Gary Bettman has held the post of NHL commissioner since Feb. 1, 1993. (Photo by Justin K. Aller/Getty Images)
The expiration of the NHL’s collective bargaining agreement is a little more than a month away. As such, the negotiating of a new labor deal will overshadow all NHL stories over the next few weeks. What issues will be most important to the players and owners? That’s the focus of this week’s THN.com Top 10.
To certain NHL owners and league brass, the option teams have to transfer the contracts of underperforming players to the American League (as was done with Wade Redden, Kyle McLaren and Jeff Finger, among others) or to Europe (where Cristobal Huet was sent) will be a bone of contention. Small-market owners don’t appreciate the advantage highly profitable teams have in this regard and want this loophole closed. However, the NHL Players’ Association certainly doesn’t – although it also doesn’t want its members banished for years to the minors – and it’s safe to say big-market teams want to retain the power that comes with significant profit.
As part of its overarching effort to further restrict the ability of players to reach unrestricted free agency, the NHL’s first CBA proposal in July included the extension of rookie contracts from the current three years to five. Owners want to end what they perceive as an inflationary financial problem in the form of the so-called “second contract” – and, for that matter, restricted free agency altogether – via forcing young players to perform well for longer before signing megabucks extensions.
For the same reason discussed above, owners are intent on keeping control of player salary demands for as long as possible. In its July proposal, the league suggested making players wait a full decade before becoming a UFA, regardless of how or when they entered the league. Players, understandably, are not nearly so willing to do this.
In the current CBA, star players have signed contracts with durations as long as 15 years. Owners wish to drastically cut that back (in its first proposal, the league asked to cap the term at a maximum of five years). That’s too short a span for players’ liking, but many expect the era of contract lengths of a decade or longer will end.
Veteran hockey industry observers understand the league’s problems with the composition of the salary cap ceiling and floor in terms of what it does to the financial bottom lines of teams, but there’s much misinformation you’re bound to hear regarding this issue in the coming months. Some will argue the cap floor is the problem and its elimination would allow small-market teams to become profitable, but players will counter that such a move would give owners the ability to pocket revenue sharing monies and not put it back into their on-ice product. One potential solution that could satisfy both sides is to make the floor a fixed percentage of the ceiling instead of the hard $16 million difference currently separating the floor and ceiling.
That financially well-to-do teams can “front-end load” a large portion of a player’s contract into the first few years of a deal is seen by small-market owners as an end-run around the spirit of the current CBA. Those owners want the entirety of a contract to be split equally on a team’s salary cap through the life of the deal, regardless of whether a large signing bonus is awarded to a player.
This is a huge issue for players, who aren’t happy with the process of holding back sizeable portions of their contracts until the league’s overall revenues are agreed upon after the season. Right now, players pay a fluctuating percentage into an escrow account and feel doing so places all the financial risk in their lap. Predictably, owners made no mention of changing the escrow process in their latest CBA proposal.
While the actual split of hockey revenues is paramount to all sides (see below), almost as crucial is the issue of what qualifies as HRR. For instance, the current CBA specifies that players receive no share of expansion or relocation fees collected by NHL owners. That might not change, but players want to ensure the overall pool of money they’ll be divvying up is as large as possible.
It is generally believed the NHL has the least-equitable revenue sharing program of the so-called “big four” North American pro sports leagues. That’s something NHLPA executive director Donald Fehr is expected to target during labor negotiations. If he can convince smaller-market teams they should be crying poor to their big-market rivals instead of asking players to take serious salary rollbacks at a time when the league has never been more profitable, he’ll have achieved a massive victory for a constituency that has taken its lumps in recent years.
No issue is as big as how much of the league’s revenues goes to the owners. In their July offer, owners asked that they receive 57 percent of HRR (up from 43 in the last year of the current CBA) – and while some believe that’s merely an opening salvo they’ll eventually come down from, most see this element of the business as the key reason there could be a lockout come fall.
The THN.com Top 10 appears Wednesdays only on TheHockeyNews.com.