The Counterproposal, Part 2: Are You Kidding Me?Posted: 29/08/2012
This NHL offseason is getting depressing. Because meetings between actual owners and actual players were getting nowhere, the top representatives for each side: Gary Bettman and Bill Daly for the Owners and Donald and Steve Fehr for the Players decided to have their own private meeting yesterday. That resulted in the Owners making yet another new proposal, although from what information exists about it, basically all they did was take their original proposal and change the way things were worded rather than actually begin the process of working towards a compromise with the players. That’s not good. Read more when you click the link…
Today, player representatives are expected to be in attendance and I feel like if those involved in the talks don’t come away saying they’ve made “significant progress,” we will have a very good idea of whether or not the season is going to start on time. Different reports exist, but it seems that one constant is the 46% revenue sharing—the Owners this time disguised it as a “$58 million salary cap,” but for all intents and purposes, the two numbers are derived from the exact same place. One of the innovations in this plan is that the Owners also called for a sliding scale system as was introduced in the Players’ proposal, in essence, if revenue continued to go up, the percentage of team money available for the salary cap would go down—of course when you put it that way it sure does make the Owners sound greedy, huh? The best part about the Owners’ new plan is that it still doesn’t allow for a rollback mechanism so that player salaries can shrink with the cap. Wow.
- Just to go off on a little tangent: aren’t you glad the Pens didn’t do anything foolish in free agency this year? They currently sit at $60.2 million locked up in players. That means that they can dump Tyler Kennedy and move one guy to the minors and be cap compliant, compare that to those lucky Minnesota Wild who will need to cut nearly $11 million straight from the top in order to be compliant. Compare that to those free-spending Philadelphia Flyers who even after Pronger’s $4.5 million comes off the book will still need to cut nearly $4 million in salary, or in other words, one of their starting defensemen.
My personal opinion is that the cap is going to get set right around $58 million. I’m by no means an expert on labor negotiations, but if I were the PA, I would be willing to take the $58 million in return for the implementation of the luxury tax system (for a lot more check out my first counterproposal post), which calls for, in sum, that teams have the option to go above the cap by a certain percentage (probably 5%) so long as they made an equal dollar contribution into a communal fund to benefit poorer teams. I think this could be a winning scenario for both sides:
- A luxury tax system could divide the owners—large market teams that have the pressure to win now (ahem, Flyers) would be very interested in adding an extra $3 million in talent that certain other teams couldn’t also match (ahem, Devils, who knocked the Flyers out last year).
- If the Owners were to be split in terms of demands, that could also help the players keep their unlimited-year contracts, which is good for the PA.
- Finally, if the opportunity cost of using the luxury tax system were only $3 million (or $2.9 if we want to be sticklers), more teams could be induced into using it, the more teams that use it, the better it is for the financial stability of the NHL’s poorest teams, which is ultimately what this whole CBA negotiation process is about.
Are there still flaws? Of course. If the Owners seriously want to continue to shrink the percentage of the cap, the Players won’t be happy. To this point, there has been zero indication that the Owners are willing to share money with one another via a luxury tax, and to the best of my knowledge, no one has really begun to deal with the other issues including merchandising, player safety, and any significant rule changes.
Saturday is September 1st, let’s just get this dealt with NHL.