Monday, March 16, 2009

The NHL Salary Floor Cheats

The Sorry Case Of The New York Islanders

I know it's a strong headline. The New York Islanders are not cheating, merely taking the piss. They are not breaking the rules, per se; but could not be accused of operating with the true spirit of sportsmanship in mind.

After watching that game the other night, with barely a recognisable name on the gamesheet, I started wondering how it was the Islanders were even meeting the obligation of the salary floor. It turns out they don't, or at least they shouldn't given the way things have gone for them. They squeak it out on loopholes.

Initially, I felt anger towards the Islanders (and I would feel a heck of a lot more if I was an NHL-able body like Mike Johnson, for example), but really they are only playing within the rules set out for them.

I think the responsibility has to lay at the feet of the NHL, who have implemented and policed a salary floor, but can let it turn into the nonsense that the Islanders have been pulling this season.

New York Islanders under the floor

By my rudimentary calculations, if the Islanders had declared all the players that actually did have a long-term injury to actually have a long-term injury (instead of broken leg – day-to-day), then they would be in serious cap floor trouble.

If bonuses are hit, they are looking at $37.75 million. If not, as low as $32.8 million. Pretty low considering the salary floor for the NHL stands at $40.3 million for every other team...

Let's face it, the Islanders have tanked this season, and they did it from the outset. They signed veterans they knew were overpriced to make the floor knowing that they would trade them when the mandated salary obligation was met. They even tossed in bonuses which counted against the cap, but which they must have known would never have to be paid out:
The Islanders were happy to give the veteran the incentives for two reasons. For starters, they would be properly rewarding Weight if his offensive statistics rebounded closer to his career averages after a 25-point output in 2007-2008. With 21 points (4-17-21) in his first 21 games this season for the Islanders, the move has paid off for both team and player.

But there was additional strategy behind the Weight incentives package. As a player over age 35 and on a one-year deal, those bonuses counted towards the Islanders’ salary cap number. And Weight’s deal - along with the signing of Mark Streit to a deal averaging $4.1 million - took the Islanders above the salary cap “floor” as mandated by the Collective Bargaining Agreement.

What's more, they never declared certain players to have long-term injury, so they wouldn't have to pay, or as it happens, compete in the NHL.

The worst thing about all this is that instead of being encouraged to do otherwise, the rules will encourage more teams to do the same in the future. The model set forth by the trailblazing New York Islanders of 2008-09 is a blueprint for how to get a top 5 draft pick without having to pay for a full NHL roster.

Ghost players

Remember the punishment of having to pay Jassen Cullimore and Tony Salmelainen for 2 years because we bought out their contracts we never wanted? Bob Gainey should have traded these two to the Islanders or the Kings a couple of years ago – their buyout contracts would be gold dust.

The Islanders, of course, have their own ghost players in Alexei Yashin to the tune of two odd million a year and Shawn Bates at $400,000 annually.

Veteran bonuses

Over the age of 35, player bonuses are to count towards the cap. One can clearly see how this clause may be exploited by the Nashvilles, LAs and NYIs of the league.

"Doug Weight, want your biggest contract in years even though you're in full decline? The condition, of course is that you take it in bonuses, so when you decline even further we don't actually have to pay you."

This loophole, for the floor-pressed team, is even better than the ghost player (who has to be paid) because the bonuses can be set at such levels that they were never attainable anyway. It's money on the cap that will never have to be spent.

Day-to-day injuries

There is a giant loophole for those wishing to comply without complying with the terms of the NHL Collective bargaining agreement, and it is the long-term injury clause. At the moment, long-term injury requires initiative and paperwork from an NHL team to open up. If Komisarek dislocates a shoulder, the Canadiens management must process some forms to put him on long-term injured reserve and obtain the salary cap freedom allowed when players get injured.

While it boggles the mind that some GMs and their teams don't apply for this at every long-term injury (too busy talking to Eklund about trades he can invent, I guess), the more troubling bit of this arrangement is the way it affects the salary floor.

If a team does not apply for long-term injured reserve for say a player who broke his ankle or a goalie who tore his knee, that player remains on the books for the purposes of the salary cap. This in turn allows a team ice a sub-AHL team and get away with it.

Is it fair enough? Maybe so. Even so, it leaves a sour taste in my mouth.

What should the NHL do?

It's not that clear.

The first suggestion I would put forward would be to evaluate why they ever put a salary floor in place at all. It was purported at the time that the floor would be a method to foster competition, by ensuring that small market teams would sign players of star calibre – I think the Islanders have shown that this is contingent on the team's and not the league's or the fans' definition of star (Guerin, Weight, Comrie) and that, even then, there are plenty of ways around it.

Beyond excising the salary floor from the equation altogether, there could be a number of simple tweaks (as I see it) to prevent the Islanders from becoming the model for the other perennial stragglers of the NHL:

a) Count salary buyouts against the cap, but not towards the floor
Counting salary buyouts is meant to be a deterrent to GMs not an incentive. It only makes sense to leave it where it deters and remove it from the equation where it does not.

b) Count veteran bonuses against the cap, but not towards the floor
Similarly, the thinking behind counting veteran bonuses towards the cap was to prevent teams from stocking up on vets and paying them only contingent on their play. It was never intended to make Doug Weight a $4.5 million player even when his paid salary is less than $2 million.

c) Make LTI semi-automatic
It is one thing to allow teams flexibility to declare LTI for the upper level (if they want it). But entirely another to allow Rick DiPietro (out for the season in Jaunary) to count against the cap as if he were playing. The Islanders are not paying his salary (unless they have really bad insurance), so why should they get credit as if they were. Perhaps it could be as simple as an automatic LTI kicking in after 10 games are missed and going forward from there.

One or all of these would make some difference. And, to be honest, merely addressing the situation would be a positive step showing some concern for the competition they touted a few years ago.

I suspect that the Islanders would have something to say about the whole situation too, though. Particularly how injuries have hurt their chances, the attendance and their bottom line. It would be quite a convincing sob story if one ever believed that having Sillinger, Freddy Meyer and Brendan Witt would have turned the whole situation around for them. One point that they may bring up could have a lot of credence though, and that would be revenue sharing.

The current system in place in the NHL disqualifies the Islanders because of their geographic position. It conveniently fails to account for the immediate competition for hockey dollars in the "huge" hockey market. James Mirtle thinks the Islanders may deserve some help, after this whole fiasco, I find it hard not to agree.

After all that, does anyone else come to the conclusion that we really really messed up in losing twice to this team. I mean both teams seem to have had the same goal to drive towards – an Islanders loss at all costs.

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