Aug 032011

Negotiations tend to be easy when each side’s interests are one in the same.

Patrick Sharp has said he didn’t want to leave Chicago.  Now, the Blackhawks stepped up to ensure Sharp wouldn’t have an opportunity to make that choice.

….for the next six years anyhow.

On Wednesday, Stan Bowman locked up Sharp through the 2016-17 season with a five-year $29.5 million contract extension.

This season Sharp will play out the one remaining year on a four-year $15.6 million contract he signed back in January of 2008.  Sharp will make $4.2 million in salary this season and spike up to $6 million in the first year of his new extension for the 2012-13 campaign.

It’s a great day for everyone involved.  Sharp is low maintenance, charismatic, widely popular and too good to quickly replace.  Unlike in the case of Brian Campbell, the organization has no one immediately prepared to step into Sharp’s position either this year or next.  Jeremy Morin could be that player on the wing at some point and Mark McNeil or Brandon Pirri could take the second line center position eventually.  Time will tell.  But losing Sharp was never an option or the right thing to do.

Under the current CBA, Sharp’s new extension carries a $5.9M cap hit.  At this point that means next to nothing since a new CBA could bring with it a whole new set of rules, or even minor changes that will change that figure to some degree anyhow.  He’ll be 35 years old when his new deal expires in 2017.

What’s interesting about Sharp’s contract is how the money breaks out.

According to reports, of the $6 million in salary due Sharp in 2012-13, $4 million of it (“lockout insurance”) will be paid on July 1st in the form of a signing bonus.  This doesn’t come as a surprise given the potential for another work stoppage.  Whether the league goes or not next year, Sharp gets $4 mil.  Several players including Brad Richards ($8M), Christian Ehrhoff (5M), Kevin Bieksa (3.5M), Steven Stamkos (3.5M), James Wisniewski (3M) and Brent Seabrook ($2M) have all recently inked new contracts with substantial “signing bonuses” due them on July 1, 2012.  Duncan Keith collects a $1.5M on that day.  In all, the Blackhawks will dish out $9.0M to currently rostered players on July 1, 2012.  The players get that money because the CBA won’t officially expire until September 15, 2012.

But many of these new contracts, including Sharp’s, have said “signing” bonuses carried over multiple years beyond 2012-13.

Here’s how Sharp’s five-year extension breaks out. [yearly breakdown according to the Twitter account of ESPN’s John Buccigross, via Adam Jahns’ re-tweet.]

Age – Season – Base Salary – Signing Bonus – Total Salary

30 – 2012-13 – $2,000,000 – $4,000,000 = $6,000,000
31 – 2013-14 – $3,500,000 – $3,000,000 = $6,500,000
32 – 2014-15 – $4,500,000 – $2,000,000 = $6,500,000
33 – 2015-16 – $5,500,000 – $0
34 – 2016-17 – $5,000,000 – $0

First off, signing bonuses count the same as base salary.  It’s all salary.  It’s still subject to escrow.  The player simply gets a lump payment the day he signs or on July 1st of forthcoming season.  There’s a 10% cap on signing bonuses on entry-level contracts (for example, Nick Leddy’s NHL salary is $900,000. So his “signing bonus”, the money he’s due up front whether he plays in the NHL or not, is maxed at $90,000), but nothing after EL deals.  It’s just a matter of when the player gets his money.  Now the flip side of this is only so many teams will be able or willing to make multiple lump some payments to players all on July 1st of each year.  Others, like the Buffalo Sabres (Crazy Terry Pegula will owe Christian Ehrhoff and Andrej Sekera a combined $11M alone next July) are taking a huge gamble that there won’t be a work stoppage nor a shortened 2011-12 season.

These designs could be used as a competitive negotiating tactic by the big market clubs (or Crazy Terry) to outmuscle competing bidders in the free agent market.  I suppose it has already happened with Richards and Ehrhoff in particular.  The Rangers gave him ten of his twelve million up front this year and will owe him eight of the twelve he’s owed next summer even if there is a lockout.  You can’t really call it cap circumvention unless the league removes the signing bonus from the cap hit equation.  Does the Richards or Ehrhoff contracts make for a fair and level playing field?  No.  But the league office will always want it both ways when it comes to their big market clubs.  They want to help the little sisters of the league without hurting their big boy revenue earners.  And you’re left to hope that philosophy won’t lead to infighting and bargaining unrest.

I guess the question could be asked “How can a player sign a contract in July of 2011 and still be due a “signing bonus” four years into said contract?”  Four years down the road it’s nothing more than salary.  The way the math works in today’s CBA the separate distinctions don’t affect the 100% rule in any way.  Brad Richards is due a $4M payment on July 1, 2016 when he’s 36 and at that point a 15-year veteran.  The way his deal is structured it would figure he’s at least eyeing that as his last season as his total pay drops from $7M in 2016-17 to $1M the following year.

Kevin Bieksa’s new 5-year $23M deal is the oddest.  He got 4.5 of his $7M up front last month.  For 2012-13, Bieksa is due a total of $4.5M, all but $1M of it he’ll receive next July 1st.  So Bieksa will cash 46 percent of his contract by July 1, 2012.  Smart guy.  Chances, though, he’ll regret agreeing to a $2.5M pay sum in 2015-16 when he’s 34 and still in the prime of his career.  Not smart.

Print Friendly, PDF & Email

 Leave a Reply

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>