Friday, August 24, 2007

Long-term, big money contracts: Not such a great idea after all.

Milan Michalek of the San Jose Sharks just signed a 6 year contract worth $26M, which will begin in the 2008-09 season. As the summer comes to a close, I realize that we have seen this contract time and time again in the last few months - the big money, long term contract. Derek Roy, Ryan Whitney, Dustin Penner, Stephen Weiss...and the list goes on.

I've been thinking a lot about this issue lately, and I'm conflicted. On the one hand, I think that these players are really good and part of me is not bothered by the salary. But on the other hand, I think that players are receiving the big bucks because of their potential - their current paychecks are not based on what they are doing now, but rather what they are projected to do in the future. This is a dangerous way to do business because a player may not develop as predicted, leaving the team with a player who is grossly overpaid. And the long term nature of the contracts just make everything worse.

I heard that the NBA went through something like this in the late 90s, when they were handing out long term contracts to their players - and things fell apart. Now, the teams hand out short term contracts and everybody's happy. It's too bad that the NHL didn't learn from the NBA's mistakes...

NHL teams should hire some people who specialize in the salary cap. In fact, I predict that 'Cap-o-logists' will be in high demand within the next couple of years.

I think I picked the wrong major...


Stoosh said...


I think it depends on the player and the situation they're in, but I'd rather see a team lock up a younger player with a long-term deal as opposed to a seasoned veteran. At the very least, the teams signing these guys are identifying those youngsters as part of their core around which to build the rest of the team.

Whitney, for instance, has improved exponentially over the last couple of seasons both offensively and defensively. He's never going to be Niklas Lidstrom, but he looks like he could be a better offensive defenseman than Gonchar. Whit won't even turn 25 until February, and he'll have just turned 31 when his deal expires. And at an average of $4 million a year over the life of that deal, he could be a steal less than halfway through that deal.

Conversely, look at Danny Briere's deal. He'll turn 30 just as this season starts, and Philly will be paying him until he's 38. His upside is fairly fact, his game will likely begin to decline before his contract is even half over. Besides, it's always fun to laugh at Philly.

The one I feel bad for (relatively speaking, because he's still richer than all hell) is Penner. Considering what Lowe gave up to get him, he's going to have to pretty much be the second coming of Messier up there...or at least Ryan Smyth.

Ashley said...

Hey Stoosh

I totally agree with your argument. I actually have no problem with the Ryan Whitney deal, and I do think that Philly was kinda stupid for giving Briere that contract. I'm more concerned with the general trend of handing out big money, long term contracts. I think that some players show a flash of promise and are given the big bucks before they can prove that they truly deserve it, and that's not good.


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