On October 16, the NHL made a new CBA proposal to the NHLPA which caught many observers, including the PA leadership, by surprise. Here’s my take on the salient points of the league’s offer.

The length of the proposal is reportedly six years. No change from the league’s previous offers.

Fifty-fifty split across the board of hockey-related revenue, with no salary rollbacks. 

PA director Donald Fehr stated such a quick reduction in players share of revenue would result in “a very large escrow” in the early years of the league’s proposal. Thus, if the players are to accept this 50-50 split, they’ll prefer it be phased in gradually, to lessen the escrow hit.

ESPN’s Pierre LeBrun reported the league’s proposal would allow teams to go over the salary cap for the first season, up to $70 million max, as part of a transition period before the cap would be reduced the following season. That would certainly address the sticky issue of how clubs currently sitting with payrolls currently close to that figure (hello there, Boston Bruins, Minnesota Wild, Vancouver Canucks, among others) would get compliant this season under the league’s plan.

Larry Brooks of the NY Post observed via Twitter, “Escrow has been under 2.5% in 5 of 7 years of last CBA. 12.78% in 08/09, 9.41% in 09/10. Players got added 4.64% in 05/06 and 0.66% in 07/08.”

As James Mirtle of the Globe and Mail observed, escrow could come in at between 7-11 percent, depending upon the annual growth of revenue, which is why it’s an issue for the players. He suggests, however, if the league were to pay that back over time, it could alleviate the problem.

So, without a salary rollback, how does the league get to that 50-50 split in the first year?

According to Tom Gulitti of NorthJersey.com, “money on salaries above that point would be deferred and paid back over the life of the contract”.

Michael Russo of Startribune.com added: if a player on a ten-year deal had $1 million trimmed from his contract, he would get an additional $100K per season for the next ten seasons.

It does, however, come with some risk. As Katie Strang of ESPN.com observed, “if deferred payments rely upon future growth, what happens if future growth not sufficient to support those payments?”

Another issue, as noted by David Shoalts of The Globe and Mail, is if the definition of hockey-related is to remain as it was under the previous agreement, or if the league is seeking changes in their recent proposal.

That, however, appears a detail which will have to be determined between the two sides in future talks.

 

Eligibility for unrestricted free agency at age 28 or eight years of NHL service. 

That represents only a one year increase from the current eligibility for UFA (27, or 7 years of service), which is a decline from the league’s initial proposal of age 30. I consider this a notable concession on the league’s part. PA will likely push to keep the current eligibility criteria, but I can’t see this being a significant show-stopper.

 

Entry level contract term remains at three years.

The league initially sought to extend that to five years, which I’ve frequently suggested since July could make it difficult for the league to attract the best young European talent. Good to see them showing some common sense with this.

**Update** ESPN.com’s Pierre LeBrun reported entry-level offers for rookies would be two years instead of three. If so, looks like the league understands the potential damage it could do by pushing those ELCs beyond three years.

 

Contract lengths would be capped at five years.

No change to what the league has initially sought, and which the PA might not be keen to accept. I still don’t foresee this to be a significant sticking point, as only a handful of players get contracts longer than five years (the average is just over three years). If push comes to shove, I don’t see this as a deal-breaker.

 

Salary arbitration rights remain in place. 

The league initially sought to eliminate the players’ right to salary arbitration, so this is a significant concession on their part.

 

Salaries for NHL players demoted to the minors would still count against salary cap. 

This one could be a sticky one. Some pundits believe the PA aren’t going to be keen on that point, but I also think a number of NHL players don’t like teams burying high-salaried players in the minors simply to become cap compliant. See Wade Redden of the NY Rangers for a notable example.

If anything, such a move would handcuff those few big market, free-spending teams which have employed that tactic to rid itself of costly salary cap mistakes.

 

Revenue sharing would be $200 million. The NHL initially sought $190 million, the NHLPA $250 million.

This is one where I could see some more negotiating between the two sides, as the PA could try to push that number a little higher toward between $210-$220 million.

 

The League’s offer would be contingent upon a full 82-game schedule beginning on November 2.

That would mean training camp would have to open on October 26 to allow the teams a full seven-day preparation period before the November 2nd start date. The NHL has already cancelled games up to October 24th, so I daresay that’s to be the deadline for a new deal to be implemented in order to reach that November 2nd season opener.

One final point: it’s interesting the NHL’s deal comes on the heels of the revelation of the league employing a noted American pollster to determine the best way to conduct its spin in the PR campaign regarding this lockout. Cynics are suggesting the offer is little more than a PR gambit designed to force the PA into rejecting the offer and thus painting the players as the bad guys and the team owners as the fair and reasonable ones.

Then again, as the Globe and Mail’s David Shoalts suggested:

“Possible reasons could be the adverse fan reaction in many of the league’s U.S. cities, where indifference seemed to be the most noticeable feeling.

This may have frightened more than a few owners in a league that has long waged a battle for mainstream acceptance in the U.S. Several U.S. teams, such as the Dallas Stars, St. Louis Blues, Tampa Bay Lightning, Florida Panthers and the Stanley Cup champion Los Angeles Kings saw the lockout stall their chances to build on encouraging signs in their markets due to ownership changes and/or playoff success.”

The league’s offer certainly puts the puck firmly into the NHLPA’s end. If the players reject it outright, the backlash from the fans will be significant, killing off whatever support they previously enjoyed.

That being said, Fehr’s remarks in the press conference immediately following yesterday’s offer from the league suggest the PA views the league’s offer as a solid “starting point” for further negotiations, which suggests the PA will likely make a counter-proposal soon.

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7 Responses to Analysis of NHL’s Latest CBA Proposal.

  1. Freewillig says:

    I’ve not been on the side of the players in this, but to characterize the owners giving concessions in this, outside of increasing the revenue sharing and entry level contracts, I don’t find to be accurate. A concession would be for the players to get something they didn’t already have in the current contract; not the owners coming off their initial lowball offer.

  2. Alex says:

    This is the first proposal from either side grounded in reality. It’s a shame that the NHL had to submit such an outrageous (and no doubt insulting) initial proposal. Had they began with this, or even a slightly more aggressive form of this proposal, I feel we’d have a deal by now.

    The devil is in the details of course. We’ll have to wait and see what those details are but I’d be shocked if the NHLPA didn’t make a counter-offer to this proposal. Maybe it’s the optimist in me but it appears hockey of some length could be back on the menu for this season.

  3. rattus rattus says:

    Alex,
    could you explain to me precisely why the initial offer, where the League would be getting 57% and the NHLPA would be getting 43%, was so insulting?
    After all, isn’t it exactly the reverse right now, with the NHLPA now getting 57% and the League now getting 43%?

    Yet you don’t seem to be getting too worked up over that, do you?
    So tell me, please, on what basis the players are entitled to 57% and yet the League is not.

    You might argue that neither side should get 57%, and I would agree.
    So, maybe the League was just trying to make a point, neh?

    Gary one smart guy, imo.
    Pity about the voice and phenotype.

    rich

  4. Alex says:

    Interesting that you seem to know my entire view on this after one comment. 50-50 seems reasonable to me as long as the loopholes for HRR aren’t too dramatic (Fehr has already commented that given the deductions the owners are currently entitled to, the split is already about 50-50, so the league’s first proposal brought the PA’s down even further than what was on paper).

    Secondly, I’m not taking sides but keep in mind the previous CBA was exactly what the owners asked for in every way, so the only point the owners seemed to be making was that a) their dream CBA was a failure that required it to be completely flipped (contradicting all of Bettman’s statements on the CBA over the past few years), and b) they were asking for it because they could. Had the last CBA been the brainchild of the NHLPA, then you’d have a point on them making a point.

    Bettman is definitely a smart guy and a savvy business, you’d be hard-pressed to find someone honestly saying otherwise. But IMO he made a serious error in judgement with that first proposal that only served to strengthen the resolve of the NHLPA (the cattle comment didn’t help either, but that was out of his hands).

    So back to my comments: I believe this is the proposal that should have been their opening proposal all along.

  5. Mike says:

    Well said Alex. A poor decision on Gary’s part

  6. TopRightCorner says:

    So it should have been the offer first made?
    Sorry dude but i strongly disagree and still blame the NHLPA for this being such a mess and all thx to Fehr.
    If he would have started the talks a year ago like bettman asked him to it could have been settled ages ago.
    Hell even if he would have talked in april when asked it may be done but he refused all 4 times they wanted to get started.
    It was fehr that made the wait until the last minute and also fehr that killed the new alignment as soon as the NHL came out with it.

    The NHL may have made a terrible first offer but Fehr made no offers or counters.
    All he did was put forth an idea on how he thought the league should be run and his ideas were equally bad.
    he has gone out of his way to piss off the owners and is just as guilty for the work stoppage.

    i think the owners have taken a giant step forward to get a deal done but i am not confident at all it gets done by nov 2 simply because fehr will blow it.
    i can see the counter being stupid because instead of viewing it as a big positive step he will view it as weakness.
    instead of wanting a foot and going to be happy with 6 inches i can see him now saying we can get 13 inches.

    after reading player tweets and comments after the nhlpa told them the offer i was very disappointed with most as they sounded too arrogant and over confident.
    i wanted to bitch slap Bieksa after seeing him comment so dumb with his ‘it was about time they made a decent offer since up until now the players have done all the work’.

    i am an older guy and remember fehr very well from his baseball nonsense and how he handled those work stoppages and unless enough players get on him he will blow this.
    if it does not get settled in the next 9 days and games get cancelled the whole thing changes and starts going backwards.
    tomorrow the counter comes and it will be huge in seeing if a settlement is close or if damage gets done and moves farther away.
    if fehr does like he did in baseball it goes farther away and we will be looking at U.S, thanksgiving as the earliest start and a possible lost season to boot.

    i hope like hell i am wrong but when i add up everything fehr has done so far,which i see as zero,i have very little faith it gets the puck dropped on nov 2.

  7. Sean Whiteley says:

    While agree that this is definately a more “reasonable” offer, the initial offer by the NHL was a “go for the fences” type offer. It’s no different than someone putting in a lowball offer on a home/car in hopes they can get a sweet deal. Yes it suprised everyone on what it contained and most certainly offended the PA. However that is the game of negotiating.

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