Friday, February 8, 2013

Part 1 - Tim Thomas Trade: Circumvention of CBA?

By Fraser Blair

(Part 1 of 2 Part analysis the Tim Thomas trade. Part 1 examines the trade itself. Part 2 will examine the possibility of a circumvention grievance if Thomas’ contract slides into the 2013-2014). 

The trade of Tim Thomas is perhaps the most interesting trade from a non-hockey perspective since the implementation of the salary cap in 2005. This trade has absolutely nothing to do with on-ice affairs of the Boston Bruins or the New York Islanders but has everything to do with the NHL’s ever-rising Lower Limit salary threshold (or salary floor). 

Getting to the Lower Limit is increasingly difficult for low revenue teams and in recent years, some of these teams have taken creative approaches to minimize the financial implications of reaching the floor. GM Garth Snow and the New York Islanders took the creativity to a new level yesterday by acquiring the suspended Thomas from the Boston Bruins in exchange for a conditional 2nd round pick in 2014 or 2015. The pick will go to Boston if Thomas plays in at least one game for the Islanders or a team he's traded to. 

Since he's suspended, Thomas hasn't been paid by Boston and his contract did not count against the Bruins’ Upper Limit calculation. However, Section 50(10)(c) of the CBA required the Bruins to maintain enough cap space to accommodate Thomas in the event that he returned. It reads: 
“For Players that are suspended, either by a Club or by the League, the Player Salary and Bonuses that are not paid to such Players shall not count against a Club’s Upper Limit or against the Players’ Share for the duration of the suspension, but the Club must have Payroll Room for such Player’s Player Salary and Bonuses in order for such Player to be able to return to Play for the Club.” 
So the Bruins have been forced to keep their salary cap commitments $5 million below the Upper Limit because of Thomas even though his salary doesn't technically count towards the salary cap. It’s a subtle but important distinction that becomes relevant when we assess the different implications of this trade for the Islanders. Put another way, if Thomas’ cap hit won’t technically count towards New York’s Upper Limit, how does it help that team reach the Lower Limit? 

Well, the inclusion of the term “Upper Limit” and the exclusion of the term “Lower Limit” in Section 50 would seem to allow Thomas’ cap hit to count towards the floor but not the top end of the cap. In other words, Thomas’ cap hit counts towards the team’s Lower Limit but not its Upper Limit. Convenient for both the Bruins and Isles.

This seems a bit strange. It would be interesting to see the outcome of a grievance initiated by the NHLPA on the basis that the same rules should apply to the calculation of a Club’s Upper Limit as they do to a Club’s Lower Limit. 

Here's the NHLPA's argument: You can’t reach the Upper Limit until you cross the Lower Limit, and therefore the same rules that apply in determining whether a Club has complied with the Upper Limit should apply in determining whether a Club has complied with the Lower Limit. By extension, the Thomas’ cap hit should not count towards the Islanders’ Lower Limit because the CBA does not count it towards the Upper Limit.  

That reasoning works - but the issue is the language of the CBA is probably determinative of this question. It seems that the specific inclusion/exclusion of the words Upper/Lower Limit was intentional and designed to enable Clubs near the Lower Limit to take advantage of this strange rule that counts cap hits like Thomas’ on one hand (in determining whether the Club has reached the Lower Limit) but not the other (in determining whether the Club has breached the Upper Limit). The language is clear and if the agreement favoured the NHLPA’s logic, it would have been written differently.

Although the Islanders appear to be trade appears to be one designed to avoid spending money, a circumvention grievance pursuant to Section 26 is unlikely to be successful for two reasons.  

First, whether the circumvention rules apply to a trade is questionable. The spirit of the Section 26 is directed towards Circumvention in player contracting. The language is written in a way that would certainly allow for argument, but this argument would be highly technical and formalistic.  

Secondly, even if Section 26 did apply the Islanders haven’t committed Circumvention. As Eric Duhatschek pointedout today’s Globe and Mail, the Islanders had already reached the Lower Level by the time they acquired Thomas yesterday. Lubomir Visnovsky’s return to the Club earlier this week put the Islanders above the Lower Level. In this regard, the Club showed some savviness and may have protected against a grievance by not using Tim Thomas to get to the salary floor. 

1 comment:

Anonymous said...

Ok, but if the Isles didn't need Thomas' salary to get above the floor, why did they make the deal? Presumably insurance against future trades that might put them below the floor?

Also, NHLPA unlikely to file a grievance as that would only remind everyone that one of their members is a tea-party right-wing nutjob who everyone hates, and that's not exactly great PR