Friday, 17 August 2012

A modest CBA proposal to save the NHL. From itself.

Okay, let me see if this would work.

Let's take for granted that the NHL needs a salary cap to ensure some competitive balance and a level playing field, to avoid the situation such as exists in Major League Baseball where you have the Yankees and the Red Sox, maybe the Angels, and then everyone else.  Let's also assume that the players can live with a salary cap, as they indicated in their eminently reasonable proposal to the NHL owners this week, one that Gary Bettman predictably rejected with no real consideration.

Let's accept that the League is healthier if it has a broader footprint and teams in a lot of different markets, to a reasonable extent, so that it makes sense to support a Carolina or Florida team within reason.

Let's also accept that the NHL doesn't have a player cost problem, since these costs are fixed at 57%, and this is guaranteed through the salary cap and escrow system.  That's what the owners kept trumpeting during the last lockout, that they needed 'cost certainty', that was their buzz-word, their double-speak for the uglier 'salary cap' term, and what they got a lot of fans on board with, cost certainty made sense to a head of a household who's trying to manage a budget.  They got their blessed cost certainty, so that's not an issue right?

Instead, the league has a low-revenue franchise problem.  These are the franchises that are suffering and weighing on Gary Bettman's mind, so much so that he wants to hammer down the players' share of the revenue they generate to an absurd 43%, again it must be stated with little financial evidence that this is necessary.

So how about we do this (and I say 'we', because I pay for these revenues, the money doesn't just materialize out of thin air, so I have a stake in this):

We leave the players' share of HRR at 57% as agreed the last time the owners deprived us of NHL hockey for an entire season.  We leave the salary cap at $70M.  The big change is that we eliminate the salary floor, to no longer require the weak sisters from spending money they don't have.  Instead of forcing them to pay $50M they swear they don't have, let's allow them to sink down to $45M, $40M, heck even $30M if need be.

Wait, there's more.  Don't just sigh that this has been bandied about before and it won't work, because then we can't guarantee the players' share of revenue.  We'll get to that.

In the system with no cap floor, we'll have twenty or so teams that all have a roughly equal shot at contending for the Cup budget-wise.  They'll all be packed together near the ceiling.  There will be eight or ten teams out of the running from the get-go, but that will be out of the team's and market's choosing.  They won't be forced to buy a couple of high-priced washed up veterans to reach an arbitrarily floor if they want to spend a couple of seasons developing their youngsters (I'm looking at you, Islanders).

For those teams bumping up against the cap, we can use the NHLPA's proposal of allowing them to purchase 'cap credits' from the weaker teams if they want, and for this they'd have to compensate them with a lower-round draft pick, and the league with a luxury tax that goes into an escrow fund.  So in the Players' proposal example, the Rangers flip a fifth-round pick to the Islanders for their $4M cap credit, and then pay out $4M to the escrow fund.  In effect, the repugnant James Dolan will now pay two dollars for every dollar he goes over the cap.

So in this system, most teams are in the running, three or four are beating their brains out by going over the cap, and there is a group of teams that uses the fiscal timeout to build a team through the draft and their fan base, until slowly they emerge as a power like Nashville did last season, hopefully with an energized fan base.

At the end of the season, the players' share of revenue is calculated.  I would think that invariably this would work out to under 57% of HRR, at which point all teams top up player salaries a corresponding percentage from the escrow fund.  For illustration only, let's say that the players salaries amounted to 55% of league revenues, which means that their paycheques were roughly 3% too low.  Now every player gets a cheque from the escrow fund bumping up their pay by three percent for the year.

This can be a form of equalization.  Let's say that teams below the now completely theoretical floor contribute to the fund at a rate of a dollar for every two dollars that teams at the cap pay in, on a sliding scale so that a team at the midpoint would chip in a buck and a half.  Maybe luxury tax teams chip in $2.5 for every buck by a salary floor team, something like that.

On another matter up for consideration, let's say entry-level contracts stay at the same two or three years duration.  That system works.  When a Steve Stamkos or Drew Doughty is a star player and major award candidate in their second or third year, it isn't fair to ask them to be locked in for five years.  They've paid their dues and deserve to be paid a higher wage after three.  In the case of a player like Blake Geoffrion, for example, this player comes off his entry contract and makes roughly the same amount of money and tries to earn a higher amount in a subsequent contract by the dint of his play.  Guys like Alexei Emelin and Raphaël Diaz earn a decent raise based on their decent play.  Again, this works.

Arbitration stays, if the players' rights are owned by teams, they must have some power to negotiate, although maybe there's a mechanism that spells out top end and bottom end salaries players can earn, based on objective criteria.  It would be understood that the 'homerun' contract is the third contract, the second one is the bridge contract that pays much better but doesn't max out unless you're the aforementioned Steve Stamkos and reach a few objective targets.

The players gave up a lot in the last round (24% rollback on salaries, people) in return for more freedom of movement, so I'm loath to take this away, but I believe the game is healthier when players stay with their teams longer and teams are more stable roster-wise.  When the Minnesota Wild or Colorado Avalanche roll into town, I'd like to know that pretty much the same players are going to be in their lineup from year to year.  It's good for rivalries and team identity.  Fans, especially children, respond well to that stability.  I grew up with the same Canadiens, Expos and Alouettes year after year, and I'd prefer if the new generation had the same attachments to their heroes.

So I would roll back the free agency eligibility criteria.  It doesn't make sense in the big picture for 26 year old players who are hitting their athletic peak to be able to desert their teams.

For when the players do reach free agency, I would also create a 'hometown' hero system where a player can earn more money with his incumbent team than by shopping himself to other clubs.  So the player would be allowed to move, but it wouldn't be in his best financial interests on top of everything else.  In a way, we'd be fostering more Joe Sakics and Daniel Alfredssons and discouraging mercenaries like Dany Heatley and Pavel Bure.  I have struggled with the details of this, maybe the weaker teams are allowed to dip into revenue sharing or escrow money for this, but there has to be a way to prevent every star from ending up a Ranger.

So there you have it.  The players still take in 57% of HRR, maybe a little less if they're in a generous mood/quaking in their boots at the thought of a lockout, there's still a salary cap to ensure competitive balance, but not a floor that's driving smaller market teams to bankruptcy.  Super rich teams can appease their fans and competitive drive by going over the cap if they desire, and in doing so pay into revenue sharing through the luxury tax.  An escrow system underpins this system, one which gives the smaller teams a breather.

After three to five years or so, the League and PA can re-assess if the small market teams are using this breathing space to load up and climb back up the standings and payroll rankings.  If not, and the situation is not likely to improve, then relocation can be considered, but without a gun to anyone's head.

Comments are welcome.  Be kind when pointing out errors or fallacies.  Good talk.

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