Friday afternoon the National Hockey League’s PR department released a statement on behalf of League Commissioner Gary Bettman indicating the NHL is not utilizing an early termination clause in their current Collective Bargaining Agreement (CBA) with the National Hockey League Players’ Association (NHLPA).
In short, though the league has concerns of their own, it is ultimately beneficial “to operate under the terms of the current CBA– while working with the [NHLPA] to address our respective concerns…” the statement read in part, adding that the “[benefits] far outweigh the disruptive consequences of terminating [the CBA] following the upcoming season.”
Bettman’s statement read in full,
“Based on the current state of the game and the business of the game, the NHL believes it is essential to continue building upon the momentum we have created with our Players and, therefore, will not exercise its option to reopen the CBA.
“Rather, we are prepared to have the current CBA remain in effect for its full term– three more seasons through the conclusion of the 2021-22 season. It is our hope that a continued, sustained period of labor peace will enable us to further grow the game and benefit all constituent groups: NHL Players, Clubs, our business partners and, most important, our fans.
“In any CBA, the parties can always identify issues they are unhappy with and would like to see changed. This is certainly true from the League’s standpoint. However, our analysis makes clear that the benefits of continuing to operate under the terms of the current CBA– while working with the Players’ Association to address our respective concerns– far outweigh the disruptive consequences of terminating it following the upcoming season.”
The two sides have been meeting regularly throughout the offseason to discuss a possible extension of the current CBA and talks have been “productive and cordial” as noted by both sides in the NHL’s press release.
While the NHL would certainly like to see a larger cut of the revenue from all streams (what owner wouldn’t?), the league would also like to push forward with further cementing its image as a global brand.
A couple hours before Bettman’s statement was released, the NHLPA made it known in a media release of their own that the NHL had informed them the league would not be using its opt-out to terminate the current CBA next year.
The union has until Sept. 15th to reopen the current CBA, giving both sides a year to negotiate an agreement (either a new CBA or an extension on the current CBA) before it expires.
For those that are dying to know, the earliest possible date of a work stoppage would be the 2020-21 season.
But there’s reason to believe there won’t be any such interruption in the business and game fans enjoy.
Yes, the NHLPA would like to rework the current frameworks surrounding escrow, Olympic participation (specifically in the upcoming 2022 Winter Games) and the overall split of hockey-related revenue.
Those things have been long-known since (in order) escrow was introduced in the last decade, the players weren’t able to participate in the 2018 Winter Games and, finally, forever.
Both sides are wanting more international competition and are communicating about the possibility to hold another World Cup of Hockey as early as February 2021, following the cancellation of the 2020 World Cup of Hockey announced back in January.
Some players are worried the salary cap is inflating too fast and isn’t sustainable given current revenues.
However, there’s two reasonable methods of dealing with this and one additional method both sides would’ve done in the past (*ahem* work stoppage).
First, under the current escrow stipulations, a small percentage of players salaries is withheld by the league in a trust setup to account for “unexpected” expenses, such that, if the league revenue isn’t as much as owners had hoped, then the money in the trust goes back to boost the owners wallets.
It’s not terrible– in concept– however, the current escrow situation for the league and players is that the percentage fluctuates from year-to-year, let alone financial quarter-to-quarter.
As such, players can miss out on a variable amount of salary, because the league can (and will) sometimes fudge the numbers in revenue growth to show that the league needs the money more and can therefore boost the salary cap the following season.
It’s a way of dangling bait in the water for the larger fish (pending-UFAs) to potentially make more on their next contract in total salary, cap hit, etc., but they might not actually make that much since the escrow exists.
In other words, $10.000 million cap hits can be handed out like candy under the current rules because owners know they won’t actually end up shelling out $10.000 million a year to their best player(s).
It’s the union’s interest to benefit not just the top-end players, but all players– as they’re all union members (see, that’s how unions work).
The salary cap was $79.500 million in 2018-19– up $4.500 million from 2017-18– but only raised to $81.500 million for the 2018-19 season.
While general managers continue to handout bad contracts on July 1st as they always do, the intent is worth more than the bad asset management that may or may not have played out for your favorite team this summer.
A lower raise in the salary cap means that there might be a lower escrow withheld from player’s salaries, which means everyone makes more money.
Owners don’t have to spend to the (would be more expensive) ceiling and the lower limit doesn’t go up as much as a league-wide mandatory minimum payment (*ahem* Eugene), while players take home more of what they were signed for.
If both sides continue to keep escrow low and barely raise the salary cap from year-to-year under the current CBA, then both sides just might be happier in the long-run.
Then there’s the second option, which is really just an extension of the first option, but with the mutual understanding of what’s down the road.
The current United States national broadcasting rights deal with NBC Universal expires at the end of the 2021-22 season– coinciding with the current CBA’s expiration date (as long as the NHLPA doesn’t enact their early termination clause).
Not that all parties involved have to wait until the last minute on everything, but if escrow is lowered and the salary cap isn’t increased as much from season-to-season for the next three seasons, then by the next US broadcasting rights contract, everyone will make out a winner.
The current deal brought in $2 billion ($200 million per season) between NBC and NBCSN in the United States and CBC/Sportsnet in Canada.
Most major professional North American sports leagues are now seeing at least double that total amount for the same timeframe– meaning it’s quite possible the NHL will add close to a billion, if not at least a billion, dollars per season to the league’s total revenue.
Even if the NHLPA gave up a percentage of their current revenue split with the league, just about any percentage out of a billion US dollars per season is worth more than the current percentage out of $200 million per season.
If both sides can keep escrow low, keep the cap from inflating too much and wait three seasons, then it’s a surefire cash cow as the demand for sports on major networks increases in the States.
But wait, what about streaming?
It’s true– streaming live sports is a growing industry and that can all be attached or sold separately by the league in the next media package.
Speaking of which, it might be time to return to two major US networks in favor of even bigger gains…
Regardless, both the NHL and the NHLPA are in much better shape than the last couple of CBA negotiations.
This time around– provided everyone is patient and actually understands the reasoning behind the careful decision making– it’s really a no brainer.
There’s nothing to see here, folks. Move along.
Of note, the NHLPA’s executive board is scheduled to meet in Chicago on Wednesday. There’s been a work stoppage prior to the ratifying of the past three CBAs, yielding a 48-game season in 1994-95, the cancellation of the entire 2004-05 season and 48-game season in 2012-13.
But the league isn’t falling on economically hard times in nearly half of its franchises (like in the 1990s), the salary cap was created (and a necessity) out of the 2004-05 lockout and the initial “growing pains” of the salary cap era seem to have sorted themselves out since 2012.
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