News Article: The Athletic: Lockout Talk

[KINGS17]

Lockout talk: Why each side might (and might not) want to...

Should the league decline its option to re-open the agreement, the union will have until Sept. 15 to make a call on whether to terminate the deal in 2020, setting the stage for a possible work stoppage in 12 months time.

The parties have had ongoing talks for months; they met again this past week. There are suggestions those dates could come and go without a definitive resolution, by mutual consent.

“The parties have basically stopped operating under those deadlines,” said a source close to the talks.

Further down in the article:

As an agent was quick to note, if the players opt-out with a view to gaining ground on a series of demands, they can expect the other side to show up with a lengthy shopping list as well.

That’s not to say some players aren’t feeling militant.

San Jose Sharks defenceman Marc-Édouard Vlasic said recently he wouldn’t mind if there was a work stoppage.

Quite the contrary in fact: He’s hoping for one.

“We’ll wait and see what the league will say on Sept. 1, but of course there’s a lot of stuff that I’d like to change,” Vlasic said. “If the players aren’t satisfied on certain fronts, then we should rethink the CBA.”

The main sticking point for Vlasic, and for a great many other players, is the escrow mechanism. In order to ensure a 50-50 revenue split with the owners, players see a portion of their salary withheld each season in order to compensate for any shortfall in revenue growth.

It can take years to get a reimbursement, and often it amounts to pennies on the dollar, partly because the players have not shied from exercising their annual escalator option to increase the salary cap. (The cap increasing more quickly than revenues = more escrow. Roughly half of the increase in the NHL’s escrow-retention percentage is due to the rise in the upper limit.)

“Escrow should be eliminated. It should be zero,” said Vlasic, who was involved in the last labour talks in 2012 and plans to play a role in the coming negotiations. “I mean, players sign a big contract, and they get 15 percent taken away immediately because of escrow. It’s not our fault. We’re the product, and it’s our job to ensure people watch our league. It’s not our job to take care of (equalizing revenues). Players keep saying year after year that they don’t like escrow. Now’s the time to put on the big-boy pants.”

LOL, Vlasic is out of his mind. Yes, the article does mention the owner's Holy Grail, the end of the guaranteed contract.

Click to read more...

 

[crassbonanza]

I like how Vlasic just complains about escrow then says that it is not their job to take care of equalizing revenues. If they have a better solution for maintaining a 50/50 revenue split they should present it instead of just asking for escrow be to zero. The league has already shown that they would extend the CBA right now, so the players threatening to shut down the league over a mechanism to maintain fairness is just childish. They won't win the PR battle on this one.

 

[Raccoon Jesus]

I like Vlasic, but he never struck me as the sharpest tool in the shed. But he's got some points.

I do really think it's important to note that if we're talking about 'revenue sharing'--as the article points out--the players didn't get a cut of massive expansion fees, nor will they again with Seattle, and same with the renegotiated tv contract. If they're not going to get that directly--it does make sense that those sorts of things get split amongst the owners to me--then for the players sake, the league needs to count that as 'revenue', and reduce escrow accordingly so that the players see their portion of that payment in a roundabout way because right now that's a 100-0 revenue split amongst owners and players. They're right to chirp about that. That's like your boss who is never in the office getting a christmas bonus the size of your most expensive employee's salary while the employees get fruit cakes.

 

[KINGS17]

I can see the players wanting a piece of the expansion fee pie. I would have thought Donald Fehr would have been well aware of the fact they didn't get any of it in the last CBA, since he knew how narrowly hockey related revenue was defined.

The owners will of course counter with the argument that they take their 50% share of the revenue and re-invest it in everything from training facilities, to travel expenses, to maintaining an arena or paying a lease on one. Would the players like to share in those expenses? I think a taste of the expansion fees for the players might be appropriate, say 5%.

 

[YP44]

if I was an owner I would say ok remove escrow but then players get 35% of revenue not 50.

 

[Ziggy Stardust]

It’s all Bobby Orr’s fault.

 

[Stimpythecat]

without escrow, how would the 50-50 split be maintained? Would they base if off the prior season and not the current one? In an era of rising revenue, that could cost the players a decent amount of money especially consideing there's a new tv deal coming.

 

[Master Yoda]

without escrow, how would the 50-50 split be maintained? Would they base if off the prior season and not the current one? In an era of rising revenue, that could cost the players a decent amount of money especially consideing there's a new tv deal coming.

Which is exactly why many fans are so frustrated that the players don't seems to understand this, especially for a guy like Vlasic who already went through it last time.

 

[KingsFan7824]

Gotta say, I sign up for tickety-boo and dischuffed. Those are new to me.

Yeah, if one side is so pleased that they're fine to keep an originally contentious deal going, maybe it does favor them a bit too much. However, don't use the escalator, and let the usually less than good UFA's get paid a little less than ridiculous contracts. It tends to be the guys not good enough to pay, that actually hit the market, that skews everything.

But that's life under a cap. The more limitations, the more everyone involved, agents and GMs especially, that try to find any possible way to bend the rules. They are human beings after all, and we tend to not like limits that are imposed on us. Even if they're for the greater good.

 

[Butch 19]

I can see the players wanting a piece of the expansion fee pie. I would have thought Donald Fehr would have been well aware of the fact they didn't get any of it in the last CBA, since he knew how narrowly hockey related revenue was defined.

The owners will of course counter with the argument that they take their 50% share of the revenue and re-invest it in everything from training facilities, to travel expenses, to maintaining an arena or paying a lease on one. Would the players like to share in those expenses? I think a taste of the expansion fees for the players might be appropriate, say 5%.

You must be kidding, right? What have the players done to reap any amount of the expansion fee pie? They're employees, not management / ownership.

Their money isn't at risk

 

[BigKing]

Let's all Google Vlasic's career earnings and age and then try to figure out why he'd be cool with a work stoppage v. the majority of NHL players.

 

[Chazz Reinhold]

You must be kidding, right? What have the players done to reap any amount of the expansion fee pie? They're employees, not management / ownership.

Their money isn't at risk

Make the game popular and successful enough that expansion is feasible...?

 

[Raccoon Jesus]

You must be kidding, right? What have the players done to reap any amount of the expansion fee pie? They're employees, not management / ownership.

Their money isn't at risk

Well, if we're talking strictly about 'revenue sharing,' why is that off-limits? That's a shitload of revenue the players don't get to touch.

as @KINGS17 pointed out maybe there's some sort of reinvestment deduction math to be done there, but it's f***ed up to be able to take 50% of one pie while reserving another pie entirely for yourself.

I'm traditionally pretty well on the owner's side on these things because I see the players--as a group, of course, not necessarily some of the smarter individuals--as pretty stupid and easily manipulated, or, at worst, ignorant (like Vlasic's rant, he sees only that he's losing $ to escrow). But expansion fees and tv deals are strictly owner enrichment and that's kind of crap.

Edit: oh, and the owner's money isn't at risk for either of those things, they're strictly random spike bonuses, which makes it more appalling that the players see none of it.

 

[johnjm22]

They should get rid of the escalator since it gives players a false sense of how much they should be getting.

I think the current CBA is actually pretty fair.

 

[johnjm22]

But expansion fees and tv deals are strictly owner enrichment and that's kind of crap.

I'm at work so I can't read the article. TV deals don't count towards league revenue? That's news to me.

 

[Raccoon Jesus]

I'm at work so I can't read the article. TV deals don't count towards league revenue? That's news to me.

No, you might be right, I'm probably misremembering because I threw the "TV deals" part out there pretty haphazardly.

 

[johnjm22]

A few weeks ago there was an article in The Athletic about player personal finances. Marco Scandella was featured in it. He talked about his financial situation as a pro hockey player. Pretty interesting stuff.

No matter how much money you make, whenever you see 50%+ of your pay check being taken out it's frustrating. The escrow is part of that.

These guys also have to file tax returns in each state they played that has an income tax and across country lines. It can get complicated. One minor league player who finally got called up to play an NHL game actually ended up losing money. He literally ended up paying money to play that game.

 

[KINGS17]

You must be kidding, right? What have the players done to reap any amount of the expansion fee pie? They're employees, not management / ownership.

Their money isn't at risk

You're right, short and slight lapse in judgment on my part. The owner's capital is always at risk, but in the case of expansion fees that really isn't the case.

 

[KINGS17]

They should get rid of the escalator since it gives players a false sense of how much they should be getting.

I think the current CBA is actually pretty fair.

Every time the players use this clause they should realize they are giving more money to the current UFAs at the expense of the players already under contract.

 

[KingsFan7824]

A few weeks ago there was an article in The Athletic about player personal finances. Marco Scandella was featured in it. He talked about his financial situation as a pro hockey player. Pretty interesting stuff.

No matter how much money you make, whenever you see 50%+ of your pay check being taken out it's frustrating. The escrow is part of that.

These guys also have to file tax returns in each state they played that has an income tax and across country lines. It can get complicated. One minor league player who finally got called up to play an NHL game actually ended up losing money. He literally ended up paying money to play that game.

That part is their choice though. To the extent that the cap itself wasn't their choice, or an equal split in HRR. Those things were sort of forced upon them, they could've held out longer in theory, but they've used the artificial escalator almost every year. There's a hard cap. You weren't militant enough to stop it from happening. Every dollar someone else gets is going to be some % less that you take home. Within the system, players being paid now have to say I got mine, good luck to you, and live with lower caps.

Shorter contracts might help get rid of the escrow though. Of course it would come with the downside of less financial stability, if you don't keep production up. Which then gets to the heart of the cap itself, and why is the other side artificially stunting my potential earnings, etc, etc, and everything else that comes with fundamental system questions.

 

[lumbergh]

if I was an owner I would say ok remove escrow but then players get 35% of revenue not 50.

Escrow is exactly how the owners get to specify that player get a certain percentage of revenue.

If I was an owner I would say okay remove escrow, but then players don't get to exercise an escalator to the salary cap.

There's no way the owners don't get cost certainty.

 

[Token]

Escalator has a simple solution.

If they change the salary cap to real HRR of the just completed season instead of the projection of HRR and strength of the Canadian $ futures for the upcoming season, the escrow more or less disappears and becomes a bonus once the books are closed.

Of course then the NHLPA is gonna complain they aren’t paid interest on that “bonus money” ...