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NHL Lockout Watch 2012: Negotiations as of September 13

Closer, but not nearly close enough.

By

NHL Lockout Updates: Check here for the latest on negotiations between the NHL and NHL Players' Association..

Details gathered from assorted media sources.

The Owners Want to Make a Major Pay Cut

Under the 2005 CBA, the players were guaranteed a fixed percentage of overall NHL revenues every year. In 2011-12, that share was 57 percent of $3.3 billion, or about $1.87 billion.

Overall revenues have increased every year since 2005, which is why the players' share and the salary cap climb every season. The owners want to curtail the payout.

In their latest six-year proposal, the owners would cut the players' share of NHL revenues to 49 percent (year one), 48 percent (year two), and 47 percent (for the final four years). Those lower numbers would drag the cap down accordingly.

This is a move off their initial offer earlier in the summer, which would have given the players about 43 percent every year.

Still, it's an immediate and deep salary chop. league revenues would have to grow at a spectacular rate for the players to maintain the $1.87 billion they took in last season.

The Players are Willing to Limit Their Pay Increases

The players still want a raise every year. But they've made on offer that moves off the percentage-of-revenue model.

Using the $1.87 billion the NHLPA members got last season, they want they want raises of 2 percent, 4 percent, and 6 percent over the next three years.

So overall NHL payroll would be set in stone for three years. It wouldn't rise or fall based on league revenue numbers.

In year four of the deal, the players would get their year-three money plus 54 percent of all new league revenue. The final year would be similar: year-four money plus 54 percent of new revenue.

So if the next five years are a boom time for the NHL, the players would get in on it in the final two years of their proposed deal.

Putting the Onus on the Owners

The NHLPA model appears partly designed to give NHL teams an incentive to maximize growth.

With total salaries fixed for three years, all revenue over and above that total would go directly to the owners.

That means the league would have every reason to solve problem franchises like Phoenix and take measures to ensure the economic health of struggling teams. It's a three-year window in which the players would be largely shut out of any major revenue bonanza.

The Seven-Percent Growth Assumption

As the numbers are analyzed, you'll often see the phrase "assuming league revenues continue growing at 7 percent..." used in explaining the proposals by each side.

Since 2005, the NHL's average rate of growth has been just over 7 percent per year. That's why the figure is used so often to project revenue in the years to come.

The Money Gap

Under the seven-percent assumption, most estimates say the difference between the two proposals is over $200 million per year.

"Hockey-Related Revenue"

Hockey-related revenue (HRR) defines exactly what is included when the NHL calculates its total revenue every year.

In their earlier proposals, the owners want to narrow the definition of HRR to exclude some income sources from the players' share.

This idea has now been dropped, and both sides appear to agree that the current definition of hockey-related revenue will continue.

Escrow Payments

To ensure the correct revenue split, a percentage of player salaries is placed in an escrow account every season. When exact league revenues are calculated at the end of the season, the escrow cash is divided to ensure that the players get their agreed-to share.

Players estimate that the owners' latest proposal would see escrow payments climb as high as 15-to-20 per cent of a player's salary. That more than doubles the escrow payments made under the 2005 CBA. The players oppose this.

Revenue Sharing

This appeared to be a major issue in early talks, but faded from prominence as talks continued in late August.

The revenue bonanza of recent years has not included every NHL team. Those in the biggest and healthiest hockey markets are making more money than ever. But it's estimated that six-to-ten franchises are struggling to break even.

According to various estimates, the NHL's current revenue-sharing plan sees the rich teams distribute $140 million-to-$180 million to the poor teams every year.

The players' initial offer called for a revised system that would see more than $250 million shared between teams every year. It would eliminate restrictions that leave teams in large markets ineligible for revenue sharing, and eliminate penalties to small-market teams that fail to grow revenue.

The owners, according to Bettman, are willing to increase revenue sharing "in a variety of ways," but are more focused on "paying out less in player costs."

The Salary Cap

Everyone agrees that the salary cap structure will remain.

But as explained above, both sides have made proposals that would change how the cap is calculated.

Entry-Level Contracts

Players in their first three years of NHL employment are the cheapest, because of strict limits on "entry-level" contracts.

The owners want the entry-level term increased to five years.

The players want no change to the current system.

Unrestricted Free Agency

The owners want a player to put in ten NHL seasons before qualifying to become an unrestricted free agent.

The players want no change to the current UFA threshold, which is seven years of service, with limited exceptions.

Maximum Contract Terms

The owners want to limit player contracts to a maximum of five years.

The players want no change to the current system. There is currently no limit on the length of a contract.

Salary Arbitration

The owners want to eliminate the current system of salary arbitration.

The players want no change to the current system.

Salary Cap Flexibility

At least one earlier NHLPA proposal would have given teams the flexibility to spend up to $4 million over the salary cap or drop as low as $4 million under the salary floor. This would be achieved by new rules allowing teams to trade salary-cap space.

Non-Player Spending

The players have proposed a cap on how much teams can spend on coaching, scouting, management, and other off-ice expenses.

Extra Draft Picks

The players have proposed a mechanism that could see financially troubled teams awarded extra selections in the NHL Entry Draft.

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