Signing bonuses could become next CBA battleground
Jamie Benn (Photo by Glenn James/NHLI via Getty Images)
Signing bonuses could become next CBA battleground
Jamie Benn of the Dallas Stars cashed in on his contract extension. Not only did he get $76 million, he got $56 million in guaranteed signing bonus, including $8 million even if there's a lockout in 2020-21.
When the NHL announced last fall its seven-year partnership that will see adidas become its official outfitter starting next season, your trusty correspondent asked commissioner Gary Bettman whether the deal would be extended by a year if there were another labor dispute. Bettman responded with a one-word answer.
“Really?” Bettman asked, with a good amount of offense and incredulity. Well, about as much offense and incredulity as someone who has shut down the game three times in the past 20 years could muster.
Bettman went on to say that a force majeure would take effect and if a partner were deprived of a full season, it would be extended by a year. “I haven’t even looked at the term sheet on that,” Bettman said, “which should tell you how focused I am on the next round of collective bargaining.”
Well, you’d have to think the league is a little more focused on the next round of collective bargaining now than it was this time last year. Because the players and their agents certainly are and all you have to do is look at some of the most recent contracts to see just how focused they are on it.
Let’s take Jamie Benn’s eight-year extension with the Dallas Stars that kicks in next season as an example. Of the $76 million Benn will be paid from 2017-18 through 2024-25, $56 million of it will be paid in signing bonuses that he will receive July 1 of every year of the contract. The first four years of the deal, he’ll be paid $8 million in signing bonus, then receive $7.5 million on July 1, 2022 and signing-bonus payments of $5.5 million in each of the last three years of the deal.
There’s a lot to be said for the player having the money in his portfolio early so it can start working for him, particularly when there’s a good chance that somewhere in the 15-20 percent range is going to be accounted for escrow payments. But it goes far beyond that. For example, Benn will be cut a check for $8 million on July 1, 2020 and receive just $1 million throughout the season. And that is by design because nobody knows whether there will actually be a season then.
You see, 2020-21 represents the first opportunity the league and the NHL Players’ Association will have to terminate this collective bargaining agreement. If the NHL would like to terminate, it must let the NHLPA know in writing by Sept. 1, 2019. The NHLPA has until 14 days later to let the league know if it intends to terminate the deal, but if this deal is going to be terminated early, bet very, very heavily on the owners being the ones to serve notice. Failing that, the CBA will expire on Sept. 15, 2022, but it can be renewed on a year-to-year basis after that.
That’s not all, though. Players are getting their money up front because it makes their contracts all but impossible to buy out, because signing bonuses are guaranteed. Benn will be 35 years old prior to the last season of his contract in 2024-25. Let’s say for argument’s sake that the Stars would like to buy him out to create cap space. They could do that, but all they’d be saving in real money would be $1 million because $5.5 million of his $6.5 million stipend for that season comes in signing bonus.
But Benn is hardly the only one doing this. Actually, David Clarkson got the ball rolling when he signed what might be the worst contract in NHL history three years ago. Of the $36.75 million he’ll receive in that deal, $27.75 million of it is in signing bonus. That’s more than 75 percent of the value of the contract in signing bonus. So let’s say the Columbus Blue Jackets had wanted to buy Clarkson out of the final four years of his deal earlier this summer. They would have had to pay $18 million over four years for Clarkson to not play for them - $16 million in signing bonus and another $2 million (which represents one-third of his remaining base salary). Hardly makes it worthwhile.
But Benn is hardly the only one doing this. Steven Stamkos is getting $60 million of his $68 million salary in signing bonuses, which is believed to be the highest percentage of a contract in NHL history and second only to the $68 million Shea Weber is getting in signing bonuses on the offer sheet he signed with the Philadelphia Flyers in 2012 that was matched by the Nashville Predators. Stamkos, by the way, will get a lump sum of $8.5 million in 2020-21 and $5.5 million in 2022-23.
Ryan O’Reilly is receiving $45.5 million of his $52.5 million in signing bonus, including $5 million payments in ’20-21 and ’22-23. Andrew Ladd is getting more than 80 percent of his contract - $31.5 million of $38.5 million in bonuses, including $3 million in each of the two potential lockout years. And Patrick Kane and Jonathan Toews will each receive $44 of their $84 million in bonuses, including $5 million in 2020-21 and $4 million in 2022-23.
Who knows? Perhaps paying so much money in signing bonuses will prompt Bettman to strike a CBA deal with the players. Then again, it might just give them another loophole to try to close and another hill to die on.