Derek Stepan has prepared himself in the event of another lockout with his new six-year, $39 million contract. Whether teams take the ice to start the 2020-21 season or not, Stepan will take home $3 million. Stepan’s contract structure could change the way contracts are negotiated in the future.
It’s every hockey fans least favorite word and, now, it’s something Derek Stepan has prepared himself for: a lockout.
With regards to the current CBA, the league’s owners and the NHLPA are given the option to opt out and renegotiate a new CBA come the end of the 2019-20 season. Some believe that could be the beginning of the league’s fourth lockout. As such, Stepan and his agent have taken steps to guard against any lost money.
Monday morning, following Stepan’s signing of a six-year, $39 million contract with the Rangers to avoid arbitration, details of the year-to-year breakdown of the deal began to surface. Among the signing and performance bonuses, there’s an interesting tidbit in year 2020-21. According to the New York Post’s Larry Brooks, Stepan will receive a $3 million signing bonus to begin 2020-21 regardless of whether the players hit the ice in October or not. It will be the only signing bonus Stepan receives following the contract’s third year, which makes it clear what the bonus is for.
What’s interesting about Stepan choosing to protect himself in the event of another lockout is that he’s not the first player this off-season to do so, and he could be the next in what will become a growing trend for players throughout the league.
When the Buffalo Sabres and Ryan O’Reilly came to terms on a new seven-year, $52.5 million deal, it was thought O’Reilly would have some bonuses mixed in. However, when the breakdown of the contract came in, a mind-boggling $45.5 million – or 87 percent – of the deal is based in bonuses. For O’Reilly, like Stepan, whether the league hits the ice or not in 2020-21, he’ll be taking home $5 million simply for having signed his name on a dotted line in July 2015.
For the players and their agents, it’s a clever idea and could potentially lead to a new bargaining chip. It allows for players to give up term or money for lockout or buyout protection. When it comes to O’Reilly’s contract, he’s guaranteed his signing bonuses no matter what. His game could fall off a cliff, the Sabres could buy him out and he’d still be taking home his signing bonuses every single July 1 until 2022-23.
O’Reilly’s deal is the most uniquely structured in the league and it’s hard to imagine we’ll see many more owners shell out the kind of guaranteed cash that O’Reilly is set to make. It’s not a tactic that small market teams can likely employ, which could benefit big markets with deep-pocketed owners down the line.
It will be interesting to see if, should a new CBA be negotiated, there are changes made to make sure a certain percentage of a player’s contract is in NHL salary and not bonuses.
Regardless, lockout protection for Stepan mixed with buyout protection for O’Reilly means we’re on the verge of seeing a brand new type of contract structure for some top players. And here’s hoping the lockout protection will be all for naught.