CBA Analysis: Players placing too much of burden on wealthy teams helping poor teams in proposal

It became clear Tuesday that Union leader Don Fehr gets it. The NHLPA could have easily went rogue and played hard ball by proposing to abolish the hard salary cap system in place or the salary cap system altogether. That’s a fight the NHLPA would never win and Fehr clearly knows it.

Overall, the NHLPA proposed a smaller percentage of revenues for players and an expanded revenue sharing program putting the focus on wealthy teams to redistribute more of their revenue to help stabilize the market for struggling teams.

“We do believe that the proposal the players made today, once implemented, can produce a stable industry that can give us a chance to move beyond the recurring labour strife that has plagued the NHL the last two decades,” Fehr said on Tuesday.

The union projects the players are giving up as much as $465 million in revenue under this proposal, assuming the league continues to grow at an average rate for the next three seasons.

A strong focus of the proposal hits a core economic issue of turning hockey-related revenue into a fixed rate by proposing in the first year of the agreement, players salaries will rise 2 per cent, then to 4 per cent in the second year of the agreement and then to 6 per cent in the third year. The proposal also has a fourth year player option option that has the players receiving 57% of hockey related revenue, the current number they receive now.

As the Canadian press notes, “the belief from the NHLPA is that owners would be able to pocket more profits over the first three years of the deal, some of which could be dispersed to struggling franchises in an effort to strengthen the league overall”.

“When you boil it all down, what we’re suggesting is the players partner with the financially stronger owners to help stabilize the industry and assist the less financially strong ownership groups, ” Don Fehr said.

This is a proposal that was very creative by the NHLPA in an attempt to strengthen the league with some perks for rich teams and poor teams. Despite there being chatter that the NHLPA’s proposal is viewed as being much better than the league had expected, it, however, is a proposal that will still have the players getting paid handsomely as the cap projects to be just north of $78 million by year three under the players proposal, in addition to teams being able to go up to $4 million over the cap by adding or trading cap space. While the proposal calls for a slower growth in the salary cap, it still projects to rise to around $79 million in 2014-2015, a significant jump, while the players offered no changes to free agency or term limits.

This is a proposal that has it’s perks for rich teams as spending won’t be limited from where it is now, but it also has it’s downfalls for rich teams, with the players placing the burden on high revenue teams to redistributing a much greater amount of money to lower revenue teams through revenue sharing, similar to baseball’s structure.

The proposal creates a possible civil war between the rich teams and poor teams but this proposal doesn’t have the players giving up enough and placing too much of the burden on the rich teams to stabilize the poor teams in bad markets, which isn’t going to fly with wealthy teams like Toronto and the New York Rangers, among others.

Overall, I really like some aspects of the proposal, compared to the NHL’s proposal on July 13th that was just ridiculously one sided. The players deserve credit for at least coming up with a proposal that can be an actual starting point. Aspects of the proposal I like is a fixed rate for hockey related revenue, teams being able to trade for cap space, free agency still at 27 or seven accrued seasons and no term limits after NHL proposed a five year term limit. But, when analyzing deal from both sides, I see the players still not giving up much at all……. some small market owners becoming like baseball owners in the mold of Bob Nutting, playing by the rules, but in reality not putting the extra dollars received in revenue sharing to actual use to wanting to improve the club,……. and most importantly the proposal places too much burden on the wealthy teams to bail out the poor teams. That’s my biggest issue with the proposal and in the long run the best option to solve this problem is contraction, which the players will obviously never go for as jobs will be lost.

*The proposal calls for a three year agreement with a player option for a fourth year under the current system in place of players hockey related revenues at 57%.

*The salary cap would end up at $78.93 million in 2014-15, the third year of the agreement — Chris Johnston, Canadian press

*NHLPA propose 240 million in revenue sharing for the first year of proposal.

*Clubs could go up to $4 million over cap and drop to $4 million under floor by adding or trading cap space……NHLPA has also proposed extra draft picks for teams in financial trouble that could be used, traded or sold — New York Post

*In NHLPA proposal, the artificial slowing of salary growth by players will go as follows: year 1 will increase by 2%,year 2 by 4% and in year 3 by 6%. If Revenue growth exceeds 10%, anything over 10% is subject to 57% that exists under present system — Aaron Ward, TSN

*Proposal eliminates current restrictions on teams like New York Islanders and Anaheim Ducks (market size). Also eliminates reduced payment for teams that do not grow their own revenues at the league average. (That really hurt Columbus, for example.)…….Once money is placed in pool, both NHL and NHLPA would distribute to teams based on need — Elliotte Friedman, CBC