Friday, 20 June 2008

Is the KHL the New WHA?

In the last decade, we've seen the Russian Superleague dish out some very lucrative US$ contracts to NHL-caliber players. Despite the fact that Superleague tickets, like most European teams, are dirt cheap, and the attendance in most arenas isn't more than a few thousand, some salary structures of RHL clubs rival that of the lower-scale NHL clubs.

Now, this new KHL (Kontinental Hockey League) is threatening to expand this toss-money-around mentality akin to the old days of the WHA.

The WHA put $1mil together to lure Bobby Hull from the NHL, and now the Russians are trying to do the same with one Evgeni Malkin.

If the new Russian professional hockey league has its way, the National Hockey League career of Hart Trophy candidate Evgeni Malkin will be pretty short.

According to a report in the Toronto Star, the Russian teams are prepared to offer the Russian-born Malkin a contract that would make him the highest-paid hockey player in the world. The multi-year contract would be worth at least $12.5 million tax free per season, or the equivalent of $15 million per year in the NHL.

"Hey, we can afford to pay more than the NHL right now," a high-ranking executive with the Russian league, called the Continental League, told the Star. "Our economy is commodities-based so we're not going through the same problems that you have in America."
Hilarious. This guy really thinks Russia's economy is greater than the US of A's? Yes, Russia has some extremely rich bastards and things are looking up from a decade ago, but the economy of the entire country is hardly strong.

Commodities - That, my friends, is the key word. These Russian teams are owned by billionaire Oil, Energy, and Diamond Barons who need something fun to spend their excess cash on. What better than a hockey team which can double as a tax-shelter? Yes, I know I'm repeating myself from earlier posts, but the point is a good one.

In the NHL, owners actually try and make a profit, either on normal net income or on the sale of their team. Russian owners, such as the ones who want to be in the KHL, know that they'll be losing a lot of their own money. This is an expensive hobby, and a real threat to the NHL.

I know there is an element of "Yeah, right!" to the threat that the KHL could lure NHL players to Russia, but we have to realize that many players simply value their financial situation over playing against the best in the world. Players in Russia pay little or no income tax, which is another big incentive for them to put up with cold Russian winters.

Do you really think Malkin wouldn't take the bait and play in his home country?

If I were the NHL, I would be a bit nervous. These maverick billionaires have no qualms about spending their Monopoly money to overpay NHL stars to show off to their friends.

You know that if this KHL gets under way and doesn't fold within 1-2 years, the NHLPA will be happy. Sure, it means some of their members are going overseas, but it shows the NHL that they'll have to pony up more money if they want to keep the talent on this side of the pond.

As for the IIHF? Shockingly, they are siding with the NHL, but only because Malkin has one year left on his deal with the Penguins:

"We would view any signing, from either side, of a player under a valid contract, who does not have any legally valid out-clause, to be a clear violation of the mutual understanding and existing principle. It would potentially be punishable with suspended national team eligibility and suspension from all competition or activity organized by the IIHF or any IIHF member national association. This would include events like the Olympic Winter Games, the IIHF World Championship or international club competitions like the Champions Hockey League.

Of course, we know the IIHF would hail any true free agents to sign with European clubs. The NHL has long pilfered players from Europe, so envision how Fasel and his cronies would laugh it up as the thought of the KHL pilfering players from North America.

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