8 Points To A Compromise: A New Model For The NHL's CBA

CALGARY AB CANADA - AUGUST 4: NHL Commissioner Gary Bettman (C) stands for a photo with Josh Gorges of the Montreal Canadiens and Steve Staios of the Calgary Flames at the NHL Heritage Classic Press Conference at McMahon Stadium on August 4 2010 in Calgary Alberta Canada. (Photo by Dylan Lynch/Getty Images)

The NHL and NHLPA proposals are far apart, but here are eight points that can bring them together into a compromise solution.

When details of the NHL's CBA proposal came out around a month ago, it seemed like a pretty clear combination of first-step negotiating framework and shot-across-the-bow to the NHLPA. And when the details of the NHLPA's CBA proposal leaked last week, a day or two of praise soon gave way to greater scrutiny -- scrutiny which showed that the PA's proposal wasn't quite as friendly as initially thought.

How will this all end up? It's hard to tell, though we should all take some solace in the fact that the parties are actually speaking. In the meantime, we can always take the red matter to an alternate universe, one where a middle-ground compromise is achieved by the league.

Outside of actually getting a mechanism to hop through time, space, and dimensions, I've instead taken the main points of both key proposals and built a Frankenstein's Monster version of a CBA. Would it satisfy either party? No, not entirely, but isn't that the point?

Before we start, let's refresh ourselves with the key points of each proposal. First, the owners:

  • Player salary retains linkage to 46% of hockey-related revenues (was 57 percent)
  • Entry level contract length 5 years (was 3 years)
  • Maximum contract term 5 years (was unlimited)
  • 10 years for UFA (was 7 years or 27 years old)
  • Eliminate salary arbitration (was in use)
  • No signing bonuses (was in use)
  • No changing salary (was accommodating to flexible salary structure, though cap hit based on average)
  • Change salary floor/cap to $4 million above/48 million below calculated midpoint (was 8 above/below)

Here are the broader points of the NHLPA proposal. Finer details haven't been made available yet, but you get the picture:

  • Player compensation (cap) grows at a fixed rate over next few years -- not linked -- set to roughly 54 percent
  • Player option to revert to 57 percent on fourth year
  • Expanded revenue sharing
  • Limited trade options for cap space, including extra draft pick

Remember, it's generally considered a fair negotiation when neither side feels satisfied nor ripped off -- grudging acceptance is what we're going for. In general, negotiations usually fall to one or two big points as the driver and a bunch of secondary points that act as bargaining assets. While I'm not Gary Bettman or Donald Fehr, I'm betting that the NHL's big points are 1) scale down the linkage value and 2) add a cap to terms. For the PA, it's 1) expand revenue sharing and 2) increase player flexibility with the ability to trade cap space.

With that in mind, here are the 8 key points for a proposed mash-up CBA (or as I like to call it, One CBA To Rule Them All).

1) Hard linkage drops to 52 percent (Winner: NHL)

The NHL originally proposed dropping the linkage percentage to 46%. Most pundits figured this was a first-offer ploy to give back to a desired 50/50 split per other recent CBA negotiations. In this case, this is a 5% drop from the current CBA but linkage remains. This is important because, as Dirk Hoag pointed out, recent revenue growth was artificially inflated by major deals -- keeping growth at that rate seems unlikely. That's why the NHLPA proposal seemed so clever; it unlinked salaries from revenue but guaranteed a small percentage of growth.

2) Expanded revenue sharing with luxury tax established at final $4 million (Winner: NHLPA)

The current system has a calculated mid-point with both the cap floor and ceiling $8 million from that mid-point. Under this system, the floor remains $8 million below the calculated mid-point. The top half, though, is now a two-step system -- the first $4 million above the cap is tax free while the final $4 million is subject to a tax.

For example, if the calculated mid-point was $62 million, the range between $62 - 66 million would be tax-free while the $66 - 70 million range would be subject to a luxury tax.

And what would that tax be? A straightforward 2-for-1 tax, all of which goes into a cumulative pool on top of the existing revenue sharing fund. Based on prior numbers, this should give anywhere from a 30 - 50% boost to revenue sharing. For example, last year's revenue sharing number was $146 million.

Using this system, the following teams would have contributed to the revenue sharing pool last year (courtesy NHL Numbers):

Team Cap Space Taxable Value Contribution
LAK 0.655 3.345 6.69
VAN 0.883 3.117 6.234
CGY 1.08 2.92 5.84
SJS 1.245 2.755 5.51
BOS 1.353 2.647 5.294
BUF 1.836 2.164 4.328
PIT 2.009 1.991 3.982
NJD 2.249 1.751 3.502
PHI 2.696 1.304 2.608
TOR 2.874 1.126 2.252
EDM 3.116 0.884 1.768
CLB 3.151 0.849 1.698
NYR 3.178 0.822 1.644
CHI 3.878 0.122 0.244
TBL 3.905 0.095 0.19
DET 4.459
MTL 4.924
ANA 5.03
WAS 5.255
MIN 8.533
FLA 8.752
STL 9.525
PHX 9.598
WPG 12.386
NAS 12.553
OTT 12.622
NYI 13.88
CAR 13.93
DAL 14.419
COL 14.74
Total 51.784

That's an additional $51.7 million put into the revenue sharing pool, boosting revenue sharing to $198 million. Not satisfied with the number? If you increase the tax value to $5 million rather than $4 million, then the cumulative value is $83.8 million, making the revenue sharing number approximately $230 million.

Of course, the point of revenue sharing from the PA's perspective isn't about being good samaritans and spreading the wealth around. It's about giving the teams with less revenue more money so they can have bigger player budgets, thus providing a mechanism to boost the overall player salary.

3) Salaries rolled back 5 percent (Winner: NHL)

This is more of a bone thrown at big revenue teams. A 5% rollback isn't a ton, at least for pro athletes (consider a $7 million player; his ultimate loss is $350,000), so while it's certainly objectionable from the PA perspective, it's not the end of the world. For small salary teams, it won't make a big difference but it'll certainly be nice. However, for those close to the cap/tax limits, it will provide a little more flexibility in getting acceptable rosters given the current status of contracts.

4) Limited trade options for cap space (Winner: NHLPA)

Some GMs want this and the NHLPA wants this as part of its means to loosen up activity. The problem with trading cap space is that you don't want it to be run rampantly. After all, what is the value of cap space?

Rather than let it be arbitrarily decided by the teams making the deals, I've set up a straight value for cap space. The PA initially proposed limited trade options, and while this may not reflect what they had in mind, it provides structure and value for what is being moved.

  • One second-round pick for up to $1 million
  • One second- and one third-round pick for up to $2 million
  • Two second-round picks for up to $3 million
  • One first-round pick for up to $4 million

As for the fine print, any money spent over the cap results in being taxed (thus, an additional 200 percent of the cap value goes into the revenue sharing pool) and the only teams that are allowed to trade cap space must be within $4 million of the cap floor -- the bottom 25 percent of the cap range.

Does this give incentive for teams to be cheap? To some degree, yes, but they're not getting cash for it, they're trading off unused assets for hockey assets, which should theoretically benefit their on-ice product. And if/when your team's better, you generally won't be in that bottom 25%. It's kind of the same idea between giving the worst teams the highest draft picks; this should help increase parity in the league, though the success of that depends on the performance of a club's scouts and general manager.

5) Max terms set at 8 years (Winner: NHL)

This is a compromise between the status quo and the NHL's proposed maximum length of 5 years. At 8 years, you're really not doing too much damage to the players -- only a fraction of the 700+ players go more than 8 years. It's still long enough to generally be thought of as too damn long by the regular fan -- and long enough to last about roughly half the career of a stable NHL player.

Think of it this way -- if you're getting a player in his prime hitting UFA status at 27 (per the current CBA, but see below for more on this), then a max 8-year deal takes him to 35, or nearing retirement age. He probably gets 1 or 2 more short contracts if that, but in terms of actual cash payout, you're probably not taking away much of his earning power at that age. For a hot-shot young player coming out of his rookie contract, he could be anywhere from 29 to 32 when he finishes the contract (depending on the age he breaks into the league) -- still in his prime, though on the downside of it, but good enough to warrant a significant contract to play through his final years.

It's a compromise solution that doesn't shy away from the mega-deal (because realistically, a few years ago, an eight-year contract would have been mind-blowing) but still puts a heady limit on things.

6) Entry level contract length at 4 years (Winner: NHL)

Here is another compromise solution. The NHLPA wants the current status quo of a 3-year rookie contract. The NHL wants it raised to a 5-year deal. Split the difference, make it four years, and no one's happy so it's a winner.

7) UFA changes to 28-or-8 (Winner: NHLPA)

Since the NHL is getting some headway in the areas of contract term, it's time for the NHLPA to get some compromises leaning their way. The current CBA uses a 27-or-7 system (27 years old or seven years in the league) to define unrestricted free agency. The NHL wants it as a flat 10 years in the league. The compromise is to keep the age limit, but raise both values by one year -- not the the three years that the NHL wants.

8) Arbitration remains the same; signing bonuses remain the same; salaries allowed to fluctuate (Winner: NHLPA)

Why does the NHLPA win these points? These are secondary compared to the points listed above, and I'm guessing the NHL made them part of their initial proposal to function as givebacks during the negotiation process. Consider them given back, especially since the league's proposal acts as a larger foundation for this compromise CBA than the PA's.

Now, let's revisit those big-ticket items from before:

For the NHL...

  1. Scale down the linkage value: Achieved by dropping it to 52%
  2. Add a cap to terms: Achieved by adding a maximum of 8 years.

For the PA...

  1. Expand revenue sharing: Achieved with the implementation
  2. Increase player flexibility by trading cap space: Achieved by adding a draft-pick-for-cap-space value system.

Is it a perfect CBA? No, but both sides get their principal points done. In the end, it walks as close down the middle as one feasibly can and would leave a number of constituents on both sides grumbling. Most importantly, I can only imagine that a few extremists on either side would absolutely hate this, which means it's doable.

Of course CBA negotiations rarely get to a middle-of-the-road compromise -- they usually lean one way or the other. But how about they bring this model to their big meeting on Wednesday and use it as a starting point?

For all the news surrounding the NHL's collective bargaining agreement and the ongoing quest to replace it, stick with this StoryStream.

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