Did Non-Guaranteed Contracts Play Role In Saints Bounty Program?

NFL players don’t have guaranteed contracts, which means they can be cut if they are under performing. While it may not seem reasonable or fair, this condition of employment was collectively bargained by the NFL and players, and as a result, that’s how things are for the players.

However, it is reasonable and fair to ask whether non-guaranteed contracts make events like the Saints Bounty program more likely. 

When you look at the surrounding circumstances, it’s possible that they are contributing factor.

NFL Coaches Are Powerful

Perhaps more than any other sport, NFL players fear their coaches. NFL coaches often act as de facto general managers. They can cut or sit players if they are not performing as directed. Indeed, NFL coaches wield a lot of power. Players appreciate that coaches have the power to impair their careers, or worse, end them.

Average NFL Salary & Career Span

About half the NFL population makes about $500,000 or less, and the average playing career is somewhere around 3.5 years (depending on who you ask). Agreed – some NFL players are very well paid, like Brees, Manning and Rodgers. However, many players don’t play long and don’t make a lot of money, which can represent an added incentive to follow the direction of the coaches.

Socio-Economic Status

A number of players come from disadvantaged backgrounds and want to avoid a return to that life.

Take DE Anthony Hargrove, who was suspended 8 games for his role in the Saints Bounty program.

When Hargrove was 6 years old, the Brooklyn tenement where he lived with his mother and two of his four half-siblings burned down. He ended up living in homeless shelters and foster care homes until his mother died when he was 9 years old. Later, an aunt in Port Charlotte adopted him. In June 2011, Hargrove's older brother Terence Hargrove died after being stabbed numerous times in North Port Florida. Hargrove himself has suffered from drug addiction and spent a year in rehab.

Was the incentive there for Hargrove to follow orders and injure other players (assuming the allegations are indeed true)? We can’t know for sure since we can’t crawl into his head. However, you have to wonder if the threat of being cut or benched, together with all that comes with it, may have encouraged his compliance.

Background aside, many players may think twice about not following the game plan. Players who make it to the NFL want to stay there – irrespective of background or previous socio-economic status.

Ultimately, in light of a player’s limited earning potential and limited career length, non-guaranteed contracts may make players more likely to ignore their better judgement and comply with orders to injure other players.

Or at the very least, non-guaranteed contracts may create an environment where a player would think about it.

Further Comment - From One Reader

Eric, great article. Another issue is how replaceable typical NFL players are. With the available talent provided by the NCAA programs, average LB's, D-Lineman, etc. can be cut and replaced too easily thereby compounding the non-guaranteed contract issue. Everyone, but a few, play in fear of being cut or benched and having their replacement take their job. Happens all the time. Ask Drew Bledsoe.

Offside: Podcast of Show - Economics of Danica Patrick, NFL Collusion Case and World's Richest Sporting Events

Last night on Offside, Lee Versage and I talked the NFL collusion case, the many challenges facing Roger Goodell, the economics of Danica Patrick and the world's richest events.

Danica gets elevating her name to a brand or trade-mark. She has done very well leveraging her brand to secure multiple sponsor deals, including with Coca-Cola and GoDaddy. 

She summed it up well when she said this: 

“I’m a girl, and to say that I can’t use being a girl doesn’t make any sense. In this world, there is so much competition out there and you have to use ... everything that you have to make sponsors happy, to attract them and to be unique and different”.

If you want to listen to the podcast of the show (about 45 minutes), click here.

TSN Radio Clip: Latest on Clemens and NFL

Scott MacCarthur and I break down the latest on Clemens and the NFL collusion case. Listen here.

While Fehr Says No More "Massive Concessions" Lockout Talk Remains Premature

This past weekend, Stephen Fehr, brother to NHLPA executive director Donald and special counsel to the Union, gave a talk in San Diego at the Sports Law Conference. This is according to Liz Mullen of the Sports Business Journal.

He declared that the players made “massive concessions” in 2005 and that they were not inclined to give up their current share of revenue.

The massive concessions he speaks of are the 24% rollback in salaries and the hard salary cap.

The NHL will likely take aim at reducing the players’ share of revenue from the current 57% to something in keeping with the other leagues – about 50% or so. The NBA is at about 50% (give or take a point depending on league revenue), the NFL works out to about 48.5% and MLB is at about 47% (there is no cap in baseball so this is where the approximate number falls).

A drop in revenue share from 57% to 50% is significant and represents a serious point of contention. This will lead to some tense moments complete with the ebbs and flows of negotiations.

So where does that leave us? Is a lockout in the cards?

At this point, it remains premature to conclude that the league is headed for a lockout. The NHL is enjoying an unprecedented level of success, and more importantly serious momentum in the U.S. The league is in the first year of its $2 billion TV deal with Comcast, where for the first time, all playoffs games are available nationally. As well, the league has seen a $1 billion increase in revenue since 2005 (under the capable watch of NHL COO John Collins).

So the NHL likes where it’s at right now and doesn’t want to see a labor disruption. The system isn't broken; it just needs to be refined.

As for the players, they are weary – very weary I suspect – of losing part of, or an entire, season. For many, the lost 2004-05 season remains fresh in their minds. This will be a real incentive for the players to work out a compromise.

One more point for the players – decertification may not be a viable option (blowing up the Union like the NFL players did with a view to bringing an antitrust or anti-competition lawsuit). The Court of Appeal decision during the NFL lockout significantly reduced the strength of a union’s antitrust claim and sent the message that the sides are best served working things out at the bargaining table and not a federal courtroom.

While the other leagues share about 50% of revenue with players, remember that the NHL generates significantly less revenue then these leagues. So while 57% is a high number, it must be considered in the context of the amount of revenue generated by the league.

Ultimately, the sides will find an area of compromise. It may be somewhere around 52.5% of revenue or so together with some creative math to amplify that number under certain circumstances.

Until there is evidence to the contrary, lockout talk is premature.

Source: NHL Gives Notice To Bargain

Today, I secured a copy of the NHLPA’s memo to its players advising that the NHL has issued its notice of CBA termination. This means that the NHL has given its notice to bargain (this is the legal term), or put another way, has indicated to the NHLPA that it wishes to negotiate a new CBA. The impact of notice is that it ensures that the current CBA won't be renewed for another year. If notice was not given in the allotted time, then the current CBA would have been renewed for another year.

The NHLPA’s Memo

Advising of the Notice to Bargain

Donald Fehr’s memo to the players informed the players of the NHL's recent move:

"Today we received written notice from the NHL that it wants “to terminate and/or modify” the CBA when it expires at midnight on September 15, 2012.   Had no notice been given by either party, under CBA Article 3.1(a) the CBA would have remained in place for another year.  As you know, this is not a surprise; we have anticipated this for some time.”

So if the NHL had not provided this notice, then the current CBA would have stayed in place and the players and teams would have operated under the existing rules next season. That would include a 57% share of revenue for players. You can see why the NHL had to provide this notice; the players were probably quite happy with the status quo (and therefore saw no reason to provide notice).

As for Article 3.1(a) of the CBA, it provides that the CBA “shall remain in full force and effect until midnight New York time on September 15, 2011, and shall remain in effect from year to year thereafter unless…either party shall deliver to the other a written notice of termination of this Agreement at least 120 days prior to September 15, 2011 or not less than a like period in any year thereafter”.

So again – no notice means the CBA is renewed for a year. Given that that the NHL wants to see changes to a few terms in the CBA, including revenue sharing and restrictions on long term deals, the NHL was going to provide notice. For that reason, the NHLPA advised its members that notice was not a surprise.

All Aboard Please

Fehr continues in his memo by encouraging players to attend bargaining sessions as that is an effective way to send a message to the League that the players are taking this very seriously: 

“We have been continuing to meet with Players to discuss your ideas and suggestions for a new CBA.  Stay tuned and we will notify you as soon as we have information about when and where the negotiating sessions with the League will take place. As I’ve said on many occasions, all Players are encouraged to attend as many of these bargaining sessions as possible.  In fact, there is no better way to send a message to the League that Players are engaged in the process of bargaining for a fair new contract.”

Given that notice has been provided, the next step is for both sides to meet. The NHL has said for a while that it has been prepared to negotiate and this should get things rolling. Ultimately, notice to bargain preserves the NHL's position as it looks to start negotiations.

Offside Radio Show: Podcast

Yesterday on the Offside radio show, AJ and I covered the basics of the NFL concussion lawsuits, the role of non-guaranteed contracts in the Saints Bounty program, the latest on the Roger Clemens trial, the firing of MLB arbitrator Shyam Das and the impact of a potential Coyotes/Devils final (which would be played out in bankruptcy court).

We also hit on the smash hit show The Magic Hour.

Here's a link to the podcast of the show.

Our Interview With Graham James Sexual Assault Victim Greg Gilhooly

Recently on Offside, we interviewed Greg Gilhooly.

Greg was allegedly sexually assaulted by convicted pedophile Graham James over a period of 3 years beginning in 1979 when he was 14 years old.

In 2010, criminal charges were filed against James stemming from his sexual assault of Gilhooly, as well as Theoren Fleury and Todd Holt. Ultimately, the charges against Gilhooly were stayed, and Graham James pled guilty to sexually assaulting Fleury and Holt and was sentenced to 2 years in jail.  James can apply to be released within 8 months and within 16 months will likely be free.

Greg is quite articulate and well-spoken and speaks on this topic with great clarity. Greg is also a lawyer. He went to Princeton, then followed that up with University of Toronto Law School and articles at Torys. After that he worked in-house at CanWest and Cookie Jar Entertainment.

It is important that we remind ourselves of the utterly devastating effects of child sexual assault.

Here is our interview with Greg Gilhooly:

Part 1: The relationship, Graham James' 2 year sentence and Sheldon Kennedy being a hero

Part 2: Self-blame, changes to legislation and how he ensures that what James did to him does not continue to define him.

TSN Radio Clip: We Hit Newest Saints Developments and NFL Lawsuits

TSN's Scott MacArthur and I drill down on the Saints appeals and their impact on the NFL concussion lawsuits. Click here if you want a listen.

We also talk about non-guaranteed contracts and how that may have encouraged Saints players to ignore their better judgement. 

Bottom Line Breakdown: NFLPA Challenges NFL Suspensions

In connection with the Saints Bounty gate issue, the NFLPA is challenging the suspension of 4 of its member players, namely, Jonathan Vilma, Anthony Hargrove, Will Smith and Scott Fugita.

Two separate arbitration proceedings were filed by the NFLPA challenging Commissioner Goodell’s authority to punish the players.

First, the NFLPA is arguing that the NFL is prohibited from disciplining players – period. The NFLPA is saying that as part of entering into the new CBA, the NFL released all players from conduct that occurred before August 4, 2011.

Since the pay-for-performance program occurred before that date, the NFL can’t punish players.

This exclusion aside, the Union is arguing that on-field conduct is governed by a different set of rules and as a result Goodell is not the right person to hear the appeal. On-field conduct, as argued by the Union, is addressed not by the Commissioner but an arbitrator  jointly appointed by the NFL and the Union. This is why the Union has requested that Shyam Das, a non-injury grievance arbitrator, hear the appeal.

So under this first part, the NFLPA is saying that the NFL was prevented from punishing the players and that Goodell should not hear the appeal.

On the second arbitration, the NFLPA is taking the position that the discipline deals with non-contract bonuses. Remember you can’t pay players outside the four corners of their contracts; if you do that constitutes a violation of the NFL By-Laws and Constitution and CBA.

The NFLPA argues that in cases on non-contract bonuses, the case should go to an arbitrator and not Goodell. So it’s being argued that Goodell didn’t have the authority to punish the players.

In response, the NFL is saying that the players are not barred from being disciplined for this type of conduct even though it occurred before August 4, 2011. The players engaged in dangerous conduct directed to other players, and is conduct which was detrimental to the integrity of the league. As a result, this matter is something Goodell could rule on.

It is difficult seeing these punishments being significantly amended – irrespective of who hears them. Intentional attempts to injure other players (and members of the same Union) will not be seen as acceptable and does not appear to be captured by any deal cut between the NFLPA and NFL regarding disciplining players for problematic conduct.

Offside Exclusive: Review of Raffi Torres Appeal Documents

I have secured a copy of the NHLPA’s request for an appeal of the Raffi Torres 25 game suspension for his hit on Marian Hossa. As per Article 18.5 and Exhibit 8 (3)(f) of the CBA, the decision is being appealed to the Commissioner. Ultimately, the NHLPA is challenging the length of the suspension, while also taking the position that the manner in which the hearing was conducted was unfair.

Here are the important points:

(a) Torres is not appealing the NHL’s decision that his hit on Hossa constituted a violation of the rules. Rather, he is appealing the length of his suspension.

(b) Torres is taking the position that the 25 game suspension is “excessive and arbitrary”. It is argued that the suspension is “more than double the length of any ever issued by Brendan Shanahan and is one of the longest suspensions in the history of the NHL”.

(c) Shanahan denied Torres’s request that he be permitted to view video evidence of similar or worse hits and how they “have been treated in the past”. This precluded Torres from making out a full defence.

(d) Torres is requesting an in-person hearing so that he may “present this evidence to the Commissioner”.

(e) The NHLPA is noting that a “de novo” standard should be applied to the appeal. The phrase “de novo” is a Latin term that means “anew” or “afresh”. When this standard is applied, the case is heard all over again as if it had not previously been tried. The de novo standard of review may be applied to the law of the case, the facts of the case, or both.

(f) The NHLPA argues that supplementary discipline must be imposed by the NHL in a “consistent manner” so that players have a clear understand and expectation as to how on-ice transgressions will be treated by the league. In this case, in the view of the NHLPA, the ruling was not consistent with previous cases and the hearing and suspension “violated the very basic requirements of a fair process” which is a “matter of concern to all Players”.

Here is some more detail:

In its letter to the Commissioner, the NHLPA writes that Torres “regrets his actions” and is “extremely sorry for the injury caused to Marian Hossa. However, Mr. Torres does appeal and request review of the length of the disciplinary suspension imposed upon him” and “seeks an appropriate reduction”.

The NHLPA goes on to argue that supplementary discipline needs to be imposed in a “consistent manner” and that the “discipline imposed on Mr. Torres manifestly was not”.

The NHLPA has characterized the suspension as “excessive and arbitrary in that it is entirely inconsistent with the League’s past treatment of similar incidents”. The NHLPA also wrote as follows:

On several occasions during the 2011-2012 season, conduct of a similar or even more serious nature, including like conduct by repeat offenders, eventuated in markedly shorter suspensions. Other similar on-ice plays resulted in no discipline of any kind. Mr. Torres suspension also is more than twice as long as any other issued by the Department since its inception. Importantly, such a departure from established guidelines undermines the Department’s responsibility to provide all Players with objective and reliable standards by which their conduct will be assessed for disciplinary purposes.

During the hearing, the NHLPA intends to “present videotape evidence of recent incidents involving similar or more egregious misconduct that resulted in substantially less or no Player discipline”.

With a view to properly preparing for the appeal, the NHLPA has requested that the NHL provided it with all relevant information and documents, including things like emails, memos, notes of conversations and any summaries relating to the proceedings and any investigations.

As per Exhibit 8 of the CBA, the Commissioner “will endeavor to rule promptly on any such appeal”.

CFL In Ottawa One Step Closer: Court Says No To Friends And Will We See Appeal?

By Graydon Ebert

Ottawa is one step towards the redevelopment of Lansdowne Park and the return of CFL football to the city. On Monday the Ontario Court of Appeal rejected the appeal of Friends of Lansdowne Inc., a community group, to strike down the by-law passed by City Council in June 2010 which gave approval to the Lansdowne Park partnership with Ottawa Sports and Entertainment Group (OSEG).

This decision was the latest in a long line of court action with Friends of Lansdowne losing at both the Ontario Municipal Board and Ontario Superior Court of Justice before its recent loss at the Court of Appeal.

By the way, here’s a copy of the Court of Appeal decision.

The 3 Big Issues That Were Appealed

The Friends of Lansdowne appeal was based on three grounds:

Issue 1: Unfair Bonus?

They challenged certain aspects of the plan as being against anti-bonusing provisions in the Municipal Act. These provisions prohibit a municipality from providing a bonus to a commercial entity.

The real purpose of this is to prevent municipalities from providing unfair incentives to businesses to come to their municipality or favouring one business over another. The court has said that you look at whether an unfair advantage has been given by the municipality and in doing so you look to both sides of the arrangement to ensure the municipality’s obligations are matched by benefits flowing to it.

The Friends argued at trial that when you look at certain aspects of the plan, the city favoured OSEG. The Court disagreed saying that there were benefits and obligations going both ways. The risk and the reward of the partnership was reasonably balanced between the City and OSEG. That was key.

Issue 2: Bad Faith?

They Friends also alleged that the City negotiated in bad faith. The Court said there was no bad faith. The court had some concerns about the plan negotiation and approval process but when you looked at the plan as a whole, these concerns did not amount to bad faith.

Issue 3: Competitive Bidding

Finally, the Friends argued that the by-law was outside of the City’s jurisdiction because the partnership agreement breached how the City is supposed to buy things. The City has a policy and by-law in place for the purchasing of goods, construction and services. It’s supposed to mark it a competitive process. The policy, though, does allow for a waiver of the competitive bidding process and replacing it with negotiation where there is an absence of competition and there is really only one supplier of the goods or services.

The City relied on that exception believing that the proposal was for land development rather than for the purchase of goods, services or construction and that negotiation was an acceptable replacement for competition because OSEG was the only entity that could bring a sports franchise to the table. The Court declared that the City complied with the law - the negotiation and evaluation of the proposal essentially met the required process under the procurement policy.

Not Surprising Decision

The Court of Appeal’s decision is not surprising. Courts are loathe to quash a by-law without any evidence of illegality or bad faith. It is the municipality’s jurisdiction to decide what is best and court will only encroach on that jurisdiction if the by-law is illegal or if is unreasonable and passed in bad faith.

Is An Appeal Likely?

Probably not.

The Friends can request that the Supreme Court of Canada hear the case. Problem is that Court typically only hears cases of national importance and in areas of unsettled law.

Since this case is not of national importance (except maybe to CFL fans) and does not touch on any areas of unsettled law, it doesn’t seem like this case fits the profile of a case the Supreme Court would hear.

Friends of Lansdowne may be left with no alternative but to live with the Lansdowne Park plan, a plan they have fought hard to defeat both legally and politically.

The Optics: Billy Hunter & Employing His Family Members

The NBPA is being investigated by U.S. Attorney’s Office in Manhattan for its finances and business practices. Since 2001, the Union has paid about $4.8 million to family members of Billy Hunter, the head of the Union. This is according to Mason Levinson’s recent article.

The Union has Hunter’s son, 2 daughters and daughter in law on the payroll. It’s a family affair it seems.

NBPA President Derek Fisher has insisted that an audit of the Union’s financials be conducted. His reward – he was asked to step down. Fisher, though, has refused, and now we have word of the investigation.

As per Mason Levinson’s article, here are some of the financial details:

Son Todd

He joined the investment firm Prim Capital in 2002 but didn’t work on Union matters until 2008. Prim has been working for the NBPA since 1999, which has over $200 million in assets. Since 2005, the Union has paid Prim about $3 million and is paid about $45,000 a month to run the Union’s financial affairs.

It is good that Todd was recused from working on Union matters until 2008. However, it is reasonable to ask to whether he was hired because he was Hunter’s son. As well, was it appropriate to have him work at Prim in the first place?

Daughter Alexis

She joining the law firm Howrey in Spetemvber 2007. That same month, the Union made its first payment to Howrey in the amount of $380,000. Thereafter, it is reported she left Howrey and went to another law firm named Steptoe in 2011. The next month that firm was retained by Union. 

Daughter Robyn

She works as the Union’s benefits director and has been paid $201,000 since 2009.

Daughter-In-Law Megan (Todd’s Wife)

She is the Union director of special events. She was on the payroll before she met Todd. She was paid $173000 in 2011.

Marvin Miller Speaks So We Listen

The godfather of sports unions, Marvin Miller has come out and said that “it’s not a criminal act but it’s not something I would do”. Miller has been touted “along with Babe Ruth and Jackie Robinson” as one of the “three most important men in baseball history.” He transformed the baseball union into the most powerful sports union on the planet and set the gold standard for sports unions. If Miller thinks this looks off, he probably has a point.

Appearance of Justice

Paraphrasing an old legal expression, the one thing that is more important than justice being done, is the appearance that justice has been done (the actual line is this: “not only must Justice be done; it must also be seen to be done").

Here, the optics are not good. Hunter’s family members are being paid to work for the Union. The Union has retained the executive director's law firm and is using the son's investment firm. In cases like this, it is of paramount importance that there be no perception of a conflict of interest and that the union not distract from its ultimate objective of furthering the goals of the union - and only the union. 

The Union is under Federal investigation, which is highly problematic.

This is serious – very serious. Hunter may not escape unscathed here. 

The Sale of the Dodgers & McCourt's Legacy

The $2.15 billion sale of the Dodgers officially closed yesterday as new owner Guggenheim Baseball Management (which include Magic Johnson from the Magic Hour) wired the remaining funds to former owner Frank McCourt. McCourt sold the team, the parking lots and 250 acres of land surrounding the stadium (and 3 miles from downtown LA).

The previous record sale was the Miami Dolphins, which Stephen Ross bought for $1.1 billion in 2011.

McCourt bought the team in 2004 for $430 million. In 2010, the team was valued at about $720 million. Many believe that the Guggenheim group overpaid for the Dodgers. This is despite the estimated $3 to $4 billion media deal the team expects to sign with Time Warner or Fox - or perhaps someone else. The deal hits the open market in 2014. By then, Matt Kemp should have 50 million home runs.

According to Eric Fisher of the SportsBusiness Journal, the Dodgers generated about $240 million in revenue last year, down from $265 million in 2010 and $286 million in 2009.

First order of business for the new ownership group is seeking to maximize revenue and making sure the team is working at top productivity levels.

McCourt 

MLB complained that McCourt used the team to subsidize his personal and lavish lifestyle to the tune of $187 million. In order to fend of MLB's attempts to seize his team, he took the team into the protective shell that is bankruptcy. Once inside the shell, MLB had little power to wrest the team from McCourt - despite its constitution providing that it could (judges in bankruptcy court just want to see creditors get paid - they don't care too much about a league's constitution).

What did the Dodgers buy for McCourt? According to various reports, here’s where some of the Dodger green went:

1) As Dodger CEO, wife Jamie McCourt was paid $2 million a year, while Frank was paid $5 million annually. Here’s where it gets a bit odd. Their 2 kids were each paid $600,000.00 a year. The thing, though, is that one child was attending Stanford, while the other worked full time at Goldman Sachs.

2) After the purchase of the Dodgers, the McCourts bought 4 homes in Los Angeles at cost of around $89 million.

3) They also bought vacation properties and a private jet, had private drivers, a hairdresser who worked exclusively for the McCourts five days a week and a makeup artist.

4) Jamie paid over $100,000.00 to florists.

5) Frank fired his wife as Dodgers’ CEO, claiming that she was having an affair with her driver. However, that didn’t put a damper on spending. Frank spent $30,000.00 a month on a suite at the Beverly Hills hotel.

6) Jamie used one of the homes “exclusively for swimming” and the second to store furniture.

7) Jamie went on a lavish trip to France with her driver.

All this was paid for by the Dodgers.

Dodgers fans are undoubtedly relieved that McCourt is out of the picture and that their iconic franchise can  return to respectability. As for McCourt he will go down as an owner that put himself ahead of the team - then forgot he owned a team.

The Luongo Contract: Is He A Bargain at $5.3 Million?

It looks like Vancouver Canucks goalie Roberto Luongo is on his way out of Vancouver. According to TSN, he will soon submit a list of teams that he would accept being traded to. Is Luongo tradeable? What of his contract that takes us to 2022 (when robots will feed us and Twitter will be President)?

When Luongo signed his massive deal in 2009, it seemed at that time he might be untradeable.

That, however, is not the case. Let’s take a look.

The Deal

In 2009, Luongo signed a 12 year/$64 million dollar deal. He was 31 years old when he signed the deal, which means by contract’s end he will be 43.

The distribution of pay across the 12 years is as follows:

2010-11: $10 million

2011-12: $6.716 million

2012-13: $6.714 million

2013- 14: $6.714 million

2014-15: $6.714 million

2015-16: $6.714 million

2016-17: $6.714 million

2017-18: $6.714 million

2018-19: $3.382 million

2019-20: $1.618 million

2020-21: $1.0 million

2021-22: $1.0 million

That means his cap hit is $5.333 million. Remember the cap hit is the average yearly salary over the life of the contract and not what a player makes in a specific year.

So it comes down to his cap hit. Back in 2009, the length of the deal (taking Luongo into his early 40s) together with the cap hit made it seem like he wasn’t tradeable. Of course, times – and the salary cap – have changed.

Here are some of the reasons he is now tradeable.

The Rise of the Salary Cap

Yes a cap hit of $5.333 is not chump change in a cap world. However, since the inception of the cap in 2005, the cap has gone up dramatically:

2011-12: $64.3 million.

2010-11: $59.4 million

2009-10: $56.8 million

2008-09: $56.7 million

2007-08: $50.3 million

2006-07: $44 million

2005-06: $39 million

When the adjustment to the players’ share of revenue is made from 57% to about 51.5% (in my estimation) the cap will stay relatively flat or go up or down by about $2 million or so. So this year, there won’t be a big change in the salary cap. However, in coming years, expect it to continue to rise. The NHL continues to grow revenue under the capable watch of NHL COO John Collins. Since he took over in 2006, the NHL’s revenue has grown over a billion dollars. The NHL is enjoying upward momentum and will continue to leverage its Comcast TV deal to grow the game. All signs point to up – for revenue and the cap.

When Luongo signed in 2009, the cap was $56.7 million. Now it’s $64.3 million. So that’s a gain of almost $8 million. There’s a lot more place under the cap to make room for Luongo.

Also ask yourself this: in 2015, what will the cap hit be? Assuming it;s higher, Luongo's deal will look a lot better from a cap standpoint.

Comparables

Luongo’s $5.3 million cap hit is starting to compare pretty favourably to other goaltenders in the league:

Lundqvist - $6,875,000

Ward - $6,300,000

Miller - $6,250,000

Backstrom - $6,000,000

Kiprusoff - $5,833,333

Bryzgalov - $5,666,667

Luongo - $5,333,333

Brodeur - $5,200,000

Thomas - $5,000,000

Fleury - $5,000,000

DiPietro - $4,500,000

Hiller - $4,500,000

Niemi - $3,800,000

Khabibulin - $3,750,000

Halak - $3,750,000

Lehtonen - $3,550,000

Roloson - $3,500,000

Rinne - $3,400,000 ($7M next season)

Luongo’s deal falls somewhere in the middle of the top tenders this season. Next season, Pekka Rinne’s cap hit on his new deal with be $7 million. He hasn’t yet been to a Cup final.

High Five to the Circumvention of Cap

When the Kovalchuk decision came out, the arbitrator Richard Bloch mentioned in a footnote to his decision that there were other contracts that constituted circumventions of the salary cap given that throwaway years were added to contracts to artificially lower the cap hit. One of those contracts was Luongo’s – and for good reason. When Luongo turns 40 years old, his salary goes from $3 plus million to $1.618, and in the last two years his salary is $1 million. These years lowered the cap it from about $6.7 million to $5.3. Big difference for a team looking to acquire him.

As well, the last 4 years of his deal amount to about $7 million. That means that a team would happily buy him out before he turns 40 years old in 2018. There would be a cap hit on the buyout, but it would be manageable.

Or rather than buy him out, before the 2018 season a team could trade him to a cap hungry team looking to make the floor. Why? By then his salary cap hit will be more than his actual salary. So the team that acquires him will enjoy a net gain on his cap hit. People love net gains.

Read my analysis of 58 NHL contracts in the context of circumvention here.

Wanted: Goalies

It is getting a lot tougher to find quality goaltending. Just look at the playoffs this season so far. A lot of goalies have struggled. When Luongo is at his best, he is one of the best goalies in the league. Yes he has had some issues in key games and in key situations (shaky glove syndrome). However, there aren’t a lot of good goalies to go around.

Look at the Flyers – Bryzgalov’s cap hit over the next 9 years is $5.6 million. Early on, Bryzgalov has been shaky and has emerged as a renaissance man or eccentric – you take your pick.

Whatever you may think of Luongo in the clutch, he will immediately make a team better (like Tampa).

Playoff Revenue

Teams make their money in the playoffs. When revenue is added up – gate, media, merchandising – teams make about $4 million per playoff game on average. Some of that is shared with the league and other teams. Still, teams pocket decent money with home playoff games.

As well, many execs will say that the playoffs are a springboard for marketing and ticket sales for the next season. In fact, for many teams making the playoffs is critical to the long term viability of their franchises.

Luongo helps your team get into the playoffs – there is no doubt about that. Once you’re in, you start to generate that key revenue and position yourself favourably in the marketplace. This will matter to teams, as they will look at his contract as an investment with a possibly strong return.

So there are lots of reasons why Luongo’s contract is moveable. The comparables are good, the salary cap hit is manageable, he’s a really good goalie, and the potential return on his contract is promising.

Frankly, at this point, isn't his $5.3 million cap hit looking like a bit of a bargain?

Interview: ESPN's John Barr on Loomis Eavesdropping Story

Yesterday on Offside, we interviewed ESPN investigative reporter John Barr.

John broke the story earlier this week of Saints GM Mickey Loomis' alleged ability to eavesdrop on opposing coaches. It is important to note that Barr did not allege that Loomis did in fact eavesdrop. Rather, he takes the position that Loomis had that ability to do so by way of a device installed in his Superdome suite.

John confirmed that ESPN continues to investigate this case with a view to trying to collect evidence supporting position that Loomis did indeed eavesdrop.

It is alleged that Loomis did this between 2002 and 2004. Interestingly, starting in 2008, the NFL engaged retired FBI agents to conduct electronic audits of coaching booths, locker rooms, etc.. They would sweep these areas looking for bugs and the like.  However, these sweeps were not conducted during the material time, namely, 2002 to 2004.

If the NFL was conducting these sweeps, it seems logical to conclude that there was a need for them. Where that need came from remains an open question.

Listen to our interview with John here.

Offside Interview On Roger Clemens Trial

Last night on Offside, we interviewed Ann Marimow, Washington Post reporter. Ann has been in the courtroom  during the Roger Clemens trial so she has a good feel for how things are unfolding. She spoke to that, as well as other topics such as Judge Walton, Roger Clemens' demeanour, the prosecution's slightly toned down approach and whether the Defence team's opening resonated with the jury.

Listen to the interview here.

Legal Overview: The Clemens Trial

With the Roger Clemens trial starting, here's an overview.

Trial: Self-Inflicted Wound

Here's the thing about this whole mess Clemens got himself into: it's self-inflicted.

Clemens was never forced to testify before Congress. He wanted to testify. He was never subpoenaed. Clemens wasn't happy when the 2007 Mitchell Report came out, which was a report summarizing an investigation into the use of PEDs and steroids by MLB players. The report mentioned Clemens 82 times, only third to Canseco (105 times) and Bonds (103).

So he thought he would go to Congress and proclaim his innocence. Problem is that he denied to Congress what others have insisted is true - Clemens used banned substances.

So rather than clear his name, he is now on trial for lying about taking PEDs and steroids.

The Allegations

The underlying allegation is tied to him lying about using performance enhancing drugs (steroids and HGH).

Clemens contradicted testimony given by his former trainer Brian McNamee, who testified that he had injected Clemens with both steroids and HGH.

Clemens denied that McNamee had ever injected him with these substances and said that he injected him with B12 vitamin shots.

Here is the key: to win a conviction, the prosecution will have to prove that Clemens was injected with HGH and steroids, he knew he was being injected, and he knew he was lying when he said he wasn’t injected.

The Charge of Perjury Is Not Just Lying

For the offence of perjury (the most serious offence charged), the prosecution must prove not only that Clemens lied, but that he knowingly lied under oath. This means that Clemens could wiggle out if he can convince the jury that he misunderstood a question or didn’t know exactly what he was taking.

Prosecution Versus Clemens: The Arguments

Clemens has money and will assemble a top notch legal team. This makes a big difference. Expect his lawyers to really dig in and attack the prosecution’s case from every angle. Think OJ – they will be relentless.

Clemens offered up his testimony 2.5 years ago so that means that the prosecution has very likely taken great care in developing its case. They may also have new evidence.

Prosecution’s Arguments

Here are some of the prosecution’s possible arguments:

1) McNamee testified that he injected Clemens with steroids and HGH over 40 times between 1998 and 2001.

2) McNamee has syringes, pads and gauze that have Clemens’ DNA on it.

3) Clemens’ good friend Andy Pettite testified under oath that Clemens told him he used HGH. This corroborated the evidence provided by McNamee.

4) McNamee has testified he injected Clemens, Pettite and Chuck Knoblauch with HGH. Both Pettite and Knoblauch have confirmed this. So the prosecution will argue it is unlikely that McNamee would tell the truth about Pettite and Knoblauch, but lie about Clemens.

5) In 1998, Clemens developed an abscess on his buttocks that he claimed was the result of B12 injections. However, McNamee stated that it was the result of steroid injections and numerous medical experts have said that the mass was unlikely to have been the result of B12 injections and was more consistent with steroid injections.

Clemens Arguments

Clemens is not left without arguments. Here are some of his possible arguments:

1) He will attack McNamee’s credibility and truthfulness. McNamee reached a deal with federal authorities to avoid prosecution for steroid distribution, and Clemens will argue that was his incentive to lie.

2) Clemens will challenge the admissibility and reliability of the syringes, pads and gauze arguing that while in McNamee’s possession for years, they may not have been handled with care.

3) He didn’t know what was in the syringes, so when he said he didn’t take steroids or HGH, he didn't knowingly lying. In addressing Pettite testimony, he could say that Pettite just got it wrong (he misremembered).

4) Important Person Act: Well this isn’t an argument (or a statute) so much as some jurors may be influenced by his fame.

Length of Trial?

It should last about 4 to 6 weeks. That could change though.

Will Clemens Testify?

Clemens can't be forced to testify. Will he testify? Clemens had a tough time before Congress and he may have difficulty the second time around. If Clemens were to testify then he runs risk that jurors will find him guilty simply because they were not convinced. However, it is the prosecution that has the burden of convincing jurors of the defendant’s guilt. So make the prosecution work for it, Clemens’ lawyers will tell him. 

If the case goes off the rails for Clemens, then perhaps you may see Clemens on the stand. Given his defiant, determined and brazen attitude, he may relish the opportunity. However, on balance, don't expect to see Clemens take the stand. 

Jail Time

As far as prison time, each of the six counts he is charged with could result in a sentence of up to 5 years in prison. However, under U.S. sentencing guidelines, if he’s convicted of at least one of the counts of perjury he may receive a sentence of 15 to 21 months in prison, and could be out for good behaviour in 13 to 18 months. However, all this is up to the Judge.

This will be a tough case for Clemens. Remember though – it only takes 1 juror to side with Clemens for him to walk.

Quick Hit: Suspended NHL Players, Their Salaries and The Cap

In light of the Raffi Torres 25 game suspension, the question has been raised as to whether his salary will count against the salary cap while he's suspended for an on-ice violation.

The answer is yes - the salaries of players suspended for on-ice violations do count against the salary cap. 

Remember that players are not paid during the NHL playoffs so there are no cap concerns. Come the regular season, however, Torres' salary will count against the cap.

If you want more information, here is a good link on the topic.

Offside Radio Show - Dodgers Sale; Business & Legal Side of Hockey Violence

Last night on my radio show Offside: The Business & Law of Sports, guest co-host Steve Lloyd and I interviewed Eric Fisher from the Sports Business Journal on the Dodgers sale. He wrote a great article on the sale of the team.

Listen to the podcast here.

Frank McCourt sold the team, the parking lots and 250 acres of land surrounding the stadium (and 3 miles from downtown LA) for a record $2.15 billion to a group led by Stan Kasten and Magic Johnson (of the Magic Hour).

The previous record sale was the Miami Dolphins, which Stephen Ross bought for $1.1 billion in 2011. The other top deals are as follows:

Cubs (2009) at $845 million to Ricketts family (3times)

Redskins (1999) - $800M – Snyder

Red Sox (2002) - $700M – John Henry

Jets (2000) - $635M 

Your top baseball deals:

Cubs - $845M

Astros (2011) - $615M to Jim Crane

Rangers (2010) - $593M

Nationals (2006) - $450M

Braves (2007) - $461M

The $2.15B price tag was big. New York Giants co-owner Steve Tisch said that much according to Fisher's article.

“It’s a unique situation and a very iconic brand…but it’s a big number."

So that was the big question we asked Fisher - did Kasten pay too much for the Dodgers. The TV deal is a big part of the deal, with the expected price tag to be around $4 billion. Right now Fox and Time Warner are likely bidders, but more can emerge.

We also hit on Magic Johnson and his ability to repair or undo what McCourt did since he bought the team in 2004 (when he bought it for $430 million). Just last year, attendance for Dodger games dropped 18% over the earlier year. This was big for the Dodgers - a team that routinely found itself topping attendance in baseball.

This deal was also different in that MLB had little control over the sale. In the past, the league had an active role in the sale of teams. This time, however, that was not the case. That's what prompted super agent Scott Boras to say this: "Scott Boras was quoted as saying that we are now seeing “true free agency in the pursuit of a franchise”.

We also hit on the legal and business side of hockey violence.

Enjoy the show.

Radio Clip - Team 1260: We Talk the LSAT, Grilled Cheese Sandwiches & The Loser Point

Dustin and Will from the Team 1260 and I talk about the LSAT, delicious grilled cheese sandwiches, the Saints and the NHL loser point.

Legal Glimpse: The Petrino Firing & Moral Clauses

Arkansas has fired Bobby Petrino, saying he "knowingly misled" and engaged in reckless behavior in a relationship with a female employee.

The 51-year-old Petrino was injured in an April 1 motorcycle accident. He was put on paid leave last week after admitting he lied about the presence of the 25-year-old employee, Jessica Dorrell, who had been riding with him.

Dorrell was hired by Petrino as the student-athlete development coordinator weeks ago.

"He made the decision to mislead the public, (and it) adversely affected the university and the football program," athletic director Jeff Long said at an evening news conference. There was a "pattern of misleading and manipulative behavior to deceive me."

He was 34-17 since he was hired in 2008 and was 21-5 in the past two seasons.

Petrino’s Employment Agreement

Petrino’s employment agreement issummarized in an engagement letter. At Section 9 of that letter, the University is granted broad powers to terminate Petrino for conduct or behavior that it does not agree with or approve of. In particular, it provides that the University reserves the right to terminate Petrino if he has engaged “in conduct, as solely determined by the University, which is clearly contrary to the character and responsibilities of a person occupying the position of Head Football Coach or which negatively or adversely affects the reputation of the University…in any way”. Here’s the actual clause:

This is broad since it allows the University to determine on its own the type of behaviour it doesn’t like. It needs to act reasonably – but nevertheless it still makes that assessment of right versus wrong.

By firing Petrino on the basis of his conduct, the University does so with cause. That means they don’t have to pay him out or offer him severance. That’s also significant.

Petrino will forfeit his salary, which averages about $3.5 million a year over the next 6 years. Here are the details:

Petrino could challenge the firing by arguing his behavior did not constitute just cause and that he is entitled to money. There is a lot of money at stake (about $21 million), so it would not be surprising to see some type of challenged materialize.

Moral Clauses

The University's clause in its contract is a moral clause. These moral clauses are usually pretty broad to give a company the option of cutting an employee if they engage in questionable behaviour. Don’t forget – employers are generally risk adverse as they don't want to associate themselves with a negative image.

Morals are shaped by the beliefs of a society, and so by implication, interpreting what’s moral can be a subjective exercise, at times elusive and constantly in flux.

The history behind moral clauses reveal their vagueness and how they are tied to the beliefs of a society. In the 1920s, the clauses became notorious during the McCarthyist era when they were used to terminate contracts of many writers, directors and producers who were accused of having communist leanings.

More recently, morals clauses have been used to terminate sponsor deals with Rashard Mendenhall (Twitter incident), Tiger Woods (adultery), Michael Vick (dog fighting), Kobe Bryant (sexual assault) and Randy Moss (photographed with cocaine).

This isn’t the first time Petrino has demonstrated peculiar judgement. On December 10, 2007, with the Falcons languishing in the NFC South cellar with a 3-10 record, Petrino resigned his position in Atlanta the day after pledging his commitment to owner Arthur Blank. Petrino informed his players of his decision with a short laminated note left at the locker of each player.

Now we wait and see if lawyers get involved.

NHL Playoff Teams: Lots of Wildcards

Effectively, with divisional seating, NHL playoff picture in each conference is comprised of 3 division leaders and 5 wildcards.

That's a lot of wildcards.

Someone get a wrench - this needs fixings.

Your Real NHL Standings & Their Impact on the Playoffs and Draft

You play to win the game – not to not lose the game. This is fundamental to pro sports. Herm Edwards would agree I’m sure.

Awarding NHL teams a point for losing in overtime distorts the standings. It misrepresents a team’s won/loss record, awards teams for losing and ultimately results in teams with fewer wins making it into the playoffs over teams with more wins. Divisional seating also distorts things.

How can a team that finished the season 38-44 be allowed to finish 3rd overall in the East?

The Loser Point

Entertainment is at its highest when drama is at its highest. By awarding a consolation point for losing undermines drama and by extension the raw entertainment value of a game. If fans know they will be rewarded even if they lose, the suspense and drama is diminished. Fans don’t feel the same level of elation or agony when their teams win or lose.

The NHL represents the highest and finest level of hockey on the planet played by the best of the best. Why on earth reward losing? It’s unfair, intellectually offensive and not in keeping with the principles that govern the highest levels of competition.

This isn’t summer camp – everyone isn’t a winner. There are winners and losers. To award a loser point suggests the NHL is not fully committed of its overtime format. If you implement it believe it and own it. Don’t waffle. Except for IHOP, no one likes wafflers.

There should be winners and losers, and not winners, losers and sort-of-losers-but-not-really-high-five.

Some Perspective

Let’s put things in perspective - if a team lost all 82 games this season in overtime, it would be in 12^th place in each conference.

The NHL Standings

Your Real NHL Standings

The NHL standings have been adjusted to more accurately reflect a team’s success. A few things were done. First, the loss column has been consolidated so that overtime losses are now included in the loss column. That means that won-loss records accurately reflect team success.

The second adjustment relates to the loser point. Each team’s point total has been revised so that a point is not awarded for losing in overtime – be it in the shootout or 4 on 4. A win is a win is a win.

Finally, divisional seating has been eliminated.

Ties in the standings were broken by head-to-head record then goal differential.

Who’s In/Who’s Out

After the adjustments are made, things change dramatically. The clear beneficiaries of the current NHL standings are the Panthers and the Jets.

The Panthers and Kings are out of the playoffs, and the Sabres and Stars are in the post-season. The Panthers record drops to 38-44, one win worse than the Sabres, while the Kings lose two more games than the Stars.

The Panthers drop is most dramatic. With the help of 18 overtime losses and divisional seating, it finished 3^rd overall. However, without that help, they drop to 9.

Agreed – the Panthers and Kings deserve to make it under the existing system. However, that is not the point as the criticism is not directed to these teams. Rather, it is directed to a system that allows teams with fewer wins to make the playoffs.

The Playoff Matchups

Here are your current playoff matchups:

East: Rangers/Senators; Bruins/Capitals; Panthers/Devils; Penguins/Flyers

West: Canucks/Kings; Blues/Sharks; Coyotes/Hawks; Wings/Predators

When the adjusted NHL standings are applied, things change dramatically.

East: Penguins/Sabres; Rangers/Senators; Bruins/Capitals; Devils/Flyers

West: Canucks/Stars; Blues/Coyotes; Wings/Sharks; Predators/Hawks

If I’m the Wings and Devils I’m not too happy. Teams generate significant revenue from playoffs games and for that reason they prefer home ice advantage. However, the current NHL standings award home ice advantage to the Panthers (38-44) and Coyotes (42-40) over the Devils (48-34) and the Wings (48-34).

The NHL would have preferred that the Flyers and Penguins both have a chance to advance to the next round. Under the adjusted standings, they do.

NHL Draft

The only clubs with the opportunity to receive the first overall selection in the 2012 draft are the five teams with the lowest regular-season point totals. Those teams are as follows:

(1) Blue Jackets, (2) Oilers, (3) Canadiens, (4) Islanders and (5) Leafs

However, with the NHL standings adjusted, the top five changes to the following:

(1) Blue jackets, (2) Canadiens, (3) Oilers, (4) Carolina and (5) Islanders

So the Leafs (35-47) are out of the top 5, and the Hurricanes (33-49) are in. As well, the Canadiens move up and the Islanders and Oilers slide down in the draft order.

The Adjusted Standings Are Closer

We’ve heard that the loser point keeps the standings close, thereby ensuring that fans stay interested. However, as you will notice, the adjusted standings remain close.

In fact, they are closer where it matters – at the bottom.

Without the adjustments, the Sabres are 3 points out of a playoff spot, and Tampa and Winnipeg are 8 points out. With the adjusted standings, Tampa and Florida are 2 points out, and the Jets are 4 points out.

In the West, the Flames are 5 out, the Stars are 6 out and the Avalanche are 7 points out. With the adjusted standings, the Avalanche are 2 points out, the Kings 4 and the Flames 6.

Overall, the adjusted (or real) NHL standings make good sense. They are intuitive, reward merit and keep the standings close. As a sports fan, that’s all you can ask for.