The cap hit in a new contract is always the first number revealed in the public domain.
The contract is announced, some social media outlets respond within minutes, and the first comments concern the average annual value. Was it a bad deal? Was the signing a steal? How does the number stack up to other recent contracts of star players?
The ironic part is that the people who draft the contract spend just as much time discussing the deal that is being drafted as they do when the funds become available.
Much less important than a cap hit, it seldom gets mentioned until the formal contract breakdown days or weeks later. However, signing bonuses are one of the most important parts of a modern NHL contract and in some cases are more important than the actual salaries.
This is why we almost always see agents pushing for them.
Theoretical contracts mean nothing to the actual players that signed them. Let’s say we have two players who signed the same contract in every way. An eight-year contract worth $96 million signed by each player. The cap hit is the same and the total amount of the contract is the same. One player earns their contract in full when paid their salary each day of the season. The other player earned their contract in full when a signing bonus was paid to them.
Security signing bonuses bear consideration.
Signing bonuses are final. Injuries. Lockouts. Hard seasons. None of them matter. The player has received the signing bonus.
Base salary does not have that guarantee.
That's the allure of the bonus-heavy contracts that the superstars in the league are demanding. It gives the players leverage to negotiate the timing and the security of their payout.
And it shifts the optics of the buyouts.
"Buyout protection" does not have to mean a no-trade clause anymore. It can simply mean a contract where a buyout is more financially averse. Base salary is more flexible and signing bonuses are essentially locked, removing the flexibility for the signing bonus contracts.
The issue is that signing bonuses are not fun. A cap hit is simple, while a signing bonus is not. The media usually moves on to a different story, while players and agents fixate on it.
Bonus-heavy contracts have become the industry standard. Connor Bedard just signed a contract with $49 million in signing bonuses—$9.8 million for five years.
An aspect of negotiations that people may assume agents and GMs spend the most time arguing about is AAV, but that is not usually the case. After the parties get a sense for the big-picture numbers, negotiations progress to the specifics of the contract. This may include how long the contract is or how the different payment structures may work.
Adding a million dollars to the offer may not be the best way to close in on a deal.
Offering the payment of a million dollars sooner may be the better way to close in.
There is an important element here that is often overlooked. Organizations do not all have the same comfort level with writing big checks on July 1. The salary cap will create a sense of equality in the league, but the cash flow may be different for different ownership groups. Organizations that are willing to back-charge front-loaded deals with signing bonuses may have greater success attracting talent to long-term deals.
The next time a major player signs an extension, the salary cap impact will be the most discussed number, as it always is.
A more informative number may not be the salary cap. It may be several pages into the contract, next to the signing bonus, which will outline why the parties agreed to the terms.
