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The Business of Hockey Discuss the financial and business aspects of the NHL. Topics may include the CBA, work stoppages, broadcast contracts, franchise sales, and NHL revenues.

A 12 point plan to league success

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Old
12-13-2004, 09:10 PM
  #1
Fan-in-Van
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A 12 point plan to league success

Call me crazy, but I believe there is reason for optimism. Do I think that the deal as offered last week will be accepted by the owners? Not a chance. Will it provide a framework for a deal? I'm even unsure about that one. Why am I optimistic? Because for the first time in years (not months) the NHLPA seems to have recognized that the salary structure is completely out of whack with reality. The first step towards solving this mess is admitting that you have a problem. The rollback drops the average salary back to approx. $1.36 million/year which is in line with what the league says is what it can afford.

I anticipate that the counter offer from the league will contain some points from the players proposal with "cost certainty" [read: cap] in the form of a very punitive luxury tax. This number will be too low and too punishing for the players and they will counter with a middle ground offer. Eventually, they will end up with a system that operates as a hybrid solution.

However, what should transpire is the following ... consider this my 12-point plan... hey if Burkie, TSN, ESPN, et al could have one why can't I. I'd love to have your thoughts (particularly on point #8). I figured that rather than whine about not having hockey, I might as well propose my own solution.



1. The salary rollback as proposed by the NHLPA yesterday. This resets the league salaries to a range that is "affordable" for the NHL.

2. A rolling cost certainty range that is tied to designated hockey revenues (defined below).

Today, the top end of the range should be set at $58M (which is approx. what the salary would have been for NYR factoring in the rollback). Paying over this top range would still be possible, but there would be a monetary penalty for going over ($1 for every $1 spent). This money would be redistributed into a Competitive Distribution Pool to be shared amongst all NHL teams and owned by NHL Properties. There would also be draft pick penalties. First offense, it would cost you a 3rd round pick. Second consecutive offense, would be a 2nd round pick. Third consecutive offense would be a 1st round pick. If a team continues to spend over the top-tier amount for 3 consecutive years, then the monetary penalty increases to $5 for every dollar spent and they would continue to forgo their 1st round picks.

There would also be a bottom range that forces teams (like Chicago) to attempt to ice a competitive product. Let's say that it would be set at $25.8 million (arbitrary setting for now based on 76% of the Stanley Cup winning salary of TB). Once again there would be penalties for being under (for every $1 under, $1 would also go the Competitive Distribution Pool). There would also be mid-tiers for which monetary penalties would be imposed for going over the defined limits (e.g. $0.10 at $35M, $0.20 at $40M, $0.40 at $45M, and $0.60 at $50M)

The rolling aspect to the range would be tied to designated hockey revenues. Should these revenues go up, the ranges increase. Should they go down, the ranges go down. This gives Betteman his PR win that he needs by tying salaries to revenues. Designated hockey revenues would be audited by a mutually agreed upon party. The way I classify "designated hockey revenues" is as follows:

> National and local media rights (ownership of all TV rights would transfer to the league and they would negotiate all deals, including regional ones, this would prevent cut rate deals to such broadcasters as MSG network, Ed Snyder and Co., or even the PPV broadcasts where the revenue goes directly to the club). Collective media rights has done wonders for NFL Properties. Media rights for the NFL also include Web rights. The NFL currently makes mega millions from their Web sites by running fantasy pools. The NHL should be able to do the same.

> NHL merchandising. Right now, the brands are owned by the league and revenues are shared by the teams. However, individual teams circumvent this policy and leverage their brands in local markets to raise additional money (think some of the lotteries in Alberta and BC). The brands are owned by the league and any revenue generated through use of these brands should be serviced to the league.

> Gate Revenues. For the most part, the NHL is a gate-driven league; that is, money is made by us poor saps who hand over whatever the free market demands to go and see our teams play. In some markets (like Toronto), you pay a couple hundred to take in a game. Others (Tampa, Nashville, etc), it is downright cheap. However, when you go to a game, there are two teams on the ice. With any other form of entertainment, the purse is shared by the participants. This should be the same for hockey. As such, I propose that 50% of all gate revenues should be contributed to NHL properties. NHL Properties of course would have 30 shareholders, one for each team.

3. Baseball-style arbitration with a twist. Four offers (1-year and 2-year offers from both sides). The arbitrator picks one side. The "loser" picks the duration. Comparables can only be made to the year previous [except for this year where it would be based on last year minus 24%]. This should help keep inflation in check. Also get rid of the concept of qualifying offers. Instead, every contract until the age of free agency would end with arbitration. Teams have three options after a ruling. 1.) Accept and pay the player. 2.) Release with restrictions (that is pay the league minimum for 1 year). If the player signs with another team, the team has the right to match at 80% of the signed salary. If they don't match, they get the league minimum that they paid to the player back. Draft picks can also be assigned to teams that lose players based on the scale of the salary signed (player signs for salary in top 10% of all salaries, team is owed a first round pick by the team that signs him. 10-20% = 2nd round pick. 30-40% = 4th round pick. 40-50% = 5th round pick. 3.) If a team is unhappy with the results. Release as unrestricted. Don't pay the player anything. To further restrict movement and put downward pressure on salaries this draft pick that they get would could come from the team that signed the player. This would have to be accompanied by a new rule that states that draft picks could only be traded two years out. Thus, if NYR wanted to sign a high-end free agent, they would first need to ensure that they have a draft pick that is available to be flipped back to team that loses the player.

4. Rookie cap in place as proposed $850,000 for lottery picks, decreasing from there at a scale to be determined (e.g. remaining first rounders ... $750,000; 2nd and 3rd rounders ... $650,000; all others ... $500,000). The League would mandate and set-up bonus clauses of substance. This would prevent individual teams from creating their own out-of-whack contracts such as the Joe Thornton bonus of "you-didn't-fall-down-while-skating-here's-$500,000" type of clauses. I believe bonuses should be paid to young players if they become league stars (e.g. Kovalchuk deserves $$ for winning the Rocket Richard) and the league would take this into account when building the rookie bonus plan. All rookie deals would be two-way deals and 3-years in length. Teams would own un-signed draft pick rights for 4 years rather than the present 2 (this allows a college player to finish his degree and the team would not lose his rights). It also removes the leverage that draft picks have to get a contract.

5. Free agency at the age of 29 or 10 years of service. One of the reasons for the very restrictive age for free agency is that it is very hard to keep players in small markets under the current system. Hopefully, a new system would allow all teams to bid competitively for free agents. Losing a player to free agency should still provide a team with a compensatory draft pick based on the size of salary that the player signs for. Players re-signing with their existing team would be eligible for a league-issued "signing bonus" (10%) to be paid out of the Competitive Distribution Pool.

6. "Two-way plus" contracts. The guaranteed one-way contract should be eliminated. Instead, there should be the standard two-way contracts and there should be "2-way-plus" contracts where any player could be sent down where they would earn the NHL minimum while in the minors. Any player on a 2-way plus contract on or after a certain date in the season and is assigned to the minors (e.g. the trade deadline day) would automatically qualify for arbitration in the off season.

7. Six-year agreement (to carry past the 2010 Olympics) with league option to renew for 4 years (past the 2014 games). Player option to renew for 2 years.

8. Team goal-scoring bonus. I propose that 10 percent of all designated hockey revenues to be contributed to a pool to be shared by the teams (and distributed to the players and coaching staff) for goal scoring. For example, let's say that 10% of a $1B hockey revenues equals a total pool of $100 million. The team that leads the league in goal scoring gets 10% to share equally amongst all players and coaches ($10M). Teams 2-6 get a 7% share ($7M). Teams 6-15 get a 3.5% share ($3.5M). Teams 16-25 a 2% share ($2M) and the bottom 5 get squat. Games played for the team would pro-rate your share; thus, if a player was called up/sent down/traded, they would still get their piece of the pie.

9. A drop-dead date for player signings. Any player not signed by a certain date has to miss the entire season. They do this for European players and young prospects, you might as well do it for everyone. Missing a season would not count as a year of service in the league and would delay the age of restricted free agency. However, it would count towards the 4-year rookie ownership rights.

10. Implementing Shanny's recommendations. With two exceptions ... the proposed Competition Committee should include representation from us fans. Also ... forget the shootout. You might as well play tidily-winks. I have no problem with ties.

11. League-wide steroid testing.

12. A mechanism in place to have the Competition Committee recommend binding arbitration for future labour disputes "for the good of the game". After all, that is part of the reason why they are there. This recommendation would require two-thirds support from the committee.

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12-14-2004, 12:53 AM
  #2
SPARTAKUS*
 
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You get my vote.

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