For Pens, no assurances with Crosby deal
The Penguins cannot insure themselves against a concussion-related early retirement by franchise center Sidney Crosby, NHL sources told the Tribune-Review on Friday.
Crosby, 24, has missed all but 63 games the past two seasons because of concussion symptoms. He and the Penguins agreed to a 12-year contract worth $104.4 million — all of it guaranteed. The team will present the contract to the league Sunday for approval.
Insurance companies offer teams protection against career-ending injuries, but Crosby's concussion history is considered a pre-existing condition. If Crosby cannot finish his contract because of a concussion-related injury, he will still be paid in full, but the Penguins would not receive assistance from an insurance policy on the deal, sources said.
However, this will not cripple the franchise like the ailing health of current majority co-owner Mario Lemieux did in the 1990s, a sports business expert said.
“It's so different now for the Penguins. They've got a sold-out new arena, a better TV deal, big sponsorship and deeper-pocketed ownership,” said Lynn Lashbrook, president of Portland, Ore.-based Sports Management World Wide. “The Penguins can withstand this even if Crosby can't play out the majority of this contract.”
Lashbrook said the Crosby contract could contain wording for him to serve as a club ambassador, similar to what George Brett does for the Kansas City Royals. Crosby, who annually commands millions of dollars in endorsements, will generate interest among fans and sponsors long after his playing days, Lashbrook said.
The Penguins, playing in a traditionally smaller market, never have been in a position to take on a contract like the Crosby deal. But nowadays their season-ticket waiting list sits at 8,000, and their local TV ratings were tops among NHL and NBA teams last season. Their ownership group includes Ron Burkle, a California billionaire, and Lemieux as majority stakeholders.
The Lemieux-Burkle group purchased the team out of bankruptcy in 1999 when Lemieux was still owed most of a six-year, $42 million contract.
The Penguins benefit better financially from all non-hockey events at Consol Energy Center than they did at Civic Arena, where until the final two seasons they did not operate the facility. The majority of revenue for events at Consol Energy Center goes to the Penguins, who also are developing the old Civic Arena site.
Crosby's deal will be front-loaded to pay him more money in the early years, sources said.
Crosby's average annual salary will remain $8.7 million. He could have signed for the individual player maximum, which is 20 percent of the NHL salary cap, set tentatively for next season at $70.2 million. The maximum salary available to a free agent this summer is $14.04 million.
The Penguins have spent to the salary cap each of the past five seasons.
NHL rules require that clubs insure the top six contracts in terms of average annual value. A contract cannot be insured for more than seven years. However, a contract can always be insured for seven years, so the remainder of a long-term contract such as the one Crosby signed will always be insured.
The following Penguins contracts currently are mandated to be insured: Crosby and center Evgeni Malkin ($8.7 million each); goaltender Marc-Andre Fleury, defenseman Paul Martin and right wing James Neal ($5 million apiece); and defenseman Brooks Orpik ($3.75 million).
The salary-cap impact of a potential Crosby early retirement due to concussion cannot be determined because terms of the next collective bargaining agreement between the NHL and its Players Association have not been set. Currently, a team can place a player on the long-term injury list to get long-term cap relief. The current CBA expires in September.
Crosby was not available for comment. He has not addressed the contract since the team confirmed it Thursday. He is currently in northern California to attend Orpik's wedding.
Penguins general manager Ray Shero has said he would not discuss the insurance of Crosby's contract, calling it “a team issue.”
Shero also said he was not concerned about Crosby's concussion history.
Crosby has spent the past several weeks training in Los Angeles, agent Pat Brisson said.
“This is an important summer for (Crosby),” Shero said. “We feel confident with where he is. We believe his best days are going to be ahead.”
Staff writer Josh Yohe contributed. Rob Rossi is a staff writer for Trib Total Media. He can be reached at firstname.lastname@example.org or 412-380-5635.