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Let’s Make a Deal!

Posted 7:24 AM ET | Comments 8
I sit here today and watch Hurricane Sandy roll across the east coast, what could I do today? So I decided to take a stab at crossing the divided between the NHL and NHLPA. So they were negotiating, or at least gave the impression two weeks back with the offers. Both sides are playing the public relations game instead of actually negotiating. Let me take a quick poll, anyone who cares whose fault this is, raise your hand. Yeah nobody! The blame goes across the NHL, NHLPA, GMs, and agents equally. Both sides say that they don’t need a mediator, but that is the job I am taking today.
I have heard Don Fehr talk about impacts to player’s salary over the new proposal, but here is a number I just generated from Capgeek.com; if the players do not make a deal this season, they will forfeit over $1.8B in salary on the books for this season. This number is low, since not every player is under contract yet.

Hockey Related Revenue (HRR)
First let’s get the major term defined. Hockey Related Revenue shall be all profits that exist from the sale of the NHL product including television contracts, sponsors, merchandise, ticket sales, etc. This is profit so the owners can subtract the cost of running the franchise (scouting, minor league teams, training facilities, etc.) from the bottom line to calculate profit. Now the lawyers from both sides can put this issue to bed. It is the job of the owners to grow the sport. Therefore they cannot claim to create the Winter Classic and that revenue is not part of the HRR. This issue in my solution is not the major factor that the both sides are making it. HRR should be a factor in developing the cap number, not a direct mathematical formula.
My Proposal
Salary Cap Ceiling and Floor
The owners and players have agreed to the contracts on the books so far and for this reason the contracts must be honored in full as signed. This means that the salary cap CANNOT be determined to be any percentage of HRR, since this will cause the contracts not to be honored.

The salary cap stays in place at $70M which allows the current contracts to be honored. The amount of growth in the salary cap shall be the greater number between Cost of Living Increase (COLI) and 25% of the growth of HRR. Additionally a team only has to spend 55% of the salary cap to be compliant with the salary cap. This would allow teams that are struggling to spend only $38.5M this season.

The long-term impact here is that the owners are in charge of growing the game and they get the benefit of that effort, the players get to keep their contracts. It also keeps the salary cap from growing like it has in the last CBA. GMs can plan for the upcoming salary restraints ahead of time. Salaries will be affected in the future, but only by limiting the outrageous contracts. On the plus side, there is no salary rollback.

Contract Terms
Players need to assume some risk as well and for that reason, even for existing contracts, the team would have the right to terminate two (2) contracts due to lack of performance or long term injury that forces retirement prior to the start of any season without an impact to the salary cap. This would make the player an unrestricted free agent, free to sign with any team except the team that released the contract. This also would allow a team that has a player “buried” in the AHL a way out and would let that player move to another situation where he can return to the NHL. Additionally this would allow a team to spend money on other NHL players. A player that is injured needs to be paid as a buyout that has no impact on the salary cap.

Players that signed an NHL contract and are sent to the minors do count against the cap, however the player can be cut from the franchise during the season with a CAP hit of 25% of the salary cap value and free to sign elsewhere in the NHL as an unrestricted free agent.

Length of Contract
There are a few issues within contracts that need to be defined. First is contract length. Maximum contract length shall be 5 years. This means that a player coming into the league enters on a 5 year entry level contract. This takes the player to the age of 23 (if they start at 18) when they become a restricted Free Agent. They are free to sign with any team to an offer sheet, but the current team can match the contract at 90% of the offer sheet value. This gives the home team that has spent 5 years building the player, a home team discount. At 28 (or 2 five year contracts) the player is eligible for unrestricted free agency.

Salary Cap Value
Salary cap numbers shall be calculated as the average of the contract over the term. However, the range of contract values must within a factor of 25% of the maximum contract amount. Therefore a contract of $4M, $3M, $1M, $1M, and $1M is not valid. These last 3 years are only there to drive the salary cap number down. So if you sign a player for $4M on year of the contract, the lowest year you can have a season is $3M.
Plus 35 Contracts
Plus 35 contracts need to be identical to all other contracts. This rule is preventing players from retiring that have become injured in the normal course of the game. This was not the intent of the rule. If a player is injured and can no longer play the game, the player can retire and the team is given full relief of the remaining contract.

Revenue Sharing
Take a percentage of the HRR annually and build a war chest for teams that get into financial problems. It would not be hard t o calculate a percentage that would allow the league to run 3 teams if necessary. If this fund is not needed in any year, the money can be split 75% 25% with 75% going to the owners and 25% being paid to the players. This gives the owners incentive to run their teams responsibly.

Realignment and Growth
Let’s add two new teams to begin play next season. If you add both new teams in the east, and move the Winnipeg Jets to the west, you have 2 balanced conferences. I know this keeps Detroit in the western conference, but geography cannot be helped. Two sixteen team conferences would be created that play a balanced schedule. During this season due to the late start, all games would be conference only playing each team twice at home and twice away, creating a 56 game season. The top 8 teams are ranked and 1 plays 8, etc. The two new teams would be added in Quebec and Hamilton Ontario.

Starting next year the league would be split into 4 divisions as shown here. Each team would play 2 home/2 away games in division and 1 home/1 away game versus other divisions. This makes a total of 76 total games per team.

Patrick: Rangers, Islanders, Devils, Flyers, Capitals, Penguins, Sabres, Blue Jackets
Norris: Senators, Canadians, Maple Leafs, Bruins, Red Wings, Blackhawks, Quebec, Hamilton
Adams: Panthers, Lightning, Hurricanes. Blues, Predators, Stars, Wild, Avalanche
Campbell: Jets, Canucks, Flames, Oilers, Coyotes, Sharks, Kings, Ducks

While this schedule would cost each owner 3 home games, it would balance the schedule so that every team in the conference plays the exact same schedule. It also allows every team to play more regional based games and shorten travel for teams like Detroit, STL, Chicago, etc.

For the playoffs the top 4 teams from each division advance and on a rotating basis teams cross to play another division in the playoffs. For example, Patrick 1 plays Norris 4, Patrick 2 plays Norris 3, and so on. While the Adams and Campbell would square off. This would allow for different playoff matches each season.

So this is not rocket science, and we are talking about two groups splitting over $3B in revenue. While my suggestions may not be the deal, there are enough points here for each side to make a deal. Now NHLPA and NHL sit down and hammer these financial points out! This deal benefits the players in that they get to keep their contracts and it benefits the owners since they get to the keep the lion share of HRR. Win/win and let’s play hockey.

Good Night and Good Hockey!
Filed Under:   NHL   NHLPA   Lockout  
November 5, 2012 7:58 AM ET | Delete
First of all, HRR is not profits. You cannot remove the operating cost of running the League, and then split the profits. You would never be able to pay the players. Your math doesn't add up. Secondly, you'll never get the players to agree to a 5 year EL system. Nor will you get them to agree to having the contracts of 2 players a year, terminated.
November 5, 2012 7:05 PM ET | Delete
The players get to keep 100% of their contract and if they terminate they can re-sign. They almost at the $1B mark of salary lost this season already. Sometimes you have to re-think your position.
November 6, 2012 1:48 PM ET | Delete
good approach...we shall see what happens...i would like to see players be waived and allow them to sign with any other team if they choose too...
November 6, 2012 5:55 PM ET | Delete
November 6, 2012 5:58 PM ET | Delete
Players that are terminated getting to keep 100% of their salary, and re-sign with another team. Increases the players share, and increases player salaries that the League has to pay. exactly the opposite of what the League wants
November 6, 2012 6:05 PM ET | Delete
Players salaries total 1.95B for this Season as it stands now. In order to lose a Billion in salary, half the Season would have to be lost. They're no where near that point now in games lost. It's November 6th.
November 8, 2012 3:42 PM ET | Delete
Sens/Quebec/Habs in the Western Conference? I want some of what you're on.
November 10, 2012 2:00 PM ET | Delete
mjl...been reading your posts...bang-up job...the most sensible posts concerning the lockout on the site (which may or may not be saying much *shrugs*)
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