Exposing the NHLPA Proposal
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12-11-2004, 10:47 AM
Join Date: Nov 2004
Originally Posted by
Brian Burke is right, by offering a 24% rollback, NHLPA is trying to buy the same system and since he's one of the league's voices, you know the NHL is laughing at this proposal.
Let's try to start with the positives.
NHLPA says 592 players with 90 or more days of service during the 2003-2004 season have contracts signed for the 2004-2005 season. Those deals amount to $1,123,391,657, reduced by the 24% rollback and the league saves $269,613,998. For 2005-2006, 288 players are signed for $660,353,895 so the league would save $158,484,935 and in 06-07, 112 players totalling $336,198,722 with a savings of $80,687,693.
For an immediate impact on the financial landscape of the NHL, this rollback would certainly help bring back the balance of fairness and help begin the creation of a partnership between the league and its players.
In the middle ground of positive changes, NHLPA did move towards the league's concerns for entry-level contracts but if you just read the league's summary, little do you know, it does nothing to reduce the performance bonus. It appears the length will be extended to four years, maximum annual base salary reduced to $850,000 and annual signing bonus maxed at $212,500.
The problem is the performance incentives.
A player could earn $850,000 for "Individual A Bonuses" which have a maximum payable bonus of $212,500 for each category so expect the NHLPA to force players and agents to demand the most attainable statistics and for the maximum. This would be fine but then the union wants to reward players for league wide rankings in those categories and any awards in the section called "Individual B Bonuses". These incentives are unlimited and would continue the Thornton Model in a new style that would be harmful for the NHL. If the NHLPA would agree to an $850,000 cap for type B incentives, a successful entry-level player could receive $2,762,500 annually and $11,050,000 over the four years of his contract.
The next issue to tackle is the qualifying offer detailed by the NHLPA.
- players making over $1,000,000 must receive 100% QO's
- players making less than $660,000 must receive 110% QO's
- players between $660,000 and $1,000,000 must receive 105% QO's
NHL has stated the current 110% rewards players who have declined in skills or don't deserve the same prior salary to continue making money beyond their performance capability. It is almost certain the NHL will come back with a vastly different multiplier around 80% for all players since all player salary levels have history a of under-performing.
All the talk about changing the arbitration system to allow the team some fairness was nothing but window-dressing by the union.
If a team believes a player making $1.5 million or more has a lower market value, the team does not have to make a qualifying offer, must announce the election by June 30, player selects the term (one or two year deal), player can only be subjected to a club-elected arbitration once in his career, and a team can not select more than one per year or twice in any consecutive three-year period.
Now for high-level players, teams don't want to lose and have for the start of the season, teams must make the required QO and announce that it is reserving the right to elect arbitration. If the players declines to sign the QO or file arbitration, then the team has 48-hours to select the arbitration. The team must offer his prior salary and player selects the term.
This doesn't allow for a team to keep a quality but declining player because the QO and arbitration offer will be 100% of his prior salary so very few teams if any will use this tool. As for the players in the first method, since they only have to be subjected to the process once, they will only select a 1-year deal and then hope for the best that season giving them all the leverage again. This will force teams to be very careful on the player they select for arbitration.
On the next issue of revenue-sharing, NHLPA wants $189 million or more in the system but for whatever crazy reason, NHL owners and Bettman are refusing to have meaningful revenue-sharing, something that will become a hot topic of fans against the league for many of the lower revenue teams.
Before the nuclear issue, NHLPA did a great job to try and hide some very significant changes to the expired CBA at the end of their proposal.
- eliminate Group IV free agents but adjust draft choice compensation procedures and levels
- change no-trade provisions and increase the minimum salary to $250,000
- adjustments to the waivers system
- reduce length of training camp and exhibition games
- to discuss number of regular season NHL games, lenght of season, and playoff seeding
- increase the per diem
- increase number of tickets available to NHLPA for purchase and clarify seating location
- increase pension plan
- eliminate Exhibit 3 - the entry draft opt-in form
- change Exhibit 4 - lottery system and draft
- eliminate Exhibit 15 - compensatory draft system
- eliminate Exhibit 16 - transition rules
- eliminate Exhibit 17 - pro rata adjustments
Finally, the luxury tax system.
Gary Bettman has been very clear about his dislike and unwillingness to accept any form of a luxury tax system, so it is no surprise the NHLPA offered a weak and unsubstantial luxury tax system.
Here's the breakdown...
$45,000,000 to $49,999,999 receives 20% tax for 1st year, 25% for 2nd consecutive year, and 30% for 3rd consecutive year
$50,000,000 to $59,999,999 receives 50% tax for 1st year, 55% for 2nd consecutive year, and 60% for 3rd consecutive year
$60,000,000 and beyond receives 60% tax for 1st year, 65% for 2nd consecutive year, and 70% for 3rd consecutive year
This means only three teams would pay a tax on the currently signed contracts after the 24% rollack and generate $1.6 million for revenue-sharing among the low-revenue clubs. New Jersey would pay $264k, Philadelphia $1.023 million, and Toronto $321k.
Next week, Bettman will provide the players a counter-proposal and then the union will lash back with threats of ending the season on their own and filing an unfair labor practice claim against the NHL before the league even has a chance to declare an impasse.
Thanks for the breakdown. Very informative.
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