Claimed:A Modest Proposal: Signing Bonuses [Final 6/6]

[CowboyinAmerica 2,887]

 

Could the VHL actually implement a signing bonus?

 

In Edition 256 of the VHL Magazine, Draper named myself and YEAH! to the VHL Board of Governors. It was a great honor, and vindication that I am actually producing something of value for the league. There was only one problem: I had actually turned down Draper’s offer the night before, and he never got to edit his article before it went up. Whoops. (The reason? I find leagues more fun when I’m not involved in the behind-the-scenes politics. I’ve done that enough in my sim league career.)

 

However, that doesn’t mean that I don’t have ideas to share; I’ll just have to do them in a different forum, then let the powers that be argue about whether they have merit without me. Recently, it’s bugged me a bit how the contract system works, and how GMs have learned to game the system through midseason trades (even though Calgary has been a major benefactor). I’ve also been interested in a way to further incentive free agency and seeking other, more lucrative contracts (which is why I appreciate Boom’s movement, even if he leaves Calgary after this year).

 

Unfortunately, there aren’t many ways to do one or the other under the current system. However, there is one key element that the NHL – and other pro sports – include in their contracts that could hypothetically accomplish both goals: signing bonuses.

 

The Proposed Mechanics

 

Whenever a player is assigned a new contract – from a rookie deal to a last gasp free agency and everywhere in between – the team offering the contract is able to offer a signing bonus to a player. Likely with some sort of cap as a percentage of the original contract (more on that later), the team can frontload some money to the player upon the signing of the contract. For players and teams, this money would then be treated in two different ways.

 

For Players: The player would receive his or her entire signing bonus in the very first season, as well as the average base yearly base salary for what is left over. For the math inclined, the player in year one would receive (Full Bonus + ((Total Contract-Bonus)/Years on Contract)), while in each subsequent year the player would receive the greater of ((Total Contract-Bonus)/Years on Contract) or the TPE contract base.

 

For Teams: Similar to most pro sports, the original signing bonus would not be applied entirely in the first year for salary cap purposes. Instead, the signing bonus would be prorated over the life of the contract, meaning that the average signing bonus would be applied each year. Contracts could also be doled out specifying different base contract totals for each season.

 

An Example: The Calgary Wranglers really want Bismarck Koenig, and they’re willing to offer him a 3 year deal, worth $16 million in total. In order to incentivize him to sign, they are not only giving him an extra million in base salary in year one, but a $3 million signing bonus as well. For Koenig, this is great, as his yearly payout for the player store (since his TPE-based salary can increase no further) amounts to this:

 

Koenig's Payout

S45: $8 million ($5 million base + $3 million bonus)

S46: $4 million base

S47: $4 million base

 

For Calgary, though, the move doesn’t clog their cap as badly, as the signing bonus hit will be spread among all three seasons. This breakdown also means that they stay above Koenig’s mandated $5 million minimum each season.

 

Calgary's Cap Hit

S45: $6 million ($5 million base + $1 million bonus)

S46: $5 million ($4 million base + $1 million bonus)

S47: $5 million ($4 million base + $1 million bonus)

 

Additional Loophole-Closing Rules

 

• All contract increases that occur from TPE gains are applied to the base contract only, and the original prorated signing bonus will not change.
• Any contract bonuses added to pre-existing contract years must be in base salary only; however, team-issued extensions are allowed to have signing bonuses tacked on to the additional years.
• For team accounting purposes, the signing bonus will always be prorated evenly, to prevent a team from loading up the cap on one down season.
• For ease of the VHL contracts person and the VHL Store person, it could be mandated that all signing bonuses are in increments of $500k per year.

 

The Benefits and the Catch

 

For both teams and players, it’s another level of realism to the VHL, and it’s one that hypothetically could be mutually beneficial if played correctly. Unlike the NHL, where signing bonuses are often made to the team’s detriment, a successfully deployed signing bonus not only helps the player by being able to spend cash earlier (and having extra seasons of the gained TPE), but teams also benefit from their players being able to purchase TPE earlier. It's a win-win.

 

However, there’s one element of signing bonuses that I didn’t mention above but occur in all sports. Those signing bonuses will never leave your team’s cap. Even if you trade, cut, or waive a player, the team is still on the hook for that signing bonus. You want to start a rebuild? Perhaps you should have thought about that before signing so many bonuses. Did a player go inactive on you? That’s your fault for trusting him with a huge bonus. Want to make a deal for a similar TPE player who doesn’t have a bonus? Too bad, because you’ll have to pay the remaining signing bonus, while the other team would not, so you’ll have to retool the deal. It’s an additional element of strategy, and one that would require GMs to become even craftier.

 

Issues

 

As much as I like this idea, I do acknowledge that there are a few kinks that would need to be worked out with its implementation. First, how will the accounting work for traded players? For an example, let’s take this season’s Bruno Wolf. Quebec is selling, but there aren’t any obvious homes for Wolf because most contenders are maxed out on cap. What’s to stop Brovy from signing himself to a one year, $4.5M contract with a $3M bonus in order to lower the other team’s cap hit? One way to combat this would be to mandate a cap (e.g. 30% of the original contract) on how high the bonus can be – but what’s the right figure? Another way to combat this would be to have the original team take the salary cap hit AND have the new team take a full hit for accounting purposes – but would this stifle trading?

 

Another issue comes into play with inactive general managers. While I have no issues with players going inactive after receiving a large bonus – that’s the risk, GMs – the opposite issue could get thorny. Take, for instance, Mikaelson’s large S43 Seattle contract. He locks up a hypothetical large bonus in the beginning of the season, but then, through no fault of his own, Bushito disappears. It could be cost prohibitive for the new GM to trade the long contract. Is Mikaelson and Seattle both essentially stuck for the next several seasons? Would there be commissioner intervention in that circumstance in order to ensure the member stays active? And what precedent would the commissioner intervention set if so?

 

Finally, there’s the issue of how exactly traded/cut players come off the team’s cap. Is it better to move the remainder of the signing bonus to the team’s cap immediately, NFL-style? That could seriously hamper a contending team in the given season and make long contracts next to impossible to move. Or would it be better to keep the signing bonus on the team’s cap, prorated NBA-style? While it would ease the initial burden for the team, it could mire a team or a new GM with a poor decision for seasons to come. Given these additional cap hits with no lowering of base salaries, it could also make sense to increase the cap ($35M?) with this kind of system.

[CowboyinAmerica 2,887]

So yeah, it's long, but discuss or whatever. Though it was at least interesting to propose. Would make GMing (and even determining player's store cash) a bit more complex though.

[Fire Tortorella 2,653]

It is interesting but I think it's too complex of a system. Currently, a team could theoretically offer a "signing bonus" just by offering a higher base salary in year one, since we don't use AAV. I know that that doesn't capture the benefits of the system you described above, but it is something at least.

 

Plus I think you'd make Devise's and Kesler's heads explode at all the math involved.

[eaglesfan036 4,598]

I really like the thought and effort put into this, but I see 2 problems

 

1) Super long and confusing for all the GMs, commies, and gorlab's head would explode

 

2) Those signing bonuses will never leave your team’s cap. Poorly run teams could head into cap hell for a long long time which would screw over parity and such. Also if a sucky GM leaves and goes inactive or whatever then the new GM could inherit a horrid situation

[TheLastOlympian07 2,388]

a simpler solution would be to raise the cap jokes jokes I think this is an interesting idea. However that would be a terrible thing to happen if a new gm would have to inherit such a bad situation but then again thats half the fun is trying to clean up someones mess

[CowboyinAmerica 2,887]

Yeah, it's complicated. I was just thinking about it though so figured I'd write it all out to organize my thoughts.

[Molholt 2,185]

a simpler solution would be to raise the cap jokes jokes I think this is an interesting idea. However that would be a terrible thing to happen if a new gm would have to inherit such a bad situation but then again thats half the fun is trying to clean up someones mess

Not really.

[Toast 887]

Content 3/3 - Really cool idea here, but I do believe that it's too complex with all the various things going on as well. We can just stick with our technical bonuses that we use now. Nice write-up of the idea though, hopefully the board can work with it.

 

Grammar 2/2 - Nothing seemed wrong anyways.

 

Appearance 1/1 - Looks good!

 

Final 6/6

[CoachReilly 688]

Claimed