CBA Discussions: Fehr, NHLPA Present “Alternative View” to NHL

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By: Tyler J. Altemose (@TJamesAltemose)

CBA discussions between the NHL and the NHLPA continued today in Toronto as NHLPA Director Don Fehr presented the PA’s “alternative view” (counter-proposal) to the league’s July 13 proposal. For some (including myself), today marks the commencement of talks on the league’s new collective bargaining agreement despite the fact that negotiations have been ongoing for some time now.

The NHLPA’s proposal contains a three-year term for a new CBA with an option for a fourth year. Notably, the proposal contains a measure which would result in the players receiving a reduced proportion of HRR (hockey-related revenue) resulting in increased revenue sharing which could be as much as $250 million per year, assuming the financial growth of the NHL continues at the pace in which it has grown since 2005. This, Fehr and the NHLPA proposes, will create a “more stable industry” in the NHL.

Currently, the link between player salaries and HRR is such that they both increase in a linear fashion. David Shoalts of The Globe and Mail writes that the players have agreed to cap their annual salary increases provided NHL revenue continues to grow at the 7 percent rate it has grown by since 2005. If NHL revenue growth exceeds 10 percent annually, the players would receive 57 percent of HRR for the amount of revenue which exceeds the 10 percent mark, the same percentage which has been agreed to in the 2005 CBA.

According to the proposal, player salaries are set to increase as such:

  • Year 1: 2 percent
  • Year 2: 4 percent
  • Year 3: 6 percent
  • Year 4 (Optional): Revert to 2005 CBA guidelines; Players receive 57 percent of HRR

As Jeff Marek of Sportsnet wisely notes, this concession by the players will end up pitting the owners against one another. Instead of this being a wholesale issue of “players versus owners”, the players are essentially saying, “We’ll back out of this debate and proverbially ‘take one for the team’. Now that there is going to be more money in the pool, you owners need to sit down and discuss amongst yourselves how that revenue is going to be split up.” As one might imagine, big market clubs are none-too-enthusiastic about footing the bill for player salaries on small market clubs.

Also wise was the method in which Fehr and the NHLPA presented their proposal. For days now, Fehr has not been calling today’s presentation a “counter-proposal”. Instead, he has referred to it as an “alternative view” to the NHL’s original July 13 proposal. This is not simply an issue of differentiating semantics. This was a way for the players to simply give their side of the story to how they believe things should work rather than engage in a back and forth war of attrition with the league that would likely lead to detrimental results in the negotiations.

Also discussed in the NHLPA’s proposal was player contracts. According to reporters, player salaries, arbitration, and the free agency system would remain unchanged in the PA’s proposal.

Regarding the salary cap–another contentious issue–Fehr stated to reporters that a “hard” salary cap would remain in place with “a couple small exceptions”. [The previous version of this story indicated that the players presented the idea of a luxury tax in their proposal. As David Schoalts writes, that is in fact not true.]

The surprise was that the players did not suggest a luxury tax on clubs who want to spend beyond payroll limits. The proposal retains the hard salary cap that was brought in after the 2004-05 lockout with what Fehr called “a couple small exceptions” that would not change the players’ share of hockey-related revenue (HRR).

It is a way to keep the league as a whole within the confines of a certain spending limit while also maintaining the competitive balance among teams with an otherwise huge disparity in their markets.

Put bluntly, it would mean that the Flyers would end up helping a team like the Predators pay for Shea Weber’s $110 million contract.

The NHL will take some time to look over the NHLPA’s proposal. When asked to comment, Fehr again reiterated to reporters that he is out of the “prediction business”. The feeling I get is that while this may not necessarily be a good thing, it certainly isn’t a bad thing. To clarify, while I don’t necessarily think today’s proposal means a lockout will be diverted, I also do not believe that a lockout is necessarily an inevitability now.

Meetings have been adjourned for the day. They will continue tomorrow in Toronto.

Update: John Shannon of Sportsnet has announced that part of the NHLPA proposal includes the option for teams to “trade” cap space. While unspecific on exactly what this means, the impression I get is that, for example, Team X can trade $2 million in cap space to Team Y for a player or players. Team Y would then be in a position to exceed the salary cap by $2 million while Team X acquires the players and has their salary cap reduced by $2 million. The amount of money in the pool would be the same; it would simply be redistributed differently. This may also explain what Fehr meant by there being a “hard” cap with “a couple small exceptions”.

Update 2: Larry Brooks of the New York Post clarified the issue of “trading  cap space”. He explains that teams will be allowed to go as high as $4 million above the salary cap ceiling and $4 million below the cap floor. Furthermore, the proposal contains provisions for additional draft picks given to smaller market teams to do with as they please (develop, trade, “sell” for cap space). The NHLPA has also proposed a limit on non-player spending on teams.

Elliotte Friedman of CBC Sports  has also revealed more information regarding the PA’s position toward revenue sharing. The current system imposes a set of benchmarks that small market teams must meet based upon certain elements such as market size (attendance) and rate of growth. Occasionally, small market teams will fail to meet these benchmarks and will hence receive a lesser portion of shared revenue from the bigger clubs.

As Friedman reports, the NHLPA proposal eliminates those benchmarks as well as the imposed sharing cutbacks for those teams that fail to meet the benchmarks. Hockey-related revenue (HRR) will remain unchanged. Very simply, the system will be set up like the MLB where the NHL and the NHLPA distribute funds to teams on an as-needed basis.

Stay tuned to The Hockey Guys as this story develops.

3 Responses to CBA Discussions: Fehr, NHLPA Present “Alternative View” to NHL

  1. Pingback: Spectors Hockey | NHL Blog Beat (NHLPA Counter-Proposal Edition) – August 15, 2012.

  2. Pingback: NHL Reviews NHLPA Proposal | The Hockey Guys

  3. Players receive 57 percent of HRR is not an appropriate one decision. I think the increase of player salary is not should be linear with respect to the tax rate. Otherwise this will create a burden for the players.

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