Friday, January 27, 2012

Can NHL Contracts be Renegotiated Before Their End Date?

While filling in as a guest co-host on TGOR this morning, we talked about whether the Ottawa Senators could renegotiate the last year of Daniel Alfredsson's contract. 

The Ottawa Senators captain has one more year that will pay him $1 million. His cap hit remains $4,875,000 (the average yearly value of his 5 year/$24,084,754 deal). The topic of renegotiating the last year of his deal came up when the host of the big show, JR, wanted to increase Alfredsson's pay in the last year of his deal given the captain's iconic status in the city of Ottawa. In part, the logic was that the cap hit was already upwards of $4 million so why not pay him the same. It's the right thing to do, he said. Fair statement.

Unfortunately, Article 11.10 of the NHL CBA does not allow for the renegotiation of contracts:
11.10 No Renegotiation. In no event shall a Club and a Player negotiate a change in any terms of a Player SPC for the then-current season or for any remaining season of an SPC. This provision shall not prohibit a Player and Club from negotiating an extension to an existing SPC in accordance with the terms of Section 50.5(f) hereof or from negotiating a new or reformed SPC or Offer Sheet in the limited context and time-frame expressly set forth in Section 11.6(a)(vi) above.
The language is pretty clear - in no event shall a contract be renegotiated. Players can, however, negotiate an extension to a deal while under contract.

As well, teams can't do indirectly what they can't do directly. That means that the Senators can't buy Alfredsson dinner every night, pay for his haircuts and starch his shirts to make up for the fact that he is only being paid $1 million. That would be a circumvention of the CBA.

Also don't forget: a team could intentionally pay a player a lot less in the last year of a contract to enjoy a lower cap hit and then come that last year pay that player more. Problem is the cap hit in the other years of the contract can't be readjusted so that team would ultimately enjoy a net gain on the cap hit.

Players are stuck with the deals they sign - as are teams.

CBA aside, while Alfredsson is certainly the most beloved athlete in Ottawa by a country mile, his 5 year deal was front loaded at $7 million for the first two years. As well, he's made about $50 million playing for the Senators. While he has taken some home town discounts, that's still some pretty good money. He was free to contract with any party and chose Ottawa.

As well, when parties enter into contracts, both sides bear risk. That's how contracts work. The Senators didn't ask Alfredsson to pay back part of the $4.5 million he was paid last year after a tough season (31 points in 54 games).

In any event, I don't think Alfredsson would ask for more money. He's doing just fine.

As always, though, these discussions raise interesting legal questions.

Enjoy your All-Star weekend.

No comments: