I’m wading into the strife that is collective bargaining in the NHL … I don’t really want to, but if everyone else is going to provide their opinions on who to bridge the wide gulf between the stupid owners and the apparently more-than-willing-to-sacrifice a little bit players (bet you can’t tell whose side I’m on) that I might as well throw in my thoughts too. I have a few radical ideas that I think would be great, but in the guise of actually trying to bridge the gap, I think I’ll avoid such suggestions (like relocation and/or contraction being part of the equation because there’s probably less than 0% chance the owners are willing to discuss those topics – which of course are a large, large reason we are here). I will touch on the core issues at stake here as they are likely the hardest to bridge.
So on to it…
1. Length: It’s a 10-year deal. Anything less would just put us in the same spot again too soon for fans to stomach. Labor peace has to be lasting this time. MLB is doing great with it’s no long stretch without a shutdown. As an incentive to players, who are moving closer to the owners’ proposal in this deal, I think the players should have five one-year options to extend the CBA up to another five years. Each of those additional years would follow the same terms in relation to hockey-related revenue splits, salary cap, salary floor, etc. that are seen in year 10 of my proposal.
2. Hockey-related revenues: The definition does not change from what it is right now. It’s already not the full revenues that owners take in, so they are already getting a bit of a bonus from the definition. Greed is unbecoming.
3. Splitting of hockey-related revenues and Salary Cap: The owners have come in at 43-57 in their favor, a near reverse from the current level. The owners also want an immediately 24% rollback. The players have offered a drag on growth that based on projections brings them down to about 54-46 in their favor. That’s not going to work either. The obvious answer is a 50-50 split, but that’s too simple. Why not a hybrid of the two proposals. The players put an artificial drag on salary growth, so as hockey-related revenues continue to increase as they likely will, the players get a bit more money in the first few years and eventually give up a little more than 50% by the time things are all said and done. There is also no immediate rollback on salaries, a win for the players and an acknowledgement by owners that players are giving up more than they want. Here’s the breakdown starting with what is projected for 2012-13. Under the current CBA with a 57-43 in favor of the players, the salary cap is $70.2 million this year. That will hold for the first year just so teams don’t have to make huge changes before this season. I will project revenue growth will average 7% a year for the 10 years. Don’t forget the cap is currently at $8 million above the midpoint. Here we’ll also be scaling back the upper end over the 10 years to further slow salary growth, which would theoretically benefit the owners.
HRR: $3.27 billion
Players’ Pool: $1.87 billion
Salary Cap: $70.2 million ($8 million above midpoint)
HRR: $3.5 billion
Players’ Pool: 54%, or $1.89 billion
Salary Cap: $71.05 million ($8 million above midpoint)
HRR: $3.75 billion
Players’ Pool: 52%, or $1.95 billion
Salary Cap: $72 million ($7 million above midpoint)
HRR: $4.01 billion
Players’ Pool: 50%, or $2.01 billion
Salary Cap: $73.8 million ($7 million above midpoint)
HRR: $4.29 billion
Players’ Pool: 50%, or $2.15 billion
Salary Cap: $78.5 million ($7 million above midpoint)
HRR: $4.59 billion
Players’ Pool: 50%, or $2.3 billion
Salary Cap: $82.5 million ($6 million above midpoint)
HRR: $4.91 billion
Players’ Pool: 48%, or $2.36 billion
Salary Cap: $84.6 million ($6 million above midpoint)
HRR: $5.26 billion
Players’ Pool: 48%, or $2.5 billion
Salary Cap: $89.1 million ($5 million above midpoint)
HRR: $5.62 billion
Players’ Pool: 48%, or $2.7 billion
Salary Cap: $95 million ($5 million above midpoint)
HRR: $6.02 billion
Players’ Pool: 48%, or $2.89 billion
Salary Cap: $100.3 million ($4 million above midpoint)
4. Salary Floor: The salary floor currently comes up $8 million below the midpoint. If the players really want to help out the owners who are losing money and don’t have any signs of improving elsewhere, lower payrolls costs would be helpful. So we’ll actually slow the increase in the floor as well.
Year 1: $54.2 million ($8 million below midpoint)
Year 2: $55.1 million ($8 million below midpoint)
Year 3: $57 million ($8 million below midpoint)
Year 4: $58.8 million ($8 million below midpoint)
Year 5: $63.5 million ($8 million below midpoint)
Year 6: $67.5 million ($9 million below midpoint)
Year 7: $69.6 million ($9 million below midpoint)
Year 8: $75.1 million ($9 million below midpoint)
Year 9: $80 million ($10 million below midpoint)
Year 10: $86.3 million ($10 million below midpoint)
5. Entry-Level Contracts: They currently last three years. The owners want to extend them to five. Split the difference and call it a four-year deal for first contracts. That helps slow contract growth for young players, a benefit to owners. It also actually means more money for veterans since that money will have to be spent elsewhere.
6. Free Agency: Currently players need seven years of experience or to turn 27 to become unrestricted free agents. The owners are asking in the current round of negotiations for 10 years of experience with no age restriction. Here again, a little compromise goes a long way. How about eight years of experience or the game of 29? That again helps to slow wage growth, which is good for owners. Players still can get a big contract in the prime of their career.
7. Contract Length: Outside of entry-level contracts, the owners now want to cap contracts at five years. That’s too short. First, to help small-market owners, no contract can be front loaded. Yearly payments cannot change materially, say 2% from one season to the next within a contract. Let’s cap the limit of contracts at eight years. That means an all-star player getting a big payday after turning 29 can be signed until his late 30s. Not a bad deal if you can get it.
8. Olympics: The players get to compete in all Olympics. It’s too important to grow the game. The owners should want it to help generate interest, which in turn generates revenue.
9. Buyouts and other cap-clearing loopholes: Teams cannot send a player to the minors or loan him to a European team to remove his cap hit. Teams can buy out a players contract in the similar fashion to they do now, taking a cap hit in the process. Any player on a one-way deal remains a cap hit regardless of where he is playing unless he gets bought out or he goes on injured reserve. That does limit salaries for players, but to help offset that loss for players, LTIR savings can be banked for cap purposes (unlike now) so mid-season acquisitions can be even bigger.
10. Revenue Sharing: The owners need better revenue sharing. So, during the 10 years a lot of that money they players are giving up goes directly into a revenue sharing pot. That money gets re-distributed to lower revenue teams. And there is no restriction by market on who can receive revenue as part of the sharing program. If you simply take the difference between the 57% players are getting now and the percentage they’ll get each year in the future, we are talking about $3.16 billion over 10 years.
While that number grows over 10 years, we are going to use that and divide it by 10 and say that $316 million in shared per season. I am amending this part (Aug. 29) because thinking more fully about it, there’s no way that much revenue sharing will happen. What I’ll suggest then is half that money go toward revenue sharing. That’s $158 million a year into a pot to share. This number doesn’t change from year to year. It’s based on projected revenue yes, but it’s set at the beginning of the contract. Owners will have incentive to make sure the game keeps growing at at least 7% just because of the added revenue sharing. The top 15 pay in revenue pay in. The bottom 15 get money. It gets weighted by how much a team brings in above the median revenue or mow much below the median revenue.
At $158 million per year, that’s an average of about $10.5 million per top-15 revenue team per season. That isn’t much at all, on average. Again, it’ll be based on how much above the median revenue a team is to determine how much their share will be. But we’re not talking about about one team having to pay too much. Maybe even there is a cap for the top team and the rest of the sharing from there trickles down based on that. It’s something worth developing further. Plus if the game does grow by 7% a year, then the owners are still pocketing even more money thanks to the rollback in how much money goes to players. And any growth above 7% goes completely to the owners so if they grow the game and push for growth, they get all the profits.
Well, that’s my broad, but basic plan for the collective bargaining agreement. I might continue to tweak it or add to it in the future and will note that throughout. Let’s call it a living document. The players are absolutely giving up a whole lot in terms of revenue, but they weren’t going to get that much anyway. Owners get a lot, but also give some up as well. It’s fair and balanced. The owners don’t get their immediate rollback but by the end of the contract are closer to their terms by the end of the contract in terms of revenue split. The owners also get a drag on wage growth with longer term entry-level contracts and a higher threshold to reach free agency. Contract limit lengths also favor the owners. Players get a steady increase in the salary cap each year, still favorable free agency requirements and options to extend the CBA and keep labor strife at bay. They also get the owners to better share revenue, which will help all teams and the players together. Both players and owners … compromise. What a revolutionary thought.