02-03-2005, 07:48 PM
A closer look at the NHL's latest proposal
PIERRE LEBRUN
February 3, 2005
CP - Feb 3, 4:06 pm EST
More Photos
(CP) - A closer look at the NHL's latest proposal, which was rejected by the NHLPA:
Term: Six full seasons after this shortened year, including the 2010-11 season. The union would have the unilateral right to re-open the deal after the fourth full season, 2008-09.
The skinny: On the surface, the four-year re-opener is a gift to the union but the reality is that once you sign on to a salary cap system, it's very difficult to back out of it.
-
Entry-Level System: Four years, mandatory two-way contracts. Maximum compensation of $850,000 US includes salary, bonuses for games played and signing bonus.
Players can earn $250,000 more a season in individual 'A' bonuses, categories such as ice time, goals, assists, points, plus/minus and an all-star game appearance; goalies' bonuses would work on minutes played, GAA, save percentage, wins, shutouts and the all-star game.
A few select entry-level players can earn over and above if they reach the 'B' bonuses, which few ever do. That would include $500,000 for winning a major award such as the Hart, Norris, Vezina or Selke, or between $100,000 to $400,000 for being anywhere from fifth to second in voting for those awards.
The skinny: It's a step in the players' direction after taking away all bonuses in the league's Dec. 14 offer. Bottom line, given that very few entry-level players would ever reach the elite 'B' bonuses, the maximum compensation here is $1.1 million a year ($850,000 plus $250,000).
-
Restricted Free Agency: Qualifying offers (which are needed to retain rights) for players earning less than $800,000 (average salary last season was $1.8 million) would be 100 per cent of his salary from the season before. But the required qualifying offers for players earning over $800,000 would be 75 per cent of his salary from the season before.
Same right to match/draft choice compensation rules as under the expired CBA, in terms of other teams trying to sign restricted free agents to offer sheets.
But a new wrinkle: restricted free agents and their respective clubs have to agree to terms on a new deal by no later than 14 days after the opening of training camp. Failure to do so "results in player ineligibility (and unavailability to the club) for the balance of the season."
The skinny: The 75 per cent qualifying offers would be a huge victory for the league, clubs finally able to backtrack underachieving players without losing their rights. The 14-day signing deadline is a smart move, putting pressure on both the team and player to make a deal on time. Which likely means no more prolonged contract disputes. Too bad they didn't have that rule for the NHL and NHLPA in negotiating a new CBA.
-
Salary Arbitration: Entirely mutual, players and clubs have identical rights to request arbitration. Under the old agreement, only players could elect. All restricted free agents are eligible for arbitration, another new wrinkle. Under the old deal, only certain players who fit a certain criteria would elect.
Players and clubs can defer being dragged to arbitration in two ways: the player can defer the team's attempt at arbitration by signing his qualifying offer; the club can defer a player's attempt at arbitration by one year by signing him at 105 per cent of his prior year's salary. The entire deferral process would not apply to a player coming out of the entry-level system.
Walkaway rights: clubs can walk away from an arbitration award in return for which players become free agents subject, however, to right to match from his old club for any offer that's 90 per cent or less than the value of the award. Players can walk away from a bad award and instead accept a contract for 90 per cent of their qualifying offer.
And finally the big catch in all of this: The league reserves the option "to eliminate salary arbitration mechanism in its entirety at any time during the term of the agreement" by dropping the age of unrestricted free agency to 28 (more on that later).
The skinny: It's a step up from Dec. 14, when the league completely obliterated the entire system. On the other hand, the fact the league could scrap it entirely when it wants is hard to take. Another tough pill to swallow here for the players would be the team's right to defer arbitration by simply signing him to a five per cent raise. That would mean, for example, that Hart Trophy winner Martin St. Louis , who earned $1.5 million last season and who should have cashed in big in arbitration, could be re-signed by Tampa at $1.575 million. That's crazy.
-
Unrestricted free agency: Age eligibility would drop from 31 under the old deal to 30 in the new agreement. But it would drop to 28 if the league decides to scrap the salary arbitration system.
The skinny: A giveback to the players, obviously, and a major one if it drops to 28. On the other hand, some GMs believe the bigger the UFA market, the less crazy the spending is on the available players.
-
Player contracts: Minimum salary increased 62 per cent to $300,000 a year and maximum term of contracts to be no longer than three years.
Oh, and this: "The parties may have a mutual interest in negotiating over the establishment of an NHL maximum salary for individual players. No specific amount is being proposed in this regard," says the league.
The word on the street is that the league would like no player to make more than $6 million a season. Jaromir Jagr is slated to earn $11 million next year.
The skinny: On the surface, the players have been thrown a bone by simply having guaranteed contracts still in place. But the three-year maximum on contracts is a huge blow, giving players little security. And the individual salary cap to be negotiated is a total non-starter for the union.
-
Linkage/salary cap: This is the meat of the offer, the league's most important component and the one that the union absolutely abhors.
League-wide player compensation in any year of the agreement can't exceed 55 per cent of the league revenues (it was 75 per cent last season); that's up from 54 per cent in the league's Dec. 14 offer. Also, player compensation can't be below 53 per cent of league revenues.
Under this scenario last season, 55 per cent of the league's $2.1 billion in total revenues would have limited teams to spend no more than $38 million apiece on player compensation. Laymen terms? That's a $38-million salary cap.
The league also calls for 15 per cent of each team's player payroll to be automatically escrowed every season to ensure compliance with the 55 per cent rule. In other words, the escrow is solely for the purpose of squaring up at the end of the year. If owners pay too much, they get paid back from the escrow. If everything balances out between the 53-55 per cent range, than the escrow money is simply released back to the players. If the owners ended up paying less than 53 per cent of their revenues to players, than the players get the escrow back PLUS get a cheque for the balance.
The skinny: This is why there won't be hockey this year. The players would rather retire en masse than link their future salaries to the league's revenues. What if the damage of the lockout drops league revenues to $1.5 billion for the next full season? The players would get 55 per cent of that loot, $825 million. Translation? Team salary caps of $27.5 million. Now you see why the players have no interest in this system. The owners, on the other hand, feel they need this to ensure they won't continue to pile up operating losses.
-
Floating team payroll range: The new range would be set by averaging total team payrolls, reflecting the NHL's acceptance of the union's offer to roll back all existing contracts by 24 per cent. The average range would be set by knocking off the top five spending clubs from last season and also ignoring the bottom five, in order to find a more representative range of the league as a whole.
The result for this season (based on last season's $2.1 billion in revenues) would see each team required to spend at least $29.8 million in player salaries ($32 million including benefits) and no more than $40 million in salaries ($42.2 million including benefits).
The skinny: Regardless of this payroll range, the league-wide link between player compensation and revenues would override this component. It's all about the 55 per cent ratio, that's the real salary cap.
-
Payroll tax: The NHL is willing to implement a payroll tax somewhere in the floating payroll range but admits it will only go ahead with this at the union's discretion. Yes, the union prefers a tax over a cap, but it doesn't want both!
The skinny: Forget this, if the union ever swallows a linkage/cap system, the last think it will want is to add yet another salary drag on top of it.
-
Profit sharing: A profit-sharing plan to which the players would share in "league profitability over a negotiated level on a 50-50 basis." The players and owners would share the profits 50-50 over and above a negotiated profit threshold.
The skinny: Without a figure to attach the threshold to, it's tough to know whether this is for real. Still, it would be the first of its kind in the major professional sports leagues in North America.
-
Joint audit: The implementation of a jointly monitored accounting and audit function, with stiff penalties to teams who try to cheat on their financial reports. Teams fined $2 million and lose their first-round pick for first offence and get nailed with $5-million fine and loss of three first-round draft picks for second offence.
The skinny: A major part of this deal if the union ever accepts linkage. But given the inability of both sides to agree on numbers since eternity, one has to wonder how they could ever agree on what is a neutral, third-party accounting firm. Still, a smart component put in by the league.
-
Owner-Player Council: The establishment of a joint owner-player council to discuss various business and game-related issues. The union wanted this in its Dec. 9 offer. On the surface, this should give the players the voice it's always wanted in helping Colin Campbell, the league's director of hockey operations, re-shape the game and make it better.
The skinny: Somewhere Brendan Shanahan must have been smiling when he saw this. The Detroit Red Wings star held a hockey summit in December that called for players to get a bigger voice in the on-ice issues of the game. An important gesture by the league.
-
2005 playoff plan: Plans for a shortened regular season this year with a full playoff, but splitting some revenues from the post-season to "ensure that the players receive the agreed-upon 53 per cent of league revenues."
The skinny: Given that players have already lost eight of 13 paycheques and only get paid during he regular season, a chunk of the action in this spring's playoffs is a must for them to agree to come back at this point.
-
Salary rollback: The union's offer of 24 per cent across-the-board salary rollback for all remaining years of all existing contracts is accepted by the league.
The skinny: This is the original NHLPA rollback, not the league's restructured rollback of Dec. 14.
PIERRE LEBRUN
February 3, 2005
CP - Feb 3, 4:06 pm EST
More Photos
(CP) - A closer look at the NHL's latest proposal, which was rejected by the NHLPA:
Term: Six full seasons after this shortened year, including the 2010-11 season. The union would have the unilateral right to re-open the deal after the fourth full season, 2008-09.
The skinny: On the surface, the four-year re-opener is a gift to the union but the reality is that once you sign on to a salary cap system, it's very difficult to back out of it.
-
Entry-Level System: Four years, mandatory two-way contracts. Maximum compensation of $850,000 US includes salary, bonuses for games played and signing bonus.
Players can earn $250,000 more a season in individual 'A' bonuses, categories such as ice time, goals, assists, points, plus/minus and an all-star game appearance; goalies' bonuses would work on minutes played, GAA, save percentage, wins, shutouts and the all-star game.
A few select entry-level players can earn over and above if they reach the 'B' bonuses, which few ever do. That would include $500,000 for winning a major award such as the Hart, Norris, Vezina or Selke, or between $100,000 to $400,000 for being anywhere from fifth to second in voting for those awards.
The skinny: It's a step in the players' direction after taking away all bonuses in the league's Dec. 14 offer. Bottom line, given that very few entry-level players would ever reach the elite 'B' bonuses, the maximum compensation here is $1.1 million a year ($850,000 plus $250,000).
-
Restricted Free Agency: Qualifying offers (which are needed to retain rights) for players earning less than $800,000 (average salary last season was $1.8 million) would be 100 per cent of his salary from the season before. But the required qualifying offers for players earning over $800,000 would be 75 per cent of his salary from the season before.
Same right to match/draft choice compensation rules as under the expired CBA, in terms of other teams trying to sign restricted free agents to offer sheets.
But a new wrinkle: restricted free agents and their respective clubs have to agree to terms on a new deal by no later than 14 days after the opening of training camp. Failure to do so "results in player ineligibility (and unavailability to the club) for the balance of the season."
The skinny: The 75 per cent qualifying offers would be a huge victory for the league, clubs finally able to backtrack underachieving players without losing their rights. The 14-day signing deadline is a smart move, putting pressure on both the team and player to make a deal on time. Which likely means no more prolonged contract disputes. Too bad they didn't have that rule for the NHL and NHLPA in negotiating a new CBA.
-
Salary Arbitration: Entirely mutual, players and clubs have identical rights to request arbitration. Under the old agreement, only players could elect. All restricted free agents are eligible for arbitration, another new wrinkle. Under the old deal, only certain players who fit a certain criteria would elect.
Players and clubs can defer being dragged to arbitration in two ways: the player can defer the team's attempt at arbitration by signing his qualifying offer; the club can defer a player's attempt at arbitration by one year by signing him at 105 per cent of his prior year's salary. The entire deferral process would not apply to a player coming out of the entry-level system.
Walkaway rights: clubs can walk away from an arbitration award in return for which players become free agents subject, however, to right to match from his old club for any offer that's 90 per cent or less than the value of the award. Players can walk away from a bad award and instead accept a contract for 90 per cent of their qualifying offer.
And finally the big catch in all of this: The league reserves the option "to eliminate salary arbitration mechanism in its entirety at any time during the term of the agreement" by dropping the age of unrestricted free agency to 28 (more on that later).
The skinny: It's a step up from Dec. 14, when the league completely obliterated the entire system. On the other hand, the fact the league could scrap it entirely when it wants is hard to take. Another tough pill to swallow here for the players would be the team's right to defer arbitration by simply signing him to a five per cent raise. That would mean, for example, that Hart Trophy winner Martin St. Louis , who earned $1.5 million last season and who should have cashed in big in arbitration, could be re-signed by Tampa at $1.575 million. That's crazy.
-
Unrestricted free agency: Age eligibility would drop from 31 under the old deal to 30 in the new agreement. But it would drop to 28 if the league decides to scrap the salary arbitration system.
The skinny: A giveback to the players, obviously, and a major one if it drops to 28. On the other hand, some GMs believe the bigger the UFA market, the less crazy the spending is on the available players.
-
Player contracts: Minimum salary increased 62 per cent to $300,000 a year and maximum term of contracts to be no longer than three years.
Oh, and this: "The parties may have a mutual interest in negotiating over the establishment of an NHL maximum salary for individual players. No specific amount is being proposed in this regard," says the league.
The word on the street is that the league would like no player to make more than $6 million a season. Jaromir Jagr is slated to earn $11 million next year.
The skinny: On the surface, the players have been thrown a bone by simply having guaranteed contracts still in place. But the three-year maximum on contracts is a huge blow, giving players little security. And the individual salary cap to be negotiated is a total non-starter for the union.
-
Linkage/salary cap: This is the meat of the offer, the league's most important component and the one that the union absolutely abhors.
League-wide player compensation in any year of the agreement can't exceed 55 per cent of the league revenues (it was 75 per cent last season); that's up from 54 per cent in the league's Dec. 14 offer. Also, player compensation can't be below 53 per cent of league revenues.
Under this scenario last season, 55 per cent of the league's $2.1 billion in total revenues would have limited teams to spend no more than $38 million apiece on player compensation. Laymen terms? That's a $38-million salary cap.
The league also calls for 15 per cent of each team's player payroll to be automatically escrowed every season to ensure compliance with the 55 per cent rule. In other words, the escrow is solely for the purpose of squaring up at the end of the year. If owners pay too much, they get paid back from the escrow. If everything balances out between the 53-55 per cent range, than the escrow money is simply released back to the players. If the owners ended up paying less than 53 per cent of their revenues to players, than the players get the escrow back PLUS get a cheque for the balance.
The skinny: This is why there won't be hockey this year. The players would rather retire en masse than link their future salaries to the league's revenues. What if the damage of the lockout drops league revenues to $1.5 billion for the next full season? The players would get 55 per cent of that loot, $825 million. Translation? Team salary caps of $27.5 million. Now you see why the players have no interest in this system. The owners, on the other hand, feel they need this to ensure they won't continue to pile up operating losses.
-
Floating team payroll range: The new range would be set by averaging total team payrolls, reflecting the NHL's acceptance of the union's offer to roll back all existing contracts by 24 per cent. The average range would be set by knocking off the top five spending clubs from last season and also ignoring the bottom five, in order to find a more representative range of the league as a whole.
The result for this season (based on last season's $2.1 billion in revenues) would see each team required to spend at least $29.8 million in player salaries ($32 million including benefits) and no more than $40 million in salaries ($42.2 million including benefits).
The skinny: Regardless of this payroll range, the league-wide link between player compensation and revenues would override this component. It's all about the 55 per cent ratio, that's the real salary cap.
-
Payroll tax: The NHL is willing to implement a payroll tax somewhere in the floating payroll range but admits it will only go ahead with this at the union's discretion. Yes, the union prefers a tax over a cap, but it doesn't want both!
The skinny: Forget this, if the union ever swallows a linkage/cap system, the last think it will want is to add yet another salary drag on top of it.
-
Profit sharing: A profit-sharing plan to which the players would share in "league profitability over a negotiated level on a 50-50 basis." The players and owners would share the profits 50-50 over and above a negotiated profit threshold.
The skinny: Without a figure to attach the threshold to, it's tough to know whether this is for real. Still, it would be the first of its kind in the major professional sports leagues in North America.
-
Joint audit: The implementation of a jointly monitored accounting and audit function, with stiff penalties to teams who try to cheat on their financial reports. Teams fined $2 million and lose their first-round pick for first offence and get nailed with $5-million fine and loss of three first-round draft picks for second offence.
The skinny: A major part of this deal if the union ever accepts linkage. But given the inability of both sides to agree on numbers since eternity, one has to wonder how they could ever agree on what is a neutral, third-party accounting firm. Still, a smart component put in by the league.
-
Owner-Player Council: The establishment of a joint owner-player council to discuss various business and game-related issues. The union wanted this in its Dec. 9 offer. On the surface, this should give the players the voice it's always wanted in helping Colin Campbell, the league's director of hockey operations, re-shape the game and make it better.
The skinny: Somewhere Brendan Shanahan must have been smiling when he saw this. The Detroit Red Wings star held a hockey summit in December that called for players to get a bigger voice in the on-ice issues of the game. An important gesture by the league.
-
2005 playoff plan: Plans for a shortened regular season this year with a full playoff, but splitting some revenues from the post-season to "ensure that the players receive the agreed-upon 53 per cent of league revenues."
The skinny: Given that players have already lost eight of 13 paycheques and only get paid during he regular season, a chunk of the action in this spring's playoffs is a must for them to agree to come back at this point.
-
Salary rollback: The union's offer of 24 per cent across-the-board salary rollback for all remaining years of all existing contracts is accepted by the league.
The skinny: This is the original NHLPA rollback, not the league's restructured rollback of Dec. 14.