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How About A Cap On Escrow?

from Kevin McGran of the Toronto Star,

The path to NHL labour peace — and a chance to save the season — is an idea that only number crunchers could love: a cap on escrow.

“If they’re willing to cap escrow, there’s something to talk about,” Mathieu Schneider — Donald Fehr’s special assistant at the NHLPA — told the Star on Thursday. “That would definitely be a step toward our direction, but that hasn’t been discussed.”

The two sides have no plans for face-to-face negotiations.

“The comment (from Schneider) is news to me, but the concept isn’t,” said NHL deputy commissioner Bill Daly. “The subject has never been raised across the table to us, either in the form of a proposal or otherwise.

“It’s just another way of addressing the ‘make-whole’ issue.”

continued

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

Comments

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1) Players agreed to allow future CBAs to affect their current SPCs.  Every player agreed to this when they signed every SPC.  ‘Honoring signed contracts’ is a false flag planted by the NHLPA so they don’t have to appear as nakedly greedy as they are being.  This is about money, not ‘honor’.

2) Here’s an idea.  Turn NHL contracts into documents based on points rather than on dollars.  Instead of signing ‘x year at y dollar’ deals, sign ‘x year at y % of the salary cap’ deals.

3) If the NHLPA is getting hung up on Escrow, they are morons.  Escrow doesn’t matter.  What matters is the players share and the HRR it is derived from.  All escrow is is a mechanism for making sure they don’t get a huge bill at the end of the season or a portion of their share whacked the next season.

The NHLPA is fighting the wrong fights for the wrong reasons.

Posted by HockeyinHD on 11/02/12 at 04:31 AM ET

J.J. from Kansas's avatar

I really would have liked the follow up question to Schneider when he said an escrow cap hadn’t been discussed. Why not, Mathieu? Obviously the NHL isn’t going to offer that. Setting a decent cap on escrow can help solve the problems associated with the idea that the NHL wants the players to come to 50/50 immediately and they want to do it over time.

Plus, it’s one of those things the big-market clubs can get behind because they get to hand out the contracts that are likely to drive player salaries to the escrow cap and then the entire league gets to share in the losses of those escrow dollars returned.

Posted by J.J. from Kansas on 11/02/12 at 08:03 AM ET

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Setting a decent cap on escrow can help solve the problems associated with the idea that the NHL wants the players to come to 50/50 immediately and they want to do it over time.

Do you think the NHLPA would agree to the following:

-An 8% cap on escrow deductions, but if player payments exceed share the NHLPA can either elect to a) pay off that amount immediately or b) have the overage deducted from HRR the following year.

Posted by HockeyinHD on 11/02/12 at 09:08 AM ET

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The subject has never been raised across the table to us, either in the form of a proposal or otherwise.

Translation: This is not in any of the NHL proposals to the NHLPA and all negotiations must begin and end with the NHL proposal. There is no need to have further discuss or have any face-to-face meetings unless we start with the NHL proposal.

Players agreed to allow future CBAs to affect their current SPCs

And players are NOT COMPELLED to sign a new CBA that adversely affects the existing SPCs either.  So why it this point brought up over and over and over and over and over again? We get it, we know, it doesn’t mean the players have to sign a CBA that would gut the existing SPCs.

Posted by hockey1919 from mid-atlantic on 11/02/12 at 09:13 AM ET

J.J. from Kansas's avatar

Posted by HockeyinHD on 11/02/12 at 09:08 AM ET

I don’t think they would. Deducting the overage from next year’s HRR is just a year-to-year Make-Whole Provision in practice and, as the whole article said, lowering everything to where players paying escrow back like that is the effectively the same as them taking a rollback. Capping the amount of withholdings only to drop a huge bill on them to start the next season isn’t something I think the NHLPA would be interested in bringing on itself.

Posted by J.J. from Kansas on 11/02/12 at 09:17 AM ET

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And players are NOT COMPELLED to sign a new CBA that adversely affects the existing SPCs either.

True.  But that’s not the argument being made.  The argument being made is ‘Hey, we signed those old contracts so you have to honor them to the letter.’

The reality is that those contracts which the NHLPA is being argued have to be followed to the letter have letters in them that say they don’t have to be followed to the letter.

This is why I think the ‘honor existing contracts’ argument is fallacious.  The NHLPA already agreed to allow future CBA’s to modify any and all portions of their SPCs. 

The real issue is money, not honoring old deals.  The ‘honor the contracts’ slogan is packaging, not product.

Deducting the overage from next year’s HRR is just a year-to-year Make-Whole Provision in practice and, as the whole article said, lowering everything to where players paying escrow back like that is the effectively the same as them taking a rollback. Capping the amount of withholdings only to drop a huge bill on them to start the next season isn’t something I think the NHLPA would be interested in bringing on itself.

Totally agree.  Because this isn’t about honoring contracts.

What the NHLPA wants is all of the real dollars of their contracts and to ignore their assigned player share if those real dollars exceed their allotted portion of HRR.  They would also scream to high heaven if their total of real dollars failed to meet their share of HRR and would demand that shortage to be made up.  Those two points stand in direct contradiction.

That’s why their position on escrow is stupid.  Escrow doesn’t matter.  Escrow doesn’t change what the players make as a group.  All ‘honoring current contracts’ does is steal from future FAs to pay recently-signed players.

And, oh yeah, cost all of them any of the money they’d be making right now.

It’s a peanut butter and jelly sandwich, just instead of peanut butter there is stupid and instead of jelly there’s dumb.

Posted by HockeyinHD on 11/02/12 at 09:51 AM ET

J.J. from Kansas's avatar

I’d be in favor of a points-against-total-cap-percentage system for players, as I think that would only cause escrow in very small (truly corrective) amounts instead of the occasional 13% hit (admittedly caused in major part by the players taking an escalator during the absolute worst part of the economic downturn).

If you tied that percentage to the midpoint, you could trade a 10% player from one team to another and his salary wouldn’t change.  You cap the collection at 100% and you floor it at… hell, I don’t know… 80% ?

The complexities of balancing out such a system (and explaining both to players and to fans exactly how much anybody actually makes) would have to be worked out, of course.

All ‘honoring current contracts’ does is steal from future FAs to pay recently-signed players.

I still think the best solution to the “honor signed contracts” roadblock (if they’re not going to go to a percentage system and just work it like that..which make no mistake the players would view as a rollback if it came along with the applicable percentage changing immediately), is to use a “Luxury Cap” system where teams can continue spending up to the $70.2M, but any amount they spend that’s over the new applicable percentage cap (let’s go with the old $59.4 from the now-pulled offer) simply doesn’t count.

Yep… the players make more than 50% of league revenues that way, but the amount over which they make it is paid solely by the clubs who can afford to do so and are willing to go forward with that.  Additional details would need to be created to correct between how much floor teams were required to spend then vs. now, but if the big clubs are willing to let the percentage slide as they control their own spending (controlled against growth projections which eventually catch the regular cap up with the Luxury Cap), then I think the players might be willing to give some of those “already signed-for dollars” back to the teams who actually need to keep them.

The obvious problem with that system is in getting the big-money clubs to buy into it.

Posted by J.J. from Kansas on 11/02/12 at 10:35 AM ET

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The argument being made is ‘Hey, we signed those old contracts so you have to honor them to the letter.’

I don’t believe that is the argument. The argument is you promised me $x millions just last month and now you want me to take a cut before ever paying a cent out of the contract. This is all about getting the most amount of dollars from both sides.

My issue from the start is that percentage of HRR that the players get means virtually nothing if the big markets don’t do more to help the smaller markets. Once the NHL got a cap, they were no longer became markets since they have linked costs and revenue. The NHL cannot insist small teams are losing money and then expect it to come 100% from the players without asking their profitable “partners” to pony up some cash as well.

If the NHL said they were going to 50/50 and all additional revenue went to a revenue sharing pool from day one, I would be more inclined to tell the players to agree o the deal. A deal that just increases profits for the top 5 teams and does nothing to help the bottom will just result in CBArmageddon 4 when the NHL asks for a 30/70 split next time to achieve a 40/60 split during the next “negotiation”.

Posted by hockey1919 from mid-atlantic on 11/02/12 at 11:21 AM ET

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This is why I think the ‘honor existing contracts’ argument is fallacious.  The NHLPA already agreed to allow future CBA’s to modify any and all portions of their SPCs.

It really isn’t difficult to understand AT ALL that while a new CBA can affect the contracts that players are currently under, the players don’t want to agree to a CBA that changes the terms of the current contracts.  The players want their contracts under the new CBA to be the same as the contracts under the old CBA.  They do not want a new CBA that changes their current contracts.

I’m not sure it can be put an simpler.

Posted by Garth on 11/02/12 at 12:26 PM ET

HockeytownOverhaul's avatar

Something tells me this horse is dead.

 

Posted by HockeytownOverhaul on 11/02/12 at 01:46 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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