The Two Biggest Potential Issues in the Next NHL CBA Standoff

The Two Biggest Potential Issues in the Next NHL CBA Standoff

In two years time, the National Hockey League or the NHL Players Association could decide to bring their current collective bargaining agreement to a premature end. Though the CBA’s expiration date is Sept. 15, 2022, the league can opt out on Sept. 1, 2019 while the PA can do so on Sept. 15, 2019.

If one or the other takes the early out, the CBA will expire on Sept. 15, 2020. That would set the stage for perhaps another lockout of the players by the team owners if no new agreement is in place by then. Given the contentious history of NHL CBA negotiations, we can likely expect yet another work stoppage.

Can NHL commissioner Gary Bettman (right) and NHLPA director Donald Fehr avoid another NHL lockout? (Photo via NHL.com)

Should that occur, it probably won’t be the season killer of 2004-05. Back then, the league was determined to implement a strict cost certainty system from scratch whilst crushing the PA’s militant leadership. The next lockout will likely cost half a season, just like in 2012-13 and 1994-95.

On Aug. 20, The Athletic’s Katie Strang detailed the main issues that could arise in the next round of collective bargaining. Distribution of hockey-related revenue (HRR) and escrow topped the list, followed by maximum contract lengths and Olympic participation.

Of these, HRR and escrow are the most consequential. Contract lengths and the Olympics are secondary matters likely to be used by either side as leverage on the more important issues.

Over the last two lockouts, the division of HRR was reduced from a 75-25 split for the players (according to the league; some reports at the time suggested it was closer to 60-40) in the 1994 agreement to 57-43 under the previous CBA, eventually arriving at the current 50-50 split.

As long as the league addresses what Strang called HRR leakage by broadening what is considered to be hockey-related revenue (such as money from legalized betting) to ensure the players get a fair share, or doesn’t insist on the owners getting a larger slice of the revenue pie, another round of labor strife could be avoided. Otherwise, don’t expect to see your favorite NHL team in action during the autumn of 2020.

Escrow is the bi-monthly clawbacks from the players’ salaries. As Strang explains, it is the establishment of a fund that sets aside money in order to reconcile the frequent discrepancies between projected revenue vs. actual revenue. It provides cost certainty for the league, and it acts essentially as an accounting mechanism.”

The problem, however, is the escrow percentages rose along with the salary cap. The players usually got very little of that money back once the final HRR was tallied at season’s end. As Strang notes,  the escrow percentages since 2012-13 were usually over 12 percent and sometimes exceeded 15 percent.

The players hate the system but, given that the salary cap is tied to revenue, it’s not going away. They’ll likely seek to reduce the percentage but it won’t be easy.

Strang noted one way to reduce it would be to lower the salary cap but that won’t sit well with players seeking new contracts. Indeed, she suggests it could pit the players against each other. That’s a scenario the league will happily exploit.

If there’s a possible silver lining here, it’s what Strang called the “wild card”: Seattle becoming the NHL’s 32nd franchise. The league board of governors could green-light that entry during their annual meeting this December in Florida.

If approved, the earliest the Seattle club could hit the ice is 2020-21. The last thing league honchos want is the potential embarrassment of their new franchise’s debut put on hold over a work stoppage. It could become the PA’s biggest bargaining chip.