Mock CBA with J. Reinhold

Mock CBA with J. Reinhold

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Heading into a season with the potential for a lockout, it seems like mock trade proposals and mock line combinations are less relevant than ever before. We’re about 10 months away from the draft so doing a mock draft seems pointless as well, especially since most people can only identify a handful of 2013 prospects. What I propose we focus our energy on is Mock Collective Bargaining Agreements! Fun!

It pains me to link to Michael Grange, as he co-wrote Leafs Abomination, but the fact of the matter is he seems to have the best grasp on what is happening in the NHL CBA talks. Grange wrote this article suggesting how the NHL could be fixed in five easy steps. While I think that most of what he has suggested is very “pie in the sky” for immediately implementation I do agree his vision would produce a healthier league.

My approach is a little different. I am acknowledging that the NHL isn’t going to ax two teams at the bargaining table and force two others to relocate. I don’t think Grange was suggesting this as an immediate action either and was looking longer term ideas. I’m thinking shorter term. What I’ve suggested below is some middle ground between what has been said publically from both the league and players association. It will come likely come off as the owners getter the better of the deal, but in all reality that will be the case anyway.

Hockey Related Revenue is the catalyst for the gap between the league and players. I would suggest that a team like the Maple Leafs probably has been skewing that number for years and for good background on this I suggest reading the post by Draglikepull over at Pension Plan Puppets regarding ticket revenue, and the response from JP Nikota as well. The difference between what the Leafs generate on tickets vs the rest of the league is huge and this is before all of the other components of what makes the Leafs profitable including the fact that a hockey monopoly in the Toronto market is a license to print money. If it is not done so already it might be prudent to cap what teams like the Leafs, Rangers, and Canadiens have counted towards to Hockey Related Revenue. Similarly if a team is hemorrhaging money and can’t stay afloat should they be considered either? To determine what the true state of the league is financially it might be best to exclude the top five teams and the bottom five teams and look at the average HRR from the remaining 20 teams. Arguably this provides a realistic picture of what league is really like and would capture what is sustainable. If the bottom teams are so far removed from the revenue they need to stay in the league it is certainly arguable that they should relocate, fold, or take their losses with a smile on their face.

One of the points that made the most sense in the Grange article was that teams should just settle on a 50/50 split of Hockey Related Revenue. With the NBA and NFL already in that ballpark it’s hard to imagine the owners not being like a dog on a bone with this topic and they’re not going to budge until some compromise is met. Ideally what would seem fair to me is that a commitment towards transitioning to a 50/50 split over the next 3 years while keeping the salary cap steady at the $64.3 million total from last season. Very few teams have exceeded that mark for 2012-13 and immediate compliance to that number should not be an issue, especially if amnesty buyouts are possible. If at that time the league needs to reduce salaries a flat cut across the league might be necessary, though you’d hope that teams would have taken advantage of a couple of off-seasons to get their houses in order and avoid this embarrassing rollback.

Counter to that, I do have a thought on how to immediately rollback salary, though maybe not to the extent the owners want to cut away at it. If the owners are going to hack away at salary it seems only fair that escrow will no longer exist.

-Entry Level Contracts are not rolled back
-15% rollback over $3.5 million (cannot go below $3,149,100)
-10% rollback over $2.5 million (cannot go below $2,374,999)
-5% rollback over $1 million unless player is on a 35+ contract (cannot go below $949,999)
-league minimum to $1 million are not rolled back

Essentially the money comes from the players with larger contracts. This may seem like punishing players for being too talented, but the additional piece that I would want to see put in place is that any player who is on a contract longer than three years has the option to shorten their deal to that length and can renegotiate with the same restricts that a restricted free agent would have in place.

I regard this as the Sidney Crosby rule. If Crosby feels he is worth more than the $7.4 million his deal has been modified to, he should have the right to adjust this number in the future rather than being committed long term to a rolled back contract. The stipulation on this would be that it would require players committing to this shortened contract now, not as an option three years from now.

If these salary rollbacks were applied to the Leafs it would take their cap hit from $59.2 million down to $52 million, 87% of their current hit. If you applied that 87% to the cap ceiling you’d set the maximum at $61 million dollars. Not a horrible compromise between players and ownership.

Am I losing you yet? I’ve got more.

One of the next pieces as a consolation to the players is that all prior buyouts are now removed from teams cap hits. Teams in 2012-13 will have to spend their cap money exclusively on active players. In addition there will be an amnesty buyout option. I’d argue that given the severity of what the NHL is trying to accomplish it should be for up to two players, not just an option on one. The available money that this creates for teams will allow the league to avoid things like salary rollbacks, and it’s not like the bought out players won’t be paid or have plenty of options to re-sign around the league.

The one thing I would like to see in place actually could handcuff the Leafs, so I’m sure it will be unpopular. Rather than the cap adjusting for each player that is called up, sent down, etc. Why not base the cap on the 20 highest paid players, and the three highest paid goaltenders in the organization (including those on LTIR)? Maybe I just like this idea now that Jeff Finger is gone, but it certainly closes a loophole.

As an additional piece I would like to see three goaltenders in each organization that can be identified as waiver exempt. While the emergency recall gives some flexibility to bringing up goaltenders in a pinch it is a safe bet that most organizations need to rely on a true reserve, but it is damaging to keep them sitting in a pressbox throughout the season rather than giving them icetime. Similarly it is a healthy option for second string goaltenders to be available for some games in the AHL. Teams and goaltenders would still have an option to waive their exempt status if they mutually agree that there is no longer a fit for them within the organization.

Similar to closing the option to bury contracts in the minors, long term injury reserve or through club suspensions to avoid cap hits, it will be necessary to close the extremely long contract loophole. I don’t have anything fancy here, just simple logic. If you can only insure a contract up to seven years, why not make the maximum contract length seven years? Since I don’t like the idea of axing things that have been negotiated in good faith, I’d argue that existing deals should be grandfathered in, but to make it slightly more complicated and painful I’d give both the clubs and players an arbitration option on what happens after year seven.

As I just noted above I am in favour of keeping club and player elected arbitration. Other than it being a bit of a hassle I think it’s a very fair thing to include in the Collective Agreement.

There have been a number of areas identified by the owners that haven’t fully been addressed yet by the NHLPA. Knowing that they are on the table I’ve listed a few thoughts on those areas as well.

In regards to the five year entry level contract I can’t say that I’m opposed to it. However, you need to give players the option to earn more if that is the case. If players had the option to earn up to $3 million a season, and then have eligibility for another $2 million a season in bonuses I can’t see why 5 year entry deals couldn’t work. This also has the option to see clubs have high first round picks blow up in their face rather than being a simple disappointing bust (imagine Pavel Brendl hitting your cap at $3 million for five years.) The slide rule would need to be tossed out the window here, and the maximum age for a player to be on an ELC would be 24 (i.e. if you sign a 21 year old they would only be on a 3 year ELC.)

I’d also give in on the NHL’s desire for a revision to unrestricted free agency. The NHL called for players being in the league for ten years before being eligible for unrestricted free agency. The compromise I’d go for is that after a player has been eligible to be in the NHL for ten years they can become unrestricted free agents (basically 28 year olds.) Since most of the free agent crop is 27 year olds and older now it means very little changes, with the exception to players like Crosby, Tavares, and Stamkos who presently had the option at 25 based on the current seven year system and their early arrival in the league. Based on the length of the contracts that players have been signing as RFAs it’s possible this will have little impact, but by 28 players are beginning to decline while players at 25 are very much in their prime. There could be few teams willing to risk being frugal and losing players to unrestricted free agency.

Of course that brings us to Restricted Free Agents. If players are going to have to wait for unrestricted free agency something needs to be done to make offer sheets a more attractive option to GMs. Simple enough, make reductions to the compensation grid:

Offer Sheet Value Compensation
500k-1.25m no comp
1.25-2m 3rd rd
2-3m 2nd rd
3-5m 1st rd
5-6m 1st rd + 2m cash
6m+ 2 1st rd + 4m cash

Nothing here is overly painful, but I’d say as the cap adjusts the table needs inflate/deflate along with it (same as before.)

Of course what will be the most visible aspect of what fans will see of a new CBA is the new structure of the salary cap, and while a hard cap still makes sense I like components of the NHLPA plan which offer different rewards, penalties along the way. I also like their idea of trading cash/cap space mainly because anything that facilitates a greater number of trades is a win for fans. One of the other pieces I’d consider before getting to my cap table is that bonuses should only count as a 50% cap hit from their actual dollar value. I also think that performance based bonuses should hit the cap only after they have been achieved (the following season.)

CAP DESIGN
exceeding violation Playoff ineligible
$12m over (hard cap) Forfeit 1st round pick, pay penalty to league equal to each dollar over 10m
$10m over Forfeit 2nd round pick
$8m over Forfeit 3rd round pick
$4m over In compliance
median In compliance
$4m under In compliance
$8m under In compliance
$10m under (cap floor) You are ineligible for draft lottery
below violation You are ineligible for draft lottery, revenue sharing withheld equal to each dollar under 10m

At first glance there are a lot of punishments put in place, but they are all outside of what the owners originally proposed which is a cap that goes $4 million over, but $8 million under. With potentially a high number of picks being forfeited it is likely that an 8th round will need to be added to the entry draft. It still offers some flexibility of a soft cap, luxury tax system, but it severely limits it to only $8 million dollars of excess.

While these areas don’t make up the entire scope of the CBA, they are likely the sticking points. I’m sure there will be plenty of time to go into the minutia and none financial issues in later posts.

At this point we are still in for what will likely be a three week game of chicken before both sides may begin to sit down and negotiate in good faith. That’s a best case scenario. I continue to remain optimistic that television revenue means enough to the league that they won’t leave more than a month or two of it on the table.

LINKS

Toronto Maple Leafs 2012-13 Annual: The Burden of Expectation
Grab yourself a cup of coffee and a fritter and sit down and read Cam Charron’s thorough look at the current state of the Leafs.

What a player’s day with the Stanley Cup tells us about his personality type
Puck Daddy profiles the ways players spend their day with the cup. I look forward to the day Mike Brown fills the cup with beard shavings.

Nathan MacKinnon, Seth Jones, Sean Monahan led BTN’s ranking for 2013 NHL draft
Behind the Net has their top ten of the 2013 draft. I am firmly in the Curtis Lazar camp and based on the lack of improvements to the Leafs I might get my wish on draft day

Maple Leafs: Former figure skater Barb Underhill helps prospects make big strides
The Toronto Star has an update on the Leafs skating lessons. Personally I like the idea of Mark Fraser
sneaking onto the Leafs.

MACKINNON SCORES HAT TRICK, CANADA WINS IVAN HLINKA
The legend of MacKinnon grows.

Just wondering: what do the new Maple Leaf owners truly believe about the ongoing labour talks…
Another gem from Michael over at Vintage Leaf Memories looking at why the new owners of MLSE might be less than thrilled about losing part of the season. With Rogers and Bell now at the ownership table it means that the group responsible for every Canadian team TV deal is in the room at all times, also known as the group with the most to lose.

CHL Players forming union
W
hat a great thing to do when the transfer agreement isn’t finalized. You can pretty much kiss that goodbye. I’d also imagine that there are a lot of happy people in the NCAA about this as their red tape is no match for a players union.

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