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SBJ/July 14 - 20, 2003/Labor Agents
It’s a buyer’s market in NHL
Published July 14, 2003
Whether it's a natural correction or mass preparation for a new economic system, NHL teams clearly have kept tighter purse strings during this year's free-agent signing period.
Since July 1, when free agents could begin signing deals with NHL clubs, only a handful have signed lucrative contracts, while several have taken pay cuts and some of the game's biggest stars — Sergei Fedorov and Brian Leetch among them — are still without deals.
This time last year, players well below all-star level such as Bobby Holik and Bill Guerin were getting $9.5 million-per-season deals (with the New York Rangers and Dallas Stars, respectively), but 2003 has seen only one player sign for more than $6 million a season.
The volume of activity has not changed — this year there were 43 free-agent signings in the first nine days, compared to 41 last year — but the market at the high end has seemingly evaporated, while players on all ends of the salary spectrum have found themselves with little leverage.
Brian Lawton, president of Octagon's hockey group, said there's a good chance that not one of Octagon's 15 clients who are free agents will get a pay raise for next season.
Phoenix Coyotes general manager Mike Barnett said that instead of signing big-name players, he's using the free-agent market to go bargain hunting.
General managers say a combination of factors has created what appears to be the best buyer's market for NHL talent in years.
One is that the league's collective-bargaining agreement expires on Sept. 15, 2004. With NHL Commissioner Gary Bettman promising a system that many believe will feature some sort of salary cap, general managers are trying to keep payrolls below a threshold that would force them to make major moves once a new system is in place. Not only are free agents getting the cold shoulder, but teams reportedly are looking to trade many of their highest-paid stars under contract.
"Absolutely, the fact that we have a collective-bargaining agreement expiring in a year is on everybody's mind," said Bill Daly, the NHL's executive vice president and chief legal officer.
"We're preparing for change in 2004-05," said Dave Taylor, general manager of the Los Angeles Kings. "I don't know exactly what the changes will be, but I think we'll have a very different model than what we have now. The less financial obligations we have committed beyond '04 will give us the most freedom to adapt to whatever the new system looks like."
Officials from the league and from clubs say teams are simply reaching their limits in terms of what they can spend on salaries and recognizing that the highest-paid players and teams don't always win titles.
"I think clubs are coming to understand in constructing their payrolls that having two or three real high-priced players might not be the best way to construct their rosters," Daly said.
Last season, only one of the 25 highest-paid players was on a team that advanced to the Stanley Cup semifinals. The rest were on teams that had been eliminated (20 players) or missed the playoffs entirely (four).
The one player in the top 25 in compensation who did go deep into the playoffs won't be on the salary leaderboard next season. Paul Kariya, who made $10 million last season with the Anaheim Mighty Ducks, agreed to a record-breaking $8.8 million pay cut to sign with the Colorado Avalanche.
The Ducks elected not to make a "qualifying offer" to Kariya, which would have allowed them to retain his rights by matching his previous salary plus 10 percent. By not making a qualifying offer, the Ducks made Kariya an unrestricted free agent. They offered him a three-year contract in the $6 million-a-year range, but he turned it down.
Instead, he elected to join the Avalanche for $1.2 million per season, joining his friend and former linemate Teemu Selanne, who took a less dramatic pay cut to also sign with the Avalanche.
More than a third of players whose contracts expired after last season were not given qualifying offers. Those players, 155 out of a possible 435, became unrestricted free agents. Last season only 125 out of 416 players did not receive qualifying offers.
Lawton said "there's a little bit of panic in the air" among players and agents.
"The league is not just trying to slow salaries, they're trying to roll them back," he said. But Lawton noted he is comfortable with a system that features market forces playing out on their own.
"I am in favor of free market, and if salaries are rolled back because teams can't afford it, then I'm in favor of it," he said.
The league also hopes to see that trend develop but draws very different conclusions as to what that means.
"I would hope there's some sort of market correction this summer," Daly said. "But the bottom line is, based on where we are, a market correction is not going to accomplish what we need to accomplish. It doesn't change what we have to do in collective bargaining."