Front-loading the CBA

Cam Charron
September 12 2012 08:01AM

From Michael Grange's Monday column:

If the owners promised to pay the players the dollar value of the contracts they've signed them to and let the player's share of HRR shrink over time, the players would very likely sign up Wednesday afternoon. If the players were willing to let their share of HRR diminish to 50 per cent or so sooner rather than later, the owners might go for it, but the players are still trying to win battles they lost seven years ago.

This is an extremely interesting thought. I'm going to work this post under two assumptions:

  1. The NHLPA does not want salaries to be rolled back
  2. The NHL wants to control costs in the future

Right now, the NHL has apparently offered 46 per cent of hockey related revenues to the Players', a significant concession from their original offer of 43 per cent, but not enough to bridge the gap with what the NHLPA wants. Gary Bettman blinked first, so the likely midpoint that the owners are probably willing to concede HRR is probably higher than 50 per cent in general.

Let's work with Grange's proposal here, because I quite like it. In essence, it does for Players' what a long-term, front-loaded contract does for an individual. The difference is that Danny Briere's contract, say, when it was signed in 2007, wasn't tied to the salary cap. Briere will be paid out, in event of a full season with no rollback, $7-million in the 2012-13 season, but that hasn't gone up as revenues have increased.

With an estimated increase of 7 per cent of salaries per season, the Players' average salary jumps from $2.4M to approximately $3.2M over seven seasons. With the same generous revenue increase, even if the Players' share was to be reduced to the NHL's 46 per cent, Players' salaries increase from $2.4M to $2.9M, a similar increase from the $1.8M the average player made in 2004 to the $2.4M they're making today.

Here's the 57 per cent to 50 per cent proposal:

And the 46 per cent:

But this is a generous revenue increase, and the proposal only works for Players' if revenue continues to jump. Since part of what happened last time was an increase in the Canadian dollar, you can't think that revenues will continue to grow at the same rate.

I see no reason why Donald Fehr wouldn't want to take a decrease in overall HRR percentage if it came alongside a promise that the league's revenues would grow at a similar rate. If HRR went down to just 50 per cent, say, revenue would need to grow at 5 per cent a year for the player's to see their expected increase in salary. Everybody wants raises.

That's where "partnership" comes into play. In a previous post here, I discussed how teams like Phoenix and Anaheim and other low-market, generally Southern United States teams that collect revenue sharing actually help the big-market clubs profit because they artificially keep player costs low. A team in Markham doesn't necessarily benefit the Toronto Maple Leafs, since all that would mean is the Leafs' have to pay more for players since Markham would bring in indisputably more revenue than the Coyotes, 57 per cent of which is distributed to the players.

The NHL as a whole, particularly the big-market owners, can't be restrictive in wanting to prevent the game from both a) growing and the league from b) succeeding, but I think that's precisely what the 30-team NHL accomplishes. Expansion has generated interest in non-traditional markets and amateur players in Carolina, Nashville and Southern California are on the verge of becoming stars. That's good for us as consumers.

It just doesn't help the current players. While the players who are actually in Phoenix may enjoy playing there, but let's assume the Coyotes played in Markham last season, and instead of bringing in $52M in revenue, they brought in $152M. That's an additional $73K into the pockets of each player on the 29 other teams.

The problem I have with the way the NHL is doing things is it wants a similar ending as last time: A single wage cut, and then watch salaries go un-checked for seven years. There's no real plan in there to make the game better, just a way to slice the salaries now and offer no future checks.

Of course, that leads to our next problem. But the time the revenue is split at 50-50, a new generation of players have come in who are woefully underpaid. The free market dictates that players are currently worth well more than they're being paid right now, hence the need for the salary cap to control costs. If only a system like European football were remotely feasible in North America, we a) would never be in this mess and b) the Toronto Maple Leafs could out-spend the world.

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Cam Charron is a BC hockey fan that writes about hockey on many different websites including this one.
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