Monday, May 26, 2008

Stanley vs. Gagarin

Okay, well it might be a little early to imagine a clash of the Cups...Stanley in North America versus the new Kontinental Hockey League's Gagarin Cup...but the KHL sees itself as a legitimate, if fledgling, competitor for the NHL. And there's fear in North America, among fans and NHL teams' management that the Russians might be right.

The KHL is basically the twenty teams of the old Russian Super League, plus four other teams that have been elevated from the lower ranks in former Soviet Republic countries. It's backed by big corporate money and the ambition of pride-filled Russian businessmen to bring hockey back to glory in their own country. They're looking at the recent World Championship gold medal win as an important tool in convincing the Russian public that their hockey is world class hockey. Now they want to convince the hockey federations of other countries like Sweden and Finland that the KHL has the potential to be a well-organized, legitimate powerhouse league. An important step in that process would be bringing wealthy Scandinavian teams like Farjestads and Jokerit into the KHL fold. That might be a while away from happening just yet, but the people who are running the new Russian league have big plans to keep their own players, attract new ones and make their league the equal of the NHL.

So far, the players who've abandoned the NHL in favour of playing in the Motherland have been the discontented (Alexei Yashin and Daniil Markov), the fringe (Robert Esche, John Grahame, Petr Cajanek and Chris Simon), the washed-up (Oleg Petrov and Darius Kasparitis) or the unproven (Alexander Perezhogin and Andre Taratukhin.) Of more concern to the brass of various NHL teams is the trend of Russian draftees refusing to abandon their own teams to cross the pond for NHL salaries. The Canadiens alone own the rights to defencemen Alexei Emelin and Konstantin Korneev...both very solid players who'd benefit the Habs' blueline immensely...and 1999 second-rounder, winger Alexander Buturlin, none of whom have played a game in the NHL. That's why top prospect Alexei Cherepanov, ranked in the top three talent-wise at last year's draft, dropped to the New York Rangers at number seventeen overall, even after many assurances that Cherepanov has every intention of finishing his contract with Omsk and coming to the NHL. It's also why Nikita Filatov, touted as the most talented skater available in next month's entry draft behind only Steven Stamkos, may drop significantly. He's likely to be chosen by a team already rich in young talent, which can afford to lose a gamble on a first-rounder who might not come over. Teams with higher picks who are desperate for a turnaround will bank on the sure-thing North American players.

But the tiny trickle of players back to Russia and the reluctance of NHL teams to draft Russian in recent drafts had already been happening before the KHL was formed back in March. Now though, the new league has a structure and form similar to that of the NHL, including a salary cap. And it has some interesting rules that may change the way players look at playing in Russia.

The salary cap, on paper, looks like it will actually benefit the NHL. KHL teams are required to spend between a minimum of ten million dollars and a maximum of 23.5 million on salaries. That total will be divided between 21 regular players who'll make a total maximum of 16.7 million between them, and four "star" players who'll make the other 6.8 million maximum. So if you consider that the average regular salary can be no more than about $795-thousand and the average "star" salary will be about 1.7 million dollars, the numbers don't compare to what the NHL can pay. But it seems as though there will be considerable flexibility within the cap that might include, for example, paying ten players peanuts and giving the other regular players bigger shares of the cash. Or paying just one "star" player the bulk of the reserved star money. Considering the essentially tax-free status of hockey income in Russia, the salaries automatically gain a third to a half of their value over and above a comparable salary in the NHL. And I say the cap will benefit the NHL on paper because there are no rules that say an owner can't handsomely reward a player for services outside of hockey, such as making public appearances on behalf of the parent company. I also haven't come across anything that says players can't receive in-kind bonuses on top of their salaries, which could serve to close the gap between NHL and KHL incomes. Of course, many of the smaller-market teams paying closer to the minimum cap figure won't be able to compete unless the richer teams play fair. It remains to be seen whether the ambition of challenging the NHL at its own game will trump the almighty dollar for some of these owners.

There are some interesting rules about eligible players too. Of the four "stars" on a team, the rules say three can be whomever the team feels like designating a star for salary purposes. But one of the "stars" has to be either a player with 40 NHL games under his belt, a Canadian or American junior player younger than twenty years old and selected in the first three rounds of the NHL entry draft, or a European player who played for his country in the most recent World Championships or Olympics. This is fairly significant, as the new league isn't just targetting young Russians anymore, but is trying to entice players from other countries. The second stipulation is directed specifically at the NHL entry-level contract. Now, if a junior-aged player is drafted, an NHL team has two years to sign that player. Once he has signed, he's subject to entry-level maximum amounts for the first three years he's under contract. The KHL rules would allow a Russian team to draft a young highly-touted North American player and immediately elevate him to "star" status at 18 years of age, with commensurate salary. This basically gives North American juniors a big financial incentive to skip the possible five years of low earnings they'd accrue at home in favour of instant wealth in Russia. It mightn't make much difference to a first-rounder like Stamkos or Tavares will be, with bonuses attached to their early NHL deals. But what about a PK Subban or Ben Maxwell, who, as second-round picks, could be well-paid "stars" in Russia rather than continue to toil in the junior ranks at home?

We won't see that sort of thing happen this year, as the first KHL draft is scheduled for next July. But it's a real possibility, especially for junior-aged players outside the first round. The other criteria for star status, including having played more than forty games in the NHL the previous season, won't change a lot. Hundreds of NHLers fit that requirement, and the real stars will still get the money and prestige they want in North America. It may, however, be tempting for mid-level players, who may still be restricted free agents and looking for a better deal, to find it in Russia. A guy like Guillaume Latendresse, who'll still be making RFA money for the next several years, could make the jump and do well overseas. Of course, he likely won't, since he's playing for his hometown team and is probably pretty happy with his situation. But, the point is, the opportunity is there and if more North Americans decided to go to Russia, the mystery of the place will dissolve and become more of a main-stream option. The Russians foresee a day when the KHL is similar to the old WHA in its ability to compete with the National Hockey League.

Another interesting move is the KHL contract rule that allows a team to sign any player older than seventeen years old. That trumps the NHL draft age by a year, and the rule also stipulates that a seventeen-year-old who signs a contract must sign for no less than four years. Also, each KHL team will have a farm, or junior, team it supports. A team will be allowed to protect its top three juniors from the draft and opt to sign them to four-year-deals at the age of sixteen. And, on top of that, if a team drafts an unprotected player from another team's farm club, it must pay cash compensation to the other team. In effect, the KHL teams will develop their own players and be given every opportunity to keep them from bolting overseas by locking them up to pro deals at very young ages. Would Ovechkin have stayed in Russia if he'd been signed to a long-term deal at sixteen years of age, and paid big money at home early on in his career? We don't know what he would have done, but the next Malkin or Ovechkin or Kovalchuk will have a much tougher choice to make. And for the Russian-born player who would ordinarily spend time in the North American minor leagues, versus a well-paid spot on a team at home, the choice is much easier.

Right now, rosters in the KHL can't be larger than 25, with a maximum of 5 foreign-born players, for a total of 120 non-Russian jobs. That could change if greater numbers of North Americans choose to test the waters in Russia. It's not hard to imagine a player who's having a hard time cracking an NHL lineup take off for a guaranteed, well-paid spot in Minsk. The Russians have big oil money behind them. They're working on a tv deal and expansion into the rest of Europe. They have the desire to make their league as prestigious and influential as the NHL. They have the home-grown talent and the will to keep it at home. They've also fired the first shots across the bow of the National Hockey League, in serving notice that it will be drafting North Americans next year.

I think the Russian league has the potential to be a real alternative, not just for Russian players, but for NHLers and North American juniors who want to enhance their earning potential at younger ages. But I can't see the big stars defecting there just yet. There are rumours that Jaromir Jagr will get an offer of twelve million over two years, tax free. If it's true, and he accepts it, he might be to the fledgling league what Bobby Hull was to the WHA.

Until that first big star breaks the barrier and heads to Russia though, the biggest threat right now is for teams like the Canadiens who have drafted a lot of Russians. The Habs have already seen three of its picks not come over at all, one leave after a couple of North American seasons and another, albeit Belarussian, likely to leave this summer. We've heard rumours of big offers for Andrei Kostitsyn, which he's denied. But if the league takes off, they'll resurface along with offers for his brother Sergei. And if Pavel Valentenko doesn't crack the roster this fall, you can be sure he'll generate some interest in Russia too. Trevor Timmins, like most NHL scouts, has moved away from drafting Russians. But there could still be consequences for having drafted so heavily from there in the past.

The other group that's already feeling the threat from the KHL includes the young players who have grown up dreaming of the NHL and now will find it a lot harder to get a chance in North America. On the other hand, an NHL team that takes a risk on a Russian it believes really wants to play in the NHL could end up with a steal or two. It's becoming a bigger gamble than it used to be, though.

It'll be very interesting to watch the development of the KHL. Will it be a real upstart league like the original WHA, or a fly-by-night dream like the attempt to resurrect the WHA a few years ago? Either way, NHL teams are walking carefully and being very cautious about their dealings with Russians from now on.


Naila J. said...

Very informative post! I feel like I know loads more about this whole issue now!

DD said...

Me too!