishing them (docking them two draft picks -- one of which was a first-rounder -- and $3 million).
Burke has support from a lot of other teams on this issue and you can bet when the time comes for the league to tackle this issue in CBA talks, the Leafs' GM will be pushing hard for the league to do what he feels is the right thing.
Reached by ESPN.com Thursday, Burke declined to comment, citing the league’s rules about teams not commenting on CBA matters.
And because the league has been focused almost entirely on the Big One, the core economic issues, this issue of back-diving contracts sits on the sideline for now.
In the meantime, we are left to speculate on what, if anything, the league will do with back-diving contracts.
-- Could the new CBA recalculate back-diving contracts so that years left on a contract still count against the team’s salary cap even if said player retires?
-- Could all long-term contracts, back-diving or not, be recalculated so that the five highest-salaried years count as the cap hit? Suddenly Hossa’s deal in Chicago would go from a $5.275 million cap hit to a $7.9 million cap hit under that scenario.
-- Could all existing contracts, long-term or not, be recalculated so that the actual yearly salary for that season counts against the cap and not the average salary? Imagine Minnesota’s reaction if Ryan Suter and Zach Parise would suddenly go from counting $7.53 million (average salary of their new deals) against the cap to $12 million against the cap this season and next?
-- Could the teams that signed these back-diving deals still be penalized in cap space, retroactively, even if they since have traded those contracts? Think of the Flyers, for example, being on the hook for Jeff Carter’s cap hit after he retires, even though he’s no longer in Philly.
-- How about this one: If contracts are recalculated leaving teams with front-loaded or back-diving contracts way over the salary cap, allow those teams to stay over the cap, however tax them for each dollar they’re over the cap. Then, put that money into the revenue-sharing system. This could entice the NHLPA, which is espousing more meaningful revenue sharing among the 30 teams, to perhaps come on board with the recalculation of contracts and the cap.
And you can go on and on and on speculating just how the league might go after existing back-diving contracts. If the league does, teams such as Toronto and San Jose and Carolina (there are plenty of others) who didn’t do back-diving deals will feel vindicated and gain an advantage by not getting hammered by the new contract calculations.
If the league doesn’t do anything drastic on this front, then teams such as Chicago (Hossa), Vancouver (Luongo), Minnesota (Suter, Parise) and others will certainly breathe a sigh of relief.
Keep an eye on this one. It's going to be one of the most fascinating developments in the next CBA.