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The questions (still) not being asked
Posted 12:16 PM ET | Comments 2
understanding about how the proposals compare, the better. The one thing that has been sorely missing from all of the talk, though, has been the possible flaws in each side’s proposal and whether new problems are created.
Let’s rewind to August, 2005. The NHL and NHLPA had finally signed off on a new CBA, the 2005 Entry Draft had been held, and the free agent frenzy was on. Few details were available about how the CBA actually worked other than what the NHL had released. We knew there was a salary cap, limits on salaries, a fixed trade deadline, new limits on entry-level contracts, and a lower threshold to clear for UFA status. Otherwise, we were all in the dark on what had changed. It would take almost a year for the CBA to finally be released, and even then people who read it as thoroughly as possible didn’t understand the flaws that existed or how those flaws might be abused by teams and/or players. No, that would take 2-4 more years.
It wasn’t until teams started handing out long, front-loaded contracts that most hockey fans realized “hey, something’s not right.” The 15-year contract to Rick Dipietro just looked stupid to everyone (except Garth Snow and Charles Wang). Hockey fans everywhere said, “what morons, no one else is going to be stupid enough to hand out that kind of a contract.” It wasn’t long, though, before it started. Danny Briere to the Flyers for 8 years, $52 million – and a salary in the final 2 years of $3 million and $2 million. Vincent Lecavalier for 10 years. Johan Franzen for 11 years. Henrik Zetterberg for 12 years. Roberto Luongo for 12 years. Duncan Keith for 13 years. Marc Savard for 7 years, with a $525,000 salary at the end. Marian Hossa for 12 years. Chris Pronger for 7 years, with a $525,000 salary at the end – and, a complaint from Flyers GM Paul Holmgren about how the cap hit should apply for the life of the contract (underscoring the fact that there are people in the NHL in high positions who have no idea how the CBA works). The grand finale was the 15-year, $100 million Ilya Kovalchuk contract, which resulted in a “global agreement” designed to end ultra-long, front-loaded contracts (which teams instantly sidestepped, as we saw in July, 2012). All of those contracts were front-loaded to pull down the cap number – and, were done knowing that (with the exception of Pronger) if the player wasn’t in the NHL for whatever reason, the cap hit wouldn’t apply.
The last 2+ years have been spent picking apart known or potential problems in the CBA. That’s a good thing; it exposes the problems that exist and helps form solutions to fix those problems. [Most of the common solutions offered up have flaws as well; I’ll cover those in the future.] However, no one has done the same thing with the proposals being lobbed out from both sides. If no one is asking questions now, it’s quite likely we end up with a CBA that still has flaws that cause “unexpected” problems, and gets fans and the media to scream that things need to be fixed “next time.” Let’s not have a “next time” we have to wait 4-6 years for, let’s get this right the first time.
So, in no particular order. here’s a simple list of 10 questions (divided into 24 parts) that the media should be asking about the various CBA proposals put out by the NHL and NHLPA – and things not in either side’s proposal that probably should be.
1. One of the core problems with the 2005 CBA (IMO, it’s the biggest flaw) is that the floor has been driven up faster than low-revenue teams can keep up with. Given that the cap ceiling and cap floor are driven by revenue growth, and that revenue growth has been driven by high-revenue teams [who are growing faster than low-revenue teams], what mechanisms are in place to ensure that 6+ years from now, we’re not back in the position where low-revenue teams are once again struggling to hit the cap floor and need either more revenue sharing or ask for yet another rollback on the players share of HRR?
2. The NHL is seeking to have shorter contracts by imposing a 5-year limit. At the same time, the NHL has voiced concerns about salary inflation. Virtually every long-term contract trades salary for length, which pushes down salaries over the life of the contract [even if salaries are higher short-term and lower long-term]. (1) If a maximum contract length of 5 years is imposed, isn’t this more likely to drive up salaries short-term [as players reach for more dollars now] and long-term [players no longer will take less salary in later years; when the contract expires they’ll seek to be paid at fair market value – which is more likely to be above what they would take on a longer deal]? (2) Won’t that cause salaries to become even more skewed toward high-end players, at the expense of all other players? (3) When “5 year maximum” is stated, does that really mean the NHL will be OK with a 5-year contract handed out to a player who’s age 36, 37 or 38?
3. The NHL seeks to limit the change in salary by year across a contract by eliminating the current “100 Percent Rule” and limiting changes to no more than 5% per year. (1) Does the NHL understand why larger fluctuations in salary by year may make sense for both the player and the team, and that implementing this change removes that kind of flexibility? (2) Does the NHL understand that implementing this change makes “salary” and “cap hit” more equal, and that this actually makes the salary cap system harder? (3) The NHL also seeks to allow cap hits to be partially traded (along with the associated part of the salary). Has the NHL considered how this can (will) be abused by teams?
4. The NHL has also voiced concerns about the “second contract” and seeks to shift dollars from younger players toward older players. (1) How does this ultimately help out all teams? (2) Since the players are capped in aggregate in what they can earn in a year, does it really matter how their slice of revenues is divided? (3) Even if dollars are shifted from younger players (thus pushing down their salaries and decreasing salary inflation here), doesn’t shifting dollars toward older players actually cause salary inflation for those older players?
5. Much has been said about the “problem” of ultra-long, front-loaded contracts. While the 2005 CBA had no penalty to teams when the player quit playing in the NHL before the contract ended (other than the “35 and older” clause), the NHL’s solution is to force the full AAV (cap hit) to apply if/when the player is not playing in the NHL (subject to a couple small tweaks) on the team that originally signed the contract. (IMO, this is the 2nd biggest flaw in the CBA.) (1) Does anyone realize how this ultimately impacts the salary cap system for both teams and owners if/when a contract triggers this clause? (2) Why not alter this to state that the amount that counts against the cap is equal to the difference between the AAV and the salary for that year, in order to ensure that “$ paid to the player while in the NHL” = “$ incurred against the cap” for the life of the contract, as the salary cap system is designed to do? (3) The NHL’s proposal would only apply the cap penalty to contracts longer than 5 years in length. Has anyone considered how that change may (will) be abused by teams to still avoid cap hits if/when a player isn’t in the NHL? (4) Coupled with other changes suggested to contracts, has the NHL considered whether this will restrict player movement and make trades even more difficult to make (even after accounting for the ability to trade cap space)?
6. The NHLPA has voiced complaints about escrow and paying players the full value of the salary listed in the contract, and stated that owners are ultimately responsible for the contracts handed out. However, in none of its proposals has the NHLPA ever suggested actually holding the owners accountable for overspending; escrow forces the players to always bear the full brunt of the owners inability to control spending. If the NHLPA is really that concerned with holding owners accountable for the contracts handed out, then why has the NHLPA continually agreed to bear the brunt of such overspending regardless of where the HRR split point is, instead of asking the owners to bear some of that burden as well?
7. Has the NHLPA suggested any changes to free agency? If not, (1) does the NHLPA realize there’s a “dead zone” that exists when a player ends his ELC but does not have 3 years of pro experience [Erik Johnson and Jack Johnson are examples) and thus makes him ineligible to be RFA? (2) Is the NHLPA seeking any kind of changes for offer sheets, other than what was suggested in its initial offer (which had an idea that was terribly worded and full of problems)?
8. No one contemplated the possibility that a 1st-round pick might die before he could be signed (even though it happened with Calgary and George Pelawa in 1986) and thus a compensatory pick might be available until it happened with the NY Rangers and Alexei Cherepanov in 2008. Has either side come up with anything to address this scenario going forward?
9. The NHL’s most recent proposal for revenue sharing removes all penalties for non-compliance, and shifts the burden of revenue sharing more toward the top-10 revenue teams. (1) Why is there no criteria at all to induce teams to grow revenues and/or control costs? (2) Are those teams likely to be in the top-10 in revenues really OK with providing revenue sharing to a team that then proceeds to spend to the Upper Limit and has no incentive to control costs? (3) Given that the NHL’s proposal calls for all teams to reach the Lower Limit without performance bonuses, this is likely to put more pressure on low-revenue teams to spend to hit that threshold … and that will likely cause teams to need more revenue sharing. Has the NHL factored that into its calculations? If so, how much of an impact will that have?
10. The NHL’s proposal for handling the salary cap for 2012-13 suggests a cap of $59.9 million, but allows teams to spend up to $70.2 million without penalty despite the league’s warning to teams prior to the start of free agency (a) not to spend to that amount, and (b) that there would be no amnesty for overspending. Teams also spent up to the $70.2 million threshold knowing that they would push for a lower HRR split point in the next CBA (and were very likely to get it). That ability to overspend the $59.9 million Upper Limit comes without any penalties at all. (1) Is the NHL actually serious about having absolutely no penalty for overspending the $59.9 million threshold in 2012-13? Why not impose some kind of punishment (luxury tax, decreased cap ceiling in future years to offset) for that ability to overspend this year? (2) Has the NHL considered any form of compliance buyouts or compliance renegotiations to help get teams under the cap in ’12-13? (3) If there truly will be no penalties for overspending in ’12-13, the league has essentially rewarded teams who gambled correctly that they’d get to overspend without penalty. What (if anything) is the NHL going to do to ensure this doesn’t happen yet again at the end of the proposed CBA?
Let’s rewind to August, 2005. The NHL and NHLPA had finally signed off on a new CBA, the 2005 Entry Draft had been held, and the free agent frenzy was on. Few details were available about how the CBA actually worked other than what the NHL had released. We knew there was a salary cap, limits on salaries, a fixed trade deadline, new limits on entry-level contracts, and a lower threshold to clear for UFA status. Otherwise, we were all in the dark on what had changed. It would take almost a year for the CBA to finally be released, and even then people who read it as thoroughly as possible didn’t understand the flaws that existed or how those flaws might be abused by teams and/or players. No, that would take 2-4 more years.
It wasn’t until teams started handing out long, front-loaded contracts that most hockey fans realized “hey, something’s not right.” The 15-year contract to Rick Dipietro just looked stupid to everyone (except Garth Snow and Charles Wang). Hockey fans everywhere said, “what morons, no one else is going to be stupid enough to hand out that kind of a contract.” It wasn’t long, though, before it started. Danny Briere to the Flyers for 8 years, $52 million – and a salary in the final 2 years of $3 million and $2 million. Vincent Lecavalier for 10 years. Johan Franzen for 11 years. Henrik Zetterberg for 12 years. Roberto Luongo for 12 years. Duncan Keith for 13 years. Marc Savard for 7 years, with a $525,000 salary at the end. Marian Hossa for 12 years. Chris Pronger for 7 years, with a $525,000 salary at the end – and, a complaint from Flyers GM Paul Holmgren about how the cap hit should apply for the life of the contract (underscoring the fact that there are people in the NHL in high positions who have no idea how the CBA works). The grand finale was the 15-year, $100 million Ilya Kovalchuk contract, which resulted in a “global agreement” designed to end ultra-long, front-loaded contracts (which teams instantly sidestepped, as we saw in July, 2012). All of those contracts were front-loaded to pull down the cap number – and, were done knowing that (with the exception of Pronger) if the player wasn’t in the NHL for whatever reason, the cap hit wouldn’t apply.
The last 2+ years have been spent picking apart known or potential problems in the CBA. That’s a good thing; it exposes the problems that exist and helps form solutions to fix those problems. [Most of the common solutions offered up have flaws as well; I’ll cover those in the future.] However, no one has done the same thing with the proposals being lobbed out from both sides. If no one is asking questions now, it’s quite likely we end up with a CBA that still has flaws that cause “unexpected” problems, and gets fans and the media to scream that things need to be fixed “next time.” Let’s not have a “next time” we have to wait 4-6 years for, let’s get this right the first time.
So, in no particular order. here’s a simple list of 10 questions (divided into 24 parts) that the media should be asking about the various CBA proposals put out by the NHL and NHLPA – and things not in either side’s proposal that probably should be.
1. One of the core problems with the 2005 CBA (IMO, it’s the biggest flaw) is that the floor has been driven up faster than low-revenue teams can keep up with. Given that the cap ceiling and cap floor are driven by revenue growth, and that revenue growth has been driven by high-revenue teams [who are growing faster than low-revenue teams], what mechanisms are in place to ensure that 6+ years from now, we’re not back in the position where low-revenue teams are once again struggling to hit the cap floor and need either more revenue sharing or ask for yet another rollback on the players share of HRR?
2. The NHL is seeking to have shorter contracts by imposing a 5-year limit. At the same time, the NHL has voiced concerns about salary inflation. Virtually every long-term contract trades salary for length, which pushes down salaries over the life of the contract [even if salaries are higher short-term and lower long-term]. (1) If a maximum contract length of 5 years is imposed, isn’t this more likely to drive up salaries short-term [as players reach for more dollars now] and long-term [players no longer will take less salary in later years; when the contract expires they’ll seek to be paid at fair market value – which is more likely to be above what they would take on a longer deal]? (2) Won’t that cause salaries to become even more skewed toward high-end players, at the expense of all other players? (3) When “5 year maximum” is stated, does that really mean the NHL will be OK with a 5-year contract handed out to a player who’s age 36, 37 or 38?
3. The NHL seeks to limit the change in salary by year across a contract by eliminating the current “100 Percent Rule” and limiting changes to no more than 5% per year. (1) Does the NHL understand why larger fluctuations in salary by year may make sense for both the player and the team, and that implementing this change removes that kind of flexibility? (2) Does the NHL understand that implementing this change makes “salary” and “cap hit” more equal, and that this actually makes the salary cap system harder? (3) The NHL also seeks to allow cap hits to be partially traded (along with the associated part of the salary). Has the NHL considered how this can (will) be abused by teams?
4. The NHL has also voiced concerns about the “second contract” and seeks to shift dollars from younger players toward older players. (1) How does this ultimately help out all teams? (2) Since the players are capped in aggregate in what they can earn in a year, does it really matter how their slice of revenues is divided? (3) Even if dollars are shifted from younger players (thus pushing down their salaries and decreasing salary inflation here), doesn’t shifting dollars toward older players actually cause salary inflation for those older players?
5. Much has been said about the “problem” of ultra-long, front-loaded contracts. While the 2005 CBA had no penalty to teams when the player quit playing in the NHL before the contract ended (other than the “35 and older” clause), the NHL’s solution is to force the full AAV (cap hit) to apply if/when the player is not playing in the NHL (subject to a couple small tweaks) on the team that originally signed the contract. (IMO, this is the 2nd biggest flaw in the CBA.) (1) Does anyone realize how this ultimately impacts the salary cap system for both teams and owners if/when a contract triggers this clause? (2) Why not alter this to state that the amount that counts against the cap is equal to the difference between the AAV and the salary for that year, in order to ensure that “$ paid to the player while in the NHL” = “$ incurred against the cap” for the life of the contract, as the salary cap system is designed to do? (3) The NHL’s proposal would only apply the cap penalty to contracts longer than 5 years in length. Has anyone considered how that change may (will) be abused by teams to still avoid cap hits if/when a player isn’t in the NHL? (4) Coupled with other changes suggested to contracts, has the NHL considered whether this will restrict player movement and make trades even more difficult to make (even after accounting for the ability to trade cap space)?
6. The NHLPA has voiced complaints about escrow and paying players the full value of the salary listed in the contract, and stated that owners are ultimately responsible for the contracts handed out. However, in none of its proposals has the NHLPA ever suggested actually holding the owners accountable for overspending; escrow forces the players to always bear the full brunt of the owners inability to control spending. If the NHLPA is really that concerned with holding owners accountable for the contracts handed out, then why has the NHLPA continually agreed to bear the brunt of such overspending regardless of where the HRR split point is, instead of asking the owners to bear some of that burden as well?
7. Has the NHLPA suggested any changes to free agency? If not, (1) does the NHLPA realize there’s a “dead zone” that exists when a player ends his ELC but does not have 3 years of pro experience [Erik Johnson and Jack Johnson are examples) and thus makes him ineligible to be RFA? (2) Is the NHLPA seeking any kind of changes for offer sheets, other than what was suggested in its initial offer (which had an idea that was terribly worded and full of problems)?
8. No one contemplated the possibility that a 1st-round pick might die before he could be signed (even though it happened with Calgary and George Pelawa in 1986) and thus a compensatory pick might be available until it happened with the NY Rangers and Alexei Cherepanov in 2008. Has either side come up with anything to address this scenario going forward?
9. The NHL’s most recent proposal for revenue sharing removes all penalties for non-compliance, and shifts the burden of revenue sharing more toward the top-10 revenue teams. (1) Why is there no criteria at all to induce teams to grow revenues and/or control costs? (2) Are those teams likely to be in the top-10 in revenues really OK with providing revenue sharing to a team that then proceeds to spend to the Upper Limit and has no incentive to control costs? (3) Given that the NHL’s proposal calls for all teams to reach the Lower Limit without performance bonuses, this is likely to put more pressure on low-revenue teams to spend to hit that threshold … and that will likely cause teams to need more revenue sharing. Has the NHL factored that into its calculations? If so, how much of an impact will that have?
10. The NHL’s proposal for handling the salary cap for 2012-13 suggests a cap of $59.9 million, but allows teams to spend up to $70.2 million without penalty despite the league’s warning to teams prior to the start of free agency (a) not to spend to that amount, and (b) that there would be no amnesty for overspending. Teams also spent up to the $70.2 million threshold knowing that they would push for a lower HRR split point in the next CBA (and were very likely to get it). That ability to overspend the $59.9 million Upper Limit comes without any penalties at all. (1) Is the NHL actually serious about having absolutely no penalty for overspending the $59.9 million threshold in 2012-13? Why not impose some kind of punishment (luxury tax, decreased cap ceiling in future years to offset) for that ability to overspend this year? (2) Has the NHL considered any form of compliance buyouts or compliance renegotiations to help get teams under the cap in ’12-13? (3) If there truly will be no penalties for overspending in ’12-13, the league has essentially rewarded teams who gambled correctly that they’d get to overspend without penalty. What (if anything) is the NHL going to do to ensure this doesn’t happen yet again at the end of the proposed CBA?
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17 Critiquing the NHL's proposal [Part 1]
24 Unfounded Optimism
26 The questions (still) not being asked
24 Unfounded Optimism
26 The questions (still) not being asked
I disagree with #8. While it is a tragedy, a case could then be made with regards to players that will not sign with the club that drafts them. Or players that go overseas.
hey, this is outstanding work as usual. could I post this as a guest blog on main site?