Thursday, January 10, 2008

It's Official: Ovechkin Has Signed

Those rumors you read on sites that aren't in the rumor-mongering business are partially true - Alex Ovechkin has signed a contract extension. However, the terms are not the reported six years/$54 million.

The official announcement will be made tonight following a team-hosted event for season ticket holders, and we'll follow up with all the details.
Photo: AP
Update: Tarik confirms 13 years/$124 million. Jesus.

Update 2: Some quick math. Ovechkin's new deal will pay him:
  • $9,538,461.54 per season for the next 13 years
  • $116,322.70 per game for the next 13 seasons
  • $5,311.54 per shift (based on his current season's shifts-per-game pace)
  • $304,332.65 per hour of ice time (based on his current season's time on ice per game)
Update 3: The press conference audio, courtesy WashingtonCaps.com:
boomp3.com

Update 4: Fantastic video of Ted Leonsis making the announcement to season ticket holders (courtesy KCK):

29 comments:

CHIC-HANDSOME said...

great week

Ogre said...

13 Years. When I read that number, I definitely yelled out something allowed that I don't think I'm allowed to post on the internet.

JP said...

You can post it here - we don't have a comment policy.

kb said...

sweet jeezus.

Tyler said...

FUCK.

How's it structured?

Ogre said...

I'm not 100% sure of what it was anymore (CRS, eh?, but I do remember more than one of each major swear (Fuck and shit included) and a few Hebrew swears and slurs about that mashugina Crosby not getting nearly as much as Ovechkin. I also remember it not having much of a major structure.

Victor said...

Per Tarik, it's 9 mil/yr for six years, then 10 mil/yr for the remaining seven.
http://blog.washingtonpost.com/capitalsinsider/2008/01/ovechkin_extension_terms.html

NS said...

i think i just pooed my pants a little

Daniel said...

I posted on OFB that Crosby left money on the table -- and I still think he did -- but Ovie is leaving TONS on the table in years 6+ if you project even a modest increase in player salaries.

Awesome job by GMGM, Teddy, and the rest of the bunch, though - as a fan I think this is the best possible deal that could have been done, cost certainty for the majority of Ovie's career!

-d

wow said...

I think knowing that he's making 5 grand a shift might be a little too much information

Scott said...

holy shitballs. that is all

Jordana said...

Scott,

You and I must be sharing a brain. I shouted the exact same phrase...followed by a slow clap. Unfortunately, no one joined in and my husband just looked at me like I'm crazy.

Oly_for_Olie said...

Now it's time to get Mike some Green.

NS said...

the Caps are now, officially, Ovechkin's team. Wonder how long before he wears the "C" on his jersey? i'm thinking 2009-10 season

Gary said...

Great news!

Also: holy fucking shit...

JJ said...

YES!!! 13 Years, even better than I could have hoped!

Rage said...

Okay, here's my take as a vaunted FINANCIAL ANALYST ON WALL ST (actually on 57th St, but whatever). These numbers are rough, but you get the general idea.

A) Ovy left tons of money on the table towards the end of the deal as someone already wrote.
B) Assume inflation at 2%, this deal pays Ovy in the following 13 years ($ MM):
9
8.82
8.65
8.48
8.31
8.15
8.87
8.70
8.53
8.36
8.20
8.04
7.88
We're currently in a high inflation market, so those numbers would be even smaller.
C) Those numbers are EXTREMELY reasonable, even with only inflationary growth in revenue/cap. If the NHL manages to grow a fan base, these numbers become ridiculously competitive. There is essentially a gap of 1MM, 2MM, and 3.5MM "inflationary dollars" left on the table in years 3, 8, and 12 (monotonically increasing).
D) This gives the Caps plenty of flexibility, especially in later years.
E) Perhaps most telling, unless I've misunderstood the rules, the Caps are now committing to spending $47.692 MM+ next year because of the 20% rule.
F) I'm really excited about this deal. I think this makes tons of sense fr the Caps, but obviously comes at a huge risk if Ovy gets injured (I have no knowledge of the insurance situation).

Tyler said...

Agreed: Mike Green, you're up.

Fanhouse said...

http://sports.aol.com/fanhouse/2008/01/10/ovechkins-deal-wealthiest-in-nhl-history/

"UPDATE: Sources have just confirmed for me that the original report on the term and value of the contract were correct, that was, before the team decided to revise them upward earlier today."

JP said...

Damn, Rage Bernanke - that's some serious analysis you just dropped.

Rage said...

You're just impressed because lawyers are easily impressed by numbers.

OrderedChaos said...

Agreed -- kudos, Rage! Helluva job on the analysis, and an interesting point about the 20% rule.

As for the terms, basically the team presented 6 years @ $9M (the $54M originally reported), which apparently Ovechkin was ready to sign. Then the team decided to offer a "second" contract to start after that term -- like a free-agency raise at the end of the six years -- and the final result of the ensuing at-the-table negotiations was $10M per year for 7 more years. Hence, $124/13yrs.

bradley said...

Rage, great analysis, although you are misunderstanding the 20% rule. The language of the CBA says "team's upper cap limit", not total cap number, so the caps don't have to raise their salary at all if they don't want to. Basically, it's just 20% of the cap (although I imagine the language is as it is because team's cap limits can be lowered due to penalties for going over in previous years). Now, it's almost agiven that the Caps will be raising salary anyway, especially for Green, but there's no urgent need to meet that number to keep OV's contract legal or anything.

cd said...

JP, remember when i asked you yesterday if i should go to the fan thing tonight and you told me not to bother since i'm not into autographs and then i asked, yeah, but do they do anything special?

This is what i meant by that.

AO's Sunshine State Fan said...

He'll earn every penny too! Just wait and see! I may have to move back to DC now!! You local fans are so lucky to be able to see him play all the time! WAY TO GO CAPS!

DMG said...

Thanks for that analysis Rage.

I say: Silence, Fools

Focality said...

Great news, this signing of 8.

The "professional" hockey media are up in arms though, with quick jabs being taken by THN's Ken Campbell and some talking heads over at TSN.ca (Glenn Healy: "They stink! I'd take Crosby over Ovechkin any day"). They compared the contract to Philly's recent deal, as well as the Isles' deal with Yashin and the Jagr debacle.

All everyone's hearing is "13 years/$124 million." They haven't sat down and actually read the terms of the contract. Give it a few more days once the Caps begrudgingly release more details. It'll start to sound more sensible and the experts at THN, TSN, CBC and Eklund will find something else to whine about.

This sounds like a crazy thing to do, but Rage brings up interesting points. I read somewhere (CBC or TSN) that the projected salary for a high caliber player in five to six years will be around $15 million.

JP said...

Honestly, anyone who has a problem with this deal has no understanding whatsoever of the time value of money.

As Ted said, look at it as two deals:

Deal A: 6 years, $9m per. Yes it's more than Sid. But for 2/3 of the current minimum salary per year, I'll take that extra year, thank you.

Deal B: 7 years, $10m per. Long after Sid has left Pittsburgh (or is still in Pittsburgh making $14m or $15m per year), Alex will be a bargain.

Unless Alex's game (or the League) goes totally in the shitter, this deal is an enormous win for the team.

NS said...

there's got to be an injury clause in the second leg of that contract. especially with the way Ovie plays.