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This photo combo shows NHL Commissioner Gary Bettman, left, talking to the media in Toronto, on Thursday, Aug. 23, 2012, and at right is Donald Fehr, executive director of the NHL Players' Association, speaking to the media, Friday, Nov. 9, 2012, in New York. (Chris Young and Louis Lanzano/AP)
This photo combo shows NHL Commissioner Gary Bettman, left, talking to the media in Toronto, on Thursday, Aug. 23, 2012, and at right is Donald Fehr, executive director of the NHL Players' Association, speaking to the media, Friday, Nov. 9, 2012, in New York. (Chris Young and Louis Lanzano/AP)

Analysis: Breaking down the NHL’s new CBA Add to ...

Finally, unbelievably, the NHL lockout is over, after 113 days of what has to be the most unnecessary labour stoppage in pro sports history.

It's a deal many could see coming, too.

Here’s some of my early thoughts on the tentative agreement the NHL and its players agreed to at around 5 a.m. on Sunday morning:

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CBA term length: 10 years with an opt out after eight
Salary cap: $64.3-million in 2013-14
Salary floor: $44-million in 2013-14

These are the main pillars of the agreement that will affect teams and their GMs working under the CBA to build their rosters.

And there could a few interesting wrinkles here if the NHL begins to grow revenues like it did under the last agreement.

If we assume 5 per cent annual revenue growth after a 2013-14 season where hockey-related revenue is flat at $3.3-billion, then the salary cap would be approaching $80-million by the time the league can opt out of the deal.

These calculations assume the salary floor remains $16-million below the cap and the 5 per cent cap escalator is still available, as per early indications that these aspects would be the same as the previous CBA.

Year

Season

Revenue

Players’ share*

Salary cap

Salary floor

1

2012-13

$2,275

$1,138

70.2

44.0

2

2013-14

$3,303

$1,652

64.3

44.0

3

2014-15

$3,468

$1,734

62.7

46.7

4

2015-16

$3,642

$1,821

65.5

49.5

5

2016-17

$3,824

$1,912

68.6

52.6

6

2017-18

$4,015

$2,007

71.8

55.8

7

2018-19

$4,216

$2,108

75.1

59.1

8

2019-20

$4,426

$2,213

78.6

62.6

9

2020-21

$4,648

$2,324

82.3

66.3

10

2021-22

$4,880

$2,440

86.2

70.2

      
 

*– player share doesn’t include $300-million in make whole

 

The first thing you can’t help but notice about this is that the floor, after an initial period of stagnation, would be back at a very high level only three or four years from now.

The other thing to keep in mind is that 5 per cent annual growth isn’t exactly outrageous. This is a league that was growing at better than 7 per cent a season under the last CBA and in the past two seasons was close to 10 per cent annually.

If HRR skyrockets like that – a distinct possibility if there are more Atlanta to Winnipeg situations – the players’ share, cap and floor will all shoot up even more than what’s outlined here.

And you can’t help but wonder if that high of a cap and floor would create the same problems it did for the lower revenue teams in the last CBA.

After all, the average NHL salary when the players’ share hits $2.2-billion is roughly $2.9-million, a 20 per cent increase from last season.
 

Contract term limit: seven years for free agents, eight for players re-signing with current team

The NHL’s “hill to die on” ended up moving closer to where the players wanted it to, with the only concession players made from their eight year limit being the seven years imposed on unrestricted free agents.

An eight year limit is still fairly long, especially given most players aren’t becoming free agents until they turn 27, meaning this limit only cuts out the extremely long deals that were becoming more and more common.

For that reason, this is an important limitation – but don’t be surprised to see the majority of stars on seven and eight year deals four or five years from now.

Here was how Kevin Westgarth, who was on the players’ negotiating committee, had previously explained why players weren’t crazy about free agents only able to sign shorter deals than with their own teams:

“Clearly if that was the case, you’d be hard pressed to not sign with your old team,” he said of the NHL’s previous proposal of free agents only being able to sign for five years. “Basically that means your life is dictated by who you were drafted by when you’re 18 years old. That’s where that lies. I think that’s relatively important to some guys.

“I can see the teams’ argument for it. They don’t want to lose a player that they’ve developed and that the fans have some relationship with. But it boils down to the freedom and the ability of a guy in a short career to make decisions as to where to live and where to play, etc.”
 

Variance: 35 per cent per year but a minimum of going no lower than 50 per cent of the highest year

That’s a high number for variance, but it’s mitigated quite significantly by the 50 per cent minimum there.

That basically means any deal that includes one year of salary at $10-million cannot have another year at less than $5-million, which ends the very egregious backdiving deals that were an issue for the league under the last agreement.

(Update: There is some suggestion at this point that the minimum would only apply to the final year of a deal. If that's the case, contracts would be able to dip below that 50 per cent mark at points earlier than the final season.)

Here’s an illustration of the types of deals that would be possible under the new variance limitations if teams wanted to pay much of the salary up front and tail off at Year 4 of a seven-year deal:

35 per cent

Y1

Y2

Y3

Y4

Y5

Y6

Y7

 

Cap hit

 

12.00

12.00

12.00

7.80

6.00

6.00

6.00

 

8.83

 

11.00

11.00

11.00

7.15

5.50

5.50

5.50

 

8.09

 

10.00

10.00

10.00

6.50

5.00

5.00

5.00

 

7.36

 

9.00

9.00

9.00

5.85

4.50

4.50

4.50

 

6.62

 

8.00

8.00

8.00

5.20

4.00

4.00

4.00

 

5.89

 

7.00

7.00

7.00

4.55

3.50

3.50

3.50

 

5.15

 

6.00

6.00

6.00

3.90

3.00

3.00

3.00

 

4.41

 

5.00

5.00

5.00

3.25

2.50

2.50

2.50

 

3.68

 

4.00

4.00

4.00

2.60

2.00

2.00

2.00

 

2.94

 

Pension plan: Upgrade to defined benefit plan

This is what players are hailing as the big “win” out of all this. As it was explained to me, the major gains here are that the pension plan a) becomes a defined benefit one instead of defined contribution and b) players are now able to contribute some of their own money.

In the last CBA, the pension plan essentially involved teams putting $49,000 a year per veteran player (at least 160 games played) into it annually, making it a cost within the players’ share (but not the cap) that added up to just under $1-million a team per season.

I had planned on writing on this in more detail prior to the lockout ending, but a lot of the disagreements there were on this front are now pretty well irrelevant. What is worth pointing out is that, historically speaking, NHL players between 1967 to 1992 received a very poor pension setup as a result of having Alan Eagleson in charge of the NHLPA.

According to some former players, they were told to forgo going for things like salary increases and more liberalized free agency in negotiations in exchange for the “best pension plan in pro sports” but it was actually far from that.

We’ve even seen during this lockout that retired former players, like Darren Turcotte, for example, have talked about how little their pensions are ($1,000 a month for some) and how important this issue is to players.

While it seems odd to many fans that there are superstars making big money with a better pension, this is a change that should help the many players making less than $1-million a season and who last only a few seasons in the league.

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