There's a reason why contracts were signed before old CBA expired...
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It appears the answer to the above question may be slowly revealing itself as the two sides in the CBA dispute, the NHL and NHLPA, continue to actually negotiate. Today the groups will proceed, after the seven plus hour session from yesterday, to discuss the ‘make it whole’ provision. If you want to read my thoughts on ‘make it whole’ click
HERE because the issue at hand today is how does this happen with a decreasing revenue split.
While I am no economics genius I have been in this game for the past 18 months and have resolved it with overall satisfaction for the party I help represent, and yes ‘make it whole’ was a key provision.
My suspicion is that ‘make it whole’, as it relates to the NHL And NHLPA, revolves around the existing contracts as those are the only things that can be considered. This of course means somewhere there must be a salary concession by the NHLPA based on revenue split if it is to get to the 50/50 the owners have offered and requested.
This is also why there was a rush to sign so many players…or a rush for so many players to sign because a contract in place has a lot better chance of being ‘kept whole’ than one that does not exist. So for Parise, Suter, Kane, Eberle, Skinner and others who inked huge, long and medium-term deals, you will probably get to keep your money but it comes with a cost. At least that’s how I see it.
It’s the next contracts that will pay the price for the ‘make it whole’ provision for the current ones. If the players want to take escrow off the table (I’m not sure if they do or not) and the NHL wants to close loopholes in contract terms all-the-while revolving around a 50/50 split in existing HRR something has to give. I see it as the next series of deals.
While the existing salary cap was not directly linked to the split in HRR of 43/57, 1.87 billion divided by 30 equals 62.3 million/team and the cap last year was 65.3 million. If the NHL does something sensible, as I proposed in the article linked above, they would guarantee a floor of revenue split not below the 50/50 of high water mark revenue of 3.3 billion, or 1.65 billion. This equals a $55 million cap-hit for each team if directly tied to a 50/50 split of HRR floor.
Where this all leads to is no roll back for existing contracts which was a key concession for the NHLPA last year and victory for the owners. However, even if there is a deviance in the salary cap from a direct split of 55 million there still has to be concession(s) to make it work. That concession comes by those players who are not under contract and are looking for one, and those who are not even in the league.
It appears the NHL is taking Donald Fehr at his word about continued revenue growth and is using the existing contracts to create savings on future ones. How so? Simply by negotiating the expansion of the cap to expansion of revenue, just like last time, but this time current contracts will take up far more cap space at the start. So what is different in this deal to prevent the owners from wanting to go down this lockout route again?
The devil is in the details and while this is merely speculation based on personal experience with contract negotiations, one thing remains clear. The NHL has to curtail the rising salary cap and the loopholes within it to control it’s biggest expense, players salaries. Then they have to allow for growth to benefit both sides equally all-the-while not allowing the cap to run so high that competing in it for half the teams is impossible.
It seems to me the best option is to hit those who are not in league yet or have to negotiate a new deal as opposed to the ones you are asking to vote on the proposal. Without looking I wonder how many players in the league have deals starting this season longer than 3 years? The NHL will know and probably other significant economic demographics about it’s players so this may be another way of splitting the union. For the record, by my count on Cap Geek’s active roster list of contracts and salaries of 23 per team for 690 players there are only 197 who meet the criteria mentioned above, just 28.5%.
As in 2004-05 there may be unintended consequences that are yet to realized and I hope both parties apply some significant effort to look ‘forward’ and forecast what those consequences may be. The first one that comes to mind is that if there is less money for players who have yet to enter the league I’m sure the KHL wouldn’t mind stepping up to cover the shortfall. These days are very interesting and today may be the most interesting of all as we all hope to understand ‘make it whole’ much better.
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