Tuesday, July 21, 2009

On How The Rich Get Richer

We can't find a source for this, but we read once that John D. Rockefeller actually became wealthier during the Great Depression. Essentially, his competitors went broke and he bought up their distressed assets; since everyone else was broke, he could buy them for incredibly cheap.

Similar things are true about a falling salary cap environment. The wealthier teams can afford to stash contracts in the minor leagues, thereby enabling them to have freedom to make riskier movements - their mistakes are simply not as costly. In times of rising salary cap environments, wealthy teams can sign big-ticket contracts because those contracts increase in worth as the salary cap increases - i.e. they cost less of a percentage of the cap. As the cap increases, ostensibly the number of teams who can spend up to it decreases, and the wealthier teams are once again in the running for the top free agents. The rich win both ways. Shocking, really.

We have spoken at length here about how we think the salary cap is going to fall to between 50 and 53 million dollars next season. There are a number of teams who've already committed that much money or more. With estimated RFA contracts, here's those teams:

What unites these teams? They're either big-market teams or Canadian teams. Clearly they are not as worried about the falling salary cap as others. Let's look at some ways rich teams can use this crisis to their advantage - We'll use the Rangers as an example, because they have been the most brazenly defiant team this 0ff-season:

1. Hiding Contracts In the Minors

The CBA realizes that wealthy teams might do this - teams are only allowed to go 10% over the salary cap between July 1 and the end of training camp. The Rangers cannot therefore grab up every bad contract they want to. If the salary cap is between 50 and 53 million, the Rangers could have between 55 and 58.3 million dollars on their cap before the season starts.

2. Using Injured Reserve

Let's say Marian Gaborik gets hurt. Shocking, really. The Rangers are now permitted to replace his cap number until he returns from injury. The Rangers could then trade for or call up salary equal to Gaborik's. With basically every team having a bad salary on their books, the Rangers can wheel and deal with the assets they've got, using the minor leagues to hide their worst contracts while hopefully acquiring better ones.

3. Using Emergency Recall

We tried to make sense of this in the CBA - emergency recall is a procedure a team can use when they have less than the 18 skaters necessary to play, they can call up a player without subjective him to waivers - once the emergency is over, the player has to be immediately returned to the minors (or be subject to waivers). The Devils had Scott Clemmensen on 'emergency recall' for several months while Martin Brodeur was injured this season. The Rangers could use this to avoid subjecting high-priced contracts to re-entry waivers, where the Rangers and the player's new team each pay half of the salary.

4. Playoffs?! You kiddin' me?

When the playoffs begin, the salary cap no longer applies. We'll repeat this, you might've had something crazy in your ears: When the playoffs begin, the salary cap no longer applies. A gambling team can therefore hide bad contracts in the minors, then resuscitate them for the playoffs. The Rangers are almost certainly going to waive Wade Redden next season unless he picks up his performance - but were they to suffer injury, or were they to think that Redden is their man in the post-season - in he goes.


If these teams are willing to kick one big-ticket contract to the curb, they have the possibility of scooping up UFA assets that the poorer teams, most of whom are not far away from the $50 million threshold themselves, will not be able to afford. The 2010-11 off-season is shaping up to be a very interesting one indeed.


  1. It is important to remember that if a player is buried in the minors all year/on LTIR, they can not be called up for the playoffs if they haven't played a game during the regular season. A good example is Matvichuk a couple years ago. IIRC, he was on IR all year until the last game of the season and went on to play in the playoffs. The regular season game was important because he would've been ineligible for the playoffs.

  2. ah that's a great point, i totally forgot about that.