Financial Issues

[SharksGM]

Here are my views on the problems with the current systems and possible options to consider. You may disagree with whether these are problems at all, but they're my views so whatever.

Problem: Rookie contracts are too cheap and (with options) too long. Furthermore, there are ways to get around the 3 year contract limit imposed by the game. This seems to be exacerbated by top draftees being NHL ready after just one AHL season, if not earlier.

Solution: Borrow the NHL rookie contract rules. 3 years, no options. Top 10 picks have a higher minimum salary (I don't know exactly what it is, but I think it's somewhere in the CBA). I would suggest perhaps having a minimum salary that scales down with draft position and/or POT. NHL rookies can make up to $3-4 million on their rookie contracts with bonuses. Granted those bonuses aren't always easily attainable but they do count against the cap.

Problem: Contract extensions to still-developing RFAs are unrealistically undervalued if the player is still well away from their ceilings.

Solution: This is obviously the toughest nut to crack, so here are some ideas, none of which will necessarily solve the problem entirely by itself.

1. Limit second contracts to 3 years max. This gives you 6 years of efficient production from a prospect before they ask for what (EHM thinks) they're worth.
2. No RFA negotiations until later in the year, perhaps March or once the regular season ends. This can sort of approximate how an improving player wouldn't want to re-up after a good start to a season if they think they'll have a career year.
3. Minimum salaries based on some permutation of current ratings and potential. I don't really like this, although it's basically what EHM does to figure out salary demands.
4. Minimum salaries based on player performance. That's what happens in real life, but then in real life they have long ass meetings and negotiations with agents. Doesn't sound tempting.

Problem: UFA age is too high, leading to a shortage of free agents. Last season was not so bad mostly because of ANA's unqualified RFAs.

Solution: Lower the UFA age gradually, say by 1 per year every year until it hits 28 or 27. However, as far as I know EHM has a hardcoded UFA age, so this requires some manual work, beyond that I don't ever recall RFAs refusing to re-sign the way greedy UFAs on bad teams do. In fact, right now it is advantageous to have low greed upcoming UFAs, because they don't require minimum raises like RFAs do. So this solution also requires some sensible system for re-signing players.

Problem: Bonuses don't count against the cap and seem to be more efficient than adding to base salary.

Solution: The current limit of 50% of the salary helps but doesn't completely solve the problem. Again, do what the NHL does and count bonuses against the cap. The easiest way is just to add bonus amount/number of years to the cap number. I suppose it could get more complicated with options...

Problem: Player options are always picked up (as far as I can tell) and team options are strictly better than an extra contract year.

Solution: At the minimum, have options (if they are permitted) count the same way as an extra year does. I don't know how to make team options 'cost' more than an extra year, though.

Problem: Some UFAs get signed to ridiculous bargain contracts in the dog days of summer. Not necessarily a problem, but it's not really realistic either

Solution: Fuck if I know. UFAs tend to request stupid contracts, so EHM's system is definitely no better. At the risk of drawing out the UFA process, I would suggest a week-long bidding period rather than 24/48 hour limits. Also, total contract value isn't entirely fair. Years 3-6 of the contract should be worth less than the first few, especially for younger UFAs. I highly doubt a 31 year old UFA would really prefer 6 years @ 500k over 1 year at 2.9 million.

[Virtual Jarmo]

We're talking about all of this on Tuesday night. I think I have a pretty sound idea in place, but I'll have to discuss it with Nick and Ryan before anything gets announced or confirmed.

The ELC's and no options has already been discussed somewhere and it was deemed standard operating procedure as of next year's draft. The reason it wasn't instituted this year is because it would be unfair to GMs who haven't signed their players yet. But, that being said, we won't allow teams to violate it further with unsigned prospects.

Further, there will not be individual year salaries. I'm not keeping track of all of that. It'll be done on an average, just like the NHL cap hits. So, you'll be stuck with that guy at the average price (cap hit), even if he's 38. It's the only reasonable way to do it with a flawed program.

[SharksGM]

I wasn't suggesting individual years of contracts in any case. I meant the following:

If you offer a $1M/year salary + $1M bonus, the cap hit (and salary in the file) is $2m/year for a 1 year contract, $1.5M/year for a 2 year contract, etc. There's not really any reason for bonuses not to count against the cap, other than that it's more work (sorry).

Also, if you offer $1M/year x 6 years to a 31 year old UFA, they should value that as, say, 3 years x $1M + 3 years x $500k = $4.5 M total, so they won't accept that over a $5M/1 year offer. I can see the argument that for older UFAs (35+) they may prefer job security to a bigger immediate payout, but for younger guys that isn't typically the case unless they get one of those retarded 10+ year lifetime deals that are getting more popular in the NHL.

[Virtual Jarmo]

There's a lot of levels to the financial shortcomings of EHM to consider. Bonuses are certainly one of them, but my issue would be getting a bargain price because of a high bonus. Say, a player wants 5M a year, but you can get him signed with a 2M/year contract with a 3M bonus for a 3-year deal. Then he makes 3M per year instead of the 5 that he wants. We could still work with the 50% bonus stipulation, I guess, but then the bonus would have to be yearly (ie, guy wants 2M/year over 4 years...a 1M bonus is only 250k/year over the duration of the contract; that would make the signing bonus 4M to adhere to 50% and with bonuses counting against the cap).

Conservatively, I'd estimate that we'll have 2/3 of the financial issues taken care of on Tuesday night. ELCs are a no-brainer and should be done with little discussion. Figuring out contract year maxes and so forth, along with a system for increasing yearly salaries will be the hard part.

Until that time, I'm open to suggestions. I can't honestly say that I'll do anything other than take them in to consideration. No system is going to be perfect, but we're going to try and cover everything that we can.

[SharksGM]

Yeah, I meant counting bonuses against the cap and keeping the existing maximum of 50% of annual salary.

From what I can tell most players will accept a substantial reduction in annual salary, even on a 6-year long contract, in exchange for a smaller bonus. So even if bonuses count against the cap, for long term contracts it is almost always beneficial to offer as large of a bonus as possible.