Deja Vu………….

Here we are once again on the verge of another potential NHL Lockout. If this lock out does come to pass, then it will be the third work stoppage in the last 18 years. This would also be the third work stoppage in the tenure of NHL commissioner Gary Bettman. Now, instead of talking smack about Mr. Bettman, the owners, NHLPA head Eric Fehr or the NHL platers themselves, I have decided to take a different route.

I want to propose my ideas on how to rectify the economic issues that the NHL and it’s players state they are miles a part on. I want to address each issue, share the concerns of both sides and then state my thoughts. The main issues according to Jamie Fitzpatrick, Guide.

1. The Players’ Share

What is it? The salary cap and floor are calculated to ensure the players receive an agreed percentage of NHL revenues. The players’ share began at 54 per cent in 2005. It climbed as league revenues increased, and was near 57 per cent in 2010-11.

What’s the problem? The players’ share is too high for the NHL’s liking.
Trends in other sports would appear to favor the NHL’s position. In its recently signed deal, the NFL reduced the players’ share to about 46-48 per cent, while the new NBA CBA splits revenue approximately 50-50 between players and owners.

The players will counter that each league defines its revenues differently, and when those differences are accounted for, the NHL players’ share under the current CBA is on a par with the NBA and NFL.

This is the core issue that drives all the others. Once a revenue split is agreed to, all that’s left to decide is how each side will divide its share.

My Thought: I seriously think that the revenue for the NHL and NHLPA should be shared 50 – 50 just like the NBA. This way both sides are not “giving in” to each other and submitting to the other sides demands. It will also generate a sense of fairness to the fans who would be alienated by yet another lock out and the NHL needs to avoid alienating any fans. They are not in the position of the NFL, NBA or Major League Baseball in that they do not share the overall popularity that the other three leagues do.

Gary Bettman – NHL Commissioner

2. The Salary Cap “Floor”

What is it? The minimum season payroll of an NHL team. A formula in the 2005 NHL collective agreement sets the annual floor at about $16 million below the salary cap.

What’s the problem? Money-losing teams would prefer the option to carry much lower payrolls. Spending to the floor means they lose even more cash. The league will likely seek to lower the salary floor in relation to the cap, or eliminate the floor altogether.

The players will fight this. A salary floor helps distribute earning potential on all thirty teams, rather than having too much salary tied up with a few wealthy franchises.

My Thought: I can see why money losing teams would want to have a much lower, or non-existent, salary cap floor. It makes sense but I think that the salary cap floor is something that is good for the game. It creates a better situation for unsigned players who may not be “the” free agent that everyone wants and it also forces those money losing teams to field a more competitive team than the owners may want to. I would keep the cap floor but perhaps tweak the percentage of the cap that generates it.

3. The Guaranteed Contract

What is it? Under the current NHL CBA, a player is guaranteed to earn every dollar of a signed contract, unless the team buys him out. Buyouts are expensive: a team pays two-thirds of the remaining contract value and absorbs a long-term salary cap hit, while the player is free to sign and play elsewhere.

What’s the problem? As in 2005, the NHL is seeking ways to save team owners from themselves. It’s not unusual to see star players signed to contracts running 10, 12, or 15 years, with enormous price tags and salary cap burdens. The NFL’s widespread use of non-guaranteed contracts, allowing teams to cut players with little financial penalty, surely looks attractive to owners. The league will also likely seek a term limit of 10 years or less.

This will be a big fight for the players, as the guaranteed contract is about the only guarantee a player has in a game where many careers are short.

My Thought: Both sides have a valid point in this argument and I truly believe that there is a way to come to a compromise. I do think that guaranteed contracts and the lengths of those contracts are an albatross for the owners, but they did sign the player and have only themselves to blame. I also do not blame the players for accepting the crazy contract offers that they have been presented from the owners. So I propose this. Why not settle on a top end contract length of 7 years maximum. The contract is only guaranteed for 5 seasons, which is more than half the deal. For whatever reason if the team wants to end the contract early via buying the contract out, they would be on the hook to pay out 80% of the guaranteed 5 year deal. After the 5 year deal, the team could cut the player loose for no penalty as the last 2 years are not guaranteed. For shorter contracts the guaranteed years would reflect the length of the deal. So a 4 years contract would have 3 guaranteed years and one non guaranteed. I would also get rid of the ability to front load contracts. Have the contract pay out the true average of what the deal would be.

Donald Fehr – NHL Executive

4. The Escrow Payment

What is it? To ensure the correct revenue split between teams and players, a percentage of player salaries is placed in escrow during the season. (In 2010-11, the withheld share was 12.5 per cent.) When exact NHL revenues are determined at the end of the season, the escrow account is divided among players and owners to ensure that the targeted split has been met.

What’s the problem? Players are concerned that a small number of troubled franchises – most notably the Phoenix Coyotes, operated by the league as it searches for a new owner – drag down overall revenues and suck up much of the escrow money. Effectively, their pockets are being picked to prop up lame-duck teams.
That opens the larger issue of franchise stability and profitability, which the NHL and team owners consider to be their business, not the players.

My Thought: I think this system is a good idea but I can definitely see where the concerns of the players are coming from. Teams like the Phoenix Coyotes have been a headache for the NHL, the team’s management, the team’s players and it’s fans for a long time. Why should a player in a successful market help prop up a struggling market? Well, a healthy league means a successful league, which means more money. So maybe we can maintain the Escrow payment system but lower the amount to 10.5%, It may only be a 2% drop it is a compromise for the players.

5. Revenue Sharing

What is it? To even the financial playing field, high-revenue teams distribute money to low-revenue franchises every season.

What’s the problem? This could be a point of contention between have and have-not teams. The current revenue sharing system is not considered especially generous. But the rich teams are surely reluctant to give away more cash.

The players will surely suggest increased revenue sharing as a solution for the game’s weakest markets. The argument will likely go something like this: Overall NHL revenues have increased substantially since 2005, so the NHL makes plenty of money. If the wealthy franchises share more generously with the money-losers, all teams can be financially sound and competitive.

My Thought: This is where I think we may have more grey area and more wrangling to come to a conclusion. I think that there does need to be some form of revenue sharing, as the league does have to strengthen the financial situation of those teams. The amount, percentage or process is something that is up for debate and I do not feel I have a clear cut solution. The stronger financial teams feel it is not there job to support their poorer brothers and I say that perhaps these poorer teams may need to be moved to a stronger market. Recently a report was published in which it was stated that Canada could sustain 3 more NHL teams. This is not really a surprise as hockey is seen as religion here, so moving three teams to Canada makes sense. The Florida Panthers and Columbus Blue Jackets are sure bets to benefit from a move. What other American markets would see the NHL flourish in? Why not try Seattle? There is a natural rivalry with Vancouver already to go and Seattle is a sports city that has endured some bad seasons from their existing teams in other leagues, so the novelty of the NHL would draw people in.

What are your thoughts???

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