Thursday, July 5, 2012
The Issues Behind the NHL’s CBA
Early July has provided a welcome distraction for hockey fans as the Zach Parise/Ryan Suter saga have dragged on for days. Behind the scenes, though, the bigger news is that the NHL and NHLPA have started negotiations for the upcoming CBA (the current one expires on September 15). Here's a primer on some of the key sticking points from both sides:
Percentage to the players — The NHL locked in the percentage of revenue coming out of the last work stoppage at 57% to the players. This time, you can be sure they'll want to drop that further — probably to the 50% mark. They'll argue that a true partnership is 50/50, the players will argue that the league has never been stronger. In the end, it's one of the biggest bargaining chips for the players, and every percentage point that it drops will probably equal something in return.
Revenue sharing — A point of contention within the Board Of Governors itself, the revenue sharing formula will most likely be tweaked coming out of the new CBA. What shape will it take? There will probably be some relief to smaller markets, but there are too many parties in play between the owners themselves and the players to see how this one's going to end.
Cap floor — For smaller teams losing money (and that's relative, see below), the cap floor is similar to the cap ceiling from a few years back. A lower cap floor provides more flexibility within the organization. However, for players, they'll want the cap floor to stay as high as possible, as a lower floor can provide drag to low- and mid-tier player raises.
Length of term — Just like the salary cap back in 2004, the owners are looking for a way to save themselves from their own worst enemy — themselves. A cap on term would eliminate any future contracts that range in the double-digit length. For the players, they simply view these as "Hey, they're the ones giving us these deals" and they feel that there should be no further limitations on what they can earn in a bidding war.
Actual expenses and revenue — Every time an owner complains about losing money, that's only true on a technicality — in many cases, "loses" are creative bookkeeping as the hockey team is only part of an organization. If they're the anchor tenant in the building, than the organization also makes money of concerts and other sporting events, and the hockey team is a necessary financial evil to keep the building filled. Many teams sell suite packages for an entire season of events, not just a concert package or a hockey package, and those numbers often get filed away under the parent organization.
Olympic participation — International play is important to the NHL. How that is staged, though, is where the challenge is. The Olympics take place in the middle of the season, thus causing a shutdown period. Then there's travel and injuries to factor into the regular season. On the other hand, players want to participate in the Olympics, as it's a unique and unforgettable experience. And as fun as the World Cup is, it's not the same thing. The compromise would seem to be to play in the Summer Olympics so it doesn't interfere with the NHL schedule, but who knows if that's on the table.
Buried contracts — Anyone heard from Wade Redden lately? Look for the players to push for some form of resolution so high-priced busts can be rescued through some type of contract amnesty. Yes, there's the current buyout system, but that still has pretty harsh cap issues for long-term expensive deals. Meanwhile, talented guys are seeing their careers go by without another chance. However, the owners can use the same argument that the players do with term of contract — "Hey, they're the ones that signed these deals."
The only real certainty facing this year's CBA negotiations is that the hardline stances from both sides don't appear nearly as venomous as last time. For the most part, everyone is saying the right things, and even NHLPA head Donald Fehr noted that the PA and the league can agree to start the season without a CBA.
In short, there's little reason to fear a season-destroying catastrophe like the last negotiations. However, don't say anything just yet — we don't want to jinx it.