(Editor’s note: I was going to give my take on the upcoming labor war—and I do believe it will be a war—but this was done in the nick of time by someone far more versed on the CBA than I … so thanks, Captain, and soon-to-be-new daddy).
Carp, thank you for allowing me to do a post as a guest blogger.
Initially I was going to wait until after Mr. Fehr steps in with his NHLPA proposal before doing this, but then I realized that next week, due to the upcoming new addition to my family, I simply may not have enough time to do it. My goal is simple.
We are the fans and we do not want to lose another season. Not again. We were miserable in 2004 and we waited the whole year until the new agreement was finalized. A common consensus was, and still is, that the players gave up too much. Hard to argue, 24% rollback notwithstanding, but something needed to be done. The salaries were outrageous (Bobby Holik, anyone?). The league wasn’t making enough money. Very few teams could survive without substantial losses. Granted, it didn’t fix everything, not at all. But it was a step. And, let’s be honest, by the end of this now expired CBA, players benefited tremendously. Their salaries now are very healthy, front loaded, and long term.
I am going to try and play devil’s advocate in order to defend the fans. We want to see hockey. We want both parties to sit down and see what’s acceptable. Do the numbers. See what works and what can be changed and negotiated. Talk, dammit. Don’t throw tantrums.
If I have enough time next week I will try to look at the NHLPA proposal and see what the owners should consider accepting from it in order to avoid losing another season. As well as some other proposed changes by NHL (EL contract length, UFA eligibility, signing bonuses, salary arbitration rights etc.) I will try, but I think I may have much more important issues to attend to. Can’t wait!
But today I will concentrate on seemingly the most important part. NHL proposed reducing players’ hockey related revenues (HRR) from 57% to 46%. What does it mean and what changes would have to be made?
The first implication would be on a salary cap and, respectively, on players’ salaries.
First, let’s see how the cap is calculated in general. Let’s say that NHL’s total HRR during the past season was $3B. Let’s assume that the players’ share (what they get as salaries) is 57%, as it is now. That amounts to $1.71B to be paid to players. Divided among 30 teams—that’s $57M per team. That is called mid-cap and it is calculated for the upcoming year, next season. The current system allows the cap to be $8M above mid-cap, and the floor $8M below the cap. The numbers would be $65M cap and $49M floor. As you can see, $8M above the mid-cap means that the league expects revenues to go up next year, otherwise players’ share would become higher than 57%. What if the revenue doesn’t go up? In order to assure that the number stays at 57%, players pay escrow- certain part of their salary is withheld, and gets redistributed after each quarter, depending on reported revenue. Over the years, the escrow varied between 5% and 17%.
Looking at the current cap of $70.2M (mid-cap $62.2M), one can calculate that in the 2011-2012 season, NHL made $3.274B. I did the numbers myself, maybe CTB can correct it J
Let’s do the math now, shall we? Assuming that the 46% number is accepted by NHLPA (fat chance!), the mid-cap next year would be $50.2M, and the cap (the NHL wants to reduce the cap allowance from $8M to $4M above the mid-cap) would be $54.2M. Just for your reference, the cap in 2005, when the current CBA started, was $39M. It’s still a 40% increase.
Now, how about we negotiate a little bit. Shall we, just so those poor fans can actually watch hockey? Because, while it was proposed, it is just a proposal and NHL knows it. How about we go midway? Let’s say we go 52% and $6M above the mid-cap, instead of proposed 46% and $4M, respectively. The cap number now is $62.7M. Last year (2011-2012) it was $64.3M. The difference? 2.5%. So how do you compensate for that difference, especially since some of the teams already spent up to the next year’s cap? A rollback? Do they grandfather some of the current contracts in order to be under? An amnesty buyout?
Look, let’s not fool ourselves. The players knew very well that their salaries will not escalate continuously. And the rollback was well anticipated. That’s why players like Richards, Parise, Suter etc, as well as their agents, insisted on heavily front-loaded contracts with huge signing bonuses to protect them from a rollback. The word rollback is well known to players.
How about another issue? Apparently Wade Redden’s $6.5M per year isn’t counted against 57% players share since he isn’t playing in the NHL. Nor is he paying the escrow. Well, the owner is still paying him his salary. Is it really unreasonable to ask that at least some of his salary count?
To me, the most worrisome part is that not only does the NHL want to reduce players’ share, they also want to change how the HRR is calculated. Without knowing any specifics, it’s difficult to predict what numbers they are talking about. We’ll have to wait.
For your reference, the only major sport with hard cap, the NFL, is currently functioning at 47% players’ share. Their Cap number is $120M, only $50M more than the current proposed NHL cap. The revenue? $11B. So while the NFL generates 3.3 times more money, their salary cap is only 1.7 times more than the current NHL’s cap.
Again, I am not defending the players, nor am I defending the owners. All I want is that both parties look at all those numbers and instead of posturing and throwing temper tantrums, like Larry Brooks proposed in his Sunday Slap Shots, try and see what can be done in order to avoid the lock out. And, yes, Larry, it is billionaires against millionaires. For while the owners pocket huge profits, the players, too, are being paid handsomely and sometimes ridiculously. Let’s find what works for both parties. This doesn’t have to become a war. At least, we, the fans, hope so.