Here we go again. Edmonton general manager Kevin Lowe today signed Anaheim restricted free agent forward Dustin Penner to an offer sheet worth $21.5 million over five seasons. Ducks GM Brian Burke now has a week in which to either match the offer, or accept compensation from the Oilers in the form of three draft choices: a first, a second and a third-round pick. With the rumored impending retirements of defenseman Scott Niedermayer and UFA winger Teemu Selanne, Burke probably has enough cap room to match the offer if he chooses to do so.
Penner is one of several players the Ducks have signed in recent years as undrafted free agents out of college. The 6-foot-4, 245-pound Penner began his collegiate career at Minot State in 2001-02, then sat out the following season so he could transfer to U. of Maine. (For the record, Minot State was not compensated when U. of Maine poached Penner.) He played one season at Maine in 2003-04, and the Ducks signed him on May 12, 2004.
Anaheim signed Andy McDonald out of Colgate in 2000 and inked Chris Kunitz out of Ferris St. in 2003. The Ducks have signed several other college free agents who are still in their system, but Penner, McDonald and Kunitz are the most noteworthy; all were integral players on the Ducks’ 2007 Stanley Cup championship team.
A few weeks after signing Buffalo’s Thomas Vanek to a seven-year, $50 million offer sheet (the Sabres quickly matched that one), Lowe set his sights on the 24-year-old Penner, a “veteran” of 101 regular season NHL games.
We’re almost exactly two years removed from the contentious lockout that cost the league, the players and us fans an entire year’s worth of NHL hockey and did damage to the game that is still being repaired. (It’s probably more accurate to say that repairs are being “attempted.”) We’re only two years out from having put in place an economic system that was supposedly fair to all and one that would keep salaries in check, players happy and ownership profitable.
But here we are now, living in a world where a 19-year-old kid and two-year NHL vet (Sidney Crosby) gets a contract that will pay him significantly more than established NHL stars such as Joe Thornton and Jarome Iginla and others.
We’re living in a world where a guy (Penner) with a shade more than a season’s worth of NHL experience (and 45 points in that one season) is now being given $4.3 million a year.
We’re living in a world now where a team thinks it’s a good idea to tie up about 20% of its salary cap allotment in Sheldon Souray and Penner. Which might mean that team is headed to lotto land for the next few years, which might make it worth Burke’s while to take the picks rather than match the offer sheet. It’ll be interesting to see what happens here in the next week or so.
If Burke does match, Lowe may then set his sights on someone like New Jersey’s Zach Parise or another high profile RFA. He’s done it once, he’s done it twice, what’s to stop him from striking again? Only Lou Lamoriello getting Parise’s signature on a deal as a pre-emptive measure.
Here’s another item that puts a bit of a different wrinkle on things. In the two years since the lockout’s end, the salary cap has risen from $39 million to $50.3 mil, a climb of 29% in a span of just three seasons. But that growth simply has to slow in the years ahead. The trouble is that salaries have shown no sign of slowing down.
Scott Gomez made $2,204,000 in 2005-06. He had a great year, putting up 84 points. His next one-year deal — an arbitration award — paid him $5 million. He backslid from 33 goals to 13 and dropped all the way to 60 points in 2006-07, but his salary skyrocketed in the other direction. Recently, Gomez signed a contract with the Rangers that will pay him $51.5 million for the next seven seasons. He’ll actually be paid $10 million in 2007-08, but the Rangers’ cap hit over the life of the deal is $7.357 per year.
In the same span that the salary cap rose 29%, Gomez’s salary went up more than 300%. Sure other salaries around the league have gone down since then, but the bottom line is this: if lucrative multi-year contracts are signed under one salary cap figure and that figure subsequently declines, there will be trouble.
If revenues drop and cause the cap to do likewise, guys like Gomez and Crosby could find themselves taking up more than 20% of their respective teams’ salary cap total. And their teams’ GMs might be put in the unenviable position of moving players in trades just to fit big-ticket guys under a shrinking cap.
The cap is based on revenue, right? So it would appear that revenue has risen at a strong rate, which is the whole idea. But we all also know that the NHL is a gate-driven league. According to ESPN’s attendance figures (which are compiled from figures given by the clubs themselves at each game), two-thirds of the league is already playing to 90% or better of capacity, and more than half the league is above 95%.
Aside from growing the attendance totals of the teams on the bottom third of the list (six of the bottom 10 were non-playoff teams and three others didn’t get past the first round), the only way to raise revenue would be to sell the “new look” jerseys for $400 or so, or to raise ticket prices. It’s hard for me to see how ticket prices can go up much more in most markets, so I believe we’re about to enter a period of slow growth (or even decline) for the salary cap. Also, even if there is growth in the attendance of the bottom 10 teams on the list, you’ll likely also see some other clubs slide in the standings, and then at the gate as well.
Revenue can fluctuate, so can the salary cap. Attendance can only go up to arena capacity, and is far more likely to decline once it reaches a certain level. The only way to make more revenue is to raise prices, and that should only happen once capacity is reached. Contracts are being signed as if the cap will continue to climb at its current rate, but can anyone show me how this would be possible?
There just doesn’t seem to be much “vision” being exercised in some of the front offices around the league. If the salary cap holds or drops even a few million, the Rangers and a handful of other teams are going to have some problems.
Much was made of Crosby’s altrusitic nature in taking less money than he could have made when he recently signed his five-year contract extension. He could have gotten a maximum of $10.06 million under the current 2007-08 cap, and yet he “settled” for a figure of $8.7 million per season. That savings ($1.36 million a year) is not enough for the Pens to pay the salary of defenseman Mark Eaton or forward Ryan Malone for this year or next season. Eaton and Malone are nice players, but are hardly key cogs in Pittsburgh. Evgeni Malkin is, and so is Jordan Staal. And those two will have their respective hands out soon enough. What then?
It’s crazy, and none of it is doing the Caps any favors. Washington is already looking to get Alex Ovechkin’s signature on a contract extension. And Caps fans are already getting antsy and suggesting Washington needs to lock up Ovechkin as soon as possible, even if it means giving him longer term and more money than Crosby got. The Caps need to lock up Ovechkin, and they want to lock up Ovechkin.
But what if every indication pointed to the salary cap going down next season? Would it still be prudent to go ahead and sign him now for $60 million over six years (too much, in my opinion), or better to wait and be able to get him for $57.6 million for six years (still too much) if the cap were to drop to $48 million in 2008-09? These are the hard questions that must be asked.
We can also hope that Ovie grants the Caps a bit more of a “discount” than Crosby did the Pens. Chris Clark certainly did so when he signed his three-year extension last week.
Right wingers Shane Doan ($4.550 million a season), Bill Guerin ($4.5 million a year), Scott Hartnell ($4.25 million), Todd Bertuzzi ($4 million) all recently signed multi-year deals that Clark and his agent could have used as the basis for their own number.
Doan is a better player than Clark, has had a better career than Clark and is roughly the same age, but has only seven more goals than the Caps’ captain over the past two seasons.
Guerin is five years older than Clark and has scored one fewer goal than Clark since the lockout ended. He’ll make $9 million over the next two seasons, less than Clark will be paid for the next three.
Hartnell is several years younger and has a lot of upside. But is he really that much better a player than Clark that he should earn a salary that’s more than 50% higher than the Caps’ captain? The Flyers think so.
Bertuzzi is a year older than Clark. A back ailment limited him to 15 games last season. But if one GM thinks he’s worth $4 million a year for the next two seasons, that’s all it takes. Burke is that one GM.
Blues right wing Lee Stempniak has played in all of 139 NHL games, totaling 41 goals. But he will earn just a shade below what Clark will be paid over the next three seasons, Stempniak’s contract is identical to the one just signed by Carolina right wing Scott Walker, a 34-year-old veteran of some 688 NHL games.
When it comes to NHL salaries, it is hard to find any rhyme or reason. General managers and owners would likely be happy negotiating a new deal for every player, every year. That’s a radical system proposed many years ago by former Oakland Athletics owner Charles O. Finley. Players and agents wouldn’t want any part of such a system, because it would much more accurately reflect a player’s actual “worth” at any given time.
One or two renegade GMs can skew the league’s salary structure and impact contract negotiations around the league for years to come. It’s what led to the lockout of 1994-95 and the lockout of 2004-05. I hate to even bring it up, but some of the foolishness we’re seeing now could be responsible for the next NHL lockout.
It’s great for players to be able to make as much money as they can, while they can. The career shelf life of a pro athlete is a very finite thing. The problem is that once profits began turning into losses, owners are always asking the players to empty their pockets. The most recent lockout was all about owners telling the players: “We can’t stop ourselves from spending, we need your help.” That help of course, came in the form of a salary cap and a 24% rollback of existing contracts at the time. What’s next? We can only wonder.