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NHL CBA proposal would allow New York Islanders revenue sharing, eliminate cap mules

The NHL's latest CBA proposal to "save the 82-game season" would allow the New York Islanders to receive revenue sharing, while eliminating the ability to reach the cap floor through individual player performance bonuses.

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Letter: Fehr outlines NHLPA offers

You've seen* the rhetoric from the NHL claiming the NHLPA's latest three counteroffers "didn't even begin" to approach 50/50.

*Or maybe you didn't, because you've mercifully ignored all this nonsense.

Now you can see the NHLPA's version of events, thanks to Donald Fehr's letter to the membership, which was conveniently shared with ESPN's Pierre LeBrun (in html-friendly format!). It has the full breakdown of numbers, if you care to review the three proposals.

Fehr closes with a summation, and a naturally down note:

Our hope was that the owners would find one of these three approaches worthy of serious discussion, but the owners rejected these ideas in less than 15 minutes, and further advised the players that their last offer was, in essence, a take it or leave it offer, subject to "tweaks only".

That proposal contains, as you know, an immediate reduction in the share to 50%, a 2012-13 cap with a 51.9M mid-point, and, among other things, player contracting provisions including a change in the ELS, a reduction in salary arbitration eligibility, no UFA status until after 8 years or at age 28, no contract longer than 5 years, no contract may have a year to year variability of greater than 5%, and all money paid under NHL contracts to players playing in the minors or in Europe counts against the team cap (except for the first $105,000 per player).

[...]

At the end of yesterday’s meeting, Gary did say that the players were prepared to agree to all of the other parts of their offer (subject, perhaps, to "tweaks") then I could call him about this issue.

So yeah. Don't expect the owners to compromise on anything that exists in the just-expired CBA, save for some modest improvements to the revenue sharing system (that, in truth, would help the New York Islanders).

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True to Form: NHL, NHLPA agree on nothing

After Thursday's meetings, the NHL and NHLPA returned to their familiar routine of repeating what they think is important in the next CBA, then publicly whining that the other side doesn't agree.

In the NHLPA's defense, they countered the NHL's latest proposal with at least three proposals of their own -- at least two of them, according to NHLPA director Donald Fehr, which would move toward the NHL's wish of a 50/50 split of hockey related revenue, as long as the NHL honored existing contracts.

Ah, but honoring existing contracts was too much for the NHL owners who signed them.

Commissioner Gary Bettman disagreed, claiming none of the PA's proposals "even began to approach 50/50." Bettman was also quoted as saying, he was "totally disappointed," and called the day a "step backward," as he is wont to do when he doesn't get his way.

Deputy commissioner Bill Daly went further, releasing the following statement:

"The so called 50-50 deal, plus honoring current contracts proposed by the NHL Players’ Association earlier today is being misrepresented. It is not a 50-50 deal. It is, most likely a 56- to 57-percent deal in Year One and never gets to 50 percent during the proposed five-year term of the agreement. The proposal contemplates paying the Players approximately $650 million outside of the Players’ Share. In effect, the Union is proposing to change the accounting rules to be able to say ‘50-50,’ when in reality it is not. The Union told us that they had not yet ‘run the numbers.’ We did."

What a surprise that both sides can't even agree on reality, right?

Fehr, rather than simply point out the absurdity and apparent bad faith of the NHL's position -- which is like shooting fish in a barrel, really -- couldn't resist returning to his own hyperbole playbook by claiming the players "gave up $3.3 billion in the last CBA."

This oft-repeated assertion is true only if you believe that the CBA that expired in 2004 would have continued in perpetuity, in a land of pixies and fairies, where 30 surviving franchises would have continued to pay out 75% or more of their revenues but for the grace and generosity of the players' collective hearts.

Fehr also asked "what is the reason [NHL owners] want this other than the NFL and NBA got a better deal?" A good point that the NHL hasn't quite answered publicly other than to say their costs have increased. (Of course, one could also ask, "What is the reason the NHLPA believes it deserves 57% other than that that's what they had in the old CBA?" But fair and reason are in the eye of the beholder in this spat.)

In this laborious battle, what will actually engender a solution does not appear to be the priority for either side, which is why they've been shouting at each other from distant, opposite sides of a reasonable middle ground all summer long. Instead, who will win the war while hanging on to their money (for the owners) or their pride (for the players) appears to be the driving force.

And if the owners' gamble will be realized and they eventually break the union, then pride goeth before greed. Owners, players before fans.

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NHL, PA bring heavy hitters to Toronto standoff

The NHL's Oct. 16 CBA proposal to "save the 82-game season" has been dissected by the NHLPA, and both sides are bringing a heavy cast of characters into Thursday's meeting in Toronto to discuss that proposal and/or a counter-proposal from the union.

The meeting was pushed back slightly to 1:30 p.m. Oct. 18, after a lengthy internal NHLPA conference call.

According to multiple reports, including TSN's Bob McKenzie and Darren Dreger, the sides are bringing their heavies, including:

NHL: Gary Bettman and Bill Daly, as well as Boston Bruins owner Jeremy Jacobs, Washington Capitals owner Ted Leonsis, Minnesota Wild owner Craig Leipold, and Calgary Flames owner Murray Edwards.

NHLPA: Donald Fehr and Steven Fehr, as well as a group of 18 players that includes Sidney Crosby, Shane Doan, Jarome Iginla, Eric Stall, Jonathan Toews.

Quite a crew. And most likely, quite a standoff will ensue. For a not surprising but ominous tone, we quote Dreger:

Sometimes that's a sign of a solid compromise on the path toward agreement. But in these two warring parties' case ... not likely.

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NHL 'Made Whole' Clause Delightfully Orwellian

So you're an NHL owner. You want the players to take a reduction in their share of the league's revenues but you don't want to blatantly request (anymore) an immediate rollback in their salaries for the coming year.

How do you reconcile this dilemma?

Why, you give it an awesome investment-ese name with a connotation that would make Orwell proud:

The League proposes to make Players "whole" for the absolute reduction in Players' Share dollars (when compared to 2011/12) that is attributable to the economic terms of the new CBA (the "Share Reduction"). Using an assumed year-over-year growth rate of 5% for League-wide revenues, the new CBA could result in shortfalls from the current level of Players' Share dollars ($1.883 Billion in 2011/12) of up to $149 million in Year 1 and up to $62 million in Year 2, for which Players will be "made whole." (By Year 3 of the new CBA, Players' Share dollars should exceed the current level ($1.883 Billion for 2011/12) and no "make whole" will be required.)

Any such "shortfalls" in Years 1 and 2 of the new CBA will be computed as a percentage reduction off of the Player's stated contractual compensation, and will be repaid to the Player as a Deferred Compensation benefit spread over the remaining future years of the Player's SPC (or if he has no remaining years, in the year following the expiration of his SPC). Player reimbursement for the Share Reduction will be accrued and paid for by the League, and will be chargeable against Players' Share amounts in future years as Preliminary Benefits.

The objective would be to honor all existing SPCs by restoring their "value" on the basis of the now existing level of Players' Share dollars.

Dirk Hoag of On the Forecheck puts that in English:

Now this is interesting - basically, the league is aiming to ensure that the players don't actually lose any money in 2012-2013 compared to 2011/2012, by spreading out payments covering that gap over the duration of their contracts. The kicker, however, is that those deferred payments will count towards the Players' Share in those future years, so it will hold back their progress on the financial front.

Eureka! Hockey renewed by fire made whole!

From USlegal.com:

Make whole is a term used in reference to compensating a party for a loss sustained. The precise definition varies, according to contract terms and local laws...

Or make-whole call provision:

A stipulation in a bond indenture that permits the borrower to redeem a bond prior to maturity by making a lump-sum payment equal to the present value of future interest payments that will not be paid because of the early call. The provision makes the bondholder whole by providing compensation for interest payments that are missed because of an early redemption.

The NHL is going all investment- and legal talk* on the players here, acting as if lowering their payment now but paying it out later out of the players' share makes them, well, "whole." All square.

*Or hey, maybe they're actually going all Biblical, alchemy, or astrology on us.

Of course, guessing where revenues are going is, well, a guessing game. The players themselves modeled their offer off higher growth rates, which would make them "whole" sooner and be less of a hit to them. (Unless you view 57% as their divine right, in which case they will always and forever be "losing" more and more money to the owners because each year of revenue growth, in the NHLPA's terms, simply means more money they could have had but didn't.)

Dear Players: You Already Steal from Each Other

Indeed, while it's fun to pile on the owners for this clever word usage, let's not forget that every time an NHL player signs a front-loaded, cap-navigating deal that gives him tons of money up front while spreading the cap hit over a decade, that player is in essence stealing from his fellow players' share of the revenue pie. The yearly cap is determined by revenues, but the players' share is affected by what's actually paid out -- i.e. in actual salary, not in cap hit.

When players complain about escrow, they always sound a little oblivious. Why? Because some mechanism like escrow is necessary to maintain the system, but they pretend that it's not. It's like complaining about taxes simply because you don't like paying taxes. The only way to ensure a specific share of revenue is upheld when the actual season-ending gross revenues are not yet known, is to initiate some control that accounts for over- or under-spending, hence: Escrow. Stop whining.

But players also sound like they're avoiding the elephant in their own room: Every time a player takes home $10 million in a year where his cap hit is only, say $7 million, he's altering the balance of what cut he "should" be taking home and what he's actually taking home, thanks to the difference between his actual pay and his averaged cap hit. Escrow hits his peers harder.

The players, in a letter from Don Fehr to the PA, are naturally skeptical of the "made whole" concept. But even there, Fehr himself is guilty of his own fundamentalist spin:

"It is players paying players, not owners paying players. That is, players are "made whole" for reduced salaries in one year by reducing their salaries in later years."

Well for one, that depends on what the revenues are in future years. And two, even if you're making less than what you hoped, it's still actually owners paying players. No amount of "but we made concessions last time!" whining can change that.

The Oct. 16 NHL proposal has made things interesting again, but the PA's initial internal response should remind you not to get your hopes up. This battle still looks long and bloody. The two sides are too in love with their own rhetoric and righteousness to find a solution soon.

Bottom line, the owners want a change to the old system that gives them a bigger piece of the pie. The players feel they shouldn't give that up because they gave things up last time. Until someone bends, we'll just be laughing and crying over the language.

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NHL CBA Proposal: Expanded revenue sharing

We've discussed how the NHL's CBA proposal would affect the New York Islanders after reports of the proposal filtered out Tuesday night.

But on one of the more interesting aspects emerged after the NHL decided to post the entire thing online and distribute to media with an explanatory addendum.

Namely, not only would teams like the Islanders be eligible for revenue sharing for the first time (previously their metro market size excluded them), but the proposal would eliminate some of the hurdles that previously kept even eligible markets from receiving revenue sharing:

All Clubs in the NHL except the top 10 Revenue Grossing Clubs will now be eligible for Revenue Sharing, including Clubs in large media markets who were previously ineligible (such as Anaheim, New Jersey and the New York Islanders, among others).

Further, our proposal eliminates some of the current "business performance" thresholds that had the effect of materially reducing the amounts a Club might otherwise qualify to receive in revenue sharing. Instead, under-performing Clubs will be expected to enhance their business planning capabilities, will be provided on-site assistance to meet enhanced business objectives and will be provided with much greater counseling as to "best practices" in business operations.

Now, how would the revenue sharing pool work? That's not entirely clear just yet, though naturally the NHL calls its proposal to help teams over the next two years "historic" and "unprecedented."

Here's what else the NHL's proposal said:

The Revenue Sharing pool will be redistributed to those Clubs who are in the most need in order to enable those teams to have sufficient resources on hand to compete for and compensate Players within the Payroll Range, and otherwise to provide a basis for their continued financial stability. In this regard, we are proposing to commit for the next two years revenue sharing payments to recipient Clubs that are equivalent to or greater than what those Clubs will receive on account of the 2011/12 season. The effect should be to continue -- and even improve -- the historic and unprecedented quality of play and level of competitive balance we have jointly been able to achieve during the period of the recently expired CBA.

Of course, all of this could be moot. The NHL has good publicity reasons to make a "save the 82-game season" push now, and the NHLPA will have to look at it and decide how seriously they want to engage on these terms, which still represent concessions from the previous CBA.

That said, it's an interesting window into how the NHL is looking at addressing some of its long-running problems.

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How the NHL Proposal Would Affect the Islanders

If we pretend that the NHL's latest proposal has half a chance of leading to a deal and a full season, we can pretend that some of its tenets will actually help the New York Islanders.

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