Contract Issues Significant NHL CBA Sticking Points.

The “make whole” provision remains the biggest sticking point in NHL CBA negotiations, but player contract issues have recently emerged as significant stumbling blocks in the path toward a resolution.

Put simply, the league wants to implement five-year contract term limits, impose rules preventing “cheat contracts” (front-loading contracts to make them more salary cap-friendly), raise the eligibility for unrestricted free agency by one year to age 28 or eight years service, reduce entry-level contracts from three years to two, and implement salary arbitration after five years in the league.

The NHLPA, however, is refusing to accept what they see as restrictions upon their contract rights, believing the league is pushing for the players to make all the concessions.

NHL deputy commissioner Bill Daly lamented the lack of progress on these issues.

“I would’ve hoped that during the course of the past week they (NHLPA) would’ve shown some movement on those issues toward us, knowing what our fundamental concerns are. The message we basically got this week was, ’We know what your contracting proposals are, we’re not prepared to agree to them.’

Though the PA is refusing to be flexible on contract rights, there is sufficient wiggle room here without conceding too much to the owners.

Regarding contract term limits, most NHL players never see contracts up to five years in length, let alone over that number. According to CapGeek.com, the longest deals run between 6 to 15 years. By my estimation, approximately 70 NHL players have contracts six years or longer, and of those, only 42 are seven years or more.

Capping term limits at five years would affect less than 10 percent of the PA’s 700-plus membership, affecting mainly the elite players.

Long term contracts provide financial security, but it’s not as though the superstars will be hampered by five-year contracts. They will continue to be paid top dollar, either from their current teams, or by another via free agency. Even if the league succeeds in implementing five-year term limits, there will be teams willing to pay (and over-pay) for top talent.

During the CBA covering the period from 1994-95 to 2003-04, star players rarely saw contracts longer than five years. Alexei Yashin inked a ten-year deal with the NY Islanders in 2001, and Jaromir Jagr a seven-year deal with the Washington Capitals in 2002, but those were exceptions.

It was only under the recent CBA when there was a notable increase in the number of contracts stretching beyond five years in length, mainly done as a means of legally circumventing the salary cap.

Had the NHL not succeeded in implementing a salary cap under the previous CBA, there wouldn’t have been any need for teams to sign players to such lengthy, front-loaded contracts. Star players still would’ve received contracts around five years in length.

Though it can be argued the longer term deals ensure players will be well-compensated even at the tail end of their careers, that’s simply not true in most cases, since many of those contracts are heavily front-loaded, meaning the players earn the bulk of their money in the first half of the deal.

Lengthy contracts are also difficult to move, even for players who request a trade, potentially limiting potential destinations.

Capping contracts at five years could result in more players – especially the stars – becoming easier to trade, as those with deals of five years or less are easier to move than those carrying much longer terms. Another benefit of shorter terms could be more stars entering the unrestricted free agent market.

Increasing the eligibility age by one year seems a small matter, especially when one considers between 1995 to 2004, the eligibility age was 31, and unrestricted free agents did quite well financially during that period.

The reason why it’s considered a sticking point is that , in conjunction with reducing the entry-level contract from three years to two, it would supposedly tie a player to a team for a longer period.

But is that such a bad thing? It’s not as though they won’t be well compensated, especially the top talent, by staying with a team an extra season or two. Under the previous CBA, most of the top players were usually re-signed by their teams to lucrative, long-term extensions well before their UFA eligibility.

Though UFA eligibility age is when most NHL players stand to make the most money in their careers, they aren’t going to suffer if they have to wait until age 28 or eight years of service to become eligible for UFA status.

A shorter term on entry level contracts would also supposedly prevent teams from over-paying players coming out of entry-level contracts, permitting them instead to ink those players to shorter, more affordable contracts.

Young superstars emerging from entry level deals, however, will still get big money on five year contracts, and continue to do so afterward for as long as they keep playing well, or a general manager is willing to pay big bucks for a star name. No one believes the next Sidney Crosby, Evgeni Malkin, Drew Doughty or Steven Stamkos coming out of his entry level years will be forced to accept a two or three year deal worth considerably less than market value. The same goes for lesser lights. Never underestimate the power of general managers to overpay when they get stars in their eyes.

Reducing the entry-level deals by one year actually works for the benefit of young stars. They can sign big money contracts a year sooner, which could also prove beneficial in enticing more young Russian stars to sign with NHL teams.

As for the majority of players, they don’t get usually get lengthy, big money deals once they complete their entry-level deals. That won’t change under the next CBA.

As for arbitration, players should absolutely retain those rights, even if the majority of players who file for it end up re-signing with their teams before their cases reach an arbiter. Extending the eligibility to five years won’t adversely affect them.

So why aren’t the players willing to be flexible on these issues. As Ken Campbell of The Hockey News recently explained:

“And for those who think the players should simply cut the best deal they can get and get on with playing, consider for a moment what that would mean. The fact neither side of this dispute wants to wear the tag of loser has absolutely nothing to do with ego and everything to do with preserving the collective bargaining rights for future players. If the league is successful in getting everything it demands in these negotiations and the players cave just to get back to playing, what will stop it from making even more onerous demands the next time and the time after that? “

It comes down to trust and perception. Over the year, the league has done little to earn the players’ trust in collective bargaining, leaving the latter with the perception the owners want to screw them out of their contract rights. They feel they’re making a concession by agreeing to accept a reduced share of revenue, but don’t believe they’re getting anything else back from the league except demands for more concessions.

As far as the players see it, unless the league is willing to be flexible regarding their contract rights, there’s no deal to be had.

The players could end up blinking first in this standoff and agree to more concessions. For now, however, they appear over their contract rights. Even if an agreement is reached on the “make whole” provision, these other issues could ensure negotiations take longer than expected to reach a suitable conclusion.

2 Comments

  1. I said it before and i say again this all has been pushed over the edge by Fehr.
    The PA should have hired a solid profesional negotiator and instead hired an agitator.
    Fehr claimed he expected the bully treatment and yet in the very first meeting insults him in front of everyone.
    He shows up late to every meeting and even disappears for 20 minutes when claiming to get a drink of water.
    i wil not even go into his attitude when the negotiations are happening.
    This is not how a pro negotiates,it is how you agitate.
    The more you piss off your opponent the more detrmined you make him.
    A different guy would have been cool/calm/collected and acted like a pro more like a gentleman and my bet is things would have gotten done.
    I am sure the NHL would have come to a middle ground dealing with a proper rep instead of a jerk.
    If you expect to be bullied you be prepared to be calm and reasonable and firm but not charge at him to purposely provoke him.
    you provoke him and piss him off you end up getting the crap kicked out of you and thanks to donny boy Bettman and all the owners are pissed and want to kick the crap out of him now.
    I think the chances of an even deal are slim and none and slim has just about left town.
    If/when the season is cancelled the next round will be way worse,it will be the NHLPA bringing a knife to a gunfight.

  2. I have no objections as a fan to the basic framework of what the NHL is asking regarding contracts. However, I think arbitration should remain the same as before, and all long term contracts should be honored under the terms of the previous CBA, no punishment clause for signing them under those rules to the teams that did so, rather grandfather them in. If the league wants to put its foot down regarding deals longer than 5 years it should void all contracts signed last season longer than 5 years. That would also solve any issues from players who were not negotiated with in good faith and save Minnesota and Nashville from contracts signed in the last days of a void CBA (plus create a mad scramble to sign some good players, which would be very exciting).

    A problem not addressed is how over 35 contracts are handled. I believe players should be able to retire and come off the books, even with grandfathered contracts so long as they are retiring due to injury (see Pronger).

    That leads me to another contract issue: Why not allow teams to sign their own players to contracts not exceeding 10 years or the player’s 40th birthday (a reasonable age). That way, when a player hits UFA his own team can sign him to a longer, more secure contract versus a 5 year max with any other team. I also would like to see teams allowed to sign one or two players to a franchise contract, i.e. a lifetime contract longer than 10 years. Teams cannot sign more than 2 players to super long contracts, and this way a team could lock in it’s young star for his career when he is still in his 20′s. It’s a risk, but for some teams and players it’s worth taking. Add to this for players over 35 a clause preventing them from signing a contract that exceeds their 40 birthday. For players near, at, or past 40 years, they should be restricted to 2 year contracts, or one year contracts with option years attached.

    Regarding how contracts are calculated in the cap, the solution to ending circumvention is eliminating the averaging rule. Whatever the player is making that season is his cap hit, end of story. Perhaps make an exception for a signing bonus that would average across the entirety of the cap, but the percentage of the bonus would have to be something within reason, say no more than 20% of the rest of the contract. That would allow for some edge in negotiations, even for players leaving their own team and seeking a max 5 year deal elsewhere.

    Simple solutions, but what we’ll get is likely another mess with more circumvention. Oh well.