Tuesday, November 20, 2012

Chirping The CBA: Contracts

Puck Daddy says the NHL's concern is around four player contracting issues. Let's pretend that these are the real issues and have a look at them, shall we?
1. Cap circumvention in which contracts are buried outside of the NHL, be it Wade Redden in the AHL or Cristobal Huet in Europe.

2. Cap circumvention on long-term deals that front-load salaries and then "back dive" later in the contract, with annual salaries dropping by a large percentage in order to influence the cap hit.
I'm listing these two issues together because they are A) related and B) ass-backwards -- the first is a direct consequence of the second. The only reason that universal whipping boy Wade Redden is buried in the AHL is because Rangers idiot GM Glen Sather signed Redden to that ridiculous contract in the first place.

I understand that the league is concerned about both these issues because of the negative impact they have on running franchises, but the problem isn't the players. Wade Redden wouldn't have been able to hold Sather hostange if Sather wasn't buying. I'm sure that Redden would have happilly signed for $25 million. Or $20 million. Or maybe if that was Sather's threshold of sanity, then maybe someone else would have signed Reddin to some other amount, and he'd be someone else's problem now.

This whole thing is like situations where bus drivers don't pick up passengers, and the bus company says to the passengers, what can we do to make this situation better? How about have the bus drivers stop the bus and pick up the passengers when they should?

If the league has a problem with the way that their owners and GMs are behaving, well then fix your owners and GMs.

Maybe the grownups should start acting like grownups and A) stop doing stupid things, and B) live with the consequences of their actions.
3. There is $5.7 billion in future contractual liabilities to players, i.e. long-term contracts that have already been signed. How can NHL owners deal with those commitments and still have the freedom to, for example, refinance their stakes or sell the team?
Ugh. See the whole rant above about "living with the consequences of your actions". That $5.7 billion hole has been dug, now you have to live with it. Trying to make it hard to make the hole bigger is a different problem.
4. Rewriting the contracting rules for young players, from contract term to arbitration rights. The idea is to shift the money from a player's "Second Contract" to his third contract. It's a way to create a little more fiscal sanity when it comes to big money thrown at still unproven players. It's also not a money-grab by the NHL — rather, it shares the wealth with established players in a way the system doesn't encourage at the moment.
I go back and forth on this issue.

One the one hand, keeping young players cheap is good business sense (for the owners). It also builds in space for the inevitable cap drop in the future, in that the younger players won't be paid as much while the cap space to pay them also drops. This helps protect the older contracts in a reduced cap world.

On the other hand, many -- most? -- of these guys won't see a third contract. At the end of the day, we watch the game to see the game played. We don't tune in to watch the owners and GMs make money. So it would be nice to see some more of these guys get a bit of a payday before they lose their spots.

The whole message behind these "issues" that the league has is that the individual owners can't control themselves, so they want the players to fix the problem that the owners made.

Same story as last time. Same story as next time.

The situation is exasperated by the fact that there are some teams that make a lot of money (ie Toronto) and this is pushing league revenues up, which lifts the payroll requirements for the poorer teams. This makes it harder for these teams to continue financially, which leads to the kinds of ownership debacles that we've seen (Nashville, Phoenix, etc).

Some of these teams are not viable. They won't be viable unless either A) there is a substantial cash infusion from the more successful teams (ie Toronto) or B) they get moved someplace where there is a population willing to support them. However the league's refusal to contemplate either of these possibilities just compounds the problems that they've continued to make.

So what is it going to take for long-term viability?

1) Move or close some of the financially weaker teams. Phoenix, I'm looking at you. Find someplace viable or shut them down.

2) Real revenue sharing -- something like 20% of all revenues go into a pot, which is then distributed by proportionally inverse revenues. Ideally break-even teams like Ottawa break even. Phoenix and Nashville get a ton of money. Toronto just pays. (Everybody wins!) But that's a problem for the league to solve with its franchisees. As long as the players get paid, they really shouldn't care where the money is coming from. (Or going.)

3) Real limits on contracts. Like five years max. Like "the money you pay in a July-to-June calendar year -- including bonuses -- is the cap hit." Like a cap tax for contracts signed but not active with the big team (ie the Wade Redden clause).

My guess is that in the end we might see some limits on contracts. The league is actually making some steps in this area with previous offers.

But the rest of these issues? The league has had its collective head in the sand for so long, I don't see them changing now.

And in five or seven years when this CBA expires, we'll do it all again.