There’s a lot of doom and gloom in NHL circles these days.
Late last Friday it leaked out that the league had finally put some tangible terms on the table in its talks with the NHLPA toward a new collective bargaining agreement, and the general consensus is that this is the first step toward a lockout in the fall.
My sense at this point is we won’t have hockey until at least December.
There are still months to go, however, and what the NHL is asking for today won’t likely be in the final deal. What the leaked terms do give us is a very clear picture of what Gary Bettman and Co. want to see in the next CBA.
Here are a few thoughts on the main pillars of their initial offer:
1. Reduce the players’ share of HRR (hockey related revenue) from 57 per cent to 46 per cent.
This is the big one, and the one issue both sides will be fighting over until the agreement is finally signed. For all the discussion of everything else on the table, the new CBA will very much be about the percentage.
Which isn’t a surprise considering every 1-per-cent shift is roughly $33-million to either side.
Last season, players received 57 per cent of $3.3-billion in total revenues – or $1.88-billion ($62.7-million a team) in salaries and benefits.
Dropping their share to 46 per cent would mean an immediate 19-per-cent decline in salaries and the loss of about $365-million (based on last year’s revenues).
As revenues presumably continued to increase, that figure would rise, too.
There’s also provisions in the new offer that would slightly redefine what’s considered hockey related revenues, something that would bring the players’ total pay cut to about 22 per cent.
As go salaries, so goes the salary cap, which would drop similarly, likely from the current $70.2-million level into the $54-million range.
Why do the owners want this? Easy. That’s an extra $12-million per team, on average, that goes in their pockets. All but the very weakest handful of teams should be able to at least break even under this agreement.
Shrinking the players' share
The NHL's proposed new collective bargaining agreement would reduce the cap, floor and amount of revenue given to players substantially
** All 'New CBA' figures are estimates
2. Increase the length of time a player has to wait to become an unrestricted free agent from seven seasons to 10.
One of the biggest changes during the last lockout was the reduction of free agency age from 31 to between 25 and 27, something that has contributed to younger and younger players getting huge contracts.
Teams currently have to worry about their stars leaving to another team (like Zach Parise and Ryan Suter earlier this month) while still close to their primes.
If this change was made, however, players wouldn’t hit July 1 as UFAs until 28 to 30 years of age.
Why do the owners want this? Well, for one, they don’t like the fact that players can now, on their second contracts, become some of the highest paid players in the league.
Buying UFA years on those contracts has gotten incredibly expensive, something that never used to be a concern given teams previously held the rights to players until their early 30s.
3. Limit all contracts to no more than five years – so no more Rick DiPietro deals.
This is probably the one proposal from the league that will get the most support from fans and media.
With nearly 20 players around the league now on contracts that are 10-plus years in length, the NHL feels the long, long term deals for all have gotten out of hand and stunted player movement in the process.
The deals also circumvent the salary cap if they extend beyond when a player intends to retire, as appears to be the case with several of them.
Why do the owners want this? Well, they need to be saved from themselves here, to a certain extent, although it’s worth noting it’s mainly only the well heeled franchises that are going to town with these deals.
Small market teams argue they’re at a disadvantage in this situation as they’re unable financially to offer hugely frontloaded deals and bring their cap hit down.
This is considered a big enough issue that Bettman is expected to fight hard for it. Don’t expect there to be an agreement signed without a term limit, even if it ends up being seven or eight years.
4. Make players enter the league on capped five year entry level deals instead of the current three.
Star NHL players are by far the cheapest in the first three years of their contracts right now, and we’ve often seen teams win the Stanley Cup while benefiting from a low salaried player on an entry level deal playing a key role.
Why do the owners want this? Salaries are only strongly limited (with a max base salary of less than $1-million) during this early portion of a players’ career, making them very cheap and valuable assets. Extending this portion of their contracts would also mean the “second contract” effect is put off another two years.
Because this is a change that affects only rookies, it’s also possible more established players make a concession on entry level deals in exchange for givebacks in other areas.
5. A salary floor that is just $8-million lower than the cap
One of the big problems with the existing CBA is that it mandates even the lowest revenue teams spend a ton of money to hit the salary floor, something that wouldn’t change under the league’s proposed system.
In fact, the floor would be raised even closer to the cap.
Why do the owners want this? Mr. Bettman loves parity and doesn’t want a system where the highest revenue teams are outspending the lowest by a great deal as they do in some other sports like baseball.
The problem, however, as we’ve seen under the old deal, is that if revenue rises considerably, so too will the cap and floor, making life more difficult for teams already strapped for cash.
There’s no indication that revenue sharing will increase substantially under the new agreement, although that’s something the NHLPA will likely push hard for in its offer. Without a change there, a lower cap will mainly mean owners of wealthy teams will pocket a ton of extra revenue.
The rich get richer, in other words.
6. Eliminate salary arbitration
Just what it says: Wipe out the process whereby an arbitrator determines a restricted free agent’s new contract. Arbitration is not that widely used under the current agreement, but it does force those teams and players who can’t come to terms on a new deal into one.
Why do they owners want this? They view arbitration as inflationary and a painful process, one that players sign up for far more than teams.
Without arbitration rights, players would be potentially left sitting out games if they couldn’t come to an agreement with their team, making the holdout situation more common.