NHL CBA: The Players Are Doing Their Part
After the NHL presented its first CBA proposal back on July 13 – an offer which would have rolled back players salaries to levels of a decade ago and removed much of their bargaining rights – many were wondering how the NHLPA would respond. Yesterday, the NHLPA finally responded and presented its alternate proposal. At first glance, it seems to begin to address the league’s concerns, and as gloomy as negotiations looked about a month ago, today there’s a hint of optimism in the air as Gary Bettman and the owners sounded intrigued in some of the proposal’s components.
The full details of the proposal haven’t been released, but it’s been reported that it includes: keeping the current cap system intact, lowering the players’ share of hockey-related revenue (HRR), and using their relinquished share to help fund a stronger revenue sharing program that benefits the small-revenue teams.
From Aaron Ward:
In NHLPA proposal,the artificial slowing of salary growth by players will go as follows: year 1 will increase by 2%,year 2 by 4% and
— Aaron Ward (@NHL_AaronWard) August 14, 2012
in year 3 by 6%.If Revenue growth exceeds 10%,anything over 10% is subject to 57% that exists under present system #NHLPA #NHL #TSN
— Aaron Ward (@NHL_AaronWard) August 14, 2012
Important to remember average revenue growth is 7.1% so this is a three year payroll reduction of $465M to help teams in need. #TSN
— Aaron Ward (@NHL_AaronWard) August 14, 2012
Based on the reported $3.3 billion in revenues in 2011/2012, and assuming the NHL maintains its 7.1% average revenue growth since the inception of the last CBA, here’s how the numbers project for the next 3 years (note these numbers are just pure guesstimates):
| Year | Projected Revenues | Current % | Players salaries under current CBA | Proposed % | Players salaries under NHLPA proposal | Contribution towards revenue sharing |
|---|---|---|---|---|---|---|
| 2012/2013 | $3,534,300,000 | 57% | $2,024,190,000 | 2% raise | $1,927,800,000 | $96,390,000 |
| 2013/2014 | $3,785,235,300 | 57% | $2,167,907,490 | 4% raise | $2,004,912,000 | $162,995,490 |
| 2014/2015 | $4,053,987,006 | 57% | $2,321,828,922 | 6% raise | $2,125,206,720 | $196,622,202 |
Assuming the NHL maintains its 10% average revenue growth from the last couple of years:
| Year | Projected Revenues | Current % | Players salaries under current CBA | Proposed % | Players salaries under NHLPA proposal | Contribution towards revenue sharing |
|---|---|---|---|---|---|---|
| 2012/2013 | $3,630,000,000 | 57% | $2,079,000,000 | 2% raise | $1,927,800,000 | $151,200,000 |
| 2013/2014 | $3,993,000,000 | 57% | $2,286,900,000 | 4% raise | $2,004,912,000 | $281,988,000 |
| 2014/2015 | $4,392,300,000 | 57% | $2,515,590,000 | 6% raise | $2,125,206,720 | $390,383,280 |
If you add up the last column in the first table – the difference between what the league would have paid out in salaries under the current system and what the NHLPA is proposing – that’s more than $450 million in salaries the players are foregoing potentially to help fund the NHL’s revenue sharing program. At 10% average revenue growth, that potential contribution totals more than $800 million.
Think that much revenue sharing would help the Panthers, Predators, Blue Jackets and Coyotes?
Essentially, the players have agreed to fund most of the revenue sharing program for the next 3 years while the NHL gets its financial house (i.e. its small-revenue teams’ financial house) stabilized before passing this responsibility back to the league (i.e. its large-revenue teams). By the option year (2015/2016), assuming revenue growth remains constant, league-wide revenues should be at $4.3 billion and a $250 million revenue sharing pool would account for less than 5% of it.
At least from the parts of it we know, it’s a smart, shrewd proposal. In it, the NHLPA doesn’t necessarily disagree with the NHL’s main contention that the league needs to be lowering its player costs (albeit it only proposes to do this temporarily). It keeps the cap the owners want and also directly addresses the league’s biggest problem, which is to figure out a way to help the have-not teams.
Maybe unexpectedly, the players have stepped up with some reasonable solutions and they certainly seem willing to do their part. The question is, are the owners?
(Update: 08/15/2012, 6:05 AM)
George Malik has a pretty exhaustive rundown of reaction to the NHLPA’s proposal over at Kukla’s Korner.
