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Puckin' Around With Spector

Escrow Squabble Foreshadowing Another NHL Lockout?

Earlier this month it was reported NHL players would be receiving checks by October 14th, representing the return of last season’s escrow deductions, which were deducted quarterly from their pay.

Since the imposition of the current collective bargaining agreement in 2005, players have had these payments deducted quarterly throughout the season and held in escrow, which is either returned to them the following season if their combined salaries remain beneath their 57 percent of league revenue, or returned to the league if those salaries exceed that level.

Unfortunately, the players have yet to receive their checks, because of a dispute between the PA and the league over what constitutes hockey revenue, with the biggest issue, according to CBC’s Elliotte Friedman, being the $25 million payout from the city of Glendale to the Phoenix Coyotes.

Jesse Spector of The Sporting News recently reported the league had rejected a request from the PA to release those escrow funds which are not in dispute.

Spector also reported NHL Deputy Commissioner Bill Daly downplayed the situation, claiming the year-end accounting was not yet completed.

With the current CBA set to expire in September 2011, this dispute over hockey related revenue (HRR) has led pundits like Friedman and the Boston Globe’s Kevin Paul Dupont to suggest this to be an “ugly” or “troubling” sign of things to come, foreshadowing another nasty labor dispute between the league and the PA.

Hockey pundits, bloggers and fans have reason to feel nervous about the slightest hint of potential trouble between those two sides.

Since 1992, the NHL has gone through a players strike and two lengthy lockouts, the last costing the NHL the entire 2004-05 season, driving many who love the game at the time to despair, leaving them fearful of another protracted work stoppage in the future.

The last thing any of us want is another potential labor war threatening yet another season.

It’s been suggested this current dispute is merely NHLPA Executive Director Donald Fehr’s way of sending a “shot across the league’s bow” - his first real opportunity to “flex his muscles” since officially taking over the role in December 2010 - by drumming up this dispute over HRR, something which previously hadn’t been an issue between the two sides under this CBA.

Perhaps it is, but if so, it appears - at least publicly as far as both sides are concerned - to be a minor issue.

This isn’t the first time we’ve heard or seen reports suggesting of potential trouble brewing between the two sides.

In the summer of 2010 came occasional speculation the NHL could seek to reduce the players’ share of revenue to 50 percent, which would of course result in a lowering of the salary cap, necessitating a rollback of players salaries to achieve that target.
The league’s rejection last summer of Ilya Kovalchuk’s original contract with the New Jersey Devils resulted in an arbitration hearing which ruled in the league’s favor, and was taken by some observers as a “sure sign” of trouble between the league and the PA.

While the possibility still exists for another lockout or perhaps a players strike, it must be remembered the atmosphere between the two sides has dramatically changed from the poisoned one which existed from the early 1990s to the middle of the last decade.

Gone is the very public acrimony and mudslinging which used to hang like a dark cloud over discussions between the two sides, replaced by more conciliatory, optimistic talk.

The Kovalchuk issue was resolved to the satisfaction of all sides, with the league and the PA agreeing to rewrite the current CBA to include specific language setting limits on how much teams could front-or back-load a player’s contract.

Fehr has remained optimistic a deal can be reached between the two sides without resorting to another work stoppage, and refrained from inflammatory comments toward the league and the team owners.

The players aren’t about to just roll over for the league, but most likely lack the stomach for another lengthy labor spat, especially those who were part of the PA during the season-killing lockout. They’ll want the best deal they can get without the risk of losing part or all of a season.

It’s also expected the next round of CBA talks could become more of a dispute between big and small market owners, which could center upon the latter’s desire for improved revenue sharing and a lowered salary cap “floor”.

Both sides undoubtedly closely watched the reconciliation between the NFL and its player union which avoided a possible work stoppage that threatened their current season.  They’re also likely watching to see the outcome of the NBA’s current labor strife.

For the first time since the early 1990s, the NHL’s visibility in the all-important American sports market has increased, thanks in part to young stars like Sidney Crosby and Alexander Ovechkin, improved parity amongst the teams, rule changes which improved the game’s speed and excitement, and the recent Stanley Cup championships of Original Six teams from Chicago and Boston.

While there are undoubtedly potentially contentious issues in the current CBA which need to be addressed, it’s unlikely the league, most of the team owners, the PA or most of the players are willing to jeopardize all that with another short-sighted labor war.

Unless there emerges a radically changed tone between the league and the PA over the next eleven months, one shouldn’t be too quick to anticipate a labor war based on a minor dispute over HRR.

Filed in: | Puckin' Around With Spector | Permalink


Keyser S.'s avatar

If the city gave the coyotes $25 million, I think that should count as revenue. It went toward the team right? If the team was somewhere else, they would’ve made that $25 million on folk actually showing up for the game.

I don’t think there’s going to be another lockout in the nhl for a while. With the cap, everything pretty much fixed itself.

Posted by Keyser S. on 10/19/11 at 12:25 PM ET

J.J. from Kansas's avatar

While there are undoubtedly potentially contentious issues in the current CBA which need to be addressed, it’s unlikely the league, most of the team owners, the PA or most of the players are willing to repeat jeopardize all that with another short-sighted labor war.

Unless there emerges a radically changed tone between the league and the PA over the next eleven months, one shouldn’t be too quick to anticipate a labor war based on a minor dispute over HRR.

Thank you so much.  This really is an excellent piece.

As somebody who wholeheartedly agrees with your position, I am very glad to see that there are people willing to spread facts and not worry among hockey fans.  I think you’ve covered the angles extremely well and have done a very good job explaining the overarching feeling from both sides.  There is simply too much to be lost by a labor stoppage considering all of the gains.

Posted by J.J. from Kansas on 10/19/11 at 01:03 PM ET

mrfluffy's avatar

Awesome. Repost this once a month until the next CBA is signed.

Posted by mrfluffy from the phone, calling Detroit, telling them it's on 10/19/11 at 01:12 PM ET

Nathan's avatar

I feel, as Spector mentioned, that the real threat is infighting between the owners. I think the large issues that the PA and league have to agree on are relatively close, and the only way a gap would open up is if different factions of owners started sparring, forcing the PA into a situation where it either had to pick a faction to side with, or ignore it completely, potentially letting the infighting drag on long enough to keep the main two sides from getting to negotiation on time.

Small-market owners have a reasonable request to have the floor lowered (or more accurately, the gap allowed widened). But strong clubs in bigger markets have an equally reasonable request to keep the ceiling where it is at. It will come down to that discussion. Are the small-markets willing to compromise to get a lower floor by allowing some of the parity to be surrendered in the form of allowing big-time teams to flex their financial muscle? Are healthy teams willing to continue to subsidize situations like Phoenix as a cost for getting the payroll flexibility they want?

Posted by Nathan from wasting perfect passes from my teammates on 10/19/11 at 01:28 PM ET

Hank1974's avatar

I don’t think the PA or league is dumb enough to believe they can survive a 3rd work stoppage in 17 years.
If they are, then I hope the NHL crumbles and something better, and smarter, emerges in it’s wake.

Posted by Hank1974 on 10/19/11 at 03:18 PM ET

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About Puckin' Around With Spector

I’m Lyle Richardson. You might know me from my website, Spector’s Hockey, my thrice-weekly rumor column at THN.com, my weekly column at Eishockey News (if you read German), and my former gig as a contributing writer to Foxsports.com.

I’ll be writing a once-weekly blog here with my take on all things NHL. Who knows, I might actually find time to debunk a trade rumor or two.