Friday, January 11, 2008

Warning: Contains hockey-like substances

Didn't this league just strike for over a year and cancel a full season? Didn't they implement a salary cap? Aren't their games only on a channel called Versus? Then how does THIS happen:

Ovechkin, Capitals agree to 13-year, $124 million contract extension

I don't care how good this kid is, isn't that a bit much for a league 'supposedly' struggling right now?

WARNING: Knowingly ignoring your unsuccessful past leads to bad decisions:

Leonsis said he was initially skittish about the length of the deal, having been burned by the eight-year, $88 million contract he gave Jaromir Jagr in 2001. The owner noted, however, that other contracts will surpass Ovechkin's in years to come, and that "in 10 years the deal might look really attractive."

MIGHT. Good luck with that, Ted. In other words: "While I overpaid like mad TODAY, I know I can count on my peers to take me off the hook by overpaying worse down the road. Where is Glen Sather these days, anyways?"

I'm not sure what will look more UNattractive in 10 years: Ovechkin's teeth or Ted's waistline.

And that concludes our mandated hockey reference of the month.

3 comments:

mikel said...

Although the deal is very long, I think the context now is totally different than under the Jagr deal, and that's really important. The current system gives owners a great deal of predictability, and even if the salary cap were to go down somewhat, the deal is now and will continue to be affordable for the Caps.

I think we're going to see more and more deals like this in the future - particularly because the league actually isn't in terrible health. There are some soft markets, but even owners who felt burned in the last expansion (Leipold) are trying to stay in.

Jason @ IIATMS said...

Mikel,

I knew I'd hook you in with a hockey posting. I know you're embedded in the hockey in's-and-out's more than most so I'll trust you have an idea that it will be affordable.

However, it's still staggering, both in years and dollars.

mikel said...

The competitive problem is this: there is starting to look like there's interest in breaking the bank (within the cap) for one superstar of the Ovechkin/Crosby/Luongo caliber and putting up with a supporting cast of lower-paid guys.

By signing Ovechkin to such a long deal, each year is less expensive, which means that his $$$ are a lower proportion of the cap from year to year (but you still get his services). And because it's predictable, you can both build a team around an asset you could never afford to replace AND build that team with higher-priced guys, not just kids on their first contract (which is itself capped).

The Pens could have problems with this - as their guys come off their first contracts, they're going to have to a) get long-term deals in place or b) short term deals but for 25% of total cap space or c) lose them. with those options, signing someone for the rest of their career suddenly makes sense.