More details have emerged from the NHL’s latest proposal. Here’s my analysis of the notable new points, as well as the NHLPA’s initial reaction to the league’s proposal.
The league publicly released what it called the “full text” of its offer to the NHLPA today.
I’ve already noted several of the salient points (50-50 revenue split, eligibility for UFA status, contract lengths, arbitration, entry-level contracts, players on NHL contracts demoted to minors, revenue-sharing) in an earlier post, so I won’t go over those again here. Instead, here’s my take on the more notable details that have since emerged.
- The league’s proposal is for six years, with an option for a seventh. It also claims “current HRR accounting subject to mutual clarification of existing interpretations and settlements”.
In other words, the league is claiming it isn’t seeking changes in how hockey-related revenue is calculated, which was a significant issue for the NHLPA. Still, subsequent reports indicate that’s still an area of concern for the PA, which they’re apparently seeking to clarify with the league.
- The league also confirmed the $16 million payroll range between the salary cap minimum (“floor”) and the salary cap maximum (“ceiling”) would remain in place.The salary cap for this season would be $59.9 million, and the cap minimum $43.9 million.
Teams with payrolls currently in excess of that would be allowed to spend up to $70.2 million as a transition period. By Year Two, however, all teams would have to be compliant with whatever the cap ceiling would be.
As noted yesterday, that would make it easier for clubs currently well above the $59.9 proposed cap ceiling for this season to make the transition toward being cap compliant by Year Two of the proposed deal.
- As previously noted, the reduction wouldn’t come via salary rollback but by increases in escrow payments from the players, depending upon the rate of revenue growth each season. ESPN.com’s Pierre LeBrun reported the proposal would contain a mechanism to defer escrow payments based on future growth, which would mitigate the players financial pain in the early years of the deal.
Details of that, however, remain sketchy and will hopefully be further determined in subsequent CBA talks in the coming days.
- What was also notable was what would happen to all existing NHL contracts in excess of five years.
The league’s proposal calls for those contract to be subject to new cap calculations, specifically that deals would count against a team’s cap regardless of “whether or where the player is still playing”:
All years of existing SPCs with terms in excess of five (5) years will be accounted for and charged against a team’s Cap (at full AAV) regardless of whether or where the Player is playing. In the event any such contract is traded during its term, the related Cap charge will travel with the Player, but only for the year(s) in which the Player remains active and is being paid under his NHL SPC. If, at some subsequent point in time the Player retires or ceases to play and/or receive pay under his NHL SPC, the Cap charge will automatically revert (at full AAV) to the Club that initially entered into the contract for the balance of its term.
For example, if the Vancouver Canucks were to trade Roberto Luongo this season, and in three years time he would retire, his average annual salary would still count again the Canucks payroll, even though he was no longer a part of the Canucks at the date of his retirement.
It’s a very heavy-handed way for the league to crack down upon teams which follow the practice of signing players to extremely lengthy, heavily front- or back-loaded contracts to get a friendlier cap hit (aka “cheat deals”).
Pierre LeBrun reported the league’s offer puts tighter restrictions on the fluctuations of year-to-year salaries as a means of preventing those so-called “cheat deals” calling for fluctuations of no more than five percent.
The league also seeks the elimination of re-entry waivers, four-year exclusive negotiation rights for NHL clubs who draft European players, a revenue-sharing committee (with NHLPA have representation and input) to determine distribution (with 50 percent of revenue coming from the top ten revenue teams), plus all teams would be eligible for revenue sharing if they qualify.
LeBrun also reported the reason the NHL is seeking two-year entry-level contracts is to limit the financial flexibility of the player’s second contract, so that they would now make their big money in the third contract.
In other words, it would reduce the number of players being overpaid for potential in their second contract following their ELC, making the second contract more of a “bridge deal” taking them up to their third deal.
Teams would also be able to retain a portion of a player’s salary in a trade, something which wasn’t allowed under the previous CBA. Given that the league is proposing to close the loophole which allows teams to bury players under NHL contracts in the minors to free up salary cap space, allowing teams to “eat” a portion of a player’s salary in trade provide those clubs a viable alternative.
The NHLPA’s initial response, as per a letter sent by director Donald Fehr to the players and agents, wasn’t enthusiastic to the league’s proposal.
Regardless, the league’s offer puts the pressure squarely upon the PA to make a suitable counter-offer soon which would enable real negotiations toward a new CBA to begin. If the PA rejects the league’s proposal outright, or fails to make a significant counter-offer, the support they currently enjoy from the fans will plummet faster than Felix Baumgartner.
The next meeting between the NHLPA and NHL is scheduled for October 18 in Toronto, where the PA is expected to make a counter-proposal.
For the sake of bringing about a resolution to this lockout, here’s hoping the PA’s proposal is a substantial one, which works off the league’s latest offer.