NHL Lockout: Details and Analysis on Every Topic of NHL's New CBA Offer

Mark JonesSenior Analyst IOctober 17, 2012

NHL Lockout: Details and Analysis on Every Topic of NHL's New CBA Offer

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    One month.

    After announcing the start of a lockout, cancelling two weeks of regular season games and meeting together on six occasions with little progress, could a virtually meaningless milestone have finally kicked the NHL's owners and players into gear?

    Apparently so.

    The owners of the National Hockey League offered a shockingly reasonable Collective Bargaining Agreement (CBA) to the NHL Players Association on Tuesday that would get a complete 82-game regular season underway in just two weeks.

    The deal's jaw-dropper? A fair, 50-50 split of hockey-related revenue (HRR):

    Bettman says NHL made proposal today to preserve 82 game season to start on Nov. 2. He says it includes a 50-50 split across the board.

    — Dan Rosen (@drosennhl) October 16, 2012

    The proposal also includes freshly-proposed compromises in a plethora of other areas, including free agency, entry-level contracts and the salary cap. However, an agreement would need to be signed quickly to preserve both a full season and the conditions in the NHL's offer.

    What settlements does the new CBA propose? What details are included on each particular issue? A comprehensive, issue-by-issue breakdown of the offer, and how agreeable each compromise will be, falls on the coming slides.

50-50 Hockey-Related Revenue Split

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    The obvious, fair and frankly inevitable resolution to the NHL's revenue sharing argument has, at last, made its grand entrance.

    A 50 percent portion to the owners, a 50 percent portion to the players.

    Maybe.

    Talked briefly again with #Blackhawks dman Steve Montador after NHLPA call, he said the NHL's new offer changes what makes up HRR again.

    — Adam Jahns (@adamjahns) October 16, 2012

    While the tweet from Jahns, a Chicago Sun-Times correspondent, raises questions, there is little doubt that any sort of 50-50 split is tremendous progress over the previous stalemate.

    After all, the numbers have been gradually moving towards this direction since negotiations began. Although the owners originally proposed cutting the players' portion from 57 percent (where it stood last year) to 43 percent, the NHL had previously offered players 49, 48 and 47 percent, respectively, over a three-year plan. The NHLPA meanwhile, had suggested a four-year plan of 54.3, 52.5, 52.0 and 52.0 percent, respectively.

    Today, it was simply a matter of one side finally grabbing the initiative to jump to that clear-as-day compromise.

    (That is assuming, however, that "hockey-related revenue" hasn't magically changed its definition.)

     

    Win for: Undetermined

Increased Age of Free Agency

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    The owners' side has long expressed dismay with the current state of free agency—high negotiating power for superstar youngsters, early eligibility for unrestricted free-agent status, and front-loaded contracts that (arguably) circumvent the salary cap.

    They've proposed a variety of changes in Tuesday's offer that will solve these concerns. The standards are, without a doubt, in the owner's favor, but their reasoning is nonetheless sound. Per TSN's Bob McKenzie:

    NHL's other big systemic concern is curtailing big-money 2nd contracts coming out of entry level. Proposal has 3 mechanisms aimed at that.

    — Bob McKenzie (@TSNBobMcKenzie) October 16, 2012

    1. Entry level would go from 3 to 2 yrs. 2. Salary arb eligibility would go from 4th to 5th yr. 3. UFA goes 7/27 (service/age) to 8/28.

    — Bob McKenzie (@TSNBobMcKenzie) October 17, 2012

    There's the essence of the free agency demands—the NHL would like to reduce rookies' entry-level contracts from three to two years and increase the minimum age for UFA status from 27 to 28.

    For example, if such rules were in effect in 2011-12, Jeff Skinner would've hit RFA status this summer, but neither Zach Parise nor Ryan Suter would've been UFAs and available on the open market.

    The NHL's proposals are not drastic modifications, but the players are sure to take up a fight over both changes.

     

    Win for: Owners

Less Salary Variation

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    No matter what the players argue, it's an absolute necessity that any new CBA enforce black-and-white restrictions on contract salary variation and salary cap circumvention.

    Consider Ilya Bryzgalov's nine-year contract that paid him $10 million in year No. 1 but only $1.25 million in year No. 9, adding up to a cap hit of merely $5.66 million.

    Consider Ilya Kovalchuk's decade-and-a-half-long contract that will pay him annual sums between $11.8 and $1.0 million on a wildly fluctuating basis, calculating out to only a $6.66 million cap hit.

    The NHL's new proposed CBA would fix such issues in a major way:

    Not only is NHL proposing 5 year limit on player contract length, it's proposing the yearly salary variance can't be more than 5 per cent.

    — Bob McKenzie (@TSNBobMcKenzie) October 16, 2012

    If the five percent annual limit were applied to Bryzgalov's deal, for example, his salary in year No. 9 could only drop to about $6.63 million—clearly, such a rule would have a colossal but much-needed effect on the league's payroll system.

    However, a five-year term limit on contracts will surely cause a firestorm around NHLPA headquarters. More than 50 of hockey's biggest stars currently hold a contract with more than five years remaining on it, and 16 have contracts with more than 10 years remaining.

    If a contract length limit is instated, expect it to be around the eight- to- 10-year range instead of the owners' absurd current demand.

     

    Win for: Owners, for now

New Salary Cap Standards

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    For the coming 2012-13 season, the salary cap looks to remain around typical levels. The cap was set at $70.2 million for the past offseason, and will the temporarily maintained at $70.1 million for this campaign. However, expect a three- to- four-year recession in the cap before rising revenues drive it back up again.

    More on NHL offer: calls for 2012-13 salary cap of $59.9 million but teams can go over up to $70.2 million in Year 1 as part of transition

    — Pierre LeBrun (@Real_ESPNLeBrun) October 17, 2012

    Depending on rev. growth, sounds like could be big drop in salary cap after 2012-13 season under proposal. Transition rule 1 year only.

    — Craig Custance (@CraigCustance) October 16, 2012

    Further, according to Sportsnet's John Shannon, teams will no longer be able to bury overpriced players in the AHL at no cap hit cost. Per Shannon:

    Another interesting tidbit from NHL offer... Players' Salaries for those NHLers playing in the AHL would be part of the cap.

    — John Shannon (@JSportsnet) October 16, 2012

    Therefore, for example, the New York Rangers—the league's leader in AHL salary—would have to count Wade Redden's whopping $6.5 million cap hit, despite the fact that he currently plays with the Hartford Whale.

     

    Win for: Owners

Increased Revenue Sharing

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    In a 30-team NHL, only nine franchises make steady, annual profits.

    In addition to hurting the standard of the league, such a disparity also reduces competition for free agents, and the players have long hoped for a solution via increased revenue sharing.

    The NHL's latest offer addresses that wish. Per John Shannon:

    Revenue sharing would be at or near 200 million dollars

    — John Shannon (@JSportsnet) October 16, 2012

    Most of the additional pooled money would come from the league's upper tier, as per Pierre LeBrun of ESPN:

    According to NHL offer, at least 50 percent of revenue sharing pot will be raised by top 10 revenue grossing clubs...

    — Pierre LeBrun (@Real_ESPNLeBrun) October 17, 2012

    The $200 million dollars is a substantially higher amount than the $140 million shared in 2011-12.

    Such an increase would particularly help out the Phoenix Coyotes, seeking more stable footing in a turbulent ownership situation, and the Columbus Blue Jackets—the two teams with operating incomes more than $10 million into the negatives.

     

    Win for: Players

Increased Escrow Reserves?

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    While players may be excited with a 50-50 HRR split, the sticky and shady escrow debate could cause some holdups in the process.

    First of all, what exactly is escrow? The blog Mile High Hockey explains:

    The problem here is that adding more to escrow is, in terms of real dollars, not different from a salary rollback.

    Keeping with the "tax return" theme, if suddenly you were having more of your check withheld every pay period, and your refund either stayed the same or decreased come tax time, how would that be different from just starting at a lower salary with the percentage being withheld staying the same?

    With that in mind, the NHL may have stuck in some fine print when it guaranteed no salary rollbacks for players. Per Globe and Mail columnist David Shoalts:

    Escrow could be an issue. Fehr said 50-50 not possible without large escrow bite in early years.

    — David Shoalts (@dshoalts) October 16, 2012

    Reports on the details of this mysterious system are few and far between, and the NHL has yet to reveal the full contents of the CBA itself, either. This potential concern is worth keeping an eye on, though.

     

    Win for: Undetermined

Condensed Regular Season Schedule

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    Perhaps the most ambitious clause of the owner's proposal is a full 82-game regular season, a possibility as motivating as it is hard to believe.

    The season would begin Friday, Nov. 2, and conclude by late June. Per NHL.com's Dan Rosen:

    For an 82-game regular-season to begin Nov. 2, Commissioner Bettman said each team would have to play one additional game every five weeks. That would allow the completion of the Stanley Cup Final in late June.

    "Beyond that, we don't think it would be good for the players or for the game," Commissioner Bettman said.

    Michael Russo of the Minneapolis Star-Tribune tweets that the original 2012-13 schedule may be fit into the new timeframe in an interesting way:

    Hearing if #nhl season starts Nov. 2, teams have been told schedule would likely start as is and games missed would be added at end of year

    — Michael Russo (@Russostrib) October 16, 2012

    Still, questions remain about the entire suggested format. How will the Winter Classic and All-Star Game fit into the schedule? How will partial season ticket holders be able to rearrange their packages? How will the slate be condensed by several weeks? When will the Stanley Cup Finals occur?

    Answers have yet to be provided.

     

    Win for: Both Sides