Wednesday, July 13, 2005
Key terms of NHL agreement
The NHL and the players' association announced Wednesday they have reached an agreement in principle on the terms of a new Collective Bargaining Agreement. Details were not released, pending the formal ratification process by NHLPA members and the NHL board of governors.
However, in his Insider Weblog, ESPN The Magazine's E.J. Hradek -- with the help of key sources on both sides of the table -- offered a look at some of the expected terms:
Term: Six years.
Salary rollback: All remaining contracts will be rolled back 24 percent. The rollback will also impact players who must be given qualifying offers for new deals. Those qualifying offers will be based on a player's salary in his last contracted year, minus the 24 percent rollback.
2004-05 contracts: Those contracts will simply disappear from the ledger. Players, however, will be credited with a "year of service." Years of service can determine a player's free-agent status.
Salary cap: Each team must meet a minimum, but not exceed a maximum payroll number. For the 2005-06 season, the high-end threshold will be approximately $37 million to $39.5 million. The low-end threshold will be between $22 million and $24.5 million.
The numbers are based on the league's projection of revenue for the 2005-06 season. The projection is approximately $1.7 billion to $1.8 billion. According to the league, total revenues for the last complete season (2003-04) were $2.1 billion.
If revenues increase, the salary cap thresholds will increase on a season-by-season basis. If revenues decrease, the salary cap thresholds will decrease on a season-by-season basis.
Buyouts: Teams will be allowed a window of time to buy out player contracts. A player can be bought out for two-thirds of the total remaining value of his contract (after the 24 percent rollback). A team will not be allowed to re-sign a player they have bought out for a specified period of time (which has not been disclosed yet, but is expected to be one year). The money spent to buy out a player will not count against the salary cap.
Escrow: A percentage of players' salaries will be placed in an escrow account. In the new deal, league-wide payroll can't exceed 54 percent of total league-wide revenue. If league-wide payroll is determined to be more than 54 percent of revenues, the money in escrow will be passed back to the clubs. If league-wide payroll is determined to be less than 54 percent of revenues, the money will go to the players.
Individual team-by-team player caps: No single player can earn more than 20 percent of his team's total payroll. For example, a team with a payroll of $37.5 million couldn't pay a single player more than $7.5 million.
Revenue sharing: The top 10 revenue clubs will contribute to a pool that will be redistributed to the bottom 10 revenue clubs. The NHLPA proposed a similar revenue sharing component in 1994 during the league's first lockout.
Unrestricted free agency: It will remain frozen at age 31 for the first year of the new CBA. It will gradually decrease to age 27 during the life of the deal.
Salary arbitration: The club and the player will both have the ability to elect to go to arbitration. Although not confirmed, I believe the NHL will go to a baseball-style arbitration system that calls for both sides to submit a salary figure and an arbitrator to decide on one number or the other. There will be a limit on the number of times a team or player can go to arbitration. The clubs will have a limited number of times they can walk away from an arbitrator's decision. Under the old system, teams could not take players to arbitration.
Qualifying offers: Players making less than $660,000 must be tendered qualifying offers of 110 percent of their final contracted season's salary. Players making between $660,000.01 and $1 million must be tendered qualifying offers of 105 percent of their final contracted season's salary. Players making over $1 million must be tendered qualifying offers of 100 percent of their final contracted season's salary.
Entry-level contracts: Entry-level contracts will be capped at $850,000 per season, with a maximum signing bonus at 10 percent of salary per season. The contracts will be three years in length.
Minimum salary: The minimum salary will be $400,000. Under the old agreement, the league minimum was $175,000.
2006 Winter Olympics: The NHL will shut down operations in February 2006 to allow players to participate in the Winter Olympics. To accommodate the scheduling issues, the league will cancel its 2005-06 All-Star Weekend (scheduled for Phoenix).