Saturday, July 4, 2009

Nash Contract Sets a Benchmark for Kovalchuk

Just as it happened in 2005, the contract that Columbus Blue Jackets winger Rick Nash received this week will impact what the Atlanta Thrashers will need to do to re-sign Ilya Kovalchuk. (The only difference is that Nash will have signed his deal one season before Kovalchuk has to re-up.)
The two players, selected first overall one year apart, have often have their destinies intertwined. In 2004, they both finished tied for the league lead in goals at 41 (along with Jarome Iginla.)
Nash, 25, signed an eight-year, $62.4 million contract that carries with it a $7.8 million annual salary cap hit.
The 26-year-old Kovalchuk has totaled more than a point-per-game in seven NHL seasons (545 games, 297 goals, 260 assists for 557 points) or 1.02 points per game.
Nash's totals are considerably lower. In 441 games, he has 194 goals and 161 assists for 355 points or .80 points per game.
So, in essence, Kovalchuk's production is almost 25 percent higher. Does that, then, mean that he should be paid 25 percent more than Nash?
That would mean an annual cap hit of a whopping $9.75 million per season. No doubt, Kovalchuk's agent Jay Grossman would love to land a deal of that value.
When Kovalchuk signed his last deal, contracts were mostly evaluated in terms of the average salary over the length of the deal. (Kovalchuk's was just shy of $6.4 million while Nash's was about $5.4 million. Atlanta could be lucky if the difference between Nash's and Kovalchuk's contracts ends up being $1 million per year more again.)
Because NHL teams have lengthened the terms of contracts with much smaller salaries at the tail ends to lessen the annual cap hit, the average value is no longer a valid measure of a player-to-player analysis.
For example, Tampa Bay center Vinny Lecavalier has an 11-year deal worth $85 million so his average is $7.72 million. Few would argue that Nash is a better player than Lecavalier, though Nash's contract's cap hit is higher.
And because of Lecavalier's winning of a Stanley Cup, Kovalchuk cannot command as much as Lecavalier.
But look more closely at the Lecavalier deal: It pays him $10 million for each of the first seven seasons.
Alexander Ovechkin's deal does not tail off in this way. It pays him $9 million for the first six seasons and then $10 million for the last seven, giving an annual cap hit of $9.538 million.
Some would argue that Ovechkin, relatively, is underpaid then when compared to Lecavalier. (Again, Lecavalier has that Stanley Cup on his resume, even if he had perhaps a better supporting cast than Ovechkin with Brad Richards -- Conn Smythe winner in the Cup-winning year -- and Martin St. Louis -- Hart Trophy winner that year.)
Look for Atlanta to use Marian Hossa's new contract with Chicago as a comparable. The most it pays him in any year is $7.9 million, as it averages $5.233 million. It is 12 years long and pays him $62.8 million. The total of Hossa's deal is only $400,000 more than Nash's, but the amount of years involved severely alter the average cap hit. However, Hossa is four years older than Kovalchuk and, thus, closer to a theoretical decline in production while Kovalchuk would theoretically have more years remaining in his prime.)
These will be the arguments between Kovalchuk and the Thrashers as they negotiate and, for the most part, these contracts will be the comparables that, to a large degree, will set the parameters.
Last time Thrashers general manager had Doug MacLean to thank for Nash's contract. This time, he has Scott Howson.

4 comments:

  1. Wayne stuck in ALJuly 5, 2009 at 8:19 PM

    Correct me if I'm wrong, but in the recent CBA, I remember hearing there was a clause limiting the amount the highest salary on a team could be by a certain percentage of the salary cap.

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  2. Yes, a player's salary is limited to 20 percent of the cap or, for the coming year, or $11.36 million. Teams can have two such players on their team. (I discussed this on my first post about the NHLPA's escalator clause.)

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  3. Good analysis. I remember DW saying that Kovy came in early (which apparently never happens) to practice the morning after Ovechkin signed his deal to ask Don if he'd seen it. Ovechkin and Kovy are friends and very similar players, though Ovy's numbers are better and he's got hardware that Kovy hasn't collected.

    An interesting deal that might intrigue Kovy would be to give him 1 million less than Ovechkin each year, with big incentives for reaching the finals, winning the Hart, Art Ross, Conn Smythe, Rocket Richard, or (haha) the Selke. Make those incentives enough to pay him more than Ov in the years he picks one up, so he will have no only bragging rights, but a bigger paycheck than his buddy.

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  4. A good idea but the CBA prevents bonuses for players like Kovy. Bonuses are only eligible for three kinds of players: those on entry-level deals, those over 35 and players who have missed like 50 games the previous year or something like that.

    I'm thinking you're right about Kovy wanting about $1 mil less per year than Ovie.

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