Tuesday, November 13, 2012
Back to the lockout: Now, where were we?
By Pierre LeBrun
TORONTO -- And now we bring you back to your regular scheduled programming, "24/7: NHL Labor Hell."
The Hockey Hall of Fame induction weekend gave us a nice respite from the soul-sucking reality of what’s currently plaguing the NHL.
As we wait for bargaining to resume at some point between the NHL and NHL Players’ Association, it gives us a chance to sit back and ponder where things are.
Three key areas remain a road block to a deal right now:
1) The core economic issue. The league offered $211 million in guaranteed money last week in a revised "make-whole" provision, payable via one-year deferred payments (plus interest), money that would be outside the cap system in order to try to make players whole on existing contracts. The union feels the money isn’t enough (as one union source said, try $600 million instead). Instead, the NHLPA last week told the league it wants to guarantee that players on a whole don’t earn a dime less than the $1.883 billion in total salaries earned last season plus 1.75 percent in interest on top of that.
My take: On one hand, I’m on record as saying I believe it’s more than fair for players to want to protect existing contracts as much as possible, especially given the appearance of some owners of rushing to sign contracts this summer in the veiled hope of getting a shave off those deals in the form of escrow in the new CBA. Having said that, I’m not exactly sure how NHLPA executive director Donald Fehr expects to protect that $1.883 billion salary threshold in this new CBA. I mean, that figure alone is why the league -- which claims more than half its teams lost money last year -- triggered a lockout to begin with. The point of wanting the players to go down from 57 percent of hockey-related revenue down to 50 percent is to say that $1.883 billion out of $3.3 billion was too high for its industry. That’s not to say players won’t get back up to $1.883 billion or beyond as league revenues grow in the next several years, but to try to guarantee that right out of the gates, at least to me, just won’t cut it with these owners. To me, when push comes to shove here, if I’m the NHLPA I push the league for more money on "make whole" and cut my losses once I feel the league has gone as far as possible on that front. With each passing day, 50 percent of HRR becomes a smaller and smaller target as the business becomes more damaged.
2) Player contracting rights. This has become a much bigger issue over the last week than I would have ever predicted. My understanding all along in this process is that this was a bit of a red herring, in the sense that I always believed the NHL would stand down on some of its player contracting demands once the NHLPA signed off on the core economic issues, especially "make whole." And I still believe there is some level of flexibility in this area once/if the two sides agree on "make whole." But what we have here is the chicken and the egg. The league won’t move on its player contracting rights until it has "make whole" figured out, and the NHLPA doesn’t want to give an inch either on player contracting rights, feeling its willingness to go down to 50 percent of HRR at some point in the new deal is a large enough concession on its own. Several NHL players reached out to me via text messages over the last two days saying they are through-the-roof frustrated on this issue, feeling the league is giving them a take-it-or-leave-it option on their player contracting demands. Of course, that assertion frustrates the league, which says it wants the NHLPA to come back and counter in this area but instead says the union simply says it is not interested in any of it.
My take: If I’m the NHL, to try to get a deal done, I step down on wanting to move UFA eligibility to eight years' service or 28 years old (from the current seven/27), I step down on wanting to change the entry-level system or salary arbitration, and I give up on trying to limit terms on contracts to five years. The key areas I stick to my guns on if I’m the league: the 5 percent rule introduced in the Oct. 16 proposal, in which salaries from year to year can’t go up or down more than 5 percent (this rule essentially makes the five-year term limit needless because it foils any attempt at front-loaded/back-diving deals); the Wade Redden/stashing-players-in-the-AHL rule; the Roberto Luongo back-diving rule (even if a team trades a player, if he retires before end of his deal, the original team that signed him to that contract gets nailed with his cap hit even in retirement). To me, those are the three rules that matter the most to the league because they deal with cap circumvention and, frankly, I’m not sure why the players would even care much about any of those three.
3) The damage of the lockout. NHL deputy commissioner Bill Daly estimated the revenue losses at $720 million when November games were canceled, and that doesn’t include the carnage of the Winter Classic. And what remains unresolved -- and it becomes a bigger looming issue with each passing day -- is just how the NHL and NHLPA will agree to share in the pain of the damage caused by the lockout when it comes to adjusting the core economic language to a shortened season. No question the league will see this as a 50-50 proposition, since both sides in the league’s view are equally guilty of being unable to negotiate a new deal. But I suspect the NHLPA will make this an interesting issue by pointing out that it was the NHL that locked out the players and triggered this lockout. Fehr has set up the league for this moment by repeatedly suggesting since last June that the players would have been willing to play this season while CBA negotiations were ongoing. So yes, another hot potato in the offing, another hurdle to a deal.
Last week was not a total waste of time in New York City, the two sides getting closer on one key element to the deal: revenue sharing among teams. The league pushed its total money on revenue sharing to $220 million, up from $150 million in the last CBA, and while the NHLPA might still want to modify how the program is run, the money has the two sides in the same ballpark.
My take: As bleak as things look, one thing I learned after covering the last lockout in 2004-05 is that the breakthrough in talks can come completely out of nowhere with absolutely no apparent momentum leading up to it. Out of nowhere during a secret meeting between Bill Daly and Ted Saskin in Niagara Falls, N.Y., came the NHLPA’s acceptance of a salary cap, which for better or for worse was the first step in finally reaching an eventual deal seven years ago. I suspect the same will hold true here. That without any obvious hints or signs, the two sides will finally find a trigger on the core economic issues, which will provide a domino effect for the rest of the deal.
The question is, how long do we have to wait for that moment to come?
I still think there’s chance for hockey sometime in December. But don’t hold me to it.