Thursday, August 7, 2014

On Subban, Kane and Toews, and what some fans are missing about massive RFA extensions

The P.K. Subban saga is over, and it ends with a windfall. The Habs star agreed Saturday to an eight-year, $72 million deal that ends an extended stalemate between the two sides that dated back almost two years.

In doing so, he became the most expensive defenseman in league history in terms of annual cap hit ($9 million). And his deal comes just weeks after Chicago’s Jonathan Toews and Patrick Kane became the first two players to crack the $10 million cap hit barrier, signing identical eight-year, $84 million deals on July 9.

As you might expect, that’s led to some debate among fans in Chicago, Montreal, and elsewhere. After all, while these are some very good players we’re talking about, does it make sense for them to be making more than Sidney Crosby or Shea Weber or [insert your favorite superstar here]? Are these teams sending their cap situations up in smoke? And aren’t these exactly the sort of spiraling deals that keep forcing the league into lockouts?

If that all sounds familiar, it should, because we seem to go through this every time a star player signs an extension. But while it makes sense to approach any big contract with caution in a hard-cap league like the NHL, these deals really aren’t as scary as they seem. So here are a few important points to keep in mind before panicking over the latest massive extension.

Be careful with those comparisons: The first thing we try to do when a player signs a new contract is generate a list of comparable players and see how the new deal measures up to what those guys got. But that’s easier said than done with elite players. They don’t have many comparables; that’s why they’re considered elite.

Complicating things further, we need to stay away from comparing deals signed under significantly different circumstances. For example, some have tried to compare Subban’s deal to those signed by guys like Weber or Ryan Suter. But neither works, because while Subban was a basic restricted free agency signing, Suter was unrestricted and Weber signed an offer sheet. Another restricted free agent extension like Drew Doughty is a better match, but even that only goes so far because the Kings were buying two fewer years of unrestricted free agency.

Toews and Kane present a similar problem, with UFAs like Zach Parise or Marian Hossa not really working. The best comparison for those two would seem to be Crosby. But that raises a new problem.

The new CBA changed everything: Two years ago, Crosby signed an extension worth $104.4 million. Like Toews and Kane, the signing came after Crosby’s seventh season and with one year left on an existing five-year deal. That seems like as good a match as we could expect to get, and it’s led some to point out that both Toews and Kane will carry a cap hit $1.8 million higher than Crosby. Given that the Penguins’ star is the consensus pick for best player in hockey, the thinking goes that the two Blackhawks must be overpaid.

Except it’s not that simple, because Crosby’s deal was signed under the old CBA. It’s a 12-year deal, while Kane and Toews were limited to a maximum of eight. And Crosby’s deal plunges in the final few years, dropping all the way down to $3 million over each of the final three seasons. He’ll be in his late-thirties by then and may not even still be playing. While it’s not quite as extreme a case of cap circumvention as something like Hossa’s deal, it’s not far off.

Under the new CBA, the lowest annual salary on a deal can’t be less than 50 percent of the highest year. Both Kane and Toews take advantage of that, dropping from $13.8 million in Year 1 to $6.9 million by the end, so the deals are still front-loaded. They’re just not front-loaded as much as Crosby’s deal, because they can’t be.

This matters, because front-loading a very long-term deal was a tool for teams to artificially lower the annual cap hit while still making sure the player got paid. Crosby’s deal is actually worth more money over the first eight years than Toews or Kane are getting, but the plunging value in the later years (which, again, Crosby may never play) keeps the annual cap hit much lower.

Once the NHL closed those loopholes, it was inevitable that cap hits would rise. That doesn’t mean Toews and Kane are better than Crosby, or greedier, or overpaid. It just means they signed under a different set of rules.

>> Read the full post on Grantland

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