It’s rumored the NHL could once again seek to reduce the players’ share of revenue, but that won’t be enough to help struggling franchises over the long term.
The NHL’s current collective bargaining agreement is set to expire in September, 2012, and speculation over the possibility of a lockout has been bandied about by more than a few pundits and bloggers, including yours truly, in recent months.
It’s expected the spark for another potential NHL work stoppage would be any attempt by the league to reduce the salary cap by cutting the players’ share of revenue from its current maximum of 57 percent down to between 48-52 percent.
To achieve this, salaries would probably have to be rolled back. The NHLPA accepted a 24 percent salary rollback as part of the current CBA, and it would probably take something around that number to achieve the lowered cap and reduced revenue share which might be sought by the league.
It’s also suggested that, in addition to reducing the players share, either a harder cap ceiling (which wouldn’t rise with revenues) or one less flexible (which would slow its increase) might also be pursued by the league.
Of course, this is just speculation, and currently we have no idea what the league will seek, let alone what the PA will agree to, between now and next September. The two sides are expected to open negotiations at some point in the upcoming season, but those talks probably won’t intensify until after the Stanley Cup playoffs.
The reason the league might seek these changes is because the current cap system hasn’t helped struggling U.S.-based clubs (once “struggling” Canadian teams were saved by the increased value of the Canadian dollar) as originally intended.
In the first season under the current cap system, the cap ceiling was an affordable $39.5 million, while the cap floor was $23.5 million. That made it very easy for supposed “small market” teams to bid competitively for free agent talent or trade for expensive stars, as well as retain most of their own key players.
But the cap was tied to revenue, and as the latter rose each season, so did the cap limits, to the point where, for 2011-12, the ceiling of $64.3 million and floor of $48.3 million is now considered too expensive for struggling teams to maintain competitive rosters.
Assuming the league pursues, and ultimately achieves, a reduction in the players share of revenue, and is able to prevent or slow the increase in the cap, it still won’t be enough to save the struggling franchises, many of which are located in the southern United States.
The main reason for those teams’ woes is almost always years of mismanagement, resulting in mediocre rosters, which drove away many fans, making it more difficult to raise the revenue needed to keep pace with a rising cap.
That in turn made it difficult for teams to qualify for sufficient revenue under the league’s complex revenue sharing system, which failed to improve those clubs as promised when this CBA was implemented back in 2005.
The Phoenix Coyotes were a prime example of a mismanaged team, until Don Maloney took over as general manager in 2007. Under his guidance, they’ve rebuilt into a playoff team, and slowly but surely, it appears fans are starting to return.
Their problem now however is finding an owner willing to keep the club in Arizona, and it’s possible they could be playing in a new city following the 2011-12 season.
The sale and relocation to Winnipeg earlier this year of the Atlanta Thrashers has given rise to concern over the future of clubs like the Columbus Blue Jackets and the NY Islanders.
But even for teams which seem to have stable ownership, like the Minnesota Wild, Carolina Hurricanes and Nashville Predators, there’s concern over their ability to carry on under the current system.
Slashing payrolls however only works for so long, and ultimately fails to address the problems affecting those teams.
A better system of revenue sharing, or a luxury tax system (one which works better than that of Major League Baseball), would be a better way to go, allowing the big market spenders to invest (or squander) as much as they like over an established limit, whilst sending back substantial revenue to aid struggling teams in rebuilding their rosters into playoff competitors.
Even then, it’ll only work if struggling clubs have management competent enough to invest such money wisely.
If the league seeks another reduction in the players revenue share next year, it’ll be the last time they’ll be able to go to that well.
The players might be grudgingly willing to accept another reduction in their share next year. Things turned out much better for them under this salary cap system than their critics expected, so it stands to reason it could work out for them again in the long run as long as the cap remains tied to revenue.
Perhaps the NHLPA will accept another reduction in revenue and another rollback, provided it doesn’t bite too deeply, keeps the cap tied to revenue, allows them to retain guaranteed contracts, arbitration rights, trade clauses, and eligibility for unrestricted free agency while in their mid-twenties, while capping or eliminating escrow payment, and instituting a better revenue sharing system.
But they won’t be willing to do it again beyond next year, and rightfully so.
The league tried to get its financial house in order during CBA negotiations in 1994-94 and 2004-05 by placing the blame on the players, rather than upon the questionable motives of big market teams, which gleefully exploited loopholes to their own advantage, and years of mismanagement of struggling clubs.
“Blame the greedy players” meme played well amongst many pundits and fans in the past, but it won’t wash next year. The league and the team owners touted this current CBA, with its cap on payrolls, individual salaries and rookie contracts, as the cure-all they needed to “level the playing surface” and allow all their teams to be competitive. It’s their fault it’s not working out as well as promised.
And while the players might be willing, once again, to shoulder more of the burden of saving team owners and their management from themselves in the next CBA, they won’t be so willing to do so down the road.
At some point, the league won’t be able to slash salaries any further, forcing team owners to re-examine how they’ve conducted business, and to find more sensible alternatives to address the problems of assisting so-called “small markets”.
They could save themselves a lot of future worries if they do so in the next round of labor talks. Sadly, the league and the team owners have shown a stunning capacity for short-sightedness. Yes, the names may change, but not the way they conduct their business and their labor negotiations.
It’s possible they could be more proactive in coming up with better ways to address the disparity between the big and not-as-big market teams, or to improve struggling markets which have made a genuine effort to improve themselves but still find themselves struggling to keep up.
Given the history of NHL labor negotiations, however, that appears unlikely. It’s easier to demonize the players, or force them to accept even less with threats of another lengthy work stoppage which could again cost them another season and force many to play in inferior leagues, than in seeking realistic solutions to their problems.
Cutting the players salaries to make it easier for floundering franchises to reach the salary cap floor, however, is only kicking the can down the road, especially if many of the teams fail to make any significant improvement when the next CBA is due to expire.