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.

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