NHL Morning Coffee Headlines – November 20, 2020
The fallout from the league’s request to the players for increased escrow and salary deferral rates in today’s NHL morning coffee headlines.
THE ATHLETIC: Pierre LeBrun reports return-to-play talks between the NHL and NHLPA have reached a delicate stage following the league’s request for increased escrow rates over the final three seasons of the recent CBA extension and increased salary deferral for 2020-21.
Staging the season would keep the NHL’s brand alive. The league’s requests are essentially because NHL owners are hurting, perhaps more than they thought they would, especially facing reduced revenue because of fewer games and empty or near-empty arenas.
Hockey-related revenue is divided 50-50 between the owners and the players. If the players receive more than 50 percent in 2020-21, they’ll have to pay back that overage at some point.
LeBrun notes the league isn’t asking to prorate players’ salaries for 2020-21. Proration would mean money taken from the players they would never see again, whereas deferral means they would receive it at a later date.
Nevertheless, the NHLPA wasn’t happy with the league’s requests coming only four months after an agreement was reached on a CBA extension that took revenue losses into account. They feel the league would reject any PA request for adjustments to the extension if the roles were reversed.
LeBrun believes the NHL and NHLPA can reach an agreement here. He suspects the PA will agree to tweak some of the salary deferrals but not at the league’s requested rate, provided the players get something in return.
SPORTSNET: Elliotte Friedman reports sources claim the league made two requests. The first was for increased salary deferral to 20 percent and escrow to 25 percent for 2020-21. The second was for deferred compensation for 2021-22 to be raised to 26 percent, with escrow rates increased from six percent to between 8.5 – 9 percent for the final three years of the CBA extension.
There were several problems with this for the PA. Some members wondered why the agreement is being changed so soon. Some pointed out they’ve had to live with deals they didn’t like in the past. Some point out if they agree to this, it could happen again.
Part of what’s behind the players’ anger is some of them recently signed contracts that were structured to take advantage of lower escrow over the final years of the CBA.
Like LeBrun, Friedman believes the two sides can reach an agreement as both sides are keen to play as soon as possible. However, the league’s requests knocked negotiations off-course. He also suggested the players seek an expanded playoff format in exchange for accepting alterations to the agreement as it would increase revenues.
THE HOCKEY NEWS: Ken Campbell points out how the league’s proposals would affect player salaries. A player earning $1 million would see his gross pay reduced to $720K under the current agreement. The league’s recent requests would reduce his pay to $592K. That’s before deductions such as taxes and agent fees.
One player agent said the league is offering no concessions to the players. “They get to play,” he said, “That’ll be the give-back.”
Campbell acknowledged the owners are being affected by the pandemic in terms of hockey revenue and other areas of their business. However, they’re getting $650 million in expansion money, none of which goes to the players. They can also borrow money at historically low interest rates to get them through this period. They could also see revenue significantly improve once a vaccine is developed and fans return to the games. The players, on the other hand, lose money now that they probably won’t get back.
If the players refuse to budge, one player agent suggested to Campbell that the owners could trigger Section 17 of the standard player contract that would allow the league to adjust salary based on situations beyond the league’s contract. However, that could trigger a lawsuit.
Campbell also feels this could eventually be resolved, but it could erode whatever goodwill existed between the owners and players that led to the current CBA extension.
ESPN.COM: Emily Kaplan and Greg Wyshynski report when the CBA extension was negotiated, both sides presented best, moderate and worst-case financial outlook scenarios, with the worst case being a full season without fans. The extension was negotiated during the pandemic based on those scenarios. One NHLPA member said the league will have to have to come up with something good as a giveback for the players to accept its recent proposals.
Sources say daily discussions are ongoing between NHL commissioner Gary Bettman and NHLPA executive director Donald Fehr. If the season is to start on Jan.1, teams will need two weeks of training camp leading up to that, with last season’s seven non-playoff clubs promised an additional week.
Players on Canadian teams returning to their clubs require a 14-day quarantine period. The league and PA are in discussions with local and provincial health authorities to see if accommodations can be made, such as having players serve their quarantine while also training.
SPECTOR’S NOTE: I understand the league’s side given the course of this pandemic and its effects upon hockey-related revenue. It’s the way they’ve gone about it, however, that raised hackles among the players. Based on these reports, I believe the players’ reaction is justified.
The league agreed to the extension knowing full well what the worst-case scenario could be. The owners knew what they were getting into here.
So did the players. They agreed to a higher fixed rate of escrow over the first three years of the extension with the promise of a lower rate over the final three years when revenue is expected to improve. That’s money they won’t ever get back. They also agreed to defer part of their salary for next season at a set rate.
Years of playing hardball with the PA are coming back to haunt the league. The players have steadily given back over the past 15 years, as their share of HRR dropped from 74 percent in 2004 to 57 percent following a season-killing lockout, to 50 percent following the 2012-13 lockout. They accepted another reduction under the recent extension with a high escrow rate for this season.
Now, with the ink barely dry on the CBA extension, one that took into account the worst-case scenario, they’re being asked for another giveback without anything in return other than they get to play in 2021. Getting the players to agree to that requires a significant sweetener beyond being able to go to work in a shortened schedule for less money.
Because the players can receive no more than 50 percent of HRR, they must eventually offset any overage for the upcoming season. That’s something that could have been discussed between the two sides after the 2020-21 season is completed when the full amount of the overage has been determined. If the league remains insistent on tweaking those rates now, the owners must come up with a substantial give-back to the players as an enticement.