Kukla's Korner Hockey
by George Malik on 08/21/12 at 05:11 PM ET
First, Yahoo Sports’s Greg “Puck Daddy” Wyshynski engaged in some serious-ass research to explain the NHL’s revenue-sharing program, and it serves as a fantastic companion piece complimenting the New York Times Jeff Z. Klein’s analysis of the NHLPA’s proposed “Industry Growth Fund.” How does the current revenue-sharing program work, and what “minor tweaks” are the NHL proposing to its present model? Here’s only a snippet of Wyshynski’s article:
The current model for the NHL’s revenue sharing has the teams in the bottom half of the League-wide revenues eligible for revenue sharing. Which means if you’re in the top 15 revenue-generating teams but are playing through a mountain of debt — hello, New Jersey Devils — you aren’t eligible under the current system.
According to NHL sources, the League has proposed that the system will be opened up to any team in the NHL that might require revenue sharing, and not just the bottom 15 revenue generators.
Essential to that broadening of the system: Dropping the current CBA rules that prohibit teams in big media markets — 2.5 million TV households or more — from being eligible for revenue sharing. In theory, teams like the New York Islanders, the Devils, the Anaheim Ducks and the Dallas Stars that should logically qualify for revenue sharing would be eligible under the new model.
As David Shoalts of the Globe & Mail detailed earlier this summer, the NHL’s revenue sharing system is tangled and baffling.
Part of that confusion comes from a “clawback” system that incentivizes teams to maximize their local revenue streams — if they hit certain growth targets, usually at a rate above the League’s average revenue growth, then they qualify for a larger share of the revenue. If they miss the targets … they don’t.
The NHL intends to loosen those restrictions and make it easier for teams to qualify for a larger share of revenue sharing.
Now, if the NHL expands revenue sharing, that means it needs a bigger pot to draw from, right?
I strongly suggest that you continue reading Wyshynski’s article, but the second “thing” involves Sportsnet’s Michael Grange offering a one-two punch in terms of framing tomorrow and Thursday’s CBA negotiations.
As we proceed toward an incredibly important week in terms of finding out whether the NHL will be holding games this fall or will be locking out its players and fans, Grange offers five reasons to be optimistic about the tenor of said negotiations, even though Grange deems the revenue-sharing debate to be a “red herring.” Amongst his reasons:
1. They’re talking: The players and owners might see the world differently, but they haven’t thrown up their hands or thrown down the gloves just yet. More importantly, they’re talking about the right stuff. With considerable progress being made on secondary issues, this week’s agenda has been devoted to the twin issues that will be at the centre of any agreement whenever it gets made. The first is core economics—what exactly will be defined as the league’s hockey related revenue (HRR) and how the two sides will divide it. The second are so-called systems issues—matters relating free agency and a wide range of contract rights. Fix those two issues and a deal gets made fast.
2. The hard cap stay: NHLPA executive director Donald Fehr hates salary caps. A major part of his legacy after running the MLB players association is that baseball remains salary-cap free, unlike the NBA, NFL and the NHL. If he had his way there wouldn’t be one in hockey. “The reason we have a salary cap is because the owners believe—and they are correct—that the salary cap we have now pays the players less than what the free market would pay them. That’s the starting point from the players’ analysis, but the players are willing to live with that if we can work out an agreement.”
What Fehr didn’t say was that over-turning the hard cap system the NHL shut down hockey to get seven years ago would mean a labour stoppage his members don’t want. Discretion being the better part of valour, the player’s proposal maintained a hard-cap, though it did provide means for teams to trade up to $4 million in cap space for draft picks. Allowing the owners to keep a hard cap in place may prove to be the single most significant concession the players make in the name of avoiding a lockout.
3. There is room to wriggle on HRR: That each side has put forward proposals with revenue sharing splits the other won’t accept hardly matters as much the fact that the relative positions don’t seem completely set in stone. The players’ proposal calls for a drop in their share of HRR from 57 per cent to 54 per cent over the next four years. It’s a long way off the 43 per cent the owners want to give them, but it is a concession.
Meanwhile, the owners deserve some credit for not being completely antagonistic. The NBA’s first offer to their players was to cut their share of revenues from 57 per cent to 37 per cent, eliminate fully guaranteed contracts and limit contract lengths to four years. Now that’s a low-ball offer.
Moreover, lost amid the hubbub of last week’s meetings was that Bettman did cite the NBA and NFL as models for the NHL’s position on splitting HRR. Since each of those league’s settled on splits in the range of 50 per cent, just mentioning them should signal to the NHLPA that the owners are willing to improve their first offer considerably.
Continued with a suggestion that “rollbacks” are not central to the owners’ proposals…
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