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Talking The Next CBA

from Sean Fits-Gerald of the National Post,

What would the owners want?

Given the complaints about the height of the salary floor this year (US$48.3-million, or US$9.3-million more than the original cap), it stands to reason the owners will be looking to reduce the percentage paid to players. Under the terms of the CBA, players are entitled to 57% of league revenues in any year in which league revenues exceed US$2.7-billion. A league news release — headlined “Best-ever business year highlighted by record revenue” — issued in April projected NHL revenues at more than US$2.9-billion.

How would the players react to that?

Poorly. Not only did the NHL emerge with its salary cap in the last round of negotiations — winning Bettman’s cherished cost certainty — it also emerged with a 24% rollback of all existing player salaries. The NHLPA, especially with Fehr now at the helm, would not be willing to enter another round of concessionary bargaining just to fix a system the NHL had basically itself designed.

So how would the players fix the trouble of teams fighting to get to the floor?

They would implore the league to improve its revenue sharing program between teams , with more money going from the rich clubs (Toronto, New York Rangers, Philadelphia) to the poor teams (Florida, Nashville, Phoenix). It is also worth remembering the NHLPA proposed adopting a luxury tax during the last round of bargaining. Allowing the bigger clubs to spend beyond the ceiling would obviously soften the league’s hard salary cap, but the penalties those rich teams pay would help fund the poorer teams toward the salary floor.

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Comments

J.J. from Kansas's avatar

Please no luxury tax.

That’s part of the system that led the NBA into their trouble and part of the system that MLB only survives because it’s such a huge revenue-generator.  Baseball is also a league of big-spending contenders, slightly less-big-spending wannabes, and a slew of professional farm teams, who develop talent at the big league level before trading them off to clubs that can afford to pay the salaries they demand when their early contracts run out.

I’ll keep saying the same thing I always say in these CBA articles and hope that it gets adopted:

Take the players’ share from every single team’s hockey-related revenues. If it’s going to be 57%, then the big clubs should pay 57% of their revenues toward player salaries - they pay their own players up to the salary cap and then every dollar in that 57% that’s above what they’re allowed to spend on their own players goes into the revenue-sharing pot to pay players’ salaries. (currently, individual teams are spending in a range between about 50% of revenues and 65%)

On top of that, leaguewide revenue (not attached to a specific team) that exceeds the $300M threshold they set also has the 57% scraped, but this is basically paid as an end-of-year bonus to the players (like an anti-escrow for them).  The league then divvies out the remainder to the teams.

I know it seems horribly unfair to make large-market teams pay their own salaries and essentially pay enough on top of that to field a complete other team, and I’m sure I’ll feel terribly sorry for them when they’re still pulling in more after-pay profit than those poor teams they’re “propping up”. 

The benefit of doing this rather than doing a luxury tax is that it keeps the cost certainty for the large-market teams.  Out-of-control spending is what led to the last lockout, not struggling small markets.

Posted by J.J. from Kansas on 07/27/11 at 10:59 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.

From breaking news to in-depth stories around the league, KK Hockey is updated with fresh stories all day long and will bring you the latest news as quickly as possible.

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