Sunday, August 12, 2007

Hiding Salary Mistakes In Russia

Before the lockout, essentially all of the best players in the world played in the NHL. This situation is slowly being eroded as more and more NHL capable players are choosing to play in Europe as they find they can make the same amount (or more) money in European leagues than they can with the artificial salary restrictions placed upon them by the CBA. This is especially true in the Russian Elite League, where there is there is no player transfer agreement. This allows players who are under valid NHL contracts to jump to the Russian league (and vice versa) if they are so inclined.

So far, two players who are signed to valid NHL contracts have signed to play in Russia next season. They are Oleg Tverdovsky of the Los Angeles Kings and Stanislav Chistov of the Boston Bruins. The twist as James Mirtle points out is that this (especially in the Tverdovsky case) is being done with the apparent blessing of their NHL teams.

Oleg Tverdovsky's NHL contract has him due to make $2.5 million this season. He has not lived up to this contract and spent a good portion of last season playing in the AHL. While Tverdovsky plays in the AHL, his salary does not count against the Kings salary cap, but they still must pay it. He was expected to be sent to the AHL again this season, but has instead chosen to play in Russia. As a result, the Kings can list him as a suspended or defected player and now do not have to pay him. Tverdovsky playing in Russia thus benefits the Kings.

This is an interesting method of salary cap evasion. If a team signs a player to a contract that does not fit well under the salary cap and can convince the player to play in Russia, they are no longer responsible for the contract and they do not have to buy out the player.

However, things may not be quite this simple. The Alexei Yashin case where Yashin held out for a season while under a valid contract with Ottawa was ruled that he still owed the Senators another season under the terms of the contract to make up for the lost season. Thus, it is entirely possible that Tverdovsky could decide that he is going to play in North America again either next season or some year in the future and Los Angeles will again be on the hook for his $2.5 million. The CBA does not allow re-negotiation of this contract, so LA's only option would be to buy it out (if they were aware of Tverdovsky's plans in time for the early summer buyout deadline).

Because of the CBA's salary restrictions, some players are finding Europe (especially Russia) to be a more lucrative place for them to play. This reduces the overall talent level of the NHL (though the reduction has not been huge yet it is increasing annually) and hurts the fan. Teams may also be able to use the fact that there is no player transfer agreement with Russia to let their players under problem contracts leave to Russia and be (at least temporarily) off the hook for the contract, however, the potential exists that if the player returns to the NHL he could still be owed the remaining money on the contract when he is even older and less likely to be of value to his team.

NOTE: This Boston Herald aricle claims Stanislav Chistov has not yet signed to play in Russia next season. Whether or not he is signed is immaterial since, with a lack of a player transfer agreement, he could jump back to the NHL at any time, though the Bruins might not have a roster spot for him if he does come back.

I don't believe this is any deliberate form of cap evasion by the Kings with Tverdovsky.

For one reason, the only way this works is the unwillingness of the Russian Hockey Federation to sign off on the NHL-IIHF transfer agreement. The day the Russians finally pull their heads out of the sand and sign off, no Russian-born players under NHL contracts would be allowed to sign with a Russian team.

Second, any team that "convinces" a Russian born player under contract to sign with a Russian team is setting themselves up for a world of hurt under the CBA.

Circumvention is a no-no under the CBA and any team attempting to talk a Russian born player to sign with a Russian team are setting themselves could face penalties including fines tacked onto their cap space and fines against ownership/management.

Now, there's nothing against a team telling a player like Tverdovsky that they intend to demote him to the minors, as that could be considered a "legal" form of cap circumvention under the CBA.

If the player decides then to sign in Russia, better for the team as they don't have to pay his salary, which they'd have to do if he plays in the minors although it won't count against the cap.

I wouldn't be surprised if Kings GM Dean Lombardi were privately hoping Tverdovsky would bolt for Russia once he was informed of Lombardi's plans for him this coming season. But I don't see Lombardi "convincing" Tverdovsky to do so in order to garner some cap relief.

That's something that simply cannot be controlled by a GM. Ultimately, it's up to the Russian player and of course that's all dependent on how long the Russian Hockey Federation refuses to sign off on the NHL-IIHF transfer agreement.

And as long as it's washed-up NHL'ers (or never-weres like Stanislav Chistov)doing this, there ain't a GM in the league who'll complain about this.
There is overt deliberate cap evasion. Ie Lombardi goes to Tverdovsky and says please sign in Russia. This did not happen.

And there is the more indirect cap evasion. LA wants Tverdovsky off their books. They treat him poorly knowing that he has gone to Russia before and may do it again. This happened.

That is assuming you consider it cap evasion in the first place since Tverdovsky would probably have been in the AHL and not counted against the cap this season.
I don't believe Tverdovsky was treated poorly by the Kings. Put simply, he hasn't been an effective player for the past two seasons, and it was highly unlikely he was going to make their roster again this season.

This isn't hiding a salary mistake but rather a bit of good fortune for the Kings because of Russia's unwillingness to sign off on the transfer agreement. Without it, Tverdovsky goes to the minors and his $2.5 million doesn't count against the cap. Because of it, they're fully free and clear, provided he doesn't change his mind.
Tverdovsky is used to being an NHL player. Sending him to the minors last season in his mind is treating him badly. They are expected to do it again. Tverdovsky would not have picked up his things and left the country if he thought the Kings were treating him well.

The Kings benefit from this. They made a mistake acquiring Tverdovsky with the ocntract he had and now he is in Russia and they seem to have had a do over.

Your point seems to be that the Kings are not breaking any rules. That is true. They were certainly hoping Tverdovsky would go back to Russia and any way they could try to get him there without overly pushing him (which would have been against the CBA) was likely considered a good move.
Tverdovsky may be used to being an NHL player, but as an NHL player he also knows he faces demotion if under contract with an NHL team and his play is not up to an expected standard for a player earning the salary he does. He's not being treated badly by being demoted.

If Russia had signed off on the NHL-IIHF transfer agreement, he'd be starting this season in the AHL and he knows it.

My point is that you claimed in this post that the Kings were "hiding salary mistakes in Russia". They aren't. Tverdovsky went back to Russia by his own choice thanks to Russia's unwillingness to sign a transfer agreement.
Kings made a mistake acquiring Tverdovsky at his salary.

Tvedovsky is playing in Russia this season thus that mistake has gone away (at least for this season).

I am not sure how you can say My point is that you claimed in this post that the Kings were "hiding salary mistakes in Russia".

Tvedovsky is a salary mistake that has gone away because he is in Russia.
That's not how you put it in your post. Indeed, the title of your post suggests the Kings are up to something sneaky by "hiding salary mistakes in Russia". They didn't hide it, they merely caught a break because of Russia's unwillingness to sign off on the NHL-IIHF transfer agreement.

I do agree with you that acquiring Tverdovsky was a mistake, but remember, he was part of the deal that brought highly-touted blueline prospect Jack Johnson to LA. To get the diamond in the rough, the Kings had to agree to also accept a lump of coal too.

Tverdovsky wasn't even the Kings "mistake", he was Carolina's.

Yes, the salary "mistake" has gone away, but of his own accord because of his home country's unwilingness to sign a player transfer agreement.

If not for that, the salary mistake would've been hidden in the minors, legally hidden under the CBA.
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