The Issues.
The current collective bargaining agreement (CBA) between the NHL and the NHL Players Association will expire on September 15, 2012, meaning the 2011-12 season will be the last one under that agreement.
Given the end of the last two CBAs resulted in player lockouts – the previous costing an entire season – it's understandable most NHL fans prefer not to think about the possible issues in the next round of collective bargaining which could potentially threaten yet another season.
NHLPA director Donald Fehr has said he hoped to begin CBA talks around mid-season. NHL commissioner Gary Bettman suggested talks could begin next spring or summer, as he and the team owners would probably prefer to await the outcome of the NFL and NBA labor disputes, perhaps to get some useful ideas to carry into the next round of collective bargaining.
A few pundits already assume another work stoppage will occur, citing everything from the ever-rising salary cap to the PA's hiring of Fehr, the former head of the MLB players union.
Yet unlike the years leading up to the previous work stoppages, we're not hearing a lot of sabre rattling from the league and the PA. There's been no sniping, no dire warnings, no insults.
That's probably because the PA leadership isn't as militant as in years past, while ownership isn't as united in a common cause (crushing the PA leadership) as it once was.
It's also likely a number of folks on both sides lack the stomach for another lengthy labor war, perhaps due to unwillingness to engage in a contentious labor battle which might jeopardize the league's growing revenue, as well as visibility in the all-important American sports market.
The silence on both sides could be seen perhaps as a good sign the next round of bargaining might not result in another nasty labor war.
That's not to suggest however there aren't any potentially contentious issues which could bog down or threaten negotiations. Here's a look at several:
The salary cap. Speculation the league could pursue a lowering of the salary cap began last summer, and while this has yet to be officially confirmed, it seems to have gained acceptance amongst the punditry, both in the MSM and blogosphere.
The rationale behind this move is small- and mid-market teams are struggling to keep pace with a salary cap which has constantly risen since its implementation in 2005-06, and as a result have been losing money.
Of course, there aren't “small-and mid-market teams” which are struggling, but instead teams in large markets which have been poorly managed for a number of years, resulting in a decline in both attendance and revenue.
But the league simply cannot introduce legislation which would prevent teams from making bad management decisions. Instead, it will probably do what it has always done, attack the players' share of revenue as the culprit, in hopes whittling more of it away will somehow magically level the playing surface.
The league could therefore argue the cap must be lowered if teams which are currently hemorrhaging money are to survive.
If so, it remains to be seen if it'll seek to lower the cap “ceiling”, “floor”, or both. The cap ceiling of course is the maximum amount teams can invest in player payroll in a season, while the floor is the minimum amount. The gap between the two is currently set at $16 million.
When the salary cap was implemented for the 2005-06 season, the “ceiling” was set at $39.5 million, the “floor” at $23.5 million. For 2011-12, ceiling is $64.3 million.
Don't expect the NHLPA to try to get the cap abolished. Everyone understands that's simply not going to happen. The salary cap is here to stay, and the PA will try to figure out a way to work within it for the betterment of their membership, just as they did under the current one, which worked out much better for the players than their critics believed it would.
Salary rollback/reduction in players' share of revenue. To lower the cap, the league could seek to implement another rollback of players' salaries, akin to the agreement between the league and the PA when the current CBA was adopted, resulting in salaries for existing contracts cut by 24 percent.
It could also attempt to lower the players share of revenue, currently set at 57%, to 50 percent, or possibly as low as 45%.
Escrow. I wrote the following about escrow nearly two years ago, which still holds true today:
Currently a certain percentage (based on revenue projections) of the players’ salaries are withheld by the league quarterly. At the end of each season, if revenue projections exceed expectations, the players get their money back with interest. If not, it’s withheld by the league and returned to the owners.
That wasn’t an issue in the first three seasons under this CBA as the players in two of the three seasons got their money back and saw only around three percent withheld in 2006-07. Due to the recession however the players last season (2008-09) ultimately lost eighteen percent of their wages to escrow..
Escrow remains a sore point for the players, as they understandably don't like any part of their salary being withheld throughout the season, especially when most or all of it eventually winds up returned to the team owners. It's believed they'll either seek to abolish escrow, or establish a cap to a set number under 10 percent.
Contracts. It's been speculated the league would prefer to do away with guaranteed contracts, allowing teams the right to renegotiate a player's contract, or terminate it without penalty if, by management's estimation,the player hasn't met certain performance criteria.
This might not be as serious an issue as it initially appears, since some teams have resorted to “burying” the expensive contracts of under-achieving or fading players in the minors, rather than engage in the costly effort of buying them out at two-thirds the remaining value spread over twice the term.
Wade Redden of the NY Rangers is a perfect example. Signed to a six-year, $39 million contract in 2008, by 2010 Redden – by the Rangers estimation - was no longer playing up to the expectations of a player earning an average cap hit of $6.5 million per season.
As a contract buyout would've proven too expensive, the Rangers opted instead to demote Redden to their AHL affiliate for the remainder of the season. They still had to pay his salary, but it no longer counted against their salary cap. It's expected they'll do the same again for the 2011-12 season, unless he retires.
Redden would probably prefer to be playing in the NHL than in the minors, but no team is interested in taking on that big salary, and under the current CBA rules, the teams cannot split any portion of his existing contract, other that via re-entry waivers.
The Rangers have tried placing him on re-entry waivers, whereby interested teams claiming him would pick up half his salary, but without success.
Rangers management bears full responsibility for signing Redden to such an expensive deal, but in this instance, it's a mistake which is proving costly to the player's career.
This is a case where a player would probably accept having his contract renegotiated, where the salary and term could be considerably lowered. It would free up cap space for the team, which could also allow the player to continue playing for them, or the lesser term and salary could potentially improve his trade value.
Another issue is that of lengthy, front-or back-loaded contracts. Two years ago, it was several general managers, with the blessing of their respective team owners, who found the loophole in the current CBA, allowing them to sign top players to extremely lengthy (8-15 years), often front-loaded contracts in order to garner a more favorable salary cap hit.
A prime example is Roberto Luongo’s 12 year, $64 million contract with the Vancouver Canucks, which will take him to age forty-two (unlikely he’ll still be playing by then), and despite being front-loaded, counts as only $5.333 million per season against the Canucks cap.
Luongo will probably be retired before he turns forty, and since he signed the contract before his 35th birthday, the remaining salary and cap hit will come off the Canucks books.
Critics like Toronto Maple Leafs general manager Brian Burke hate these contracts and insist the league must abolish them in the next CBA. The PA of course is likely to fight this, claiming it’s the owners, not the PA, which brought those contracts into existence.
Movement clauses. There’s a perception these are the chief culprit in reducing the number of trades in the NHL. The true reason is the cap, but movement clauses do have an impact, as witnessed recently by Dany Heatley’s refusal two summers ago to accept a trade to Edmonton and limiting the number of options to about a half-dozen teams of his choosing.
Around one-sixth of the league’s players have some form of movement clause in their contracts, and of those, most are top level players, the kind general managers wouldn’t consider trading unless it was due to exceptional and unusual circumstances.
Olympic participation. To date the NHL has yet to confirm if they'll participate in Men's Ice Hockey at the 2014 Winter Olympics, to be held in Sochi, Russia.
Although a majority of the NHLPA membership remain enthusiastic over Olympic participation, team owners are thought to be reluctant, citing concerns over potential injuries to star players and a growing opinion the Olympics have done little, if anything, to grow the NHL brand in North America.
Arbitration. This was something the PA fought to retain for restricted free agent in the previous round of labor talks, though it did result in the teams gaining the right to take a player to arbitration once in his career.
Given how rarely teams have employed that option (usually to prevent rival clubs from swooping in with offer sheets if they're unsigned after July 1st), and how few players who filed for arbitration ultimately go through the process, it's unlikely to be a significant issue in the next round of talks.
Revenue sharing. This one could be a serious issue, not so much between the league and the PA, but between the team owners, pitting the large market owners against their struggling small market peers.
It's believed the owners of franchises like the Toronto Maple Leafs, New York Rangers, Montreal Canadiens, Philadelphia Flyers, Detroit Red Wings, Vancouver Canucks and Boston Bruins aren't thrilled with having to buoy money losing franchises. There could be a push from them to either eliminate revenue sharing entirely, or make significant alterations to the current regulations to either make it more difficult for struggling clubs to quality.
Revenue sharing, like a salary cap, doesn't make general managers smarter, but for those teams which are going through a rebuilding phase, it could provide them the opportunity to off-set losses, in term making it possible to invest more in their rosters.
It's something which worked well for years in the NFL, but that league can count on considerably higher revenue, thanks to its lucrative broadcasting contracts, than the NHL.
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