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CBA Report- You Want To Call This A Starting Point Or Something Else?

Update from George: From Larry Brooks:

Filed in: NHL Talk, NHLPA, | KK Hockey | Permalink
 

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Hope Fehr and the players just smiled and walked out the door.

No sense is even dignifying that with a response.

Get back to me Gary when you’re serious.

Posted by John on 07/14/12 at 12:52 AM ET

Ajax19's avatar

That has to be a joke.

Posted by Ajax19 on 07/14/12 at 12:55 AM ET

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Players’ response: No really, what’s your first proposal?

Posted by Garth on 07/14/12 at 12:56 AM ET

John W.'s avatar

The only thing there that is even a conversation piece as far as the players are concerned would be the contract length limit of 5 years.  Everything else is so far off base it’s not even funny.  I know you start out asking for way more than you hope to get in these negotiations, but being this crazy doesn’t give a lot of hope for the upcoming season.

Posted by John W. from a bubble wrap cocoon on 07/14/12 at 01:08 AM ET

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As a fan with no skin in the game ... I like everything except the five year term limit.  I never really understood why any fans would side with the players… But I am open-minded, so I suppose if I heard a good argument I could change my mind.

Posted by gretzky_to_lemieux on 07/14/12 at 01:11 AM ET

Primis's avatar

It’s just an opening shot by the owners to let the players know they’re not going to ride roughshod over them.

It’s posturing.  I don’t think it represents even an opening to any negotiations.

The problem here isn’t so much that they represent a huge divide between the sides.  It’s more that neither side still appears to be very serious or urgent.  mid-July is not the time to be just starting to feel things out if you want a season starting on time.

Posted by Primis on 07/14/12 at 01:14 AM ET

John W.'s avatar

Just breaking those down:

1.  An ELEVEN percent drop in player revenue?  Riiiiiiiiight

2 and 5 together pretty much means no young European players (esp Russians) will ever come to the NHL when they know they’re stuck with low level entry level deals for 5 years and no real UFA raise for 10 years.

3.  Like I said, this is the only relatively reasonable thing proposed, and is likely to be included in the eventual CBA, give or take a few years.

4.  I gotta ask what this is all about?  Why would the owners want to get rid of arbitration?  If you couple this with players being RFA’s for 10 years, what happens when a deal can’t be reached when there is no arbitration?

If I’m the NHLPA I counter with a 20 percent raise in player revenue, 1-year entry level contracts, 15 year contract lengths, and UFA status after 1 year just to let them know how ridiculous this is.

Posted by John W. from a bubble wrap cocoon on 07/14/12 at 01:18 AM ET

awould's avatar

Well, those proposals mostly suck for anyone hoping to watch some hockey this year. On the bright side, I have a new baby due just before the hockey season starts so I won’t even notice the lockout until right around the New Year.

Posted by awould on 07/14/12 at 01:25 AM ET

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I never really understood why any fans would side with the players…

Because we’re fans of hockey, not of rich people who want to own things.

If I’m the NHLPA I counter with a 20 percent raise in player revenue, 1-year entry level contracts, 15 year contract lengths, and UFA status after 1 year just to let them know how ridiculous this is.

Pretty much.

Posted by Garth on 07/14/12 at 01:29 AM ET

NIVO's avatar

Well, I WAS hoping for hockey this year. Might have to pick up a new hobby from Sept-June. Bowling?

Posted by NIVO from underpants gnome village on 07/14/12 at 01:33 AM ET

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As a fan with no skin in the game ... I like everything except the five year term limit.  I never really understood why any fans would side with the players… But I am open-minded, so I suppose if I heard a good argument I could change my mind.

because you like watching guys with sticks, skate on ice, chasing a black disk.

not guys with suits plead poor, dine out, fly on private jets, etc.

Posted by akwingsfan from alaska on 07/14/12 at 01:37 AM ET

SYF's avatar

Well, the players did say that they could play through an expired CBA so long as negotiations are continuing progressively.

The initial proposal by the owners is a joke.

Posted by SYF from Zata's Epic Viking Beard on 07/14/12 at 01:41 AM ET

John W.'s avatar

As a fan with no skin in the game ... I like everything except the five year term limit.  I never really understood why any fans would side with the players… But I am open-minded, so I suppose if I heard a good argument I could change my mind.

Posted by gretzky_to_lemieux on 07/13/12 at 11:11 PM ET

I’m not even sure what to say to that…I thought we support the players because they, well, play the game we love to watch.  But I guess screw all the greedy millionaires in favor of the billionaires, eh?

Posted by John W. from a bubble wrap cocoon on 07/14/12 at 01:58 AM ET

HockeyTownTodd's avatar

1.  An ELEVEN percent drop in player revenue?  Riiiiiiiiight
Posted by John W.

Wroooooong….
It is a 19.3 % decrease (11 divided by 57).

Posted by HockeyTownTodd on 07/14/12 at 01:59 AM ET

J.J. from Kansas's avatar

As a note, it’s an 11% drop in the players’ share, but it equates to a 19% drop in total salaries… a drop of about $363,000,000. 

All told, if the NHL got their way here, it would make the cap somewhere around $54M, which is $3M less than the cap in 2008-09, when the league brought in about $650M less than they brought in this last season.

Things will get negotiated up from this bottom-line deal, but it’s a pretty insulting opening offer.

Posted by J.J. from Kansas on 07/14/12 at 02:01 AM ET

Hootinani's avatar

And that about wraps up the season.

Posted by Hootinani on 07/14/12 at 02:22 AM ET

Crow's avatar

These initial proposals are not surprising considering they came from Gary and his cronies.  This is his time to shine and earn his keep with the owners.  He always had a history of swinging for the fences.  Why should he stop now?

Posted by Crow on 07/14/12 at 02:31 AM ET

shazam88's avatar

There’s a fine line between aggressive bargaining and asshatery, and this opening position leaped far across said line.  The final numbers aren’t going to be anywhere near this.  The owners are primarily trying to start strong and show that this will be a difficult, drawn out process, undoubtedly because they actually fear Fehr (haha) and know that the players don’t plan to concede ground like they did last time.  Obviously the NHLPA will have to counter with similarly exaggerated demands in order to keep the eventual target in view.

Posted by shazam88 from SoCal on 07/14/12 at 02:33 AM ET

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Seems like those numbers would address most of the problems with the current CBA. As a fan I like this proposal, whether the players like it or not is up to them.

Posted by timbits on 07/14/12 at 02:44 AM ET

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1) Yes, its absurd for a variety of reasons BUT it doesnt matter.  The owners have ALL the leverage.  They know the players won’t sit out a season.  They caved last time and they will cave (eventually) again,  The owners know this Hell, I’m surprised they didn’t ask to eliminate guarenteed contracts
2) The final proposal will be slightly less than this, but eventually the owners will get whatever they really want.  They always have, and always will.  Only unknown is how much of the season will be lost before the players give in

Posted by Fauxrumors on 07/14/12 at 02:47 AM ET

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Sounds good to me!  Where else ya gonna make millions, the KHL?  Surely the vast majority of the players are not impressed by 15 year contracts. Sign up now boys, and don’t miss a pay-day.

Posted by Alan on 07/14/12 at 02:58 AM ET

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I don’t like NCAA sports because I think it’s unconscionable for universities to reap almost all the benefits of the hard work, dedication, and risks of the so-called student atheletes, but at least the NCAA lets atheletes choose which institution to associate with before locking them in (or rather, making it very difficult to transfer and maintain elegibility) for the rest of their college careers. Imagine you’re a top pick being drafted by Columbus or the Islanders and finding out that if you want to play in the NHL, you have to accept that you’ll be stuck with those dysfunctional owners/GMs until you’re twenty-eight—or longer if you spend some time in the AHL or college. Oh, and if these astute evaluators of talent try to low-ball you on salary, you don’t have any arbitration rights. Your choices for the next ten-plus years will be to sit out, run away to the KHL, hope that some other GM helps you out with an offer sheet (which happens so frequently!), or give up and sign.

When I put it like that, maybe this is a system that could protect even the most inept GMs from themselves. What would it be like if the owners, say, found competent GMs, instead of asking the atheletes without whom the game wouldn’t exist to give up any shred of autonomy they can aspire to?

Posted by Ken on 07/14/12 at 04:14 AM ET

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Parise and Suter sign contracts that combine for $200+ million and owners has the guts to tell the players that we want to take away 11% of your shared revenues so we can cover up our mistakes? Unreal. The owners are walking themselves into, better yet, begging for a lockout.

I never really understood why any fans would side with the players…

Posted by gretzky_to_lemieux on 07/13/12 at 11:11 PM ET

There is zero accountability for owners mistakes.

Posted by FlyersFan on 07/14/12 at 04:36 AM ET

NIVO's avatar

Thing is, I love how owners bitch about losing revenue, then would consider a lockout to get their way. Hello owners, if your not playing hockey, your seats arent full and your not making any money at all! DUH! Talk about idiocy. You wanna make some money or no money?

Posted by NIVO from underpants gnome village on 07/14/12 at 06:10 AM ET

John's avatar

This is insane.  I have never liked the cap, and strengthening the grip it has on the league is a step in the wrong direction.  Why is it a bad idea?  Its a matter of economics.  I am a capitalist.  I believe businesses should be able to take risks, but I also believe the market only works properly when businesses suffer the consequences of bad decision making.  If markets aren’t self correcting, they fail.

This is where we are headed with the NHL.  Gary Bettman and the owners want to create a system where they are absolutely protected from poor management and poor decision making on behalf of the owners.  They want to create a market where teams are profitable no matter what happens.  Bettman wants a franchise to be profitable—to be idiot proof, essentially—in any market so he can expand the league further and land that ultra lucrative TV contract he has always wanted.

But, that is not going to improve the game.  If you take the market incentive out of the ownership equation, it will create complacent, boring franchises.  It will create an incentive (not among all teams, but among a larger minority of them than do this now) to spend salaries only up to the cap floor, ice no-talent hockey teams that can’t compete, and reap the profitability from a fool-proof business model where the support of a loyal fan base—no matter how small it is—will always be able to provide profitability in a business model where salary costs are so tightly restrained.  Imagine, if you will, if half the teams in the NHL were run like the Maple Leafs (no knock to Leafs fans, but you have to admit that one of the reasons why ownership and management make consistently poor decisions with that franchise is because the rabid fan base will always ensure its profitability.  The same could be said for the Detroit Lions of the NFL).

What we need is a business model in the NHL that doesn’t protect ownership from losses, but that protects franchises from folding when losses are incurred.  They need to protect the fans and the continuity of franchises instead of bad owners.  I have always argued that that system should be built around a luxury tax and revenue sharing.  Failing franchises would only receive assistance from the league if they agreed to a management and fiscal audit and implemented best practices to right their ship.  But Gary will never let that happen and it is the sport that will suffer because of it.

Posted by John from Pittsburgh, PA (Wings fan for life!) on 07/14/12 at 06:17 AM ET

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Players’ response: No really, what’s your first proposal?

Posted by Garth on 07/13/12 at 10:56 PM ET

2/3 of GM’s response: uh, Gary, are you nuts? We can’t be compliant with that by next season. We were building under the guidelines you gave us 6 weeks ago, which look nothing like this.

Hope this is an unserious hail mary or scare tactic because, unlike last time when there were very real problems with the health of 2/3 of the league markets that had the court of public opinion somewhat sympathetic to a bunch of billionaires, the owners will be crucified by their season ticket holders if a season or parts of it are lost to…whatever this is supposed to be.

Posted by larry from pitt on 07/14/12 at 06:17 AM ET

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My favorite part is that Bettman still clearly doesn’t know how stupid it is to hard-band his salary ranges.  +/- the midpoint number doesn’t help a team at all when they struggle to grow their revenue at the same pace other teams do.

In other words, an 8 mil salary range between rich and poor teams @ a 40 mil cap is great.  An 8 mil salary range between those same clubs @ an 80 mil cap is effectively meaningless.

So you make it a % and not a hard number.  The floor should be 60-70% of the ceiling.

Posted by HockeyinHD on 07/14/12 at 07:56 AM ET

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Hope this is an unserious hail mary or scare tactic

That’s a fair description of 90% of what Bettman and the NHL ever do.

Posted by HockeyinHD on 07/14/12 at 07:57 AM ET

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There goes the entire nhl unless this change dramatically.
I was anticipating setting something more like 50% of total revenue and a larger range in the cap. I don’t have so much of a problem with the 5 year contract, but everything else is stupid.

Posted by teldar on 07/14/12 at 08:53 AM ET

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I must be on the wrong side based on all the comments above… But I just don’t see it.  I am not a spread the wealth kind of person where I am angry that an owner would actually make money.  The NHL is a business.  The players make good money playing a game.  Every business looks to cut expenses and maximize revenue.

Posted by gretzky_to_lemieux on 07/14/12 at 10:48 AM ET

J.J. from Kansas's avatar

I don’t think it’s fair to categorize people who are on the players’ side as those who begrudge the owners profits.

Seems useless rhetoric to me.

Posted by J.J. from Kansas on 07/14/12 at 11:25 AM ET

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The players make good money playing a game.  Every business looks to cut expenses and maximize revenue.

I agree, when 2/3 of the franchises regularly lose money the cost side is out of control. Unrestrained salary growth is the single biggest factor for franchise instability.  This isn’t some kind of worker solidarity issue, professional athletes don’t represent the working class and they should not be accorded the same respect.  They are paid exceedingly well for their services, so a system with caps and cost control is not going to destroy the workforce. 

Some folks here argue that this is a “capitalist” or marketplace system and there should be economic consequences for owners their decisions. Unfortunately that means that owners who make bad decisions jeopardise the exisitence of their franchise. An unrestrained marketplace will mean the 10 teams with strong markets, like Toronto, can spend to undue their mistakes and the rest of the league has to pay the new market price for players, further jeopardising their existence.  Others argue their should be more revenue sharing to stabilize franchises, the result is bad owners take the checks, don’t pay for players and their teams suffer.

The NHL has the most competitive, level playing field in sports, where all of the markets can compete. The new CBA should be focused on improving that parity, allow for more markets to make money and compete for players.

Posted by timbits on 07/14/12 at 11:26 AM ET

J.J. from Kansas's avatar

Yikes.

when 2/3 of the franchises regularly lose money the cost side is out of control

You’re looking at franchises when you should be looking at owners. First, there’s not good record that 2/3rds of the league is losing money regularly. If that were the case, they’d be bailing out en masse.  The reality is that there’s about six franchises in a bad financial state.  The rest of them that claim to “lose money regularly”? They’re welcome to open up their Hollywooded-up books and prove that.

Unrestrained salary growth is the single biggest factor for franchise instability

Except the salary growth isn’t unrestrained. It works perfectly within the constraints set up by the last CBA. The players will NEVER earn more than a percentage of the revenues. The NHL told us that they can make a 30-team league work with between a 54-57% cut.  That “unrestrained salary growth” that you’re talking about?  Well, the players have gone from making 54% to making 57% and that all happened within a salary system implemented by the owners in the last lockout.

An unrestrained marketplace will mean the 10 teams with strong markets, like Toronto, can spend to undue their mistakes and the rest of the league has to pay the new market price for players

I’m not sure anybody is arguing for taking the restraints off and going for an uncapped system.  If they are, then they should probably keep that to themselves, because that’s a monumentally stupid idea. The restraints are already in place.

Others argue their should be more revenue sharing to stabilize franchises, the result is bad owners take the checks, don’t pay for players and their teams suffer.

In your example, bad owners are going to screw over their teams regardless. What’s the difference between taking the checks and pocketing the money and just not spending the money in the first place?  The current revenue sharing agreement actually covers this problem by requiring teams which want to get revenue sharing to spend it in the right places. The problem is that it’s too weak a system.

The NHL has the most competitive, level playing field in sports, where all of the markets can compete. The new CBA should be focused on improving that parity, allow for more markets to make money and compete for players.

Here, we agree.  The best way for that to happen is not to force the players to take an insultingly low cut, it’s to make sure that their system works the same for big-market teams as it does for small-market teams.

If the idea is that players make 57% of revenues, then shouldn’t the idea also be that every team pays that same percentage towards player revenues?  The place where the system got broken is that the difference between the big clubs and the small clubs grew too large and the big clubs want the players to take more of the responsibility to make sure the small clubs survive than they do.  Right now, the big clubs only pay between 40-55% of their revenues to players and the struggling clubs are paying up around 65%  - if you make it so each team pays the players’ share evenly, then you have the right system.

Cutting the players’ share down to 46% saves the half-dozen drowning franchises and puts an extra hot tub on the life raft of the bigger clubs.

Posted by J.J. from Kansas on 07/14/12 at 11:48 AM ET

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The best way for that to happen is not to force the players to take an insultingly low cut, it’s to make sure that their system works the same for big-market teams as it does for small-market teams.

If the idea is that players make 57% of revenues, then shouldn’t the idea also be that every team pays that same percentage towards player revenues?

JJ, I don’t really disagree with your analysis, but I do believe that 57% is too large a share to be sustainable. I also believe the floor and cap are too high.  The contracts are too long and front loaded and should be standardized with equal annual payments, they should be limited in length, signing bonuses should be eliminated. I have no qualms with the current UFA standards. There should be more revenue sharing between teams.

That being said if the low ball NHL offer moves these items in the right direction it will be a good thing IMO.

Posted by timbits on 07/14/12 at 01:47 PM ET

J.J. from Kansas's avatar

I don’t have a problem with a lot of your ideas here, Timbits. I think 46% is insultingly low, but bringing it down from 57 would work.

Also totally cool with eliminating long-term front-loaded deals in favor of an easier cap hit calculation with less room for shenanigans.

Posted by J.J. from Kansas on 07/14/12 at 04:50 PM ET

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Think JJs on the ball here. Last lockout more or less had to happen because, in a closed system in which there is asymmetrical growth and no controls on inflation, the majority of teams will inevitably fail on a long enough time line. Asymmetrical growth still persists, but inflation is now completely controlled.

My belief is that at least 2/3 of teams are either making money or, at worst, breaking even at present (in which case, they’re still making money because franchise values have gone up). I can’t believe 2 out of 3 owners would be willing to devalue their franchises and lose a year’s worth of income because Charles Wang and Mike Priest can’t run a business without whatever the heck this moronic proposal Bettman’s being skewered over in the press is supposed to be.

What I think will happen? I think Fehr’s going to push for more revenue sharing, which will have owners at each others throats. In this environment, Fehr will gain some small concessions (perhaps independent discipline panels, the elimination of the 35+ penalty, reduced escrow, participation in the olympics, better retirement benefits, things of that nature), there will be some minor changes to term length and circumvention and ownership will more or less reupp the same deal they signed in 2005.

Posted by larry from pitt on 07/14/12 at 05:03 PM ET

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The contracts are too long and front loaded and should be standardized with equal annual payments, they should be limited in length, signing bonuses should be eliminated.

I think if you eliminate frontloading contracts, eliminate signing bonuses and make the annual salary be the cap hit, you don’t have to worry about limiting the length.

The reason for these long contracts is to add low-paying years at the end to get the average down so if you change the cap hit from being the average salary you’ll see the length of contracts shrink organically.

Teams aren’t going to be eager to agree to pay someone $7.5M when they’re 39 and players aren’t going to be eager to sign a contract that will force them to keep playing at 39 in order to get that $7.5M paycheck.

Posted by Garth on 07/14/12 at 05:21 PM ET

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Paul Kukla founded Kukla’s Korner in 2005 and the site has since become the must-read site on the ‘net for all the latest happenings around the NHL.

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