"Breaking Down The Deal That Ended The National Hockey League Lockout"
The National Hockey League and its Players Association agreed on the framework of a new collective bargaining agreement early this morning, and while league owners and players must still ratify it, the deal will almost certainly end the owners’ 113-day lockout of players.
The deal comes just five days before the league’s self-imposed deadline to cancel the season, and it should get teams back on the ice in the next two weeks. Players largely acceded to ownership’s demands, but given the absurdity of the NHL’s previous offers, the NHLPA managed to mitigate at least some of the damage. Here’s a breakdown of the major issues in the dispute:
“Hockey-related revenue”: The league and players will split so-called “hockey-related revenue” evenly, a rollback from the previous bargaining agreement, which split revenue 57-43 in favor of players (it is important to note that hockey-related revenue is not comprised of all revenue NHL teams make, so this isn’t actually an even split). Players had agreed to a 50-50 split early in negotiations, even though that concession will likely lead to salary reductions. The union did, however, succeed in getting $300 million for “make whole” payments, which should partially mitigate at least some of the early salary reductions.
Salary cap: The league’s salary cap, the amount each team can spend in a year on player salaries, will rise to $70.2 million this year before falling back to $64.3 million next season, matching its previous level. Players wanted to move the salary cap higher, owners wanted it lower. The lower cap will likely lead to higher player payments into escrow accounts, which are used to ensure that the league’s hockey-related revenue split works over the course of the season. Players have previously expressed fears that higher payments into escrow accounts could lead to de facto salary reductions if league revenue falls short of projections.
Contracts: The NHL won concessions on player contracts, which are now limited in length (to seven years, or eight if the team is re-signing one of its current players), and in how they can be structured. In the past, teams could structure deals in a way that paid players highly one year and much less in others, an effort to circumvent the salary cap. That structuring, known as variance, is now limited — the amount a player is paid in one season cannot vary more than 35 percent from the previous year. Players opposed both limits, but neither is as strong as owners sought in previous offers.
Pensions: Players will receive a stronger pension plan in which owners assume some liability if there is a revenue shortfall, resolving an issue players called a “centerpiece” of the deal. Owners had wanted players to assume that liability — if revenue fell, the shortfall would be made up from the players’ share of revenue. Under this deal, though, at least some of the shortfall would be covered by owners, though how much is unclear since the pension plan has not yet been finalized.
Details of the final deal are still emerging, so it’s way too early to declare winners and losers. But it appears owners got most of what they wanted — particularly, a larger share of revenue and limits on player contracts — even though they didn’t get as much of it as they had sought in previous offers. And, at the very least, the deal prevents the entire season from being canceled, as it was during the NHL’s last labor dispute in 2004-2005.