The Soapbox

Since the ratification of the current NHL collective bargaining agreement I’ve stated several times I foresaw potential problems with the agreement, specifically the possibility for circumvention, an inability to control spending or reduce ticket prices, and concerns it wouldn’t help struggling franchises.

Occasionally I’ve received requests for links to those posts and articles as sadly much of what I wrote on my Soapbox as well as my Foxsports.com articles during the lockout are no longer available online.

I do however still have the copies of every article I’ve ever written for Foxsports.com, which are also time-stamped to the dates they were last modified prior to their submission for publication.

So to ensure an online record of my comments prior to the ratification and implementation of the current NHL CBA here’s a roundup of snippets from several Foxsports.com articles from June 2005.  

I’ll be happy to forward along the full texts to those interested in reading them.

June 8, 2005:

(I)f the stipulation of increasing the cap ceiling to match increasing revenues is part of the next CBA, the league’s earlier offer of a $42.5 million cap, which the players were told they might never see after the season was cancelled, might become a reality down the road.

Regardless of the outcome of the next CBA, the league and the owners should be wary as to how the new deal plays out over time. 

Ultimately it is the owners, not the players and their agents, who determine the market value for player salaries. To ensure salaries don’t get out of hand again, it’ll be up to the owners, particularly the big market free spenders, to adhere closely to the rules of the next CBA, rather than exploit potential loopholes for their own advantage as they did under the last collective bargaining agreement.

June 13, 2005:

Under the previous CBA, a player’s rights were retained by their club from the time they were drafted at age 18 until they qualified for UFA status at 31, barring a trade or outright release, for 13 seasons.

But should that UFA age be reduced to 28 in the near future, suddenly those clubs will only hold those players’ rights for 10 seasons.  Since the average NHL’er, depending on their development, usually doesn’t make the big league until their early twenties, their team might now only hold them for anywhere between 4-8 seasons.

With those players having more upside for a longer period of time, that could stoke frenzied bidding wars for their services once they hit the UFA market. In turn, that could become the real test for the salary cap the league and the team owners fought so hard to get during the lockout.

Depending on the restrictions imposed by the salary cap in its finalized form, teams might try to find creative measures to circumvent it, possibly by prorating signing and performance bonuses, thus ensuring that, on paper, they’re within the cap.

It’s quite possible teams who get into those UFA bidding wars might want to lock up those players for longer periods of time, compared to the days when they would bid for much older talent…

UFA players under the old CBA used to sign deals lasting two to three seasons, with some stretching to four years. That was because older players past their prime will see their value decrease over time.

But 28 year olds are still in their prime with at least three to four more good seasons ahead of them.  Teams may wish to maximize their potential return on their investment in those players by signing them to deals lasting four seasons, five or possibly six seasons, depending on their status.

A lowered qualification age for UFA status will obviously benefit younger players, but what would become of older veterans who traditionally reaped the benefits of the UFA market?

For most, it’s going to mean lower salaries at an earlier age than what they got under the old CBA.  The very best older players may still command top dollar, but many are going to find their value decreasing on the open market once they reach their early thirties, compared to their mid-to-late thirties as in the past.

Those clubs bidding for that younger UFA talent will have to free up some room somewhere in the payroll due to the salary cap, even if they do overspend to land said talent.  That’ll mean declining to re-sign older players that traditionally would’ve been retained.

June 15, 2005:

The salary cap could also work to the players’ advantage.  A cap floor ensures teams cannot spend below a set minimum amount, something that was never part of any of the league’s previous demands.  The cap ceiling, meanwhile, will be tied to potential increases in revenues.

So while that ceiling is expected to be a low one for next season, due to the expected drop in revenue as a  result of the fallout from the lockout, it could rise – perhaps substantially - throughout the course of the next CBA.

Suddenly, that $42.5 million cap the league offered last February – and threatened the players would never again see when the PA rejected it – becomes a real possibility in three or four years as revenues increase.  Indeed, if revenues improve steadily, by the end of the next CBA the cap could be in the neighborhood of $50 million, which was what the players sought when they initially agreed to a salary cap.

Perhaps the best hint as to how the NHLPA is looking at the outcome of the new CBA is reflected in the comments made to SportsBusiness Journal by Winter, Gillis and Tom Laidlaw.  Winter and Gillis cited the importance of growing revenues, but it was Laidlaw who got to the heart of the matter.

 “Linkage works both ways,” he said. “If revenues go up, the player salaries will go up as well.”

June 17, 2005:

(B)logger Tom Benjamin suggests it might be more difficult for the Blues to find a new owner.

"Walmart heirs can't afford to run this team, but maybe somebody else can make a profit by convincing local governments to subsidize the team" doesn't exactly make a potential buyer want to whip out his wallet”, writes Benjamin.

So what does the Blues situation mean for the rest of the NHL?

After years of concern over the plight of small market franchises, it is sobering to consider a big market franchise should run into such difficulty, which may or may not (depending on point of view) have been the owner’s fault.

Benjamin reminds us of NHL Commissioner Gary Bettman’s comments last September, a week following the imposition of the lockout, when he appeared on CBC-TV’s National news hour to discuss the reasons for the work stoppage with Canadian hockey fans.

Bettman said that the NHL needed a new economic if it were to support 30 “healthy, competitive franchises”, that too much revenues was spent on expenses, which more than a few fans and pundits took to mean players salaries.   Without such a system in the new CBA, “franchises will be in trouble”, he warned. “Then we will lose franchises."

But players salaries apparently had nothing to do with the Blues financial problems, rather it was the high cost of simply running a franchise in a city where, despite the team’s popularity, high taxes and other issues may have made it impossible for team ownership to pay off its debt.

If there are other NHL franchises facing similar circumstances, then reduced and capped player salaries under the new CBA may not be enough to help those clubs dig out of debt, which might force their owners to put up “for sale” signs in front of their arenas.

June 24, 2005:

Many NHL fans held the belief throughout the player lockout that, if reduced and capped player salaries were the outcome of the labor dispute, ticket prices might also be significantly reduced.

The complaint amongst these fans was that because player salaries were so high, teams had no choice but to keep raising ticket prices to pay for those salaries.

The league itself did little to discourage that opinion, stressing the importance for their teams to get their costs under control to make the game more affordable for NHL fans.

But NHL tickets prices are not based on player salaries, but rather what each individual market will bear. That’s why prices are so high in traditional hockey markets like Toronto, Detroit and Philadelphia and why they’re much lower in a smaller, traditional market like Buffalo or in struggling markets like Florida and Phoenix.

Fans will be discovering this fact the hard way once the new collective bargaining agreement is implemented.

June 27, 2005:

A new economic system is coming for the National Hockey League, but many of the same people who were responsible for some of the problems that arose under the old system are still around.

Rather than address the problems that arose under the previous CBA, most of those people were content to merely wait out the end of that deal, which allowed those problems to fester.

Sure, this summer general managers will be able to buy out overpaid veterans without them counting against their salary cap, and there will be an anticipated free agent bonanza whereby rosters can be restocked with more affordable talent, but that’ll be a one-time-only opportunity.

There are no guarantees that, over the length of the new CBA, they’ll get it right this time.

Meanwhile, player agents that negotiated those high salaries that became such a problem under the previous system will be closely examining the new CBA looking for ways to work it to their advantage.

If they should discover a loophole in the new system, the onus will be on the general managers they negotiate with to decide if such loopholes will be exploited. Once again, it’ll be up to the teams to determine if this new deal will work as intended, or if they’ll utilize those potential loopholes to their advantage.

It remains to be seen if a big market club can resist the temptation to pay big bucks to players they believe will turn them into Stanley Cup contenders.

There will be clubs like the Tampa Bay Lightning, which built a Cup champion under the old system via shrewd trades, draft picks and affordable free agent signings, which could be faced with seeing their roster broken up to get under a salary cap.

Those teams might be open to any advantage that could allow them to retain their competitive edge.

Time will tell if the NHL’s new economic system will prevent or at least limit the amount of star players from small market clubs from being traded away or lost to unrestricted free agency due to financial constraints.

Lowering and capping salaries won’t bring about the end of bad management for some teams. Getting a potential free pass on buying out hefty contracts this summer still won’t prevent questionable trades or free agent signings by inept general managers. 

Arbiter Richard Bloch’s recent ruling in favor of the NHL rejection of Ilya Kovalchuk’s 17-year, $102 million contract with the New Jersey Devils on the grounds of salary cap circumvention raises questions over what could be in store for Kovalchuk, the Devils, other players on similar front-loaded, long-term deals and the impact upon the next round of collective bargaining between the league and the NHLPA.

For Kovalchuk and the Devils it appears their plan is to renew contract negotiations, leading to speculation his next contract with the club will still be heavily front-loaded over an unusually long period, just not to the extremes of the one rejected by the league and the arbiter.

As an unrestricted free agent Kovalchuk can field offers from other teams both in the NHL and in Russia’s KHL but unless talks with the Devils collapse in the coming days/weeks it appears other clubs might not be in the running at this time.

It remains to be seen if this decision will stop general managers from signing other players to these “cheat contracts”.

The loophole which allowed previous deals still exists, and with the league now having established a limit to what they would consider acceptable it’s still possible we could see more deals similar to those signed by Daniel Briere, Johan Franzen, Henrik Zetterberg and Vincent Lecavalier.

A more pressing concern is the news the league is now reinvestigating the contracts of Philadelphia’s Chris Pronger, Chicago’s Marian Hossa, Vancouver’s Roberto Luongo and Boston’s Marc Savard.

Those contracts were previously approved by the league but given its victory in the Kovalchuk decision the possibility exists the league could try to retroactively reject one or more of those contracts.

It remains to be seen what the league might do with these existing deals. This could merely be a formality on its part, as a means of perhaps further underlining the message it frowns upon those kind of contracts.

While the CBA does allow for the league to revisit the validity of contracts at any time doing so could as one pundit suggested open up a can of worms for the league, creating more headaches than it needs at this point.

The deals for Pronger, Luongo and Savard go into effect this coming season, whereas Hossa’s deal went into effect last summer.

It would be easier for the league to retroactively reject the contracts of the former three as they don’t technically don’t go into effect until the start of his coming season than it would for Hossa, who already played one season under his current contract.

Given the tight salary cap issues the Bruins and Blackhawks face they might welcome the league’s rejection of the contracts of Savard and Hossa respectively as it would resolve the payroll problems they currently face because of limited cap space.

Then again, Hossa was an integral part of the Blackhawks championship team, and having already lost 8 players due to salary cap constraints they might not like the idea of possibly losing another player.

Bruins management was rumored shopping Savard but they could still view him as a valuable part of their club and thus be unwilling to risk losing him in such a manner as contract rejection.

The Canucks and Flyers however certainly wouldn’t be happy over the prospect of losing Luongo and Pronger respectively.

Luongo is the Canucks starting goaltender, considered an invaluable part of their roster. If his contract were rejected it could potentially leave them without a quality starter, which could have an adverse impact upon their championship aspirations if they were either unable to re-sign him to another deal or adequately replace him if he were to move on.

The Flyers built their defense since the summer of 2009 around Pronger, who is considered one of the team’s leaders and a key factor in their stunning march to the 2010 Stanley Cup Final. Losing him or failing to adequately replace him would have serious consequences upon their Cup hopes for next season.

It’s possible at least one of the owners of those teams, perhaps all of them, wouldn’t take kindly to the league rejecting the contracts for those players, which could potentially upset the unified front of team ownership the league likes to present when they face the NHLPA in collective bargaining.

The last thing the league would need in two years time is a potential rift amongst the ownership ranks.

What also needs to be remembered is those contracts were registered and approved (albeit grudgingly) by the league last year, whereas the Kovalchuk contract was not. That likely could work against any attempt to successfully reject those deals if as expected the NHLPA would file grievances on behalf of those players. 

Speaking of the next round of collective bargaining, the issue of front-loaded, long-term deals circumventing the cap will certainly be an issue when the league and the PA sit down for talks, but it’s not likely to be the kind of deal breaker some suggest it could.

Since these deals started to become prevalent in the league over the past couple of years it’s been known league commissioner Gary Bettman frowned upon them, not to mention general managers were split on the issue.  It was widely anticipated the league would seek to close the loophole which allows these contracts in the next CBA.

These contracts only benefit a tiny minority of NHL players, most of whom are more concerned over the money they’re losing via escrow whenever salaries outstrip revenue in a given season. That issue is bound to be a far larger sticking point than “cheat contracts” for a handful of superstars.