[h=1]Mirtle: A closer look at the NHLPA's last offer – and what may be next[/h]
James Mirtle
Toronto — The Globe and Mail
Last updated Wednesday, Nov. 21 2012, 8:41 AM EST
NHLPA Executive Director Donald Fehr (centre) glances at his notes as he
stands in front of players, including Sidney Crosby (centre left) following
collective bargaining talks in Toronto on Thursday October 18, 2012.
(The
Canadian Press)
And so we wait.
As the lockout rolls into Month No. 3, the NHL has asked the players to serve
up a full proposal, something the NHLPA is working on into the night in order to
present it by 10 a.m. Wednesday morning.
Details as to what it may include are relatively thin, but what is available
is the economic system the union put on the table about 10 days ago when
negotiations broke down into a shouting match between players and owners.
The players' proposal at that point was based on taking the $1.883-billion
share they received last season and simply adding 1.75 per cent to it each
season.
It was also reliant on the notion of NHL revenues continuing to grow from the
$3.303-billion they hit last season. If hockey-related revenues increased by 5
per cent each season (including the current, locked out one), the players' share
would shrink from 57 per cent last season to 55.2, 53.5, 51.9, 50.3 and 48.7
over the next five years.
Sounds good, right? A players' share of less than 50 per cent?
Here's the obvious issue: NHL revenues are not going to increase 5 per cent
this season. In fact, the league already estimates they'll drop some
$400-million to the $2.9-billion range, and that's if the season starts on Dec.
1, which is looking less and less likely by the day.
That makes it virtually impossible to set a guaranteed share like the players
have in their proposal, as no one truly knows where revenues will be for not
only 2012-13, but every season after that.
Will yet another lockout pull revenues down for years?
Or will this be a temporary one-year blip?
The best way to illustrate all of this is to simply present the financials in
chart form. One word of caution, though: I've organized this information as if
NHL revenues were going to increase by 5 per cent a season, something that is a
virtual impossibility now.
I'll explain why below (note: all dollar figures are in millions):
[TABLE="width: 370"]
<tbody>
[TR]
[TD="width: 78"] [/TD]
[TD="width: 118"]
[/TD]
[TD="width: 174"]
NHLPA offer
[/TD]
[/TR]
[TR]
[TD] [/TD]
[TD]
League revenues
[/TD]
[TD]
Players share
[/TD]
[TD]
Percentage
[/TD]
[/TR]
[TR]
[TD]2011-12[/TD]
[TD]
$3,303.0
[/TD]
[TD]
$1,883.0
[/TD]
[TD]
57.0%
[/TD]
[/TR]
[TR]
[TD] [/TD]
[TD]
[/TD]
[TD]
[/TD]
[TD]
[/TD]
[/TR]
[TR]
[TD]2012-13[/TD]
[TD]
$3,468.2
[/TD]
[TD]
$1,916.0
[/TD]
[TD]
55.2%
[/TD]
[/TR]
[TR]
[TD]2013-14[/TD]
[TD]
$3,641.6
[/TD]
[TD]
$1,949.5
[/TD]
[TD]
53.5%
[/TD]
[/TR]
[TR]
[TD]2014-15[/TD]
[TD]
$3,823.6
[/TD]
[TD]
$1,983.6
[/TD]
[TD]
51.9%
[/TD]
[/TR]
[TR]
[TD]2015-16[/TD]
[TD]
$4,014.8
[/TD]
[TD]
$2,018.3
[/TD]
[TD]
50.3%
[/TD]
[/TR]
[TR]
[TD]2016-17[/TD]
[TD]
$4,215.6
[/TD]
[TD]
$2,053.6
[/TD]
[TD]
48.7%
[/TD]
[/TR]
[TR]
[TD] [/TD]
[TD]
[/TD]
[TD]
[/TD]
[TD]
[/TD]
[/TR]
[TR]
[TD="width: 78"]Total[/TD]
[TD]
$19,163.7
[/TD]
[TD]
$9,921.0
[/TD]
[TD]
51.8%
[/TD]
[/TR]
</tbody>[/TABLE]
[TABLE="width: 430"]
<tbody>
[TR]
[TD="width: 91"] [/TD]
[TD="width: 174"]
NHL offer
[/TD]
[TD="width: 30"] [/TD]
[TD="width: 72"] [/TD]
[/TR]
[TR]
[TD] [/TD]
[TD]
Players share
[/TD]
[TD]
Percentage
[/TD]
[TD]
[/TD]
[TD]
Difference
[/TD]
[/TR]
[TR]
[TD]2011-12[/TD]
[TD]
$1,883.0
[/TD]
[TD]
57.0%
[/TD]
[TD]
[/TD]
[TD]
--
[/TD]
[/TR]
[TR]
[TD] [/TD]
[TD]
[/TD]
[TD]
[/TD]
[TD]
[/TD]
[TD]
[/TD]
[/TR]
[TR]
[TD]2012-13[/TD]
[TD]
$1,734.1
[/TD]
[TD]
50.0%
[/TD]
[TD]
[/TD]
[TD]
$181.88
[/TD]
[/TR]
[TR]
[TD]2013-14[/TD]
[TD]
$1,820.8
[/TD]
[TD]
50.0%
[/TD]
[TD]
[/TD]
[TD]
$128.70
[/TD]
[/TR]
[TR]
[TD]2014-15[/TD]
[TD]
$1,911.8
[/TD]
[TD]
50.0%
[/TD]
[TD]
[/TD]
[TD]
$71.78
[/TD]
[/TR]
[TR]
[TD]2015-16[/TD]
[TD]
$2,007.4
[/TD]
[TD]
50.0%
[/TD]
[TD]
[/TD]
[TD]
$10.90
[/TD]
[/TR]
[TR]
[TD]2016-17[/TD]
[TD]
$2,107.8
[/TD]
[TD]
50.0%
[/TD]
[TD]
[/TD]
[TD]
-$54.15
[/TD]
[/TR]
[TR]
[TD]Make whole[/TD]
[TD]
$211.0
[/TD]
[TD]
[/TD]
[TD]
[/TD]
[TD]
-$211.00
[/TD]
[/TR]
[TR]
[TD] [/TD]
[TD]
[/TD]
[TD]
[/TD]
[TD]
[/TD]
[TD]
[/TD]
[/TR]
[TR]
[TD="width: 91"]Total[/TD]
[TD]
$9,792.9
[/TD]
[TD]
51.1%
[/TD]
[TD]
[/TD]
[TD]
$128.1
[/TD]
[/TR]
</tbody>[/TABLE]
As you can see, the differences between these two offers, if revenues grew at
this rate, are pretty negligible: Just $128-million over five years, or less
than 0.7 per cent of total HRR over this time frame.
That's basically nothing, which is what makes the fact this wasn't on the
table back in October, when a full season could be salvaged and revenue gains
likely factored in, a little infuriating.
Now, I had attempted to rework the projected revenue figures and present the
NHLPA's offer in that light, but it's exceptionally difficult to do so. Even if
you simply scale down this year's share to account for the lost games and
revenue, what then do you do in Year 2 and beyond?
It's too hard to accurately determine, and we'd be guessing if we came up
with a 2013-14 or 2014-15 projection.
(It's important to note here that the NHLPA has said it wanted to lay out an
economic system first and then adjust it for the effects of the lockout. My
issue with that is how on earth do you project what those effects will be?)
There are positives buried in these figures. For one, the two sides are
closer together than they were in October, as the numbers
here
show a gap of roughly $500-million before the NHL agreed to pay $211-million
toward the make whole and the PA put together these new numbers.
No. 2, the PA's ask of a 1.75 per cent increase, under normal circumstances,
isn't unreasonable.
Problem is these are hardly normal circumstances.
Where do they go from here?
Looking at the figures above, the players could theoretically put an
agreement on the table that started at 55.2 per cent in Year 1 before trailing
down to 50 per cent by Year 4.
If NHL revenues fall to $2.9-billion in a shortened season, however, the
players' share would dip to $1.6-billion and the notion of the league "making
whole" pre-existing deals would be altered significantly.
I'm not sure there's a way around that. Regardless of who either side
believes caused this mess, the so-called pain of the lockout is going to have to
be shared by both sides here or they'll never get a deal done.
Perhaps the best way to resolve the conflict is ultimately a variation of the
make whole provision: Anything above 50 per cent owed to the players in Years 1
and 2 is deferred down the road.
But even if the players decide to deal in percentages instead of guaranteed
increases for the first time, don't expect huge movement on the contractual
issues in any proposal.
There's a willingness to help the league eliminate the "back-diving" deals
like the one Ilya Kovalchuk signed a couple years ago – perhaps even with the
adoption of a 5 per cent year-by-year variance limit on contracts – but there's
not much room for movement beyond that.
Both sides are entrenched on the other issues, meaning even if there's
movement in the right direction on the economics, it likely won't be enough.
In some senses, they've never been closer. But getting through these final
series of hoops will be the most difficult part of all