Sunday, November 23rd, 2014

Coming Soon

13

I’ve said all along that once the money was settled the rest of the CBA would pretty much fall into place. I still think that’s the way it is going to work out and we’ll see the league play a little more than half a season. (I can’t decide how I feel about that. I will be happy to see some hockey, but I can’t imagine how that can wash the bad taste of this season away. And I can imagine being outraged again next year if the Canucks are forced to dump talent because the salary cap crashes.)

Tyler Dellow has written about the remaining major sticking points blocking an agreement. I agree with what he wrote about the term of the new collective agreement. Most fans may be hoping for a long deal simply so we won’t have to endure this again for at least another decade. I’m with the players on this one because I think a long deal makes a lockout ten years down the road a near certainty. We’d see a repeat of this season with the NFL, NBA and NHL all bent on extracting another chunk of cash from the players with a “give us the money or we lock you out” bargaining strategy.

Would the NHL dare adopt that same approach in four or five years? In six? I’m betting the league would find a way to make a deal next time around if the CBA term is short.

On the other issue, I think both Tyler and the NHLPA are wrong on the length of player contract dispute. I do not believe long contracts help the middle class at the expense of the rich. In fact, I think it does the reverse. It gives the stars money that would otherwise go to the rank and file. (It may be true that the CBA as a whole hurts the elite players more than the lesser lights, but I can’t see any argument that concludes that these long contracts do anything to help most players.) Yes, the structure of Parise’s contract makes cap space available for middle class players, but cap space is not dollars and players are paid in dollars.

Over the first nine years of his contract, Parise will be paid some $20 MM over his cap hit. That money is made up (through escrow) by all the players in the league. The Wild will then probably buy out the Parise contract and take a cap hit of about $800,000 over the next eight years. Those payments will also be made out of the pockets of all the players.

The problem with these deals from the league perspective is that they are clearly cap circumvention. The Wild are gaining about $20 MM in cap space over the first nine years and paying it back with about $5.3 MM in space over the following eight. Teams that can’t afford these types of deals – a significant majority of teams – consider them cheating, because, well, they are cheating the spirit of the cap. Bettman must be under considerable pressure to ban them.

Fehr’s premise is that Parise would get substantially more money per year on a shorter contract. I don’t think that is necessarily true. A team like the Canucks (or the Wild in this case) are willing to spend a lot more than the salary cap allows them to spend. The issue for the Canucks will never be the dollars. The issue for them will always be the cap hit. They would happily give a Parise quality player $12 MM a year, but they would never allocate that much cap space to him. Absent these long contracts, a Parise would get somewhat more on a shorter deal, but I don’t think he will get a ton more. Teams need top notch players to win, but they also need quantity as well as quality. Spending $12 MM (in cap space) on a single player is not a winning strategy in my opinion.

I don’t know how the parties will sort these issues out but I don’t have any doubt that they will. After all they have given up, the players are not going to tank the whole year over a couple of years on the term of the CBA. The league will not sink another season to stop teams from signing a player to a seven year contract.

A deal is coming. We’ll see how many people still care.

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Comments

13 Responses to “Coming Soon”
  1. James Mirtle says:

    But Tom, the union has already put eight year limits and protection against circumvention on the table. The Parise type deal wouldn’t even be an option in this new CBA. The debate now is between five year and eight year limits and how they would affect the middle class.

    • Tom says:

      I get this – it’s one of the reasons I think there is going to be a deal. I think the NHLPA can reasonably say, “We don’t think cap circumvention is good either, but if teams can’t give players more money players should be able to negotiate for more security.” I just don’t think they can reasonably say that long contracts help the middle class. Even when they don’t involve reducing the cap hit, they transfer risk from stars to the rank and file. Players are picking up the salary costs for Marc Savard and Chris Pronger. Bettman’s subtext on the issue is that he wants more player movement for marketing reasons.

      As much as anything, I think the delay now is about Donald Fehr trying to drive Gary Bettman crazy. He’s willing to invest a few extra weeks to punish the league for the strategy, to make them think twice about next time. I think he’s made this lockout more painful for the owners and Gary Bettman than 1994 and 2004 put together.

      • James Mirtle says:

        The escrow affect on the lower tier players is pretty minimal – just look at this past season. Almost no escrow paid and there were some mammoth front-loaded deals paid out.

        Of course, revenues may not always go up at that rate, but they generally accommodate those front loaded deals.

        I guess the question is how much different would an NHL full of five year deals look from one full of eight year deals. Would the Rob Scuderi’s get a half million less a season?

        • Tom says:

          It doesn’t matter whether rising revenues eliminate escrow or not. If the frontloaded contracts didn’t exist, all the players would get the more than 100% of the escrow returned. When a player gets more dollars than his cap hit, everybody else pays. When a player gets less than his cap hit everyone else gains. I can’t see how that is in any real sense arguable.

          I think the answer to the question about Scuderi depends on what happens to Parise’s contract under different assumptions, but I think Scuderi would get more money. The worst case scenario from Scudari’s position is if the Wild laid out the same dollars in the first eight years of his current deal. That would leave precisely the same amount available for all the rest of the players in the league – including Scuderi – as it does now. If the Wild offered Parise $53 MM for five years, the money available for the rest of the league would be precisely the same.

          There would be less cap space available for Scuderi so his contract would be down by a small amount, but that’s offset by the escrow.

          The reality is that Parise’s dollars would look more like his cap hit. He would not make as much money with a five year or eight year deal because teams probably can’t hire enough good players to win if they allocate more than $10 MM a year to a single player. Parise would get somewhat more than $7.5 MM a season. I don’t think it is possible to see the league drift toward an NBA salary structure because you need too many good players to win. I think that’s the reason the best players have gained less under this CBA than players generally.

          Would a Parise quality players get more than $53 MM over the next five years? If yes, Scudari takes less than he does today. Would Parise get more than $80 MM over eight years? If yes, Scudari takes less. I don’t believe anyone would commit that much cap space – $10-11 MM – to him. Without the tail of a 13 year deal Parise gets less money which leaves more for Scuderi.

          A more important point, I think, is that none of this can possibly deliver up a $500,000 difference to Scuderi. The amount being transferred from Scuderi to the rich players under the current setup is pretty trivial. The difference between the current setup and what would happen if contracts are limited to eight years is even more trivial. Finally the difference between 5 years and 8 years? Tiny, in my opinion.

          • James Mirtle says:

            “I don’t think it is possible to see the league drift toward an NBA salary structure because you need too many good players to win. I think that’s the reason the best players have gained less under this CBA than players generally. ”

            Yeah, this is a key point for sure. You still have to wonder how far teams will go to pay the stars when they’re free agents. Maybe they end up offering term instead of cap hit to the Scuderi types?

  2. Almo89 says:

    Agreed that the players want a shorter CBA so that it expires prior to the NFL and NBA one does and the league cannot use ‘precedent’ again like this time. But the players won’t get that. I am surprised that the players have given up maximum contract lengths of any kind actually, I thought it would be an issue that they would hold strong on.

  3. Gerald says:

    Would the NHL dare adopt that same approach in four or five years? In six? I’m betting the league would find a way to make a deal next time around if the CBA term is short.

    Huh? Since when has that been your position?

    • Tom says:

      My position has been that the player’s best strategy if they caved before the season is to go for a long deal to delay their next cut. All bets on that were off when the players decided to fight. Now my preference is to go over the cliff, lose another season and try things without any collective bargaining at all.

      If the players decide to accept the current abortion, the shorter the deal the better. I think the fans are likely to punish the parties for this fiasco and I doubt that even Bettman would dare go through this again in five years. Mind you,anything is possible for the worst run league in sports history given the assholes who are supposed to be managing it.

  4. Roberto says:

    So…

    In anticipation of the NHLPA moving for decertification, the NHL filed a class action suit seeking a ruling that its lockout is legal.

    The NHLPA moved as expected, and will put decertification to a vote beginning Sunday.

    Looks like both sides have chosen the nuclear option. Oh well. Looks like I’ll have more evening free this winter and spring.

    Funny game this disclaimer of interest, the only way to win is not to play…

  5. Derek says:

    you know there are thousands of junior hockey players who would give anything to play in the NHL and they would not expect millions of dollars yet the guys playing and the office staff are payed very well to what ?? keep us hoping for a season well i give up on nhl and will not support for awhile when they come back now i know am only one voice but you get 1″000″000 people and the NHL could really feel the drop this is madness just play the damn game already

    • beingbobbyorr says:

      Bull*&^%. There most certainly are NOT “thousands of junior hockey players who would give anything to play in the NHL and they would not expect millions of dollars”.

      There are, in fact, “thousands of junior hockey players who’ve been toiling away for peanuts in a pay-us-for-the-privilege-of-apprenticing-you system with the hope/expectation of a big NHL payday someday (or at least a free college education).”

      But those thousands of junior hockey players, plopped into the NHL, will rightly want a big chunk of the NHL’s future revenues, for the same reason current NHL players want a big chunk of the NHL’s current revenues: they, the players, are what people pay to see.

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  1. [...] CANUCKS CORNER: Tom Benjamin suggests a lengthy CBA increases the likelihood of another lockout upon its completion, and disagrees that long contracts helps the NHLPA’s middle class. [...]



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