October 18, 2012
Why the players are up in arms after the NHL's public release of latest offer
By LANCE HORNBY, QMI Agency
Here’s a summary of contentious issues arising from the NHL’s public release of its latest offer and NHLPA executive director Donald Fehr’s letter to the players:
1. Fixing A Whole
The league’s ‘Make Whole’ provision the next two years, to compensate players for their drop in revenue shares from 57% to 50%, is a complicated formula.
The league insists that a projected 5% growth rate for 2012-13 should provide present and future stability to standard contracts, but Fehr crunched the numbers and didn’t like what he came up with. He says in order to receive full value for the coming season’s contracts under the league’s 50-50 plan, owners would have to pay the players more than the 50%, in excess of 54% in fact. That money has to come from somewhere and would mean borrowing from future player revenues, starting in Year 3, taken back from players in the form of escrow.
“It’s players paying players, not owners paying players,” Fehr claimed.
2. HRR Horror
The definition of hockey-related resources continues to be the major stumbling block to determining what goes in the revenue pie. The drop in revenues to reach 50-50 is 12.3%, or nearly $231 million US.
Yes, the league wants changes to a few definitions on their side, but believe them to be costs not relating to NHL players and HRR. The first offer tabled by the league called for a cut back in its HRR share, the new one leaves the topic unsettled, which makes the union dubious.
“So far all of their ideas in this regard have had the effect of reducing HRR, and thereby lowering salaries,” Fehr said.
There is the added complication of both sides differing on the rate of growth, the league going conservative at 5%, the players believing it will be 7% or higher, based on last season. If the players are right, they expect to lose more money under 50-50.
3. Contract Subtraction
There are tweaks being proposed that can help or hurt teams and players, depending on perspectives.
While younger players, especially good ones, can look forward to quicker pay days if entry level deals are reduced from three years to two, they’ll also have to wait an extra year to become unrestricted free agents as the minimum rises a year to 28.
There is also a push by the league to make long-term deals more cap unfriendly, a direct response to teams who made ‘back-diving’ deals to circumvent the cap. The league is already trying to cap long-term contracts at five years, which the players oppose.
4. Sharing The Wealth
The players’ original offer in August was built around taking a voluntary hit on salaries at the start of the deal — if the league’s richest clubs did more to help their poorest cousins.
That did prod the league to increase its revenue sharing program by 33% in the new deal, bringing it up to $200 million. At least 10 more clubs are being added to the eligibility rolls, including such big media market teams as Anaheim, New Jersey and the Islanders.
“Under-performing clubs will be expected to enhance their business planning capabilities,” promised the league.
The players have been offered a seat on the committee addressing this issue, but Fehr is wary of just what input his group will get.
5. Judgement Daze
If a player did not accept what league disciplinarian Colin Campbell or now, Brendan Shanahan, meted out for suspensions and fines, the only appeal avenue open to them was Bettman.
“We are proposing to introduce additional procedural safeguards to protect player interests, including an ultimate appeal right to a “neutral” third-party arbitrator with a “clearly erroneous” standard of review,” the league said.
That didn’t impress Fehr, who obviously doesn’t think appeals will be granted too often.
“As a practical matter (the ‘clearly erroneous’ rider) makes it very unlikely that any decision would be overturned,” he said.
-- From the NHL’s offer to the players:
“We have reached a critical point in our collective bargaining negotiations. In an attempt to save an 82-game season (including the usual schedule of playoff games), the NHL is making a substantially revised proposal regarding the critical issues on which the parties have been separated. We believe that the proposal is fair to the players and the teams, and good for the game and our fans.
“The parties have already reached agreement on many of the non-critical, but necessary items needed to complete a new CBA. We hope the NHLPA and the players will view this proposal in the manner in which it is intended — an invitation to complete an agreement in the necessary time frame.
“Our negotiations with the NHLPA have failed to progress on the most critical economic and system-related issues. After considerable deliberation, we have decided to make this proposal because time is of the essence.”
-- From Donald Fehr’s letter to the players, commenting on Tuesday’s offer:
“Given the enormous concessions players made in the last round, plus seven years of record revenue reaching $3.3 billion (US) last season, there is no reason for a reduction in the amount players receive. Players are willing to take a reduced share going forward so that the NHL can grow out of whatever problems some franchises face,
“The player contracting rights secured in the last negotiation should, at a minimum, be maintained. Revenue sharing needs to be enhanced and structured so as to encourage revenue growth by the receiving teams The overall agreement has to be fair and equitable for both parties. Bargaining is both give and take.”