Sunday, October 21, 2012

Let's Make a Deal

While I have a lot of unorganized thoughts about the lockout, I did come up with this idea over the past few days. I don't think this will solve everything, but it's a start and something that I think is a bit different.

Let's assume a 50/50 split. Aside from the part where the players' share is going down from 57% to 50%, that's a fair deal. I know there are some details that aren't agreed on but can't be quantified in a 50/50 split (such as when salary arbitration and free agency can start for a player).

I should also mention that I support a salary cap to help prevent the top salaries from getting out of hand (some of the money to pay for that comes from the fans, and it also ends up hurting the teams too much because there is less money to play with). But let me propose a couple of alternate ideas.
  1. Raise the league's minimum salary. This isn't just about the highest paid players. It's about the 3rd and 4th line guys who aren't able to find alternate employment in the AHL or in Europe during the lockout.
  2. Create an individual salary cap instead of a team salary cap. Create some complex formula based on HRR that determines the minimum and maximum player salaries, but the idea (in 2012 US dollars) is that the floor is about $1 million and the ceiling is about $7 million. I still have trouble with the idea that any single athlete is worth $7 million, but I think that number seems fair based on where salaries are.
  3. There is still a limit on total team salaries. Sorry, but that's not going to go away. But salaries are better distributed.
  4. No more front- and back-loaded contracts. A total of $25 million over 5 years is paid out, and counts as $5 million per year for each of 5 years, and if the player doesn't play in year 5, he doesn't get paid.

The players are complaining about existing contracts being honored and having to give up a lot of potential money. Both are legitimate gripes. Last time, the players had to make huge concessions and then their share rose to a level that is too high. At the same time, the owners are putting the squeeze on because the players got too much at the end of the last CBA. But the owners also signed players to deals of the past couple summers that violate anything they support, so they aren't exactly perfectly innocent here.

So how do they honor the existing contracts while dropping the players' share? I don't think the correct answer is to say that those contracts are grandfathered in, and teams must slash other salaries in order to be in compliance with the salary cap. So let me throw this idea out for consideration.

  1. Give the NHL owners a one-time opportunity (well, actually a requirement) to buy-down any contracts that put a team out of compliance with the new CBA (ideally based on my rules), including salary caps. That includes both front- and back-loaded deals. It's kind of like refinancing a loan/mortgage. For the players, they are still getting the money that they expect. For the owners, it's their fault for signing those contracts, so they must be honored. The end result is that players contracts and team's total salaries must be in compliance with the new rules (and that may include giving some lesser-paid players raises).
  2. The buy-down money paid to the players comes from a league fund funded by the first two years of the drop in player's share from 57% to 50% (if the math doesn't work out, then it's the first 3 years). This doesn't count towards the 50/50 split. This is from the savings, basically as much as needed, to buy-down existing non-compliant contracts.
  3. Players would be paid out in installments over time that start once their playing career is finished, with each player negotiating with the league exactly how. Example: for a $5 million buy-down, it could be $500,000 per year over 10 years, $1 million per year over 5 years, or $200,000 over 25 years. The buy-down amount would be based on the average of remaining salary for remaining contract term (can't do much about season that have been played and paid for).
  4. With the league basically deferring salary over time, the league can invest the money and make some money on it, splitting dividends with the owners, so that what they re-claim from the NHLPA isn't a total loss. Worth repeating: this buy-down money doesn't count towards or come from the 50/50 split. Rather, it's funded by the sudden drop in the players' share from 57% to 50%.

I don't think this will solve everything, but I think the biggest issue is how the owners can take more money from the players (something they're somewhat justified in doing for a 50/50 split) and how the players won't lose their existing contracts.

Leave a comment or drop me a line at DyHrdMET [at] gmail [dot] com. Your comments will fall into a moderation queue.

Saturday, October 13, 2012

Opening Night

It's Opening Night. But instead of heading to my familiar train station to take me into Newark Penn Station with that short familiar walk to Prudential Center, last taken about 4 months ago during the Stanley Cup Finals, I'll be making a very long and unfamiliar drive up to Albany to sit in an unfamiliar arena to see the Albany Devils play in their home opener.

Of course, the Albany Devils are the younger brother of the New Jersey Devils. Actually, they're the AHL affiliate, the top minor league team, of the NHL's Devils, but their GM is our GM's kid and a number of younger brothers (and I think a few older ones and cousins too) of current and former NJ Devils players have played, or are playing for Albany. I can't wait for the day when a Devils' kid get drafted and assigned to Albany. We're getting close, after drafting the son of a former Ranger who broke our hearts 18 years ago. I won't go into whose kid(s) I have in mind.

But it comes to this because we've reached the point where the originally-scheduled NHL's Opening Night has come and gone, and the lockout still continues. And I need my hockey fix. So I am heading to Albany for the game.

Some lockout thoughts for you.

Let me elaborate on this one. As a business, I can't imagine many scenarios in which it is better for business to be shut down than to operate, even if operation is not under idea conditions. I don't want to start a conspiracy theory here. Maybe the owners and Bettman are just stupidly stubborn and won't unlock the league until they get the deal they want. But how would it hurt them to play under the old deal while negotiating a new deal? Of course, it should have been done last year, but right now, that's besides the point. The NHL owners seemingly have wanted the lockout the entire time. Are they shutting down the league to drive down goodwill and therefore, drive down some immediate revenue, while taking in other money at fixed prices, all with the expectation that they can get a better deal on something that's locked in when revenue does go up (which might be expected since it did the last time)? Any NHL owner who thinks it's better to NOT be in business right now than it is better to be in business with a bad deal should just look to sell and get out of the league. We'll be hearing reports on how much money the NHL is losing or has lost with all of the missed games.

And on the flip side of that, I had this realization the other day.

Don't let either the NHL or NHLPA tell you that all games are important. Because if they were, we'd be watching NHL hockey tonight.

Leave a comment or drop me a line at DyHrdMET [at] gmail [dot] com. Your comments will fall into a moderation queue.