NHL Morning Coffee Headlines – November 19, 2020
The players aren’t receptive to changing salary deferral or escrow rates, plus the latest on Pierre-Luc Dubois, Olli Juolevi and more in today’s NHL morning coffee headlines.
LATEST RETURN-TO-PLAY NEWS
TSN: Pierre LeBrun reports the NHL Players Association isn’t keen on changing salary deferral and escrow rates agreed upon in the extension to the collective bargaining agreement. This emerged from yesterday’s PA board meeting. No vote was taken on the subject as part of the discussion.
LeBrun said this is a timing issue for the NHL. Players are entitled to 50 percent of hockey-related revenue. The more they take this year, the more they’ll owe in debt payments in later years. However, the PA took that into account when it agreed to the CBA extension.
SPORTSNET: Elliotte Friedman reports the league asked for an additional salary deferment and for the players to consider raising the escrow rate. Under the memorandum of understanding, escrow is capped at 20 percent for 2020-21, with the rate dropping to six percent for each of the final three years of the agreement. The league reportedly requested to increase that rate to 8 or 9 percent. The players believe the league now seeks an additional $300 million in savings.
The requests indicate the league has concerns over revenue shortfalls exceeding previous projections. Without fan attendance, the 50/50 revenue split tilts in the players’ favor. He wonders how the shortfall will be made up and under what mechanism if the escrow rate is too low.
Friedman doesn’t believe this will derail the return-to-play plans as both sides are keen to return to the ice. Nevertheless, the league’s request didn’t sit well with the players.
NEW YORK POST: Larry Brooks reports the league sought an additional 13 to 16 percent in salary deferral on top of the 10 percent already agreed to under the MOU, as well as raising the escrow rate on those final three years to as much as 9.5 percent. Brooks claimed the league’s requests “annoyed, if not angered, the union membership participating in the call.”
The NHL’s requests, however, weren’t delivered in the form of an ultimatum. Brooks said the PA will likely identify issues, “perhaps systemic issues,” that it would like reopening in a renegotiation.
Brooks also reported a preliminary 60-game schedule was delivered to the NHL and NHLPA within the last 48 hours. He also cited sources claiming the CBA discussions aren’t expected to derail ongoing discussions for the tentative Jan. 1 start date.
TORONTO SUN: Lance Hornby reported more than 100 members of the PA took part in yesterday’s call, including its executive, return-to-play committee, team reps and some rank-and-file members. They feel they made significant long-range financial sacrifices and consenting to spend weeks in the 2020 playoff bubble away from their families.
SPECTOR’S NOTE: The players are within their right to reject those requests after making substantial concessions in the recent CBA extension. Still, the league is also justified in its concern over higher-than-expected revenue shortfalls.
The MOU was agreed to at a time when it was hoped the pandemic would recede, allowing the NHL to stage its 2020-21 schedule with a full schedule and fans in the stands. However, that’s not going to happen while the second wave of the pandemic rages across the United States while COVID rates rise at alarming levels in the provinces where the Canadian teams reside.
PuckPedia indicates one problem with salary deferral is there are 26 players whose salaries cannot be deferred because of the large signing bonuses in their contracts. They include Toronto Maple Leafs forwards Auston Matthews, Mitch Marner and John Tavares, Edmonton Oilers center Connor McDavid, New York Rangers winger Artemi Panarin and Montreal Canadiens goaltender Carey Price.
The hockey-related revenue issue remains a significant sticking point even if it isn’t currently jeopardizing the return-to-play discussions. The two sides don’t have much time to work this out if they hope to meet their timeline to open the season on New Year’s Day. It’ll be interesting to see what transpires between now and the end of November.
IN OTHER NHL NEWS…
NHL.COM: Columbus Blue Jackets general manager Jarmo Kekalainen remains confident his club will re-sign Pierre-Luc Dubois before training camp opens for the 2020-21 season. The 22-year-old center is a restricted free agent completing his entry-level contract.
SPORTSNET: Olli Juolevi is finally healthy after several injuries delayed his transition to the Vancouver Canucks. The 22-year-old defenseman was the sixth-overall pick in the 2016 NHL Draft.
OTTAWA SUN: Senators prospect Tim Stuetzle was named to Team Germany for the 2021 World Junior Championships.
TSN: Senators prospect Ridly Greig tested positive for COVID-19 on Nov. 8. He’s asymptomatic and self-isolating at home. He hopes to join Canada’s world junior selection training camp on Nov. 22 when his 14-day quarantine period is over.
THE SCORE: Speaking of the 2020 WJC, Canada’s deputy chief of public health is optimistic about the proposed health and safety protocols for staging the tournament in Edmonton. “I think the proposals and what’s been put forward to us at the present time look very promising. It looks very good,” said Dr. Howard Njoo. The WJC will be held under quarantine bubble conditions similar to those of the NHL during its 2020 Stanley Cup playoffs.
CBC.CA: Former NHL star Rick Vaive recently released his biography titled “Catch 22: My Battles in Life and Hockey.” He details his feuds with former Toronto Maple Leafs owner Harold Ballard and former Hockey Night in Canada commentator Don Cherry, as well as his struggles with alcohol addiction.
Hi Lyle
Re HRR and 50/50 split …. what happens if Revs down by more than 20 % (can’t possibly see how the are not going to be well below that)….. do players have to pay back the shortfall? Or is the escrow (currently at 20%) the max financial impact to players? Deferral is still owed; just later.
60 games is max IMHO; and highly likely zero (or extremely few) fans in stands to start; and I can’t see even near end of season…. full capacity seating
Even if they had bigger numbers near the end … the season average of fans in seats won’t be close to 50% capacity, already on (at best 60/82) about 75% number of gates… logic has total HRR probably down at least 40%…. but escrow only 20%??
TSN had previously talked about the CBA pro-ration clause (sort of an “act of God” type of clause allowing for pro-ration of Sals due to shortened season for circumstances out of the control of either side).
I’m assuming that NHL would be arguing that season MUST be shortened due to COVID ; but players would argue that COVID could delay it but not necessarily mandate it to be shortened… have I understood that correctly?
Thanks in advance
According to the NY Post’s Larry Brooks, there is no “proration clause”. The MOU for the CBA extension rules out prorating for the season. It states discussions can continue regarding the possibility of allowing players and clubs to negotiate additional deferrals on a case-by-case basis.
https://nypost.com/2020/11/17/nhl-already-wants-more-financial-concessions-from-players/
To the best of my knowledge, escrow is the only way approved in the CBA to address shortfalls. However, they’re capped at 20 percent for 2020-21, between 14 and 18 percent for 2021-22, 10 percent for 2022-23, dropping to six percent for the final three seasons.
https://media.nhl.com/site/asset/public/ext/NHLPA_NHL_MOU.pdf
Thanks Lyle
I did see Brooks column on this which was contrary to what was said by TSN this summer
I may be using the wrong term when referring to the “pro-ration” clause; but during playoffs the panel talked about the possibility of (with an uptick in Covid…. which was expected and which we are seeing now) a shortened 20/21 season and that there WAS a clause in the new CBA that allowed for “alterations” to Sals (and therefore Cap) due to shortened seasons caused by external forces (Covid? War? Natural disasters) outside if the control of either party
If there is no such clause ; OR if it can’t be activated; AND there is no CBA allowance for a “new” negotiation on Escrow; AND if players can’t be billed post season for shared losses greater than set escrow…. then owners are going to be hit disproportionately harder in the expected substantial drop in HRR
I can’t possibly fathom anything near Revs of 70% (likely less than 60% ) if the 18/19 mark
Quick math of Cap at 81.5 * 31 * 2…. that’s an assumption of HRR just North of $5B
I think $3.5 B or less for 20/21 is not out of the question
If escrow caps at 80% …. that’s Players taking $2M of the potential $3.5 M….
That’s players taking a 20% hit ; owners 40% ($1M /$2.5 M)
Again …. high level math ; and loaded assumptions; but regardless ….. if players losses capped at escrow 20% …. then owners will for sure have substantially higher percentages in share of losses
Teams like Coyotes musg be hoping and praying for full cancelation of 20/21 season to limit their losses to fixed costs (admin; rent; mgt sals; etc)
Hi Pengy, as i don’t usually get into the financial part of The NHL CBA.
As all budget they have projections and if HRR is 50/50 well then the players get 50% of whatever the actual revenue are.
I believe the NHL would be ecstatic if they were only down 20%. I don’t see how it won’t be less then 50% or more.
With that projection of loss revenue and when the losses are finally realized, how is the shortfall captured?
The loss is immediate for the league, the players salaries are they paid with HRR in mind? meaning paid in advance of actual revenue received? which I’m believe it is, otherwise you wouldn’t need an escrow.
Lastly if the HRR revenue has a larger loss then the budgeted loss, won’t the players have to pay back , if they received 75% of the HRR; meaning the NHL has a shortfall of a 25% that the players must pay back?
Hi Caper
That’s exactly what I was querying ; but from Lyle’s answer; it appears that losses > 20% are in owners
That’s why I’m sure they are trying to pro-rate
We’ll see n next two weeks I guess
I know first hand what this is like as I paid Sals in spring with basically close to zero revs coming in
I think the players will meet them in the middle somewhere.
The players have most of the leverage as the owners really do not want to cancel this season. I don’t pretend to know what their TV deals look like and what it means if they don’t play, but they expire soon and do you really want to go black leading up to that opportunity? Do you want to go black ever? Folks and businesses may just decide they can do without season tix. Especially these days.
The players share revenue and have come out of this deal ahead from where I think revenue is headed for next season and longer term to Caper & Pengy’s point(s).
I have to question the thought process of owners that they thought the pandemic would recede in time to have a full season 20/21 with fans in the stadiums. What were these guys watching? Not the same news I watch & read. Haven’t we known this for a long time regarding when a vaccine would be available? We are seeing the best case scenario actually happening on that front.
Agree Ray
Even the most optimistic of scientific prognostications had a surge and vaccine dates that would (and have) put HRR projections well below 80% (hence 20 % escrow)
They just wouldn’t listen to Captain Obvious
Maybe I’m just a bitter business owner sulking in paying Sals this Spring when basically zero revs were coming in
Don’t blame you Pengy, it would frustrate me as well. Did your staff have access to CERB? Even to absorb a portion so you didn’t have to fit the whole bill?
I am fortunate to be in an industry that is essential and it has had no impact. We are actually ahead of forecasted/budgeted growth.
We need to get a handle on this thing again, economy won’t get better until we do.
Hi Ray
I didn’t end up laying anybody off
Some could have done the CERB route if I had
Was a very tough (and expensive ) call ; but things are up again now with small/medium firms being acquired/merged/divested so Revs back up
The year will be down but nowhere near my fears of projected losses from the spring
There unfortunately will not be any Christmas bonuses…. they are all aware of that…. I made it clear in the spring
Ahhh …. should have sold to my exec team last year 🤪
Retirement then at 58…. now 70???? 😭
Hmmm smells like a lock out to me. Owners are looking like they will be taking a bath no matter what and if the players can’t get that or don’t care (which they have every right to feel) as an owner, if you’re gonna be losing money well maybe players will understand after they don’t get paid because of the cancelled season. Everyone wins!
Lockout? There is an existing collective agreement in place. On what basis would a lockout occur?
And how do players win after making concessions – once again – to attain that collective agreement? The only lesson the players would learn is that the owners and Bettman cannot be trusted in any circumstance. Hardly a recipe for a viable league.
Hi Ron and LJ
I’m sure a few owners (Arz for sure) are sweating it out for sure; and hoping and praying for the season to be canceled to limit their expected gargantuan losses
I’m on board with Ray…. some movement by either side
On a happier note, in case you all haven’t seen this from Dach at the WJC camp.
https://www.youtube.com/watch?v=amuhuKc2EUo
High confidence move, to say the least. Sneaky good. He reminds me of Eric Daze.
# 1 son showed me … a beauty
Hoping for NHL start well past mid Jan; AND Gorton allowing Laffrenierre to join team Can
Dach/Laf on same line ….. forgeddabowdid !
Byfield and Cozens also as C’s.
Going to be a good tourney tourney this year with many NHL quality guys playing.
The Rangers might let Laf play regardless?