Sunday, June 29, 2008

Malone and Roberts are Lightning...And on front loaded contracts

Over the weekend the Penguins traded the negotiations rights for impending free agents Ryan Malone and Gary Roberts to the Tampa Bay Lightning. In return they were given a 4th round pick in 2009 that would become a 3rd rounder if Malone signed.

Well, according to TSN it's a 3rd rounder, as Tampa has signed Malone seven years, $31.5 million bones. That is silly money. Tampa is also said to be close to signing Mr. Roberts for about a one year $2 million deal.

Between Vinny Lecavalier, Marty St. Louis, phenom #1 pick Steve Stamkos, Malone, Roberts, coach Barry Melrose and a couple crazy new owners, Tampa is definitely a team to keep an eye on, if only because one can never quite be sure what wild and crazy stunt they might pull next.

An interesting aside...Malone's deal is front loaded, so he will reportedly be getting about $7 million a year in the first two years before the deal ratchets down to average out to the $4.5 million a season. Perhaps Tampa's willingness to do this for him was a reason why he signed before July 1, as he previously indicated he wouldn't do.

Other notable free agents to sign front loaded contracts include Daniel Briere, Scott Gomez and Ryan Smyth so this has been a fairly regular occurance in the new-CBA. Players obviously like doing this because who doesn't want a big payday as soon as possible. And if they weren't business majors, their agents probably teach them a little something about the time value of money.

For the teams there is also much value in front loading...The top unrestricted free agents tend to be older players and are usually given 5-7 year contracts. Sure their contributions for the first few years should be great, but as they age performance will obviously peak and decline during the life of the deal (particularly for power forwards like Smyth and Malone). By leaving little salary in the contract for the final few years, the players can be bought out fairly painlessly. See example 5 here for a great explanation.

Also the player could be attractive for a trade to a small market team that needs to meet the salary floor. For example, as he contract goes, a 37 year old Daniel Briere will "only" get paid $2 million for the 2014-15 season. But his cap hit is still going to be $6.5 million. By that point Briere probably won't be among the NHL's top point scorers, but for a small market team that needs to spend more money in salaries, his deal will still be $6.5 million against the cap, even though they have to pay him less than 1/3 of that for his play that year.

Front loading contracts isn't a loophole, per se, but clearly it's a crafty way for NHL general managers, players and agents to exploit the collective bargaining agreement for a little wiggle room to make it work best for them.

1 comment:


1) If they get Rolston and Prospal the Lightning will have a very impressive set of forwards BUT did Feaster forget why they sucked last year?
2) Their goaltending was the worst in the league. Is Mike Smith really gonna carry them? Perhaps, but all that cash might be pissed away if he falls flat on his face in his first starters role