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NHL’s proposal is significant and encouraging, but is it ‘meaningful?’

Updated 5x at 1:31 AM: As Paul already posted, NHL commissioner Gary Bettman kicked off four days of CBA negotiations in New York by suggesting that he and Bill Daly offered NHLPA executive director Donald Fehr and deputy Steve Fehr a "significant" and "meaningful" proposal--significant and meaningful enough that the Fehr's digested it over lunch and brought back several player representatives to review the NHL's second view of the world--before taking their work home with them.

The proposal does, however, appear to continue to define Hockey-Related Revenues as the NHL wants to recast them (i.e. according to the PA's take at the audited books, they're taking a 51% share of HRR, not 57%), and TSN's Darren Dreger reports that it's the percentage of HRR that's at the heart of the NHL's proposal--and its backbone still involves demanding that players "give at the office" to address the fundamental problems plaguing the NHL's 30-team model:

 


To put things a little differently, (and taking note of the fact that we still don't know whether the same free agency, entry-level contract and no-arbitration rules from the NHL's first proposal apply), from TSN's Aaron Ward, these numbers are swell and all, but they're the NHL's numbers, and given that neither side can agree upon which dollars to count as HRR and which to exclude from the puzzle, it's incredbily difficult to figure out what the propsoal really means:

According to the Canadian Press's Chris Johnston, this is where things get really  complicated...


And he offers more details in an updated story, recapping the day's events:

The players received 57 per cent of revenues under the expiring agreement and the NHL’s original proposal called for that number to be scaled back to 43 per cent. The union countered with an offer that would see it fall around 54 per cent for three years before returning to 57 per cent in the fourth.

With the NHL’s latest offer, the sides appear to be creeping a little closer on what they’ve been referring to as the “core economic issue.”

According to a source, Tuesday’s proposal from the NHL called for a six-year deal — the first three delinked from hockey-related revenues and the last three coming with a 50-50 split (when factoring in a redefinition of HRR). As a result, the salary cap would climb from $58 million in 2012-13 to approximately $71 million in 2017-18, the last season of the contract.

Pressure is mounting on both sides with the CBA set to expire Sept. 15 and the league having already stated it will lock the players out if a new agreement isn’t in place by then.

There’s a growing feeling throughout the sport that it’s an inevitability. Minnesota Wild forward Zach Parise, who signed a monster US$98-million, 13-year deal in free agency, became the latest to voice that opinion this week when he told the St. Paul Pioneer Press that “Gary’s pretty adamant about his third lockout of his tenure.”

On Tuesday, Bettman expressed hope that the league’s latest proposal would start focusing the discussion at the bargaining table.

“We need to get on the same page on the economics and we’re hoping that by virtue of the proposal we made today that there will be some traction and that there will be a framework for the negotiation,” he said.

I'm going to post more stories and rhetoric from today's negotiations, but I'm going to put this out here so you can see the numbers for yourself.

Update: Here's TSN's Darren Dreger's take in story form:

According to TSN Hockey Insider Darren Dreger, the basis of NHL's latest proposal is to reduce the league's financial demands - believed to be approximately $460 million in the league's first proposal - overall, including a $120 million reduction in its Year One demands.

The latest proposal is for a six-year term on the new CBA. The first three years would come in at fixed, pre-negotiated players' share dollar thresholds: 11%, 8.5% and 5.5% less than the 2011-12 totals in the first three years respectively.

The players would also get a share in "upside hockey-related revenue growth" of over 10% in each of the first three years. For the final three years of the deal the league and players split revenues 50-50.

The players' share percentages under the league's new definition of hockey-related revenues would be gradually reduced over the course of the six-year deal.

The 2012-13 season would see the players receive a 51.6% cut. In 2013-14 that total would drop to 50.5%, before further dipping to 49.6% in 2014-15. For the following three seasons (2015-16 through 2017-18) the players would see an even 50%.

The salary cap would see an immediate reduction followed by a gradual rise over the course of the deal.

And here's the important--and scary--part:

The league's proposal did not include an across-the-board reduction (or "rollback") to existing contract values. Necessary adjustments would be financed entirely from a combination of modified contracting practices, increases in league-wide revenue and from the players' Escrow contributions.

In plain English, there isn't a rollback per se, but there's a rollback via escrow, and there's a rollback via reducing the cap without a rollback--which may or may not mean that there would be another round of buyouts, yielding a de-facto "dispersal draft," just like last time around.

Update #2: ESPN's Katie Strang provides the necessary rhetorical recap...

"It is a proposal we believe is significant and has meaningful movement," Bettman said. "It was also designed to address issues that they raised with us and to address the proposal they last made to us in terms of structure and format."

The players' association's counterproposal featured three years' worth of hockey-related revenue concessions made by players, who would partner with owners of some of the financially strong organizations to form a revenue-sharing system that could help the struggling franchises. That proposal also included an option year, when the players could revert to the current system of hockey-related revenue.

NHLPA executive director Donald Fehr declined to discuss the ways in which the league's latest proposal was different from the first one submitted July 13. That one proposed the players make multiple financial concessions, including salary givebacks, a decreased share of hockey-related revenue and a change to entry-level contracts.

Fehr said the union will take Tuesday night to analyze the new information before reconvening Wednesday afternoon.

"What we need to do with the players tomorrow, obviously, is to review what our thoughts are and discuss with them what the possible alternatives for a response are and come up with one that we think is best representative of what's in the players' interest and, at the same time, can hopefully move talks along," Fehr said.

...

The NHLPA contingent, including players Ron Hainsey, Douglas Murray and Mathieu Darche, returned later in the afternoon to inform the league they'd take Tuesday night to review the proposal.

...

More players are expected to arrive in New York, where talks are scheduled to continue for the rest of the week.

As does NHL.com's Dan Rosen...

According to NHL Commissioner Gary Bettman, the proposal Tuesday focused on answering some of the Union's concerns about the core economic issues.The current CBA is set to expire Sept. 15.

"We need to get on the same page on the economics," Commissioner Bettman said, "and we're hoping that by virtue of the proposal we made today that there will be some traction and that there will be a framework for the negotiation."

"We believe we've made a significant, meaningful step," he added.

Commissioner Bettman has said previously the owners view the distribution of hockey-related revenue as the most important part of the economic component of the new CBA. Under the expiring CBA, the players receive 57 percent of the hockey-related revenues. The NHL's initial proposal, made on July 13, called for the players' share of HRR to be reduced to 46 percent.

While Commissioner Bettman would not reveal the details of the proposal Tuesday, he said it was "a significant proposal with meaningful movement."

...

Commissioner Bettman said the owners were "hopeful and anticipating there will be a response" from the Union on Wednesday.

"We felt in order to move the process along and hopefully engage the Union in a way that would bring a negotiation that had traction we tried to address what we thought the fundamental issues were that they were raising in a way that was structured to hopefully address the way they're looking at the world," Commissioner Bettman said. "I'm trying to get us onto the same page. I'm trying to get us into a common language and hopefully this will do that."

NHL.com posted a video of the Chairan and Fehr's comments, as well as those of Mathieu Darche...

 

And the Toronto Sun's Lance Hornby allows us to get Fehr's take:

"It is different in some respects than what they've done before," said Fehr, who received a very hard-line position on revenues and contract lengths from the league at the start of the month. "With respect to some things there was some considerable detail; with respect to others, not very much. I certainly assume there's a willingness to provide additional details (Wednesday). I don't want to characterize it yet until we have studied it. It's a proposal we intend to respond to and I will leave it at that."

Bettman continues to insist the two sides aren't far apart on revenue sharing, about $50-million between their proposed pools, the players at $240-million US, the NHL $190-million.

When the league started boldly talking of chopping the hockey related revenues to 43%, contracts to a maximum five years and tightening of free agency, the players came back with a willingness to ease on their lucrative revenue percentage if the owners could fix money-losing franchises and grow the game.

It was decided last week after little movement in talks in Toronto that the big four negotiators should take a few days for "homework" and re-assemble in New York. The sides had made loose promises to take a look at each other's most recent ideas, a change from the last lockout when each shot down the rival's lengthy proposals with hardly a glance.

"I don't feel better or worse," a coy Donald Fehr said of the chances a deal has improved in the past 24 hours.

Long story short, folks, this is probably the only proposal the NHL will make this week, and the NHLPA may or may not respond, because...

Smaller groups from both sides are expected to meet throughout this week to get moving on various other issues that were pushed to the side by the larger battle over revenues.

USA Today's Kevin Allen provides us with confirmation of the numerical "guts" of the proposal...

According to details provided to USA TODAY Sports, the plan calls for fixed dollars in the first three seasons that would put players share of revenue at 51.6% in 2012-13, 50.5% in 2013-14 and 49.6% in 2014-15. In the final three years, the players and owners would split revenue 50-50.

The initial NHL proposal had called for an immediate cut of players' share of revenues to 43%.

According to the NHL's calculations, under its proposal, players would receive an 11% decrease in the first year, an 8.5% decrease in the second and a 5.5% decrease in the third.

The NHL proposal calls for a fixed salary cap of $58 million next season and then caps of $60 million and $62 million. Under the plan, the league projected a fourth-year salary cap of $64.2 million, a fifth year at $67.6 million and the final season's cap of $71.1 million. Last season's salary cap was $64.3 million and the cap was projected to rise to $70.2 million in 2012-13.

The NHL is not asking for any rollback in current contracts, suggesting that the adjustment could be made through changes in contracting practices, increases in league-wide revenue and contributions to player escrow.

Players, as a rule, dislike the NHL's current escrow practice. They have a percentage of money taken out of their paychecks to ensure that players as a group receive no more than their collectively bargained share of revenue.

Although the league has proposed a fix-dollar amount for the first three years, the league's proposal includes a provision for players to receive more if revenue growth exceeds 10%.

While the New York Daily News's Pat Leonard focuses upon the rhetorical dance which takes place every time the NHL and NHLPA butt heads (insert "butthead, huh huh, huh huh" jokes here):

While neither Bettman nor NHLPA boss Don Fehr would discuss specifics of a plan the players intend to respond to on Wednesday, the careful commissioner used the phrase "counterproposal" to mark that the league's new presentation took into account particular player concerns — a not-so-subtle dig to suggest the NHLPA's Aug. 14 "alternative proposal," as described by Fehr, did not reciprocate such courtesies.

This is how men with law degrees duel, even as they smile for the cameras.

"It is a proposal that we believe is significant and (has) meaningful movement," Bettman said in a makeshift press area on — of all numbers — the building's 13th floor. "It was also designed to address issues that they've raised with us and to address the proposal that they last made to us in terms of structure and format."

Fehr simply characterized the league's presentation as "some additional thoughts on the outline of the proposal." The presentation occurred in a morning meeting between the Big Four of these negotiations — Bettman, NHL deputy commissioner Bill Daly, Fehr and Fehr's brother and second-in-command, Steve. The Fehrs then left for their temporary offices close to Bryant Park to review the new information, returned to the NHL's offices at 3 p.m., "expressed a few things," according to Fehr, and told the league it would like to peruse the proposal more thoroughly overnight before resuming the talks.

NHL players Mathieu Darche (free agent), Douglas Murray (San Jose Sharks) and Ron Hainsey (Winnipeg Jets) were in town for the 45-minute afternoon session. The NHLPA expects more players to arrive in New York on Wednesday, and both sides are hopeful this week's round of negotiations will continue daily through Friday.

"I'm encouraged we're talking, to be honest with you," Darche said, first in French and then in English to the growing contingent of hockey media. "It's too early to characterize exactly what the (NHL's new) offer is … Obviously it didn't take them five minutes to come up with it, and it will not take us five minutes to analyze it. So … we have a number of people studying that proposal to make sure we know exactly what it is."

As Comcast Sportsnet Philadelphia's Tim Panaccio suggests, the rhetorical divide belies a fundamental philosophical gulf which remains "meaningful":

Monetarily speaking, both sides are close. The NHL has proposed $190 million in new revenue sharing. The union wants to see the number at $240 million. But here’s where the gap truly exists:

The NHL wants the increases in revenue sharing to come from reductions in player salaries. The union says that’s not revenue sharing. That’s asking the players to cut salaries to fund revenue sharing. The union wants to see the additional money taken from the owners' share of the HRR.

Hence, the two sides remain philosophically apart on revenue sharing even though they are close on the math.

“We’re not that far apart,” Bettman said. “Frankly, you have to deal with the economics before you can resolve all of the other issues, including revenue sharing.

And here's where Gary lays the bullshit down, and lays down a good three feet of it:

“There’s been a lot of speculation about revenue sharing as to either its importance or whether it is divisive to the league. It’s neither of those things. We have had significant revenue sharing and have offered to expand revenue sharing, and the pool we’ve offered to create and the pool the union asked for aren’t that far apart.

“That’s not what is going to make or break this deal, at this point. We need to get on the same page on the economics. We’re hoping by virtue of the proposal we made today there will be some traction and a framework for further negotiation.”

It kinda is the make-or-break issue, because the NHL wants to engage in reveue-sharing via reductions in player salaries, and the NHLPA wants the NHL to fundamentally revise their 30-team business model to include more meaningful revenue-sharing instead.

The Pittsburgh Tribune-Review's Rob Rossi offers a pretty thorough slate of rhetoric on his own, trying to debunk a few myths about both Bettman and Fehr, but his bottom line reads as follows...

More players, though perhaps not as many as 20, will be here tomorrow for the NHLPA’s anticipated response to the NHL’s latest proposal.

I am not optimistic the hockey world is anywhere closer to a deal, especially by the Sept. 15 deadline. That said, based off one day – and indeed basing anything off one day can be dangerous, so I look forward to Day 2 – I am willing to offer this analysis:

The narratives on Bettman and Fehr, based largely from presumptions that are based largely from their perceived respective pasts, aren’t as clearly structured as most people would prefer to believe.

In the case of this specific labor negotiation, I’m not sure that is such a bad thing when it comes to the solution everybody presumably wants, which is for training camps to open on time in late-September.

At least I think that is what everybody wants. The fact that less than three weeks remain until the CBA expires and both sides are still stuck on words leaves me a little less sure about that.

All of this has me thinking Wednesday should prove telling – should, not could, and certainly not will.

And Sportsnet's Michael Grange offers this:

[O]n the surface it does seem the owners have signalled to the players a desire break the stalemate that has existed for most of the past two weeks with the expiration of the current CBA just over two weeks away.

As has been his habit, Fehr chose not to elaborate on the proposal initially but allowed that there was information and detail within it worthy of study, which is what the players were doing at their temporary Manhattan offices Tuesday night.

"It's a proposal that we intend to respond to, I'll leave it at that," said Fehr.

How they respond will be telling and will shape the next few weeks of negotiations and perhaps well beyond if an agreement isn't reached before Sept. 15th.

"We felt in order to move the process along and hopefully engage the union in a way that would bring a negotiation that had traction," said Bettman. "I'm trying to get us on the same page, I'm trying to get us onto a common language and hopefully this will do that."

Do the player's trust the owners? Do they trust Bettman?

There are elements within the player's camp that view any 'movement' by the owners from their first proposal as a false construct: sure they're asking for less but they're hardly making concession -- the owners still come out well ahead of where they have been and the players come up short.

If that's the view that shapes the players' response on Wednesday it will be hard to see what the owners next move might be, given they're convinced they have offered an olive branch with real dollars attached. There are billions of dollars at stake, but nothing can get resolved until the two sides decide they can trust each other first.

I don't think that's ever going to happen, even if and when the CBA issue gets resolved, but that's just me.

Update #3: Okey dokey, here are TSN's non-embeddable videos. They posted a 3:41 report from Sara Orlesky, a 1:15 clip of Aaron Ward's initial take, the Chairman speaking for all of 2:06, Fehr giving the media 4:53 of his time, and they claim that the PA will "strongly oppose the proposal put forward by the NHL today."

Update #3.5: Here's Mathieu Darche discussing the day's events:

 

 
Update the last, hoepfully: from ESPN New York's Katie Strang:

A source aware of the league's proposal said the six-year deal would include a re-definition of hockey-related revenue and a phased yearly reduction of that revenue for the players from where it currently stands at 57% to 50% percent by the fourth year, where it would stay for the remaining three years. The league's initial proposal asked the players to scale back immediately to 43%.

NHL commissioner Gary Bettman said the latest one was a counterproposal to the one the NHLPA unveiled earlier this month. Bettman said this pact included "meaningful" movement and addressed core economic issues that could bring about a labor stoppage when the collective bargaining agreement expires Sept. 15.

Two people briefed on the new deal disputed Bettman's claim and, as one told ESPNNewYork.com, the latest proposal is expected to bring about "little change."

The deal would also include a "fixed" salary cap of $58 million in the first year of the agreement, followed by $60 million in year two and $62 million in year three. The salary cap in 2011- 2012 was $64.3 million, a number that was projected to increase to $70.2 million next season.

Although the NHL's latest proposal did not ask for any player salary rollbacks -- a major sticking point in its first proposal -- it is believed that the league would rely on an increase in escrow and projected league-revenue growth to compensate.

The league's counter-proposal appears to feature concessions from the first, but skepticism remains that the new components will bridge what is believed to be a significant gulf between the two sides on the core economic principles.

Update #5: Via Yahoo Sports' Greg "Puck Daddy" Wyshynski, the Fourth Period's David Pagnotta puts the escrow issue in plainer English:

Speaking on the basis of anonymity, one source revealed to me this evening that the NHL merely "masked the numbers." What seems good on paper (figure of speech, not the actual document pitched) isn't all its cracked up to be.

As part of the NHL's latest proposal, player contracts are to remain the same and there would be no rollbacks in salaries. Okay, not bad.

The League also proposed hockey related revenues (HRR) would be split 55-45, with 45 per cent going to the Players (the NHL originally pitched 43 per cent). A step in the right direction. Good.

(Here it comes...)

But, the NHL wants the current the percentage of player salaries put towards escrow to significantly increase, which, according to the source, effectively cancels out any real changes from the NHL's original proposal back in July and makes today's proposal more or less the same deal.

What exactly does that mean? Throughout the season, a piece of player salaries is put into a big pot (escrow). Once the season is completed (the process can take a few months), all of the ticket revenue, merchandise sales, broadcast money and other revenues is totaled. Based on those HRR figures, the cash are divided up and sent to the owners and back into the players' pockets.

The NHL proposed a large jump in that percentage figure today. Undoubtedly, this doesn't sit well with the NHLPA.

...

The owners are looking for creative ways to pay the players' less. That's what it boils down to. The two sides are getting closer towards revenue sharing, according to Bettman, but that's simply one piece of the equation. If they cannot agree to a framework on player contracting issues, the Sept. 15 "deadline" will pass before you know it.

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Comments

Nathan's avatar

Well, it isn’t great news, but it’s got to qualify as good news. I know that until the definition of HRR is agreed upon we can’t speculate too much on what this all really means, but if we make an assumption that the league’s definition of HRR in this proposal is at least the same as it was in proposal #1, then we can see a little bit of hope from the fact that they’ve dramatically come forward on their percentage splits.

But if we find out over the coming days that the HRR definition is actually more restrictive to the players than it was under proposal #1, then that tiny bit of hope turns into double the doom and gloom.

I have to lean toward hope on this one, not just from a fan’s perspective, but rationally, I just see no reason the NHL would make a proposal with upped players’ percentages, but then try to sneak a fast one by the PA on the definition of HRR that would effectively make the proposals identical. This isn’t 2004—the PA isn’t a mess, so they will notice if the league tries this, and they will have a PR field day with it.

Posted by Nathan from the scoresheet! on 08/29/12 at 06:45 AM 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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