A potential loophole in the Compliance Buyout process?
After an extensive lockout, the brand new Collective Bargaining Agreement between the National Hockey League and the National Hockey League Players’ Association was finally officially completed and made public a few weeks ago. It can be viewed here.
Since its release, many have begun to scour through the 540-page document for any potential loopholes- ways of bypassing the intricacies of this legal code in the salary cap-tight era all owners and general managers are faced with today.
One of the most noteworthy new features of this edition of the CBA is the ability to perform compliance buyouts- essentially terminating a player’s SPC (standard players’ contract) in order to not only gain some substantiative cap relief, but as well release them into the free agent pool.
However, what if a team wanted to buy out a player, but didn’t have the financial stability (or any remaining buyouts) to do so?
The CBA strictly prohibits teams from buying out players just so they can re-sign them at cheaper discounts.
As per the document itself, from Section 50.9, (i):
“… a Player who has been bought out under the Compliance Buy-Out provision of this Agreement shall be prohibited from rejoining the Club that bought him out (via re-signing, Assignment or otherwise).”
But surely there must be a way to bypass this, is there not?
Could a team, theoretically, trade the player to another team, one which could afford to buyout his contract, allowing the original team to sign him as a free agent once the buyout process was complete?
Just for example’s sake, let’s say the cash-strapped New York Islanders wanted to unload Rick DiPietro’s 15-year, $67.5 million contract, and no teams were willing to take on his contract as part of a “hockey trade”.
The Toronto Maple Leafs are by far the NHL’s wealthiest team, with an estimated value of $1 billion, according to Forbes. In fact, assistant GM Clause Loiselle has already gone on record stating that the Leafs do indeed have the ability to use both their buyouts this summer, and are exploring the idea of acquiring another team’s contract, solely for buyout purposes, in order to receive some compensation in return. This could be draft picks, or even a prospect.
So let’s say the Islanders trade DiPietro, along with a 4th-round pick, to Toronto for a 7th-round pick. The Leafs would then buyout DiPietro’s contract immediately, and also have moved up three rounds in the draft.
The Islanders, meanwhile, would have the burden of DiPietro’s contract off their hands (and their salary cap), while paying a somewhat minimal price for the Leafs to do so. New York could then sign him for a much better bargain via the free agent pool and retain him as their starting goaltender, as he would have no obligation to the Leafs whatsoever.
Under the brand new CBA, would this be permitted?
Technically speaking, yes. However the principle of the collective bargaining agreement is intent- and that’s where the league could potentially strike back.
The clause in the CBA only disallows the team which performed the buyout from re-signing that specific player. In the example provided, the Leafs carried out the buyout, as DiPietro was their property at the time of said buyout. Once he became a member of the Leafs, he no longer had any ties or connections to Long Island.
And as a free agent, DiPietro would theoretically have 29 teams to choose to sign with (the Leafs, obviously, excluded), but could “coincidentally” opt to sign with the Islanders.
From the CBA’s Section 26.3 (b):
“No Player or Player Actor, directly or indirectly, may… take or fail to take any action whatsoever, if the Player knows or reasonably should have known (measured by the objective standard of the “reasonable Player under the circumstances”) that either (i) or (ii) is intended to and has the effect of defeating or Circumventing the provisions of this Agreement or the intention of the parties as reflected by the provisions of this Agreement, including without
limitation, provisions with respect to the Team Payroll Range, the Entry Level System and/or Free Agency.”
So, it’s open to interpretation by the league. If the Ilya Kovalchuk scandal with the New Jersey Devils three summers ago taught us anything, it’s that circumvention revolves around intent.
And if the two teams involved in a devious process like this could somehow downplay their levels of intent, we just might have a loophole here, folks.
Latest posts by Samir Javer (see all)
- A potential loophole in the Compliance Buyout process? - June 20, 2013