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What do the NHL owners want from a new collective bargaining agreement?


Question: What do the NHL owners want from a new collective bargaining agreement?
Update: The NHL lockout ended in July, with a six-year collective bargaining agreement. For the details see:
  • How the NHL Salary Cap Works
  • Highlights of the New NHL Deal
  • New NHL Rules for the 2005-06 Season
  • Answer: The NHL, on behalf of its 30 teams, is looking for "cost certainty," defined as "a rational and enforceable relationship between revenues and player salaries." It is better known as a salary cap.

    In its most recent public offer, on February 2, 2005, the NHL asked for a six-year deal. It's main features:

    1. League-Wide Salary Cap

      A formula will see the players receive 53-to-55 per cent of all NHL revenues.

      This is the deal-killer. The players want no part of any such restriction. The percentage formula is especially unattractive now, because short-term league revenues will likely drop because of the the lengthy lockout.

    2. Team Salary Cap

      A team payroll will be no less than $32 million and no more than $42 million, benefits included. This range will be adjusted every year, ensuring that players receive 53-to-55 per cent of league revenues.

    3. Possible Salary Cap for Individual Players

      "The parties may have a mutual interest in negotiating over the establishment of an NHL maximum salary for individual players. No specific amount is being proposed."

    4. Salary Cap for "Entry Level" Players

      In his first four years in the NHL, a player will earn no more than $850,000 per year in salary and signing bonuses.

      He can be offered additional incentives: Up to $250,000 in performance bonuses (for goals, assists, etc.) and up to $500,000 for finishing among the top five in voting for major awards.

      Few players qualify for awards, so the salary-plus-bonuses formula would cap most entry-level salaries at $1.1 million.

      Under the old agreement, there were no meaningful restrictions on bonuses, and the entry-level system applied to the first three years of a player's career.

    5. Salary Rollback

      The NHLPA's December 9 offer of a 24 per cent across-the-board salary cut is accepted.

    6. Contract Lengths Restricted

      The maximum term of an NHL contract will be three years.

    7. Unrestricted Free Agents

      The age at which a player becomes eligible for unrestricted free agency drops from 31 to 30.

      This is a concession to the players, though many believe a more crowded free agent market will help discourage bidding wars.

    8. Restricted Free Agents

      As in the previous agreement, a player who is not an unrestricted free agenct becomes a restricted free agent when his contract expires. He must receive a "qualifying offer" from his team, or he becomes unrestricted.

      A qualifying offer will be 100 per cent of last season's salary for players making under $800,000, and 75 per cent of last season's salary for those making over $800,000.

      A restricted free agent can accept an offer from other teams. But his old team can match the offer or receive compensation, as in the previous free agent system.

      A restricted free agent must sign a contract within 14 days of the opening of training camp, or be ineligible to play that season. This is designed to prevent lengthy hold-outs in contract disputes.

      Combined with the new limits on salary arbitration, the new rules for restricted free agents would virtually eliminate any bargaining power for the majority of players in the league.

    9. Salary Arbitration

      All restricted free agents are eligible for arbitration to settle contract disputes. Teams or players can initiate the process. Under the old salary arbitration system, only players could request arbitration.

      Teams can avoid arbitration at any time by offering the player 105 per cent of the previous season's salary.

      The league can "eliminate salary arbitration mechanism in its entirety at any time" by dropping the age of unrestricted free agency to 28.

      The "105 per cent offer" provision and the potential elimination of the system renders salary arbitration toothless. Players are willing to accept modifications, but are not likely to agree to this.

    10. Possible Payroll Tax

      The parties will explore "the use of a Payroll Tax on Clubs within the Floating Team Payroll Range at the Union's sole discretion."

      This is what the NHLPA proposed, but they want it instead of a salary cap, not in addition to it.

    11. A Profit Sharing Plan

      Players and teams would split profits 50-50, once profits exceed a level to be negotiated. A promising idea, but sketchy on the details.

    12. Joint Auditing and Accounting

      To ensure that the players get their 53-to-55 percent. Teams that do not report all revenues will pay stiff fines.

    13. Joint Owner-Player Council

      To meet regularly and make recommendations on various business and game-related issues. The players have long wanted this.

    14. Minimum NHL salary increases from $185,000 to $300,000.

    Source: NHL CBA Website

    To bolster its case for a salary cap, the NHL makes several claims:

  • Players' salaries consume 76 percent of NHL revenues. That's a higher proportion than in the NBA, NFL or Major League Baseball.

  • A study commissioned by the league says 19 of 30 NHL teams lost a combined $273 million in 2002-03.

  • Under the expired CBA, the decisions of a few teams change the economic environment for all 30 teams, driving up salaries everywhere. This must change.
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