The NHL’s long-awaited initial proposal to the NHLPA was met with overwhelming initial criticism from bloggers and pundits. Here’s a look at the key points, and my take on where things might go from here.
After a couple of weeks of formal CBA meetings between the NHL and NHLPA, the former finally made its long-awaited initial proposal.
Nothing in it was unexpected, or shouldn’t have been to anyone paying attention to CBA issues over the past couple of years.
The league proposed the following:
- a reduction in the players share of hockey-related revenue from the current 57 percent down to 46 percent;
- increasing the eligibility for unrestricted free agent (UFA) status from seven to ten years;
- imposing a term limit on contracts to five years;
- elimination of signing bonuses;
- extending the term of entry level contracts from three to five years, and
- elimination of salary arbitration.
The New York Post also reported the definition of HRR would be “redefined” to ensure the players get a smaller share of their already reduced gross revenue. It would also lower the current cap ceiling from $8 million over the midpoint down to $4 million, while keeping the cap floor at $8 million below the midpoint.
Interestingly, the league hasn’t sought the elimination of “no-trade/no-movement” clauses or of guaranteed contracts, which some observers felt they would pursue. Whether those end up on the table at some point in negotiations remains to be seen.
As of this writing (July 14th), the NHLPA has yet to formally respond or make its counter-offer, though that is likely coming very soon.
Those in the punditry and blogging communities who’ve reviewed the league’s proposal have reacted negatively, though its generated an interesting response regarding its portent, with some downplaying the seriousness of the proposal, while others consider it “a declaration of war” against the PA.
If the league refuses to move away from this initial offer by mid-September, when the current CBA expires, then we can certainly expect another lockout.
The owners want to increase the eligibility age for UFA status in part because they don’t like investing in long-term deals for players in the mid-twenties, but also because the lower eligibility age had an unexpected adverse impact upon the free agent market.
When the current CBA was implemented, the expectation was the lower UFA eligibility age would flood the free agent market with younger talent. Instead, most teams opted to re-sign their best players to lengthy new contracts prior to their eligibility age, resulting in a significant lack of free agent talent, leading to second-tier talent being paid first-tier dollars.
By raising the age by three years, they could be counting on an increase in the numbers of free agent talent, as well as reducing the overpayment of lesser lights.
That, however, would display a stunning lack of knowledge of NHL history, since teams often overspent on second-tier talent in the previous CBA when the eligibility age was 31. True, the last CBA also didn’t have a salary cap, but it’s obvious a salary cap is no detriment for teams willing to blow up their budgets by overspending on free agents.
If the owners, a number of whom weren’t involved in the NHL during the previous CBA, honestly believe a higher eligibility age for unrestricted free agents will result in a deeper talent pool and less overspending, they’re fooling themselves.
Increasing the UFA eligibility, however, ties in more neatly with the owners’ desire to increase the term on entry-level deals.
They see this as a means to address the problem of “second contracts”, or “bridge deals”, the one sandwiched between the entry level contract and the eligibility for UFA status. A number of teams have taken to investing big money in players emerging from entry level deals, hoping to cash in on potential, rather than paying for a proven performer.
By lengthening the entry level deal, and increasing the eligibility for UFA status, teams can lock up their best players, in the prime of their careers, for two shorter, less expensive contracts over a ten year period, rather than paying out three increasing expensive contracts over the same period as they’ve done under this CBA.
During this CBA and the previous one, rookies were often left with the crappy end of the stick. The attitude was they hadn’t proven themselves at the NHL level, and therefore weren’t deserving of the big money contracts of their more experienced peers.
The Ottawa Senators overpayment of Alexandre Daigle led to the first cap on entry level contracts. The Boston Bruins exploited the lack of a cap on rookie bonuses clauses to ink Joe Thornton to an expensive contract, opening the floodgates to similar deals, and forcing a cap upon entry level bonuses in this CBA.
Imagine how more affordable it would be for a team to have the next Evgeni Malkin or Alexander Ovechkin being paid well below their true value for five years instead of three. Evidently, the owners have, but this gambit could create a bigger headache when trying to draft and retain the next Malkin and Ovechkin, courtesy of Russia’s Kontinental Hockey League.
Though the KHL hasn’t been the significant drain upon the NHL’s deep talent pool some observers originally believed it would be, its existence has led to a reluctance in recent years by NHL teams to draft promising Russian talent, fearful those players could bolt for the riches of the KHL following their current three-year entry level contracts.
It’s also resulting in some players deferring their NHL debuts in favor of bigger bucks in Russia, as the Washington Capitals discovered with top prospect Evgeny Kuznetsov. Not even the possibility of playing with the great Alexander Ovechkin could entice Kuznetsov to jump to the NHL.
The KHL’s critics will insist its existence won’t hurt the NHL’s talent pool. The possibility, however, of earning bigger bucks in Russia, rather than playing for five years for considerably less under an NHL entry level deal, might not only be attractive to more promising Russian players, but other budding stars elsewhere in Europe.
Restrictive, five-year entry-level contracts could become the best gift the KHL ever gets from the NHL.
Imposing term limits on contracts has generated a mixed reaction from pundits and bloggers. Some believe it’s necessary to close the current loophole, which has allowed for legal cap circumvention courtesy of heavily front-loaded, ridiculously long deals. Others, however, suggest it’s a necessary evil, allowing teams better odds to both retain their best players or add star talent for longer periods of time.
Regardless, the fact it is part of the league’s initial proposal seems to answer the question over how divisive this issue could be amongst the owners. Clearly, they want to put a stop to this practice, and that includes those owners who currently have players on their rosters carrying those kind of contracts.
The same goes for the elimination of signings bonuses, another creative measure at legalized cap circumvention which is usually part of these front-loaded, long-term contract, as seen in the recent contracts the Minnesota Wild signed with Zach Parise and Ryan Suter.
Both loopholes are also shining examples of the long-running theme in NHL CBA negotiations: the owners (and their respective team managements) wanting to be saved from themselves.
The exploitation of the loopholes in the current CBA was done by the teams, not the players and their agents. Crafty general managers, aided by capologists and with the blessing of their team’s ownership, were the ones who almost immediately start probing for any rule they can legally break to give themselves an advantage over their peers.
They may very well succeed in getting the current loopholes closed, but you can bet your ass some of them will be looking for new ones before the ink is barely dry on the next agreement. Rest assured, they’ll find them.
As for elimination of arbitration, the league’s rationale will simply be that the overwhelming majority of cases never reach an arbiter, as the player and the team almost always reach agreement on a new contract prior to the arbitration date, rendering the process moot.
The PA, however, will argue arbitration remains a viable leverage option for the player, for while neither side enjoys the process, the mere threat of it is usually enough for both sides to reach an amicable agreement on a new contract.
That leaves the part of this proposal which is the only true show-stopper for the PA: lowering the players share of hockey-related revenue to 46 percent, and redefining what constitutes that revenue.
None of the other parts of this proposal, singly or as a whole, appear significant stumbling blocks toward a new CBA. Lowering the players share, however, is another matter.
The league knows that part is anathema for the players. This proposal is in part its way of testing the PA’s reaction, especially that of new executive director Donald Fehr, as well as the players resolve. League negotiators are leading with the extreme number, likely in hopes the anticipated “50-50” split most observers feel is their true objective will seem more palatable and therefore acceptable to the players.
Rest assured, however, reducing the players share of revenue is the primary goal for the team owners. Everything else is mere tinkering. The PA is likely to counter by seeking a more enhanced system of revenue sharing, something which the league never mentioned in its offer, which tells us all we need to know about what the team owners and the league’s negotiators feel about that topic.
As we await the NHLPA’s counter-proposal, it appears both sides are finally laying the groundwork for both the “real negotiations”, as well as their prospective PR campaigns to win the hearts and minds of NHL fans.