The National Hockey League Players’ Association and National Hockey League early Saturday announced an agreement that will implement new rules governing the parameters of long-term contracts and how they are valued within the NHL Salary Cap System.
As part of the agreement, the NHL will register the contract between the New Jersey Devils and Ilya Kovalchuk that was filed with the League on Aug. 27, 2010. The NHL also will terminate its circumvention investigations into the contracts signed in 2009 by Marian Hossa of the Chicago Blackhawks, Roberto Luongo of the Vancouver Canucks, Marc Savard of the Boston Bruins and Chris Pronger of the Philadelphia Flyers.
Under the terms of the agreement, the new rules will apply only to long-term contracts, defined as those with terms of five years or longer, and only to contracts executed after Sept. 4, 2010. The new rules apply to contracts signed between now and the end of the CBA, as well as all contracts signed that begin in the 2012-13 season. The parties have agreed that the new rules do not automatically carry over into a new CBA.
For the purpose of Salary Cap calculations, any long-term contract that extends past a player’s 41st birthday will be valued and accounted for in two ways: The compensation for all seasons that do not include or succeed the player’s 41st birthday will be totaled and divided by the number of those seasons to determine the annual average value (AAV) charged against the team’s Cap for those seasons. In all subsequent seasons, the team’s Cap charge will be the actual compensation paid to the player in that season (or seasons, as appropriate).
Additionally, in any long-term contract that averages more than $5.75 million for the three highest-compensation seasons, the following rule shall apply: Solely to determine its value for purposes of the Salary Cap, a player’s compensation for any season in which he is age 36, 37, 38, 39 and/or 40 shall be valued at a minimum of $1 million.
“We’re pleased to be able to establish clearly-defined rules for these types of contracts going forward and just as happy we can turn the page on uncertainties relating to several other existing contracts,” NHL Deputy Commissioner Bill Daly said. “From start to finish of this multi-week process we were able to work closely and cooperatively with representatives of the Players’ Association, who shared our belief that the creation of definitive rules and guidelines in this area would be beneficial to everyone – clubs and players alike.”
“We are pleased to finalize an agreement which ends the League’s circumvention investigations and also establishes rules on long-term contracts that will provide players, their certified agents and general managers clarity for the negotiation of new contracts,” said Roland Lee, Director of Salary Cap/Marketplace & Associate Counsel for the NHLPA. “Turning the page on this process is something that will benefit all parties involved.”