After a 10-month NHLPA boss Bob Goodenow and NHL commissioner Gary Bettman finally have a new collective bargaining agreement.
THE NHL'S NEW DEAL The issues and impact of hockey's new collective bargaining agreement
CBC Sports Online | Last updated July, 21, 2005
The longest labour war in professional sports history is almost over.
The NHL and NHL Players' Association fought tough and nail for over a year on a new collective bargaining agreement, but on Thursday, the players overwhelmingly voted in favour of ratifying the proposed labour deal.
The league's board of governors will hold a ratification vote on Friday, but are expected to rubber stamp the agreement, leading to the return of NHL hockey for the 2005-06 season.
So who won this historical labour dispute? What were the issues that defined this bitter battle? And what effect will the new labour agreement have on the NHL's economic landscape and its on-ice product?
CBC Sports Online answers these questions at it looks at the major components of the new collective bargaining agreement:
1. Salary Cap
2. Payroll tax
3. Revenue Sharing
4. Salary Arbitration
5. Unrestricted Free Agency
6. Rookie Salary Cap
7. Guaranteed Contracts
8. Turin Olympics
The issue: A limit on how much each team can spend on players' salaries.
What the owners wanted: Claiming that 76 per cent of total league revenues went to player costs during the 2002-03 season, NHL commissioner Gary Bettman wanted a collective bargaining agreement (CBA) that gave owners "cost certainty": in other words, a hard salary cap that limits what teams can spend on players' salaries.
What the players wanted: The NHLPA steadfastly opposed the idea of a salary cap. They argued a free market system should determine players' salaries and that the owners should set their own budgets. The union eventually agreed to a salary cap in February, but the two sides couldn't agree on the numbers and Bettman cancelled the season.
What they got: A team-by-team salary cap with a payroll range of $21.5 million to $39 million US (in the first year), based on projected league revenues of $1.7 billion. No player can earn more than 20 per cent of the team cap - for 2005-06, this means no player can earn more than $7.8 million. The average salary from a player's entire contract is what counts against the salary cap (for example, a three-year deal that starts at $4 million, goes to $5 million and ends at $6 million counts as $5 million a year against the cap). Also, the league-wide minimum salary increases to $450,000 from $185,000. The minimum rises to $500,000 in the sixth year of the deal.
Impact: The owners now have "cost certainty". A limit on what teams can spend on player salaries should lead to greater parity on the ice, as small-market clubs will be in a better position to compete against the big-market franchises, who previously could outspend them. With limited cap space, the league's top players will be hit hard, as they won't be able to earn as much as they did under the old system. The salary cap means player agents will be handicapped in their ability to negotiate the best deal for their players. Lower-end players will earn more because of the new salary minimum.
The issue: A system that taxes a team whose payroll exceeds a set spending limit.
What the players wanted: Instead of a salary cap, the NHLPA was willing to accept a payroll-tax system, similar to the one currently used by Major League Baseball. Under this system, a tax is levied against teams whose payroll exceeds a set limit.
What the owners wanted: The owners argued a payroll-tax system wouldn't necessarily deliver them "cost certainty," unless it included an extremely punitive tax coupled with a low payroll ceiling.
What they got: Linkage. In addition to a CBA with a salary cap, the league's total expenditure on player costs can't exceed 54 per cent of defined hockey-related revenue. This percentage, however, can increase or decrease as league revenues rise or fall each year of the deal. Also, the new CBA includes a 24 per cent salary rollback on all existing player contracts.
Impact: Again, the owners now have "cost certainty" as league revenues can't be outstripped by the cost of players' salaries. If league revenue increases, players will get paid more.
The issue: A system in which big-market teams channel a percentage of their profits to the small-market teams to achieve parity and ensure the survival of the smaller-market franchises.
What the owners wanted: The NHL wanted to establish a long-term way to keep small-market clubs healthy and competitive, and fix the disparity with the big-market clubs. But before that kind of system could be put in place, Bettman argued the NHL owners needed "cost certainty."
What the players wanted: The NHLPA wanted a system that fostered small-market teams and improved league parity. The players proposed a system that would collect taxes on teams' regular-season and playoff gates, and a payroll tax on teams going over an agreed limit on salaries. The money collected would go into a pool and be distributed to the small-market, cash-strapped teams.
What they got: A revenue-sharing scheme where the top 10 money-making clubs contribute to a fund shared by the bottom 15 teams – the fund is expected to be somewhere from $3 million to $8 million per club.
Impact: Unlike the old deal, owners will now be able downgrade under-performing players when their contract expires, helping to curb the escalation of players' salaries.
The issue: Salary arbitration is the process the league uses to settle salary and contract disputes. Under the old CBA, a player aged 25 or older with at least five years experience qualified for arbitration when his contract expired. The NHL and NHLPA jointly appointed impartial arbitrators to rule on these cases. The player, the team, the league and the NHLPA presented evidence and arguments at arbitration hearings before the arbitrator made a decision. Teams had the option to walk away from arbitration awards, but then the player could become an unrestricted free agent within seven days.
What the owners wanted: The league and team owners felt players and agents held too much influence over the arbitration procedures. The NHLPA won the majority of arbitration cases under the old CBA. One system that the NHL reportedly proposed was a final-offer arbitration process similar to the one used in Major League Baseball. MLB arbitrators are presented two salaries – one from the owner and another from the player. The arbitrator picks one of the figures, with no middle ground to work with. The NHL process gave arbitrators leeway to pick a salary amount somewhere in the middle. The owners also proposed a system in which a team could force a high-salary, under-performing player into arbitration to reduce his salary for the next season.
What the players wanted: The players originally stated they would not go for any two-way deals or arbitration system in which they stand to have salary decreases. They later said they would accept a two-way arbitration system, if the age for unrestricted free agency came down.
What they got: Two-way salary arbitration where the
players and owners both have the power to go to arbitration.
UNRESTRICTED FREE AGENCY
The issue: Under the old CBA, unrestricted free agents were players who were permitted to negotiate contract terms with any NHL club. Players weren't usually eligible for unrestricted free agency until they turned 31. They could become unrestricted free agents earlier if a club exercised its walkaway rights or if their contract was bought out or terminated.
What the owners wanted: The league originally didn't support the idea of lowering the age for unrestricted free agency, but it's believed they would accept it if the NHLPA agreed to two-way salary arbitration.
What the players wanted: The NHLPA wanted to see the age for free agency lowered, arguing that under the old deal, most players had to wait more than a decade into their careers before being able to chase a big-money deal.
What they got: Under the new deal, the age for unrestricted free agency falls to 29 from 31 in the summer of 2006. Unrestricted free agency also applies to any player who's played in the NHL for eight seasons, with the wiped-out 2004-05 season counting in service time. In the summer of 2007, the age for unrestricted free agency drops to 28 or seven years' experience; in the summer of 2008 and onwards it's age 27 or seven years of experience.
Impact: Players will now have more control over their careers and will be able to leave their old team and negotiate a more favourable contract with another club at an earlier age. However, this also means a more crowded free agent market, which could give owners the upper hand in contract negotiations.
ROOKIE SALARY CAP
The issue: The rookie cap limits the salary amounts and contract lengths of first-year NHL players aged 24 and under. The cap was worked into the 1994 CBA as a way for owners to have a level of cost certainty for rookie contracts. However, players, agents and owners circumvented it by using lucrative signing bonuses and performance incentives to supplement rookies' maximum base salaries.
What the owners wanted: The league and team owners indicated the old system didn't work for them, and wanted a more stringent rookie cap to curb escalating rookie salaries. Under the old CBA, Joe Thornton (drafted by Boston in 1997) was able to earn an additional $2.3 million in his first season through performance incentives – on top of his guaranteed $925,000 base salary.
What the players wanted: The players were willing to make concessions on the rookie cap, proposing to lower the cap by an unknown amount during an Oct. 1, 2003, meeting with league officials. The NHLPA's pitch was accompanied by an across-the-board five-per-cent pay cut for all players.
What they got: An entry-level system with a rookie salary cap of $850,000 US with bonuses that are not as easily reachable as the old CBA.
Impact: Teams can give more money to veteran players, and won't have to lock up valuable space under the salary cap to unproven rookies. Some also believe that European junior players would be more likely to play in Europe – where they can potentially earn more money – as opposed to playing in the NHL where their earning power is limited for the first few years of their careers.
The issue: Under the old CBA, all NHL player contracts were guaranteed.
What the owners wanted: It was believed that NHL owners originally wanted to adopt the NFL system of non-guaranteed contracts, as it would allow them to cut players at any time without having to buy out the remainder of their contracts. The league later backtracked and said it would maintain the status quo with regards to guaranteed contracts.
What the players wanted: Players were always against the notion of adopting the NFL system, as it would have given the owners the power to arbitrarily terminate contracts.
What they got: Owners have the ability to buy players out of their contracts at two-thirds of their value without counting against the salary cap within 10 days after the CBA officially takes effect. This is meant to help teams fit under the cap, but the clubs won't be able to re-sign those same players. Teams have between July 23 and July 29 to determine which contracts they will buy out. Teams also can't restructure existing player contracts to try and fit a big salary under the cap.
Impact:Players will have job security, as owners won't be able to randomly terminate their contracts. Owners will be in a better position to trim their payrolls to fit under the cap by buying some players out of their contracts. More players will become instantly available, leading to a massive rush of free-agency activity.
The issue: The 2006 Winter Olympics will be held in Turin, Italy, but NHL participation had to be negotiated into the new CBA.
What the owners wanted: The league supported the idea of NHL players at the Olympics, provided it did not cause a major disruption to the season.
What the players wanted: The players always wanted to go to the Olympics - as did the International Ice Hockey Federation - because of the high profile NHL participation can provide the game of hockey.
What they got: The league decided to call off next year's all-star game, allowing NHL players to compete in the 2006 Olympics in Turin in February.
Impact: The best NHL players will be competing in Turin, raising the game's global profile before a massive television audience.