2008-01-14

Why is this man smiling?


All the commentary about Ovechkin's contract got me thinking. I posted this comment at Tom Benjamin's:

One thing that seems to be overlooked is the downside of this deal for Ovechkin. If he turns out to be a top 5 player in the league, he should be paid close to the ceiling (20% of the cap). Whether paying anyone the player maximum is the right team-building strategy is irrelevant - the top players will command the maximum salary. By signing for 13 years, he's allowing the player maximum in 2008 dictate what he'll be earning in 2020. I suppose that's a good bet if you think the cap will still be $50M in 2020.

Suppose the next CBA is the same as the current one. If you project a modest cap increase of 5.5% per year over the next 13 years (it's gone up over 10% in each of the last two years), you're looking at a team cap of ~$75M when Ovechkin hits age 30. In 2020 the team cap would be over $100M and the player max would be over $20M. Ovechkin's cap hit will be roughly 60% of the player max when he's 30 and under 50% of the player max when the contract's done. I don't think it's outlandish to suggest that, come 2020, he might be able to earn more in the RSL than his $9.5M cap hit in the NHL.

If this contract makes sense for any team, it's the Caps. If they hadn't signed Nylander in the offseason, they would have been dangerously close to the $34M team salary floor. They needed a big salary to pay for the next few years to replace Kolzig's. The diminishing fraction of the team cap that Ovechkin eats up over the next 10+ years gives them room to build a supporting cast. If you believe Ovechkin is a top 5 player, a deal like this gives the team it's best chance to contend.

I thought this was the reason for the brief term of Crosby's contract. If you know you're worth the league max, why settle long term for the league max right now? Why not get the most current league max (or close to it) every year?

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