Moldy Peaches

The NHL and the NHLPA are set to ratify a six year collective bargaining arrangement late next week and then hockey will have a new world order. In the hours and days following the announcement of a tentative settlement pundits have been speculated on which side got the better deal - players or owners. The majority of writers, fans and players believe that the owners cleaned up, but that declaration is likely way too premature.

First, the facts:

- A 24 per cent salary rollback on all existing contracts.

- The upper limit on the salary cap for 2005-06 will be $39 million US while the minimum floor will be at $21.5 million, based on projected revenues of $1.7 billion.

- Players salaries cannot - on a league-wide basis - take up more than 54 per cent of revenues; In ensuing years, the cap levels will be decided by the previous year's revenues.

- A percentage of salaries will be put into escrow until the new salary cap can be calculated at the end of each season.

- No player can earn more than 20 per cent of the team cap, which for 2005-06 means no player can earn more than $7.8 million. It is worth noting that one player was apparently grandfathered on this rule - Jaromir Jagr is slated, with the rollback, to make $8.36 M and there a reports that he not be asked for a further salary reduction.

- As of 2007-08, players - regardless of age - can become unrestricted free agents after seven years in the NHL, with the 2004-05 wiped-out season counting in the service time. That means any player who began his career in the NHL at the age of 18 can qualify for unrestricted free agency at 25. In the meantime, the age of unrestricted free agency will remain 31 this summer but will gradually be brought down to 27 by the end of 2007-2008 season.

- Revenue-sharing where the top 10 money-making clubs donate to a fund shared by the bottom 15 teams.

- The entry-level system will limit those players to $850,000 a year in salary (which it was 10 years ago) with bonuses not as easily reachable as the previous deal. The maximum possible amount in bonuses is $4.5 million although it's unrealistic for almost anyone to reach all the lofty targets. The age for draft eligibility will also be raised from 18 years to 19 years.

- Two-way salary arbitration. Both players and owners can select to go to arbitration, whereas only players had those rights in the previous deal. This will allow owners to downgrade underperforming players.

- The ability for teams to buy players out of their contracts at two thirds of their value at no cost towards the salary cap within 10 days after the CBA officially takes effect. This is meant to help teams fit under the cap but the clubs won't be able to re-sign those players. Unrestricted free agent signings would start at the end of that 10 day period - which is expected to be August 1.

- Teams will not be allowed to re-structure existing player contracts in an attempt to fit a big salary under the cap.

- League-wide minimum salary bumped up to $450,000 from $185,000. The minimum goes up to $500,000 in the sixth year of the deal.

- The league will play an unbalanced schedule. Teams will play their four divisional opponents a total of eight times for 32 games. Teams will play their 10 conference rivals a total of 4 times for 40 games. Teams will play a home-and-home against each team in one division of the other conference for a total of 10 games - grand total of 82 games.

- Participation in the February 2006 Olympics in Turin, Italy.
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Now, the actual investigation of the deal can begin. At first blush it appears that the players got schooled during these negotiations, however, like everything there are two sides to every story. Pundits will point to the rollback, the salary cap, two-way arbitration and lower entry level salaries and think that the players got it bad. This, however, is probably a little naive and plenty harsh.

First, it is true that the salary rollback was a public relations gamble that did not payoff for the players (early on in the negotiations. Second, there was no way that hockey was ever going to resume without a salary cap and, frankly, there is no reason why there wasn't one sooner. The salary cap (combined with meaning revenue sharing - more on that later) has allowed all teams in the NFL and to a lesser extent the NBA to be competitive. There is even a maximum player salary.

First three goals - Owners.

This non-sense about the lack of a free market is utterly delusional. A true market would have unlimited franchises bidding on the services of players. The fact is there are only 30 teams and the NHL is an exclusive club. I can't, even if I was interested and had the funds, setup a franchise in Montreal to compete with the Canadians. In fact, think back to the fight over the possibility of adding Hamilton to the league and the impact that had on both Toronto and Buffalo. Unlike Terrance Cochrane of the National Post, I will not lay this blame at the feet of the NHLPA, but this is an owners issue.

Note to self - The Cochrane column is actually worth a post at a later date since it is littered with errors and half-truths. In fact, in reading the article one comes away with the distinct impression that unions are too blame for London bombings, AIDS in Africa and Michael Jackson enjoying freedom.

Third, at least that is where I think I left off, the idea of two-way arbitration is an actual progressive idea. It is impressive that the union agreed to it, in fact, contrary to the Cochrane article, the union is subjecting their players to performance based contracts. If a player performs well, a significant raise will likely be do, however, now, if he performs poorly that same player could see a reduction in salary.

Goalpost - this change will make little difference since owners had the option to walk away from contracts before and rarely took it.

Fourth, there is actually revenue sharing between the top 10 markets and the bottom 10 markets. This may not be perfect, but this will level the playing field. Now, this is where critics say if Edmonton can't compete with Detroit then they shouldn't be in the league, however, that would likely result in a 12 team league and I am sure that nobody would want to see that - players, owners or fans.

Goal - players.

Fifth, the buying out of contracts is a wash. Again, all major sports have this and so the addition plus the cap was inevitable. Plus, the inclusion of a drug policy with actual teeth. This will benefit both the sport and the individuals.

Goalpost.

Sixth, the significant lowering of the age threshold for free agency. This is huge for players in a new era of capped salaries. Players will be able to control their own playing locale sooner in their careers, for many, this will occur in their prime.

Goal - players.

Seventh - a return to Olympics for 2006, and even though it isn't stated, 2010 in Vancouver. This is a win for both sides. The league gets needed exposure on major world networks during the biggest winter event and the players get to compete for a gold medal.

Goalpost.

Eighth, an increase to the minimum salary. Even though it was listed at $180,000, there weren't that many guys making it, however, now the minimum threshold is $450,000. This should protect 4th guys, 7th defenseman and 3rd string goalies from getting the table scraps.

Goal - players, but it barely crosses the line.

Ninth, the complete redo of the entry level system. The system is reverting back to the resemble more the pre-1994 deal. Rookies will have a hard time collecting bonuses and their salary will start near a logical point. Plus, the draft age has moved and that is a victory for minor hockey. Junior teams may get to hold onto their players for an additional year.

Goal - owners.

Tenth, and final. The salary cap is tied to league revenues. The players (while not wanting a salary cap originally) wanted linkage and the got it. This can cut two ways: if revenues grow in future years, the salary cap will move upward in the players' favour, perhaps much higher than the $42.5-million hard cap offered by the league before the season was cancelled; but if the NHL gets hammered by the fallout from the lockout, the cap could be even lower than $39 million for the 2006-07 season.

Goalpost - it almost goes in, but there are still doubts about how much effort some teams will put in marketing the game. It is too bad because this should have been a player’s goal.

Conclusion

In the end, it appears that the owners come out ahead (although time will tell who is the actual winner), but only by a little margin. This, however, does not factor in the geographic advantage that franchises have over others and I think this will be huge in the years to come. Players, knowing their salary ranges and potential maximums, will be a lot savvier as to where they sign. Teams can't wildly out bid for the services of players and that will mean, as real estate agents say, location, location and location.

For example, there will be nothing stopping 4-5 friends from signing contracts with one team - say Ottawa - to want to join a couple of others, to win a Cup. Also, the fanbase for the franchise will be huge. Toronto, Montreal, Detroit, Minnesota, Philly, Edmonton, Calgary, Vancouver, New York Rangers, Colorado, St Louis and Ottawa will enjoy an edge since they are hockey crazed markets. I would throw Chicago and Boston in there, however, their owners are write offs and the players know it.

Teams with nice climates - Florida, Tampa Bay, Anaheim, San Jose, Los Angeles and Phoenix will appeal to families who want sun all year round. Dallas will do double duty since Texas offers no state income tax.

This leaves Atlanta, Nashville, New Jersey, Pittsburgh, Washington, New York Islanders, Columbus and Carolina to fight for players with neither a hockey market to offer or weather that is particularly fantastic. Buffalo is a tweener. They have great fans, but it is Buffalo and you have to live there.

Also, the NHL and the PA, through a competition committee, have agreed to some significant rule changes that will open up the game, lead to more scoring chances and clean up the overall pace. The elimination of the redline was a wise move. This should mean that the on-ice product will be as good as it has been for years and this should help slowly win back fans. In baseball when they returned from their bitter work stoppage, they were in the throws of a home derby, all be it between guys clearly on the juice, but I digress. The NHL, may, see the return of 60 goal scorers!

Hockey has a lot of work ahead of itself rebuilding relationships with fans, sponsors and vendors, however, this should be made easier with a new collective agreement (one that should be the model for future negotiations) and some much needed rule changes.

Game on.