Another Lockout

[lomiller1]

For the first time ever the owners are not bleeding money on hockey operations going into CBA talks. They are not making enough on hockey to justify team valuations either but they can afford to be patient this time around. Unless the players are making unreasonable demands, the owners won’t dig in.

- escrow is the big one.
- HHR splits

Escrow and HRR splits are not separate. Escrow is the mechanism that enforces HRR splits, so if the players want to end escrow, they are in effect demanding an end to HRR splits. The owners won’t go back to that at this point. If the players try to end escrow there will be no hockey until they drop the demand.
The only thing that can be done about escrow is to tweak the salary cap formula. The current cap is too high, which is why players end up returning money via escrow. With most teams solvent, there are a lot more cap teams and a lot fewer budget teams so the assumption that average payroll is approximately half way between the min and max no longer holds.
Basically, the league and PA need to agree on a formula to bring the cap down by ~10% - %15 without putting so much stress on teams budgets that current free agents get screwed. The simple solution would be to agree to an across the board cut to current contracts but make them escrow exempt so the money the players receive is close to the same. New contracts would have to fall under the new cap.

- Expansion money

I doubt we see further expansion. If we do keep in mind that the owners take a hit to revenue when new teams come in because they are splitting league revenue like national television with additional teams. Conversely players benefit in the form of more jobs. More jobs doesn’t just mean new players at the bottom of the pay scale, it pushes players who are already in the NHL up the pay scale. It the players demand a share of expansion money the owners will either say no, or simply refuse to expand while the provision is in effect.

- Olympic participation

The players may want to go to the Olympics but they are not prepared to make any monetary sacrifices to do so. There are ways to make a deal but I don’t see either side going to war over this.

- Contract lengths/Structure

Possibly something to limit second contracts. I’m not sure the owners care but for players it’s a chance to increase their own take at the expense of players who are not in the league yet and therefor don’t have a say.

 

[Butch 19]

His lockouts earned the owners a massive amount of cash. Why on earth would they fire him?

Please. The NHLPA has caused every lockout.

 

[lomiller1]

They produced those profits.

You can’t exactly make millions of $ playing hockey on your local street corner. It’s far easier to find people willing to make money playing hockey than it is to find people willing to invest the ~ $1.0 Billion required to own an NHL franchise.
TBH, even now that teams are on better footing, hockey itself is still a terrible investment. The business itself doesn’t make nearly enough money to justify how much it costs. Some people assume this doesn’t matter because:

• Teams appreciate in value. This is a strategy known as greater fool investing. You buy a business that isn’t worth what you are paying under the assumption you can find someone else who is willing to spend their money even more foolishly.

• Owners can use teams as loss-leaders and make their money back on associated TV or real-estate deals. While this is possible, this isn’t the type of owner fans or plays should want to attract. This type of owner will put their time and money into the business that actually make the money and won’t invest in developing the team, the sport or the market. They doesn’t need hockey to be viable long term in the market, they just need to make their other business deals and flip the team before the bottom falls out.

 

[lomiller1]

That is an interesting example but the Bundesliga does have tight partnerships with major corporations to offset their costs and clubs lean on them for sponsorship. Effectively, corporations subsidise the league. That is not going to work in many places around the world but I will concede that it does work for the German football league.

The NHL is hanging onto 4th spot in NA sports leagues and still brings in more revenue than Bundisliga, which is arguably the second most popular league in the world among all sport. Don’t let the top end salaries fool you, only a relatively small number of players get paid like that. In terms of turning their popularity into player salary the NFL, MLB, NBA, NHL model is clearly MUCH stronger. This means more players get more money than they would using a model like Bundisliga.

 

[traparatus]

For the first time ever the owners are not bleeding money on hockey operations going into CBA talks. They are not making enough on hockey to justify team valuations either but they can afford to be patient this time around. Unless the players are making unreasonable demands, the owners won’t dig in.

Escrow and HRR splits are not separate. Escrow is the mechanism that enforces HRR splits, so if the players want to end escrow, they are in effect demanding an end to HRR splits. The owners won’t go back to that at this point. If the players try to end escrow there will be no hockey until they drop the demand.
The only thing that can be done about escrow is to tweak the salary cap formula. The current cap is too high, which is why players end up returning money via escrow. With most teams solvent, there are a lot more cap teams and a lot fewer budget teams so the assumption that average payroll is approximately half way between the min and max no longer holds.
Basically, the league and PA need to agree on a formula to bring the cap down by ~10% - %15 without putting so much stress on teams budgets that current free agents get screwed. The simple solution would be to agree to an across the board cut to current contracts but make them escrow exempt so the money the players receive is close to the same. New contracts would have to fall under the new cap.

I doubt we see further expansion. If we do keep in mind that the owners take a hit to revenue when new teams come in because they are splitting league revenue like national television with additional teams. Conversely players benefit in the form of more jobs. More jobs doesn’t just mean new players at the bottom of the pay scale, it pushes players who are already in the NHL up the pay scale. It the players demand a share of expansion money the owners will either say no, or simply refuse to expand while the provision is in effect.

The players may want to go to the Olympics but they are not prepared to make any monetary sacrifices to do so. There are ways to make a deal but I don’t see either side going to war over this.

Possibly something to limit second contracts. I’m not sure the owners care but for players it’s a chance to increase their own take at the expense of players who are not in the league yet and therefor don’t have a say.

I agree with most of what you wrote. There is really nothing in current CBA that owners want to change so much as to go to battle over it.

Escrow is obviously not going anywhere but maybe NHL and NHLPA could agree to a few tweaks to make the situation a bit more stable. If 5% escalator far outpaces typical revenue growth than why even have an option to raise the cap that much? Let's bring that number down to something more realistic. While we are at it, let's have a semi-permanent escalator with PA having an option to change it once every 3-4 years, not every season. They can write in a special clause to allow for adjustment of escalator in event of expansion and/or major TV contracts.

Finally, I believe that a lot of issues that seem to really concern fans are of no consequence to the owners. LTIR contracts, RFA contracts, signing bonuses, Olympics - I think owners more or less don't care about any of it. Olympics should be a united fight between joint forces of NHL and NHLPA and the corrupt dumpster fire that is IIHF, anyway.

 

[Saltcreek]

I think signing bonuses will be looked at in the next CBA. Owners with more liquid capital do have an advantage over owners who are more cash restricted. Everything else is relatively minor.

 

[lomiller1]

The players get 50% of Hockey Related Revenue, not league revenue. The owners get 50% of Hockey Related Revenue plus all other revenue.

HRR is league revenue. "Other revenue" is money owners make on their other business endeavours that have nothing to do with hockey. If you give players a share of everything the owners make, whether it’s hockey related on not you won’t find anyone willing to own a team. NHL teams are not publically traded, but imagine for a second they were. If players would be entitled to 50% of the income you earn at your job when you buy shares in a team would you buy consider buying shares?

 

[Lazlo Hollyfeld]

HRR is league revenue. "Other revenue" is money owners make on their other business endeavours that have nothing to do with hockey. If you give players a share of everything the owners make, whether it’s hockey related on not you won’t find anyone willing to own a team. NHL teams are not publically traded, but imagine for a second they were. If players would be entitled to 50% of the income you earn at your job when you buy shares in a team would you buy consider buying shares?

That's incorrect. Hockey related revenue is not the same as league revenue. I'm not talking about Red Wings players getting a cut of Little Caeser's revenue because the Ilitch family owns both.

Hockey Related Revenue is a net number that both sides (the NHL and NHLPA) have agreed upon as to what is included in HRR and what deductions are allowed. It's revenue minus certain costs. For example 54% of concession costs can be deducted from HRR by the owners.

So the players are getting 50% of Hockey Related Revenue, which is already a reduced amount from total league revenue. They're not splitting the pot 50/50.

It's a complicated and much debated issue in the previous lockouts as to what exactly constitutes Hockey Related Revenue. Here's a decent article explaining it from the 2012 lockout.

https://www.cbc.ca/sports-content/hockey/opinion/2012/09/making-sense-of-hockey-related-revenue.html

 

[CanadianPensFan1]

I don't know, man. I am just tired of fans being treated like this. A 3rd lockout in less than a 20 year span? **** that. No league has done that.

I stayed away for 2.5 seasons after the last lockout.

Yeah, I'm not sure Id come back after another one.

 

[Voight]

I don't know, man. I am just tired of fans being treated like this. A 3rd lockout in less than a 20 year span? **** that. No league has done that.

No league has lost a full season either........... they forgot to put that on Bettmans HHOF plaque

The players may want to go to the Olympics but they are not prepared to make any monetary sacrifices to do so. There are ways to make a deal but I don’t see either side going to war over this.

But I don't remember them making monetary sacrifices for 98-02-06-10 Olympics. The in 2014 the NHL let them go as a "goodwill gesture" but has rubbing it in their face since.

 

[Voight]

I think the owners caused it. It's a hobby for them that doesn't has to be profitable. If you are not willing to spend for the fun, don't buy. No owner made their living with hockey.

Well...... one of them did

 

[lomiller1]

Hockey Related Revenue is a net number that both sides (the NHL and NHLPA) have agreed upon as to what is included in HRR and what deductions are allowed. It's revenue minus certain costs. For example 54% of concession costs can be deducted from HRR by the owners.

So the players are getting 50% of Hockey Related Revenue, which is already a reduced amount from total league revenue. They're not splitting the pot 50/50.

You don’t know what you are talking about. Items are included in HRR or excluded from it based on whether you legitimately attribute them to hockey or not. Non-HRR is money the owners are earning on business other than the team itself, something they are perfectly entitled to do. Eg. Justin Timberlake in on tour and plays in a number of arenas that are home to NHL teams. If you just blindly say that any arena revenue the owners happen to receive is HRR then NHL players would be entitled to a cut of the money the tour earns even though they had no involvement whatsoever.

In the case of things like concessions, if you contract out to a third party it’s pretty easy to figure out what is HRR. Players get a share on what the team ernes but no share of what the food services company handling the concession earn.

If it is provided in house or if the company it’s contracted to is owned by the same it’s more complicated. Players should not be getting a cut of the earning from a food services company just because it’s connected to the team. OTOH you can’t have owners hiding HRR by having all the profits go to the food services company. It’s cases like this where you see the NHL and PA negotiate for only a fraction of the concessions be considered HRR. The HRR part is what the team would normally get out of the concessions deal, the non-HRR part is the money the food services company makes selling it's products.

 

[lomiller1]

But I don't remember them making monetary sacrifices for 98-02-06-10 Olympics. The in 2014 the NHL let them go as a "goodwill gesture" but has rubbing it in their face since.

The players made no monetary sacrifices, that’s the point. In 2012 the IOC paid for the insurance costs and the owners absorbed the cost of the NHL shutting down and wasn’t even allowed to use highlights or even mention the Olympics in its advertising.

In 2016 the IOC wanted the NHL to pay all the insurance costs as well. (IRRC ~$100 million, which amounted to 25% - 35% of the profit for all 30 teams combined.) The various national bodies like Hockey Canada eventually said they would pay the insurance costs, but that’s still a terrible deal for the NHL because this is money diverted from youth hockey. What good does it do to see NHL players in the Olympics if you can’t go out and play the sport yourself because all the hockey programs were cut to pay for it.

If NHL players were really committed to going, they would pay the insurance costs out of their own pockets. Their own earning is what’s being insured. IOW this insurance is what pays their salary if they suffer a career ending injury at the Olympics.

 

[axecrew]

There will be another lockout...Donald Fehr indicated that in an interview shortly after the last deal was done.

 

[Saltcreek]

There will be another lockout...Donald Fehr indicated that in an interview shortly after the last deal was done.

If the players want another lockout then get ready for the cap to go down and salaries to drop as another lockout will put the next tv deal at risk.

Edit: Made a time line mistake.

 

[Lazlo Hollyfeld]

You don’t know what you are talking about. Items are included in HRR or excluded from it based on whether you legitimately attribute them to hockey or not. Non-HRR is money the owners are earning on business other than the team itself, something they are perfectly entitled to do. Eg. Justin Timberlake in on tour and plays in a number of arenas that are home to NHL teams. If you just blindly say that any arena revenue the owners happen to receive is HRR then NHL players would be entitled to a cut of the money the tour earns even though they had no involvement whatsoever.

In the case of things like concessions, if you contract out to a third party it’s pretty easy to figure out what is HRR. Players get a share on what the team ernes but no share of what the food services company handling the concession earn.

If it is provided in house or if the company it’s contracted to is owned by the same it’s more complicated. Players should not be getting a cut of the earning from a food services company just because it’s connected to the team. OTOH you can’t have owners hiding HRR by having all the profits go to the food services company. It’s cases like this where you see the NHL and PA negotiate for only a fraction of the concessions be considered HRR. The HRR part is what the team would normally get out of the concessions deal, the non-HRR part is the money the food services company makes selling it's products.

Actually I do know what I'm talking about. Not everything is cut and dried so the NHLPA and NHL agree to terms during CBA negotiations. There are obvious cases of what is generated as a result of hockey but there is also a lot of grey area.

Like with luxury boxes. A certain percentage of the revenue and expenses are included in HRR. That has to be negotiated as to what percentage of each can be applied. In Toronto for example there's a good case to be made that the luxury boxes are primarily for hockey so the players can argue that a large portion should count towards HRR. In Los Angeles however, most of the boxes are likely for the Lakers. So the owners could argue that not much should count towards HRR.

Seriously, do some reading on it if you're interested. You seem to be basing it on how you think things should be versus how they're actually done.

 

[Eisen]

There’s going to be one for sure. Contracts are out of hand. RFAs getting too much. Vets getting shafted. Owners not making profits. No Olympics as of now and players still want more.

They really need to do something about the cap in all honesty. It’s increasing very slowly and a lot of teams can’t even reach the floor while others have multiple stars with no cap. So many loopholes also. I don’t see who is helping really at this point.

It takes two parties to sign that contract.

 

[lomiller1]

Actually I do know what I'm talking about. Not everything is cut and dried so the NHLPA and NHL agree to terms during CBA negotiations. There are obvious cases of what is generated as a result of hockey but there is also a lot of grey area.

The reason for the negotiated split in these grey areas is that a significant part of this revenue that has nothing to do with the NHL or the operation of the hockey team. Nonetheless you referred to it as "league revenue" when it’s nothing of the sort and implied that it could/should be added to HRR when it would not be reasonable to do so.

 

[Merrrlin]

If the players want another lockout then get ready for the cap to go down and salaries to drop as another lockout will put the next tv deal at risk.

Edit: Made a time line mistake.

Hockey players are already one of the worst paid professional "big league" athletes. If the salaries drop further, the talent will start to dry up too. Why play hockey for 7 million as a star, when a role player in the NBA or MLB makes almost twice that?

 

[Saltcreek]

Hockey players are already one of the worst paid professional "big league" athletes. If the salaries drop further, the talent will start to dry up too. Why play hockey for 7 million as a star, when a role player in the NBA or MLB makes almost twice that?

They are paid well considering how much the NHL actually makes, hockey will always be a sort of niche sport because it is so expensive to play.

Also, I do not think hockey skills translate all that well into those other sports but I am not going to stop them trying.

 

[Lazlo Hollyfeld]

The reason for the negotiated split in these grey areas is that a significant part of this revenue that has nothing to do with the NHL or the operation of the hockey team. Nonetheless you referred to it as "league revenue" when it’s nothing of the sort and implied that it could/should be added to HRR when it would not be reasonable to do so.

Im' not sure what you're getting at. My whole point was that league revenue is not the same as HRR . HRR is a portion of overall league revenue.

 

[Peter Puck]

I think signing bonuses will be looked at in the next CBA. Owners with more liquid capital do have an advantage over owners who are more cash restricted. Everything else is relatively minor.

Bonuses are important to many teams. Bonuses are treated differently than salary for income tax purposes. This allows teams in high tax localities to use bonuses to greatly reduce the player's income tax. This partially offsets the difficulty high tax rates impose on some teams when trying to attract free agents. These teams are not going to give up using bonuses.

 

[Nino33]

But I don't remember them making monetary sacrifices for 98-02-06-10 Olympics. The in 2014 the NHL let them go as a "goodwill gesture" but has rubbing it in their face since.

I don't remember them going at all in 76, 80, 84, 88, 92 and 94 (or 2018). And they didn't go from 1920-1972 either. It's not an entitlement

 

[JPeeper]

Hockey players are already one of the worst paid professional "big league" athletes. If the salaries drop further, the talent will start to dry up too. Why play hockey for 7 million as a star, when a role player in the NBA or MLB makes almost twice that?

Well this argument is hilariously stupid.

"When I was young and fell in love with hockey I noticed my favourite player only got paid $7 million so I am going to change into a baseball or basketball player so I can make more money."

Like what the f***, professional athletes don't get into sport because they want the big money, they get in because they love the game and are insanely good at it.

"Hey I am a good hockey player so clearly I'd make an NBA or MLB team and can make $15 mil a year".

LOOOOOOOOOOOOOOOOOOOOOOOOOL

 

[Butch 19]

Hockey players are already one of the worst paid professional "big league" athletes. If the salaries drop further, the talent will start to dry up too. Why play hockey for 7 million as a star, when a role player in the NBA or MLB makes almost twice that?

Name two NHLers that can switch "like that" to play basketball, baseball or football... LOL

They have a marketable skill in one sport, they can't just switch sports on a whim to make more money.