Thursday, November 24, 2016

The ten types of bad contracts (and how to avoid them)

On Tuesday, San Jose Sharks defenceman Brent Burns signed an eight-year extension that will pay him $64 million and carry an $8 million cap hit.

It’s a huge contract — the biggest since Jamie Benn‘s deal this past summer and almost certainly the largest that we’ll see signed during the 2016-17 season.

But none of that really matters.

What fans want to know about the Burns contract is this: Is it a good deal or a bad one?

We can't know for sure yet, although we can already compare it to those of his peers.

The early consensus seems to point to a deal that carries a fair cap hit for a player of his caliber, but with a length that makes it a high-risk gamble on a player who'll have turned 40 by the time the contract expires. Only time will tell whether the deal ends up being worth the risk for the Sharks.

But even if the Burns deal does end up backfiring for San Jose, they'll have plenty of company. The NHL is littered with bad contracts; every team has at least a couple.

Twelve seasons into the salary cap era, you'd think general managers would be learning how to avoid some of these mistakes. But we still see them made all the time, and they usually fall into one of a few categories.

So today, let's look through those categories, and see if we can give our friends in NHL front offices some tips on avoiding them.


The contract: This is the most obvious category, with a big chunk of the league's worst deals falling into it.

To put it simply, NHL GMs do their worst work when unrestricted free agency opens on July 1. You target a player, the bidding war starts, and next thing you know you're paying way more than you meant to.

We've actually seen a drop in truly terrible July 1 deals over the years, largely thanks to the new negotiation window that opens up a few days in advance. But we still see more mistakes made on that one day than any other.

Recent examples: Scott Gomez. Wade Redden. Danny Briere. Brad Richards. Stephen Weiss. Loui Eriksson. Andrew Ladd.

How to avoid it: Don't let anybody in the front office anywhere near a phone on July 1.

Seriously, how long will it be before some GM (or owner) makes this an official team policy? Every year, we see teams pay through the nose for players on July 1, and every year we see great bargains still sitting around a few days later for a fraction of the price.

Every GM thinks they can be the one who makes the smart deal on UFA day, but history has shown us that most of them are wrong.


The contract: Look, intangibles exist. Just because something is hard to measure doesn't mean it's not important, and that's especially true in a sport like hockey.

Leadership matters. So does work ethic. And yes, even heart. But the waiver wire is filled with guys with plenty of heart and leadership. Paying top dollar for it rarely works out well.

Recent examples: Ryan Kesler. Ryan Callahan. Casey Cizikas.

How to avoid it: If your star player is also your hard-working leader, then great, go ahead and pay him. But if not, smart GMs will focus on pouring as much talent as possible into the core and save the intangibles for the (far cheaper) depth pieces.

If there are two mistakes on this list that can torpedo a team's cap situation, it's paying for intangibles and the July 1 meltdown. In fact, it's hard to even imagine anything worse…

Oh, hey, what's this next section…


The contract: Oh no.

Recent examples: Dave Bolland. Deryk Engelland. Ryane Clowe. Dale Weise. Clayton Stoner. Stephane Robidas. And the worst of them all: David Clarkson.

How to avoid it: If anyone in your front office so much as utters the words "compete level" on July 1, fire them immediately.

>> Read the full post at Sportsnet

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