NHL Contract Termination – Inconsistencies Based on Player Value

November 12, 2015


By Casey Goodrich – Thompson Rivers University 2L JD Student

A relatively recent phenomenon in the National Hockey League has been to grant star players exceptionally long term contracts, which front-load most of the payout in the early years of the contract. This is done to circumvent the salary cap limit, in effect lowering the player’s annual average cap hit, providing a great benefit to a team that is spending to the salary cap imposed by the league.

On the contrary, this type of contract can also be detrimental as it commits a team to a player for a very long period of time, which has obvious downsides regarding the player’s potential regression, which may include injuries, old age, and inconsistencies in their play. While this type of contract has largely become a thing of the past due to the new CBA provisions enacted, there are still quite a few active players that are currently signed to these long-term deals.

The reason that I mention this type of contract is that it has triggered some controversy based on how teams handle players that are signed long-term and are no longer valued as contributors to the team. A recent example of this was the Los Angeles Kings terminating Mike Richards’ contract in June, after he was charged with having possession of a controlled substance (oxycodone) at the Canadian border. The organization justified the termination by stating that there was “a material breach of the requirements of his Standard Players Contract”.

Richards had five years remaining on his contract, with an average salary (cap hit) of $5.75 million. The timing of the termination seems rather convenient, as the team had been attempting to trade him last season and ended up placing him on waivers in January due to his lack of production (resulting in the team saving $925,000 in salary cap relief). After the termination transpired, Richards filed a grievance with the NHL Players’ Association.

What really stands out here is the seemingly arbitrary decision that a team can make when a player is guilty of unlawful off-ice behaviour. There are currently stark inconsistencies with how teams manage contracts for players that are caught in illegal conduct. To illustrate this point, there have been other recent incidents that were handled in completely different ways than that of Richards. Zack Kassian of the Montreal Canadiens was recently suspended without pay and ordered to rehab (stage two of the NHL/NHLPA Substance Abuse and Behavioral Health Program) after he was involved in a car accident that left him with a broken foot and nose. This is a much fairer and equitable resolution, since Kassian can return to the team once doctors determine that he is well enough to play.

However, it does raise the question of the motives of a team. While it is entirely possible that Montreal was only doing what was in Kassian’s best interest, it is also important to note that Kassian is viewed as a young player with high potential (as evidenced by his draft position – 13th overall) and is currently on a very cost-controlled contract ($1.75 million for one year), which makes him a low risk, high reward player for the organization.

Another recent, more analogous example involved Ryan O’Reilly of the Buffalo Sabres, who was charged with impaired driving and fleeing the scene after he crashed his truck into a Tim Horton’s coffee shop. As of now, the team has honoured his contract without any publicized discipline. Notable factors behind this decision include Buffalo recently signing O’Reilly to a seven-year contract extension worth $52.5 million, after having traded for him in exchange for three players and a second round draft pick. It is also important to note that O’Reilly is 24 years old, so he is only just beginning to enter his prime. What is evident here is that the organization, after having given up a hefty package of assets to acquire O’Reilly, refrained from any discipline or contract termination based on the perceived value that he brings to the team. This is the opposite to how the Kings handled Richards due to the value of each player to their respective team.

Based on these examples, it becomes clear that there is currently an inconsistency with how teams enforce or terminate contracts depending on how beneficial or detrimental a player is to the team. While a team should have the right to discipline its players for unacceptable off-ice behaviour, especially in extreme circumstances such as drug abuse, it leaves some uncertainty for the players involved. With the current cap era in the NHL, it is understandable why some teams are driven to terminate contracts, but the ambiguity that this creates can be problematic for the players.

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