Penguins sign Crosby to 5-year extension

Penguins sign Crosby to 5-year extension:

Sidney Crosby will lead the Pittsburgh Penguins on the ice and in salary next season after agreeing to a $43.5-million US extension on Tuesday.

Good for Crosby and good for the league. He follows in the footsteps of Iginla in Calgary and Thornton in San Jose in staking less money (or perhaps more correctly, less than the theoretical maximum) to stay in “their” city. Some I’ve heard are arguing that this is a new breed of athlete that is out for more than just the maximum amount of money (not a universal opinion, though. Just ask Alexei Yashin).

But I think there’s a larger issue going on here. The salary cap has gone up significantly since the end of the lockout, enough that some fans and pundits are worrying about the inflation and whether the league is really fixed.

But if you look behind that number, a lot of the increase is coming from the change in relative strength between the US and Canadian currencies, and a second factor is that the original salary cap number was based on revenues before a number of team or national sponsors rejoined the league, ahving let agreements lapse and waiting until the labor issue was solved before committing.

To me, that implies that these increases aren’t likely to continue, especially at that rate. I expect you’ll see the salary cap growth moderate in the next couple of years, and perhaps flatten out completely.

if I’m an agent and I’ve analyzed the numbers, if I think the salary cap is going to flatten, that’s going to lead to cap problems for teams down the road, and restrict a player’s ability to go to free agency and move teams to maximize their salary. In THAT case, what makes sense to maximize financial return for their client is to get a longer-term contract, even if it’s for “less” money. If salaries aren’t going to inflate much over time, it’s a better investment to lock up a longer term than risk a stagnant or deflating salary market.

And that’s what’s happening. Only time will tell, but I think the smart agents and smart players are locking in deals based on this being the peak of the market, not just the latest stop on an upward slope. If they guess wrong, maybe they lose a few million here or there. If they guess right, they’ll be fine, but the free agent in two or three years may well be in for an unpleasant surprise, or at least disappointment.

I certainly wouldn’t expect to see many contracts beyond what we’re seeing in the next two or three seasons; even if $9 million is a theoretical max, the thornton, Iginla and Crosby contracts all are going to set a ceiling on contracts for a while; I wouldn’t want to be the agent of someone going in and demanding more money than that and claiming their client deserves a higher salary than these guys…

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