Tampa’s Trick: Richards Takes A 20% Pay Cut
We’ve had a great discussion below about the wisdom of signing 26-year-old Brad Richards to a six-year deal that averages $7.8 million.
Never one to mince words, Andy dubbed the signing “retarded,” and Mudcrutch agreed it was “insane.” Boltsmag thinks that Richards is a franchise player, but that the deal handcuffs the team financially, and perhaps implies the departure of St. Louis. A2Y calls the signing a “sickeningly familiar” strategy that’s led to a “top-heavy team.”
As the commentary makes clear, Richards is generally regarded as a top-calibre player, but people question the wisdom of signing any player for maximum-level money – much less signing three players for close to the individual cap.
That might be fair in the very short term – this year or next. But the CBA’s built-in escalator clauses are about to take elite-player salaries on a wild ride. Thanks to these long-term deals, the Bolts have insulated themselves against the coming wave of 70s-style inflation that’s going to wreak havoc on the elite free agent market.
|(millions)||NHL Revenue||Player Share (%)||Player Rev.||Team Max.||Player Max.||Player Min.||Entry Max.||FA Age|
These numbers are based on the NHLPA’s assertion that league revenues will increase annually by 7.3% over the next five years.
If that happens, then by the 2010-11 season:
- NHL revenue will increase 42%.
- The individual player maximum salary will increase 50% to $11.7 million.
- The entry-level player maximum salary will increase 9% to $925,000.
- The minimum salary will increase 17%, but remain a modest $525,000.
Even if Tampa matched an offer sheet, Mr. Richards would have become a free-agent in 2007-08 thanks to declining age-eligibility. By then, the individual maximum projects to be $9.3 million.
That makes Richards a 16%-off discount against his likely re-signing price. Not a bad deal – although nothing compared to January shopping in Montreal.
It gets much better in the later years. By 2010, Richards will cost just 66% of the $11.7 million individual cap –- the equivalent of signing him for $5 million in today’s market. Averaged over the next five years, it works out to paying 20% less than the individual cap.
Feaster clearly believes in the long-term math. And as a GM, he’s surely in a position to know which way league revenues are going. If the league’s growing faster than 7% -- and there’s every reason to think it can –- then the math gets even more favourable for the team.
While Feaster may struggle to fill the rest of his lineup within next year’s budget, that problem also solves itself fairly quickly.
In 2005-06, the Tampa Trinity cost the team about 41% of the salary cap. With Richards’ new contract, the figure will rise to 48% next year and be back to 41% by the 2008-09 season.
After than, it just gets silly: in the last two years of the CBA, the Bolts will use just 37% and 35% of the cap to pay three players who are collectively worth close to 60%.
Not only have they locked-in three proven performers, Tampa has ensured that from 2008-11 they’ll have ample resources to sign free agents and make a run at the Cup.
That’s three franchise players for the price of 1 ½, and one helluva bargain no matter how you look at it.
I believe Tampa’s math. And all those who do should be very, very worried for small market contenders like the Oilers.
Mudcrutch nailed it at the trade deadline: “As the cap goes up and some of the bad contracts expire, the unnatural advantage enjoyed by the Albertan teams will disappear.”
Come the offseason, the Oilers had better break-out the long-term signing pen. If they want to compete in the future, they’re going to need it.