We’ve heard this theory before, NHL teams using corporate sponsor dollars to take care of their superstars. It was a conspiracy theory floated by the Denver Post’s Terry Frei this past summer, when he examined ways that NHL teams could “massage” the salary cap without necessarily violating its terms. It was enough for Hockey Independant to take a look at 7 Ways to (Legally) Circumvent The NHL Salary Cap in light of the summer’s Ilya Kovalchuk UFA fiasco.
The article’s author, Fred Poulin, used the hypothetical (and I stress hypothetical) situation of the Toronto Maple Leafs signing impending UFA Brad Richards to below market value deal:
Suppose the Toronto Maple Leafs sign Brad Richards, slated to become an unrestricted free agent next summer, to a four-year $16M deal, which would be below his fair market value. Then Air Canada signs an endorsement deal with Richards that will pay him $2M per year during the length of his contract with Toronto. Obviously, Air Canada is the owner of the Air Canada Centre where the Maple Leafs play their home game. Would that be a circumvention of the salary cap?
As unlikely as the Leafs are to sign Richards at such an absurd discount, it’s a notion that remains reasonably plausible within several sets of parameters. For instance, say Brent Seabrook is willing to sign at a discount in order to remain with the Chicago Blackhawks – and then a deal is struck with Giordano’s Pizza in which Seabrook will play a spokesperson of sorts. It’s entirely legal to supplement Seabrook or Richards in that manner, assuming that any discussion to do such a thing was off the record during negotiations.
This leads us to an article published by Business Insider on Tuesday titled Did The Boston Bruins Skate Around The Salary Cap With Their Prized Rookie? Last week, Dunkin’ Donuts announced an endorsement deal with Tyler Seguin, the Bruins’ 2010 2nd overall draft pick. Not all that different from Sidney Crosby hawking Dempster’s bread, at least on the surface. As The Biz of Hockey has pointed out, though, Dunkin’ Donuts is a Bruins’ sponsor at TD Garden.
Again, there’s no illegal activity taking place by Dunkin’ Donuts paying Tyler Seguin to rep their new iced drink. Whether or not the salary cap-strapped Bruins had premeditated such a sponsorship deal to “funnel” more money to Seguin is an ethics discussion for another day, and it’s certainly one worth examining in further detail.
The question that all of this raises, at least for myself, is this: does a healthy relationship with a city’s corporate community give one NHL club a competitive advantage over another?
In terms of the highly competitive business of free agent bidding, the answer may be a resounding YES. In the instance of Seguin, I don’t really see an issue to be had. Seguin was drafted by the Bruins, he was not available to the highest bidder.
Where the suggestion that teams can skirt the salary cap with sponsorship dollars becomes a serious issue worth investigating, is in the free agency negotiation process. Of course a franchise rich in corporate sponsorship like the Montreal Canadiens or Toronto Maple Leafs are going to able to provide more extra-curricular financial incentive to free agents than say a club like the Columbus Blue Jackets or Phoenix Coyotes – but how that plays into the negotiation process can only be fairly examined on a case-by-case basis.
What do you think? Should the NHL monitor endorsement deals that involve a major team sponsor, or is it fair game to lean on a business partnership to keep stars happy in spite of salary cap restraints?
Stick tap Dustin Parkes for the tip