NHL Might Have To Bend In Stalemate With Players
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.
Updates on the Return-to-Play plan and CBA extension, the Devils officially announced Lindy Ruff as their new head coach and more in today’s NHL morning coffee headlines.
RETURN-TO-PLAY PLAN & CBA EXTENSION UPDATES
TSN: Bob McKenzie reports the return-to-play plan and CBA extension could be ratified by Friday night. The results of the NHLPA membership vote will be completed by 6 pm ET while the NHL Board of Governors will hold a conference call at 4 PM ET.
SPECTOR’S NOTE: The BoG call is expected to be a rubber stamp. Despite several recent reports of player unhappiness leading up to this week, media consensus is the PA membership is expected to vote its approval.
McKenzie wonders if there will be a big spike in positive COVID-19 tests as Phase 3 commences Monday with mandatory training camps at NHL facilities.
SPECTOR’S NOTE: I’ve repeatedly said Phase 3 will determine if Phase 4 (the playoff tournament) takes place. McKenzie points out the league has a fighting chance to pull this off once the teams are quarantined in Edmonton and Toronto. Getting to that point, however, could be a challenge.
During Phase 4, the Eastern Conference clubs will be housed at Hotel X on the CNE grounds and the Royal York in downtown Toronto. In Edmonton, the Western Conference teams will be housed at the JW Marriott alongside the arena and the Sutton Place hotel downtown.
The playoff games are slated for 12, 4, and 8 pm local time daily, but McKenzie indicates the Edmonton schedule could be tweaked more depending on the needs of broadcasters.
Some teams are leaning toward bringing three goalies to the tournament but more are considering bringing four. They’re also mulling whether to bring 31 players or reduced those numbers to allow for an extra staff member or two.
DEVILS HIRE RUFF AS HEAD COACH, MAKE FITZGERALD THEIR FULL-TIME GM
NJ.COM: The New Jersey Devils made it official yesterday, announcing Lindy Ruff will become their new head coach starting next season and removed the interim tag from general manager Tom Fitzgerald’s title.
SPECTOR’S NOTE: Ruff is known for his defensive systems, but those expecting a boring trapping style could be in for a surprise. “We played a super-fast possession type of game, which is the same type of game I’d like to bring to this Devils team with a lot of puck pressure using the skills we have to own the puck,” he told NJ.com. “And I want a team that can dominate with speed and possession, but at the same time knowing that defending is a passion that we’re going to have.”
The latest on the Golden Knights and Flames, plus some speculation over how the players and teams could cope with revenue losses in today’s NHL rumor mill.
WHAT WILL THE GOLDEN KNIGHTS DO WITH LEHNER?
THE ATHLETIC: What to do with Robin Lehner was among Jesse Granger’s five pressing questions for the Vegas Golden Knights. They acquired the 28-year-old goaltender from the Chicago Blackhawks at the February trade deadline. He’s eligible for unrestricted free agent status at season’s end.
Granger wonders if the front office views Lehner as a rental or a long-term future in net. If Lehner outperforms starter Marc-Andre Fleury during the 2020 playoffs, it raises the possibility of re-signing him and shopping Fleury, who has two seasons remaining on his contract at $7 million annually.
Lehner will likely depart via free agency, leaving the Golden Knights with an aging Fleury and no real backup plan for next season. They could explore cheaper backup options via free agency or promote Oscar Dansk or Garret Sparks.
SPECTOR’S NOTE: If Lehner were to backstop the Golden Knights into the Stanley Cup Final, moving Fleury could become a serious possibility. After being spurned by the Blackhawks and the New York Islanders over the past year, Lehner will seek the stability of a lucrative long-term deal. He can justifiably claim he’s earned it since turning his life and career around two years ago.
Fleury’s situation is complicated by his age (35) and his 10-team no-trade clause. Even if the Golden Knights wanted to move him, they might not find many takers unless the Golden Knights pick up part of his salary.
FLAMES COULD FACE AN UNCERTAIN FUTURE IN GOAL
SPORTSNET: Eric Francis recently examined the Calgary Flames’ goaltending depth. Where their goalie prospects slot next season will depend on whether or not they re-sign Cam Talbot. The 32-year-old netminder is due to become a UFA after this season.
Talbot’s return seems likely following his return to form this season while David Rittich struggled during the second half. However, his bounce-back season could also entice him to test the free-agent market.
“Will it be status quo, or will the Flames use some of their cap space to chase a significant free agent like Robin Lehner or Jacob Markstrom?”
SPECTOR’S NOTE: If Talbot walks, the Flames will at least want a reliable backup for Rittich for next season. If they’ve lost confidence in Rittich as a starter, they could pursue a UFA like Lehner or Markstrom.
HOW WILL THE NHL AND NHLPA ADDRESS THIS SEASON’S LOST REVENUE?
SPORTSNET: In his latest “31 Thoughts” column, Elliotte Friedman reported estimates of up to $220 million in lost revenue if the NHL resumes the remainder of the 2019-20 schedule, including an extra four percent of escrow claw-backs from players’ salaries. If the season and playoffs are canceled, the losses are estimated at $1.1 billion and 35 percent escrow.
The teams and players agree to defer money could be one way to address the issue. “For example, a player with a five-year contract at a $5-million AAV would still have that term and cap hit, but could agree to hold some of the payments,” writes Friedman. “Teams would get a break on cash flow, and players could save until escrow was lowered. Don’t know if it will happen, but spitballing never hurts.”
THE ATHLETIC: Pierre LeBrun cited an anonymous player agent suggesting the NHL and NHLPA should merge the two realities of dealing with lost revenue from this season and their collective bargaining negotiations into a longer-term agreement.
The agent envisions a six-year CBA that sets the salary-cap maximum at $81.5 million with a fixed escrow of 10 percent. “It may take 2-3 seasons for that money to be returned to the owners, consider it a deferred payment,” said the agent. “As a trade-off, perhaps the players agree to receive the AAV of a contract going forward (until the owners are made whole) to avoid front-loaded cash over cap issues.”
SPECTOR’S NOTE: This is merely speculation by Friedman and LeBrun, but it’s undoubtedly based on what they’re hearing from sources within the league and the NHLPA. I believe both sides understand the need for short- and long-term stability coming out of the pandemic season.
The last thing they need is a return to the contentious labor relationship of the past. There’s a real opportunity here for long-term NHL labor peace. Here’s hoping the two sides make the most of it.