Why I Don't Hate the Players or Love the NHL's Proposal

Within about 72 hours, the tide of public opinion has shifted completely in the favor of the owners.  I cannot understand why.

Why is there a lockout?  Because many of the owners are losing money.  Why are they losing money?  Because salaries are too high.  Therefore, the players need to take a smaller salary.  Makes sense, right?

"Hey Zach, let's ruin it for EVERYONE!"

My question is, how is this the players' fault?

During the last lockout, the players took concessions.  They accepted a 24% pay cut and a salary cap.  In exchange, they received a lower unrestricted free agency age, from 30 to 27.  This was done for the health of the league so small market teams could compete with the bigger markets.

What was the result?  Short-term, the small teams were competitive and making money, there was better parity in the league, and business was booming.

And THAT was the problem.  Business was booming.  So much that salaries had to rise to keep pace, because salaries were directly tied to revenues.  And that meant the salary floor had to rise, which meant that the small market teams started to lose money.

The problem was not the players at all, it was the short-sightedness of the CBA.  It was not designed for revenue growth but to protect against revenue losses.  The greatest fear of the NHL was not salaries escalating but revenues dropping.

We talk about the players receiving a 57% share in the last CBA, but they started with a 54% share.  57% was only achievable if somehow the league could generate $2.7B in revenue, $800M more than the first year under the lockout.

Who forced the owners to offer the ridiculous cap-circumventing contracts?  It was their own greed.  The players simply went along for the ride.  If your boss offers you a 500% raise, are you going to turn it down because it wouldn't be good for the company long term?  Hell no.  You take the money and run.

Yet it is somehow the players' fault.  Even though this is exactly what the league wanted, locking out players and losing a season of hockey.  One that could have seen great players like Mario Lemieux, Joe Sakic, Nick Lidstrom, Peter Forsberg, Brett Hull, and others add to their amazing careers.

Brett Hull is awesome.

But we're going to fix this, right?  The NHL's proposal is a 12% pay cut, raise unrestricted free agency age up to 28, cap contract lengths, and eliminate front loaded contracts.  The league's sole concession is reduction of the entry level contract by one year.

Both sides expect the league revenues to rise, so we already know what's going to happen.  Revenues will rise, the salary floor will rise, small market teams will lose money again, and we're going to see another lockout.

If only there were a proposal that kept the salary cap and floor fairly flat so that revenue growth could be enjoyed by the small markets as well as the big markets...

Wait, there WAS a proposal that would do that.  The NHLPA proposal which is seen as "not serious" by so many.

Sure the numbers were out of whack with the players receiving a slight raise in the first year, but that's why it was their proposal and not a final CBA.  Build off of that with a reduced salary share and the players could be making under 45% if the league had as much success as it did since the last lockout.

Or why not split the difference in the calculation?  The NHL wants a straight percentage revenue share, the NHLPA wants a relatively flat dollar amount for salaries, how about the players receive a flat dollar amount plus a much smaller percentage share?

Last year revenues were about $3.3B.  The players received 57% or about $1.8B.  So say revenues increase to $3.5B next year.  At 50%, the players would get $1.75B and the salary floor is $47M.  Let's say instead they get $875M plus 25% of revenues.  That's $875M + $875M = $1.75B, the same result with the same salary floor.

But in five years, if revenues somehow get up to $4.5B, the NHL's proposal would give them $2.25B and the salary floor would be $67M, $20M more than it is now!  That's what got us into this mess in the first place.

Yet in my proposal, the players would get $875M + $1.125B = $2B and the salary floor would be $58M.  That's $9M less than the current proposal.  The players are rewarded for the growth of the league and the owners get to keep $250M more in profits while the smaller teams are not forced to pay nearly as much in salaries.  Add in some revenue sharing, and you have yourself a way to prevent future lockouts.

This is what both of the readers who made it this far are doing, right now.

My point is that it is ridiculous to turn on the players just because you want to see NHL hockey RIGHT NOW.  Look at the history, look at the bigger picture, and look towards the future if you want to see NHL hockey not just right now but also in 2022, 2032, and beyond.

8 comments:

  1. Great take. It's ridiculous to hate on the players because they won't let the owners off the hook for the short-sighted CBA they proposed last time. The last thing fans need is another short-sighted CBA that gets us back to the same place in 5 years. Too bad, instant gratification generally trumps thoughtful consideration.

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  2. Any Wild fan supporting the current CBA proposal (The NHL one), is a Wild fan excited to see them have to unload 15 million dollars worth of players in 2023.

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  3. Might I also add that by eliminating front loaded contracts and capping deals at five years, that really only saves money for the big teams? Small markets can't offer $100M contracts over 15 years.

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    1. But they can forced into them (see Nashville).

      It may help the big markets in saving money, but it also protects the smaller markets in regards to keeping their players. As you said 'small markets can't offer $100 million...' - getting rid of huge front-loaded deals helps them keep their stars, instead of turning into farm teams for the Rangers and Leafs.

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  4. As you admit in the opening, you don't get it. I responded on the boards http://hfboards.hockeysfuture.com/showpost.php?p=55085121&postcount=817

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  5. Wasn't the players offer also based on a 4 year deal where year 4 bounced back to 57% ? What good does that do, going back to a number that most feel doesn't work long term, and then starting the next CBA negotiations at the same point as this one ? A deal structured like that is merely a band aid, and a short term one at that. This next CBA needs to fix the long term issues, whether it be HRR%, revenue sharing, contract terms, and needs to be 6-10 years in term.

    There's a reason the NHLPA proposal wasn't taken very seriously. It was short term, guaranteed (albeit smaller) increases for the players, and bounced back up to 57% for the final year. It was essentially 'let's play under the current CBA and push fixing anything down the road...'

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  6. The players' offer isn't a final offer, it was a different idea for revenue calculation. In a negotiation, obviously you don't take the first, second, even third offer. That's why the owners' 43% and 46% offers weren't taken seriously.

    I broke down the numbers here: http://www.firstroundbust.com/2012/09/breaking-down-numbers-lockout-edition.html

    Again, you can't look at the raw numbers since those aren't going to be the final figures used for the calculation. You could however look at the concept and wonder whether it works or not, which is what I did toward the end of this article.

    Just as keeping the revenue share at 57% makes no sense, keeping the salary floor calculations the same makes no sense either long-term.

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  7. Quick note, the ELC's going to 2 years isn't even a concession. It is designed to knock the value of second contracts down.

    With the exception of the best of the best(who are going to get paid regardless), only having two years of experience before negotiating is going to reduce the salaries of most players second contracts. The players that spend a year to a year and a half in the AHL before breaking into the NHL will have no leverage or barely any NHL experience to come back and barter for raises or one way contracts.

    Quick Example would be Clutterbuck. Spent a year in the AHL, and broke into the NHL his second year. Think he has the leverage to negotiate a one way 1.5 million per year deal off of one year NHL experience? But he came back that third year, broke the hit record and firmly established himself in the NHL and did have the leverage to negotiate that.

    For every Hall, Sequin and Skinner that is going to get paid regardless, there are 10 Clutterbuck's that the third year of the ELC is crucial to a second contract.

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