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Saturday, June 25, 2005

nhl- Buyout Options

from the Dallas Morning News (Sunday edition) via the Mercury News, Stars fans, sure you're worried about free agent Mike Modano being in a different uniform when the NHL returns, but did you ever wonder about Bill Guerin ... or Pierre Turgeon ... or Doug Weight ... or Derian Hatcher ... or Bobby Holik ... or Jeremy Roenick ... or Sergei Fedorov?
These players all have guaranteed contracts, you say. Not if the NHL gets its way in negotiations. The expected new collective bargaining agreement (due any day now at your local rink) is expected to contain a clause in which teams are allowed a one-time chance to buy out any and all contracts and not have it count against the new salary cap.
Now, we've jumped the gun before in talking about the projected specifics of NHL negotiations, but this proposed buyout clause is expected to be a bone thrown to the top teams. Some big money teams wanted a dispersal draft, but the players shot that down. So, the buyout was a compromise, with one interesting twist - the teams can't reacquire their own players.
That's right, the Stars might be able to get out of Guerin's two years by giving him a large check, but then they can't get him back. With a 24 percent rollback on his $9 million a year and a 67 percent buyout, that means they pay Guerin $4.58 million per year and they save $6 million in cap space each season. Is it a big financial gamble? Sure, but you have to ask if they would be better off trading Guerin for a player who could help in another area.
How is a buyout a trade? Players who are bought out will be sitting as unrestricted free agents with a big chunk of change in their pocket. Guerin would conceivably have $9 million in hand and still be able to sell his services to the highest bidder (other than the Stars). The same will probably be true for other top-caliber players....more...