NHL CBA Musings

NHL CBA Musings

NHL commissioner Gary Bettman and NHLPA executive director Donald Fehr.

Concerns over a potentially deteriorating relationship between the NHL and the NHL Players Association could lead to another lockout, perhaps as early as September 2020.

The league and the PA each have the choice to opt out of the current collective bargaining agreement in September 2019. Should either side go that route, this CBA will expire on Sept. 15, 2020.

According to The Hockey News’ Ken Campbell, the players aren’t pleased over the league’s decision against participating in the 2018 Winter Olympics in Pyeongchang, South Korea. They believe that view hurt efforts to grow the game globally and improve league revenue. The PA is also unhappy over the marketing of last fall’s World Cup of Hockey.

Those aren’t the only issue upsetting the players. Sportsnet’s Elliotte Friedman said escrow is also a big concern. Last season opened with the players having over 15 percent of their salaries held back in escrow payments by the league.

Depending on league revenue at the end of each season, the players can get all or part of that escrow money back with interest. However, in 2014-15, they had 15 percent clawed back but received back just over two percent at season’s end

TSN’s Travis Yost notes the recent rise of star players re-signing new contracts heavy with signing bonuses. While it doesn’t affect their annual average value against the salary cap, the players receive a big chunk of their actual salaries each July in the form of a signing bonus.

As Yost observers, those bonuses can be considered lockout protection for those players, ensuring they still get their full salary as a guaranteed payment in a lockout season. He also points out the heaviest season for many of those bonuses in 2020-21, the earliest in which a work stoppage could occur.

These bonuses, by the way, are being paid to the players with the blessing of their respective team owners, the very group they’ll be clashing if there’s a labor dispute in 2020. Because of these guaranteed signing bonuses, Yost says the owners will have to pay out 25 percent of salaries owed for 2020-21, blunting one form of leverage over the players in a lockout scenario.

In keeping with the time-honored tradition of saving the team owners from themselves, expect the league – with the support of the most hawkish owners – to close that loophole in the next round of collective bargaining.

Speaking of the league and the owners, there’s little indication thus far as to what grievances they have with the current CBA. That’s because league commissioner Gary Bettman does a superb job riding herd over the owners. None dare speak out regarding CBA manners without the blessing of the commish.

Judging by Bettman’s statements earlier this year, contentment reigns on the league side over the current CBA. The only news of note, of course, was his statement claiming the owners are firmly against participating in Pyeongchang, though they’re very interested in taking part in the 2022 Beijing Winter Games to grow the game in China. 

If, however, Bettman or some team owners start grunbling over the current CBA in the next two years, that could signal the league’s willingness to opt out in September before the players do.

Perhaps the Beijing Games is a good reason for either side to end the current agreement early. It would give them a year to hammer out a new CBA without the labor talks becoming an unnecessary distraction hanging over their participation in the 2022 Winter Olympics.

Friedman also points out the NHL’s US television agreement expires in four years time. That could also potentially affect the timetable for the next round of collective bargaining. Then again, the league has no problem hurting NBC Sports’ Olympic ratings in 2018 by backing out of Pyeongchang, so maybe that TV agreement won’t have as much bearing on labor talks as some might believe.

Of course, it remains to be seen if the NHL and NHLPA actually trigger the early out in September 2019. As they did during the last two CBAs, they could both agree to just let the current one run its course and attempt to negotiate a new one in the summer of 2022.

If recent reports are any indication, the players will likely take the early opt-out. If that happens, the two sides might negotiate throughout the 2019-20 season to get a new deal in place. But if the league’s labor history is anything to go by, those discussions (if they happen at all) will be cursory at best.

Most likely, the serious talks won’t take place until mid-summer following the draft and the opening week of the free-agent market. As it always does, the league will probably fire the first salvo by tabling an unpalatable opening offer to the PA, who will make a counter-proposal that will be anathema to the owners. They’ll do their long, painful negotiation dance leading to yet another postponement of the start of another season. Talks, with occasional bursts of optimism and mudslinging, will drag on into January, when they’ll hit the make-or-break point to work out a season-saving deal.

It doesn’t have to be like that. Perhaps the biggest stars among the NHLPA membership will push for a reasonably quick resolution to avoid yet another lockout. Maybe some moderate team owners will attempt to blunt the hardliners within their ranks by reaching out to the players in hopes of swiftly finding common ground than in the previous labor disputes.

The hardliners on both sides, however, could still rule the day, secure in the knowledge that, no matter how long the work stoppage, the fans will always return. As long as that well of fan devotion remains deep, they can do whatever they want and take as long as they want. The season-killing lockout of 2004-05 proved that.

But loyalty only lasts so long, especially if the fans finally start feeling the league and the players are taking them for granted. It took two decades for Major League Baseball to reach that epiphany in 1995. Maybe, just maybe, the NHL could face the same moment of truth in the next round of CBA negotiations.

 











Musings on Some Notable NHL News

– The NHL projects the salary cap for 2016-17 could rise to $74.5 million. That’s over $3 million above the current cap ceiling of $71.4 million. It’s also likely to be an optimistic projection.

For the past two years, the league’s annual December salary-cap projections have come up short. Two years ago, the ceiling was expected to rise from $64 million to $71.1 million. It eventually reached $69 million. Last year’s projection of $73 million ultimately became $71.4 million.

The declining value of the Canadian dollar is largely to blame. In less than two years, the value of the “loonie” fell from par with the American dollar to its current level of $.73 cents US. With seven NHL teams accounting for nearly 40 percent of NHL revenue, those currency fluctuations are keenly felt.

With the ongoing decline in world oil prices dragging down the value of the Canadian dollar, some economists predictt it could fall below .70 cents US by next summer. If so, the league can forget about reaching $74.5 million for next season.

Thanks to the rising cost of attending NHL games, its successful series of outdoor games, lucrative new TV contracts and the likelihood the NHLPA will once again vote to approve its annual five percent escalator clause, the salary cap should increase for next season. However, my guess is it might come in around half of the league’s projected increase,meaning the cap could between $72.5 – $73 million.

 

Could there be another NHL lockout by 2020?

Could there be another NHL lockout by 2020?

-TSN’s Frank Seravalli did an interesting piece last week, looking ahead at what the NHL might look like in 2020. He speculates the league could be in the midst of another lockout by then.

While the current collective bargaining agreement is due to expire on September 30, 2022, both sides get an opportunity to opt out in September 2019. The NHL Board of Governors can do so on Sep. 1, while the NHLPA’s deadline is Sep. 19. If so, the 2019-20 season would be the last under the current CBA.

Player agent Allan Walsh told Seravalli he expects the team owners will opt out early. While it’s a possibility, I doubt the league goes that route. During the previous two CBAs, the board of governors decided not to use the opportunity to bail early.

It’s possible, of course, they could vote differently in 2019, but I believe they’ll want to continue making as much money as possible whilst building up their war chest in anticipation of another lockout in 2022. I also believe there won’t be much willingness to vote for another plunge back into labor uncertainty less than a decade after the previous one.

We also don’t know who’s going to be running the show on the league side by 2019. League commissioner Gary Bettman is 63 years old now and is in his 23rd season. There’s been some whispers among the punditry he could step down by 2020, perhaps soon after the league’s 100th anniversary in 2017. It’s also uncertain if some of the current hardliners among the NHL ownership (led by Boston Bruins owner and C. Montgomery Burns impersonator Jeremy Jacobs) will still be as influential by that point as they once were.

A lot can change in just a handful of years. It’s quite possible both sides could be unwilling to face another protracted labor standoff.

 

-Excitement among the league board of governors over expansion seems to have cooled over the past year. While Las Vegas and Quebec City went through the expansion consideration process earlier this year, there was no vote scheduled on expansion at the recent BoG meetings.

It doesn’t mean expansion’s off the table now, but it does appear the owners are approaching this more cautiously than during the 1990s. The recent decline in the value of the Canadian dollar could be a factor affecting the Quebec City bid. Las Vegas seems a certainty to land an expansion franchise, but the league might consider having two franchises joining at the same time.

Commissioner Bettman claimed the delay had nothing to do with allowing other cities (like Seattle) to get into the bidding. He insisted it’s just between Las Vegas and Quebec City. He also said there’s concerns among the BoG members over the terms of an expansion draft.

How no-trade/no-movement clauses apply to an expansion draft could also be an issue. You can be players carrying such clauses want to ensure they also apply to expansion drafts. The PA won’t want to see that draft used by some teams simply as a means of attempting to dump a high-salaried player they no longer want.

The delay in the vote might not have anything to do with hoping another NHL city makes a bid for an expansion franchise, but I still believe the league is keen to put a club in the Pacific Northwest. I don’t seem them rejecting interest from potential ownership in Seattle. I believe the NHL’s ideal scenario is expansion to Las Vegas and Seattle, and sending a relocated team to Quebec City.

For now, we’ll just have to wait and see how this plays out. The earliest we can reportedly expect to see expansion take place is 2017-18.