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01-04-2013, 01:38 PM
  #231
The Big Unit
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From NHL.com http://www.nhl.com/ice/news.htm?id=643572


No Rollback; Players' Share "Make Whole" Provision
The NHL is not proposing that current SPCs be reduced, re-written or rolled back. Instead, the NHL's proposal retains all current Players' SPCs at their current face value for the duration of their terms, subject to the operation of the escrow mechanism in the same manner as it has worked under the expired CBA. (In other words, under the expired CBA, the compensation a Player received each year was either higher or lower than the face value of his contract depending upon Club-Player contracting levels and the level and growth rate of HRR.) Under the expired CBA, in two of the seven years Players were paid in excess of the face values of their SPCs and in five of those years they received less than their face values. That process would remain intact under the new CBA.

Under our "make whole" proposal, which is premised upon a 5% anticipated growth of HRR both this year and in future years, every Player will be paid compensation based on the full value of the Players' Share under which his current SPC was signed.

In order to effectively transition from a Players' Share of 57 percent to 50 percent, including importantly to protect Players' current SPCs against an absolute reduction in Players' Share dollars, the new Agreement contemplates, in its initial years, a "make whole" mechanism that will effectively pay each Player currently under contract the difference between 50% of Actual HRR in 2012/13 and 57% of HRR in 2011/12 -- which was $1.883 Billion.

Again, premised upon an assumed 5% growth rate between 2011/12 and 2012/13, the "make whole" amount is calculated to be a maximum of $149 million for the 2012/13 season ($1.883 Billion minus $1.734 Billion (57% multiplied by $3.303 Billion minus 50% multiplied by $3.468 Billion). Similarly, utilizing that formula and our 5% growth projections, the "make whole" amount is calculated to be a maximum of $62 million for the 2013/14 season.

To accomplish the "make whole," each Players' pro-rata "make whole" will be determined for the first two years of the Agreement and will be paid to each Player as a Deferred Compensation benefit over the life of the Player's existing SPC. For those Players whose contracts expire after the 2012/13 season, the benefit will be paid when final HRR is determined for this season (in October/November 2013). Player "make whole" payments will be accrued and paid for by the League, and will be chargeable against Players' Share amounts in future years as Preliminary Benefits.

The "make whole" obligation will be operational only through the 2013/14 season because, beginning in Year 3, the projected growth in League-wide revenues should have resulted in an increase in absolute Players' Share dollars (in excess of the Players' Share of $1.883 Billion in 2011/12). This will effectively restore "full value" to all existing SPCs without any continuing need for a "make whole."

We note in regard to this proposal, that while the NHLPA's August 14 proposal was premised upon a 7% annual growth rate in HRR, we instead used the more conservative growth rate of 5%, consistent with our prior proposals. If the NHLPA's estimate of revenue growth is more accurate, then the amount of money needed to effectuate a "make whole" would actually be less.

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