Greg Wyshynski and Emily Kaplan provided excellent information on the current status of the negotiations. Their column augments Nick Kypreos' tweet, which on the face of it looks to be one of doom and gloom, giving us further insight on the current situation. In my view, as I tweeted earlier today,while there are substantial hurdles to overcome, we will have hockey this season. When that happens is up in the air and debate still to be determined.
I have posted excerpts from the column with my take below each component:
There's motivation from both sides to roll out a plan for the 2020-21 season; but in the background, Bettman is dealing with a handful of disgruntled owners. Those owners have been complaining to Bettman about getting a bad deal in the new CBA (which was agreed on in July along with a "return to play" plan that finished the 2019-20 season) and a few have told Bettman they would prefer to not play the 2020-21 season at all if there are no fans, because they would be operating at a significant loss. Bettman, however, is "managing" those owners, according to a source familiar with the conversations, telling them that sitting out next season is simply not an option, as it is too damaging to the league's long-term health.
Interesting to hear that the owners feel they got a "bad" deal with the CBA. Flat cap for two years with a $1 mil rise in Year 3. The players are giving up additional escrow with partial repayment in years 4-6 of the CBA. Maybe they feel Bettman should have pushed for more, likely in the case of signing bonuses and maybe a compliance buyout etc., but seeing that the players didn't get many gains, which is what we call a compromise in negotiating, unsure what ground they have to stand on here.
The commissioner is also trying to satisfy the owners' concerns, and one thing they've asked for is an infusion of cash flow to get the 2020-21 season off the ground. Last week, the league came to the players with two ideas to tweak their financial arrangement.
The first idea: deferred compensation that climbs to 20% this season and escrow to 25%, with no changes to subsequent seasons.
The second idea: deferred compensation that climbs to 26% in 2020-21, and escrow increases around or above 8.5% from Years 4 to 6.
(As part of the current CBA, the players opted to defer 10% of their 2020-21 salary to be paid in three installments from 2022 to 2025. Escrow was capped at 20% for the season, 10% in 2022-23 and then at 6% from the 2022-23 season through the 2025-26 season. As a refresher, escrow is the amount of money the NHL and NHLPA withhold from player salaries in the event that there is a shortfall on the owners' side in the 50-50 split at season's end.)
When the NHL's suggestions were presented on an NHLPA player-rep call on Wednesday, players were appalled.
"We just signed a new CBA four months ago," one player told ESPN. "And in that agreement, we accounted for this season being not a typical season. And now they're trying to walk it back and change the structure on us. That's bull. If we came to them and said we wanted to amend the terms, no way that would fly."
Said another player who was on the call: "By no means do we want to say, 'Screw you guys, we don't want to make this work.' It's more that we just agreed on something five months ago. It's what we agreed on for the next six years. Why do we have to change it again?"
This is the crux of the players' discontent. A compromise CBA was agreed to just four months ago, now the owners are going back on that agreement. In addition, the proposed terms were sprung on the players with little warning. The Return to Play Committee will be vital here in order to try and keep negotiations / discussions civil while coming up with compromise ideas.
The players are discussing how they want to play it out. If the NHL is treating them like their own personal bank -- after all, this is just to get additional cash flow into the owners' hands now -- the players could say, "OK, let's make a deal. If you're going to essentially borrow money from us, what is the interest rate going to be?"
Players are also considering what concessions they could ask for in return. One thing players have always wanted, but have never been able to achieve through CBA negotiations, is for the NHL to take care of players' health insurance for the rest of their lives. That could be an ask by the players, but it's a hefty one, and there would likely be pushback from the owners. Players could also ask for portions of benefits to switch sides, or for stipends toward health insurance after retirement.
According to conversations with several sources on the players' side, they're willing to work with the NHL because it's in everyone's best interest to have a season. However, they're not just going to just bend over backwards to the owners' new demands. The way the players see it: Business owners, by nature of the role, are the ones who assume the risk. They're also the ones who largely reap the rewards when the league is thriving. If the NHL can just weather this storm over the next few seasons, there's no reason to believe the league won't return to the trajectory it was on pre-pandemic. Plus, the 2021-22 season has two key kick-starters: the addition of Seattle as the 32nd franchise (and a $650 million expansion fee, to be split by the owners) and a new U.S. TV deal.
The possible suggestions by the players make sense. There are always $ and non-$ possible solutions. Future insurance, which kicks the costs down the road, is a viable option. I noted the other day that a vig would be needed if the players gave up capital now; the column notes the need to determine the interest rate for that cash, since the future value of money is worth less than the now.
In addition, as pointed out in the column, the owners want a capital infusion and are the one with the larger fiscal risks. But they also get 1/31 of the $650 million Seattle expansion fee pie after the 2020-21 season and potential income from a new TV deal. Though that's of little help now. Owners, in many instances, are bleeding or losing money, with not playing, as noted above, a preferable option for some of them.
When it comes to mechanisms for that to happen, a lockout isn't one of them. The CBA outlaws lockouts and strikes during the term of the agreement. So don't fear the L-word.
There is a "stopped operations" clause in the standard player contract that teams could evoke if the NHL opted not to play the 2020-21 season. Via the NY Post, the verbiage:
"In the event of reduction of operations, the [salary] shall be replaced by that mutually agreed upon between the Club and the Player, or, in the absence of mutual agreement, by that determined by neutral arbitration."
So there could be some recourse there for teams should the NHL not play the season, by enacting a force majeure clause in the contract. But player agents have told us that there would be legal challenges -- considering, again, that the CBA was forged during the pandemic.
But, ultimately, what should most ease your concerns about the season not happening is that both sides appear to very much expect it to happen. The players are back on the ice in informal workouts. Bettman has been steadfast in wanting the season to start, and start as soon as possible.
The key is that both sides want an agreement. Getting there, as we all know, will be the difficult part. The fact that a lockout might not be looming should be viewed as a positive and enforcing the force majeure would be a scorched earth event. But when an agreement is reached and how those modifications are finally reached will be the extremely challenging part. Plus, when play actually begins and how many games will be on the schedule, likely to be 60 contests with the season ending in mid-July, are to be two major aspects of the conversations.
The league will realign its four divisions for the 2020-21 season, out of necessity (see breakdown in the column). Due to travel restrictions at the Canadian border -- the closure of which was extended to Dec. 21 last week -- the NHL has planned for an all-Canadian division at nearly every step of the groundwork for next season. The other divisions would be grouped together regionally.
Initially, that alignment was inspired by a "regional hub" plan, with one in Canada and three in the U.S. But the focus has shifted to a plan that would have teams playing inside of their home arenas -- most without fans but with an eye toward having some levels of fan capacity as the season continues, and especially in the postseason. That's based on hopes for lower COVID-19 infection rates and the expected rollouts of vaccines, treatments and rapid testing by spring 2021.
The schedule would have teams visiting each other for "homestands." While Major League Baseball has been the comparison, it's more like minor hockey leagues such as the ECHL, with quick, back-to-back games in the same arenas with the same opponent.
As far as structure, it's a mystery: How does the NHL square having a traditional "East vs. West" format when its Canadian division stretches from Montreal to Vancouver? The only thing we know about the playoff format is that it's likely to revert back to 16 teams. One theory making the rounds among the players and teams: seeding the playoffs 1 through 16 on a league-wide level for this season.
The advent of a vaccine or testing at the border might lift the travel restrictions on or before that date. My view was to take the top two teams from each division with the other eight making the playoffs. That may still be the case, since to go 1-16 in terms of points alone without the division winners and/or runner ups having a leg up would not be in the spirit of the usual league rules.
The clock is ticking. We are now at November 23. To have a January 15 start date, an agreement is likely needed by the end of the month. I would say January 1 start date, but that option had slid into mild oblivion now. The two sides know the impact of no season, notwithstanding the pandemic. Hopefully that will be a driving factor.
A long way to go before an accord is reached. Both sides though hopefully continue to recognize the need to stay at the negotiating table and find a way to work through the difficulties is paramount. Expect bumps along the way, but I do still feel an agreement is reachable and will be reached.
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