Thursday, July 19, 2012

I Love The Smell Of Hypocricy In The Morning

The title of this article says it all: Minnesota Wild owner on crying poverty then spending $196 million on Zach Parise, Ryan Suter

Let's review:
In April, [Wild owner Leipold] told the Star Tribune that his team wasn't turning a profit, and put the onus on player salaries:

"We're not making money, and that's one reason we need to fix our system. We need to fix how much we're spending right now. [The Wild's] revenues are fine. We're down a little bit in attendance, but we're up in sponsorships, we're up in TV revenue. And so the revenue that we're generating is not the issue as much as our expenses. And [the Wild's] biggest expense by far is player salaries."

Three months later, Leipold authorized his general manager to sign Zach Parise and Ryan Suter to contracts totaling $196 million — including $50 million in signing bonuses in the first three years of the contracts.

Everyone keeping up now?

This is why there has to be brakes on the insanity that is player contracts.  The players themselves, while not totally blameless, are certainly not the prime reason for the hole that the Wild are carefully digging themselves.  And while I'm not opposed to Leipold being creative with his future as an owner, he's taking an awfully dangerous risk with the franchise, one that could hamstring it for the next ten years or more.  And that's likely into the reign of the next owner, after Leipold goes bust or decides hemoraging money isn't such a good idea after all.

Monday, July 16, 2012

Chirping The CBA: No Movement Clauses

It's another offseason filled with players wanting to be shipped somewhere new, but only if they approve the destination and I can't help but feel that rightly or wrongly, the end conclusion is hurting the game and frustrating the fans.
My reply in a comment on that post:
No. Frankly the only answer is the one you hand wave away at the top of your post: if management doesn't want to deal with NMC/NTC contracts, they shouldn't offer or sign them. If they sign them, they should live with them.

The NTC is about player compensation, the recognition that at a certain level of skill, the player wants some kind of control over their destiny and career so that if a contract does go sour, they don't get shipped off to some career graveyard like Edmonton (see also Dany Heatley) in exchange for a bag of pucks (see also Dustin Penner).

Banning NTC contracts would put the power disproportionately in the hands of management, and like him or loath him, Heatley's history with the Senators had afforded him the respect that gained him some measure of control over his destiny should a move be required.

You claim these contracts "hurt hockey". I don't buy that. They hurt individual franchises, yes, and I can see how individual fans could confuse the two. If a franchise becomes stuck with a player who doesn't want to be there, then that's a problem. However, shipping him off somewhere else he doesn't want to be like Edmonton doesn't fix the problem. It merely transfers it. And while shipping Heatley off to Edmonton would have solved Ottawa's immediate problem, it wouldn't have done anything for the Edmonton fan since Heatley clearly didn't want to be there either.

Sunday, July 15, 2012

Chirping The CBA: Alleged Opening Offer Terms

There are media reports that the owners have tabled a summary of an opening offer to the NHLPA.  Keeping in mind that an opening offer is as much about gauging the opposition's attitude as it is towards setting the table for constructive talks (ie: the details mean nothing in the grand scheme of things), let's quickly look at those same alleged details in the framework of my CBA wishlist:
  • Reduce players share of revenues from 57% to 46%: this is a meaningless position.  We know the owners want more of the pie.  46% is never going to happen.  It is a good starting point from which to compromise.
  • UFA status now only happens at 10 years, not 7:  This I think is a ridiculous idea.  How many players' careers make it even to the seven year mark?  Increasing the length of time a player's rights are "owned" does nothing for the game, really.
  • Contracts limited to five years: yeah, that's pretty much verbatim one of my wishlist items.  I like this.  I don't understand why the owners are talking sense in this matter.  It is not in the interest of the individual teams to have shorter contracts even if it is in the interest of the League's overall health.  Maybe the grownups really are in charge for once.
  • End salary arbitration: honestly I don't know enough about arbitration to make an intelligent comment about this.
  • Entry level deals five years instead of three:  I don't like this, I think that there needs to be some more give on the matter of entry level deals.  Forcing new guys into a standard cookie-cutter deal for three years is bad enough -- there's a difference between Erik Karlsson and Zack Smith right from the get-go.  Locking them both up for five years at the same peanuts rate is stupid.  My suspicion is that this is a throw-away position to be compromised away through negotiation.
  • No more signing bonuses: I don't like this.  How management and players structure the transfer of money to the players shouldn't be an issue, as long as the cap hit issue is addressed (see the next item).
  • Future deals all have the same financial value for each year of the contract:  This is why they want the signing bonuses eliminated, because it makes the math simple for analysts like Dave Hodge to follow without a capologist calculator.  I'd let owners and players structure deals differently through different years as long as the cap hit reflected the money paid.  If they want to pay some guy (say) an extra $1 million as a signing bonus in year 1, I have no problem with that, as long as the cap hit for that year reflected that $1 million.
Overall: this sounds like a pretty standard opening offer.  There's no way it will be accepted (not that the owners would be heartbroken if it was).  It is a starting point for discussion.  There's stuff to like in here and stuff to hate.  But I don't agree that this amounts to the owners "declaring war" on the NHLPA.  What matters more is how the NHLPA reacts to the offer, how reasonable they are with a counter-offer, and how willing to move the owners really are.  Only once we see that, probably over the next two or three weeks, will we really understand if we're dealing with a contract negotiation or a "war".

Monday, July 9, 2012

CBA Wishlist

OK, so the open secret here is that there's going to be a lockout of the NHLPA by the NHL owners in September.  The reason for this is because the current collective bargaining agreement (CBA) is apparently so heavilly tilted in favor of the players that they players would be quite happy to see another year run under it.

The owners, on the other hand, are in the position where around a third of them (I have read 10 of the 30 teams) would lose less money by not playing hockey in October than they would if hockey was played.

So, well, lockout, with the theory that they will be forcing the players to consider the potential damage to their careers (which for many players will be breathtakingly short anyways) and loss of a year's earnings.

Yeah.  We'll see how well that works, shall we?

Having watched hockey in one form or another for a few years, I have some thoughts about what I'd like to see change in the CBA.  Note that I'm not coming down on this from the side of either the owners or the players, although my bias is towards the players personally.  I'm trying to propose things that will make the NHL a better league, something which benefits the owners and the players both.

Player Contracts

The problem the last time around we did this was that some of the owners who had money had gone on a spending binge that tied up insane amounts of money to players that A) the owners couldn't afford and B) had the side-effect of raising the expectations proportionally for everyone else.  Having spent themselves into a hole, the owners were demanding that the players dig the league out of this predicament.  Which they did, through the introduction of the salary cap et al.

There are two problems here that can't really be addressed by any CBA (these proposals included): A) owners and management are smart people and will find clever ways around any rules that actually get written in order to spend money they don't have; and B) owners and management are dumb in that they'll use said clever ways to spend money they don't have and dig themselves another hole, and the next time the CBA comes up for renegotiation we'll play the same game again.

This time around the clever way/dumb result is the insane contract lengths that marquee players are getting these days.  Eight years for Quick.  Ten for Kovalchuck.  Twelve for Crosby.  I don't know how many years Luongo got initially, but he's still got ten to go.

The purpose of these contract lengths is to pay marquee players large amounts of money by planning to pay them much less at the end.  Since the cap hit is the total contract payout divided by the length, you can pay someone a large amount of money now, and still have a cap hit such that you don't have to pack the rest of the team with league-minimum entry-level type deals.  In Crosby's case, this allows Pittsburgh to pay Crosby $12.some million over the first three years, and then by reducing that number to $3 million over the last three years they get a manageable cap hit of around $8.7 million.

The thing is, it has always been a dumb idea.  The player probably won't turn out to expectations, and you end up with mediocre players eating both cash and cap space.  Or getting dumped into the AHL where the salary on their contract doesn't against the NHL team's cap (see also our favorite 6-year, $36 million man, Wade Reddin, who ended up playing in the AHL and getting paid more than most of the rest of the AHL -- combined).

So there are two things we need to do to create a disincentive against being excessively clever: make contracts more dangerous by forcing teams to live with their contracts, and limiting the maximum damage that these contracts can do to franchises.

So, my proposals:
  1. Change the cap hit calculation to be the money paid, July 1 to June 30, for that playing year.  Management can still play with the individual amounts paid each year through a contract, but the cap hit is what is paid.
  2. No more burying bad contracts in the minors.  1-way contracts stick with the big league team.  If a player doesn't make the cut, then have something like 75% of the cap hit still be charged to the team's cap.  If a player holds out or violates his contract (like running off to play in the KHL) then this doesn't apply.
  3. I like the idea of buyouts but I want them still to hurt when applied.  Limiting them to a certain time of year is good; limiting the number that a team can do per year (and maybe, additionally a lower aggregate number over every four years) is also good.
  4. Maximum contract length is four or five years.  That way, future franchise owners and management are not hamstrung too long by bad contracts.
None of this will happen easily because A) owners and management want the flexibility to be smart and believe there won't be any negative consequences for them; and B) the players think, if someone wants the flexibility to pay me $12 million while only costing them $8 million in cap hit, who am I to say no to that?

But for the health of the NHL franchises, which will all hopefully live on after the current owners are bankrupt and the management has all been fired, some kind of damage limitation has to happen.  The League really has to be the grown-up here and take a long term view of the entire organization's long term health instead of the 2 to 5 year view that management and owners typically take.

Cap Inflation

One of the interesting effects of the CBA was to tie the cap to league revenues.  Revenues go up, the cap (and minimum) go up with it.  The theory is, a rising tide lifts all boats.

It does make comparing apples to apples difficult though.  Since the last CBA went into effect, the cap has risen around 80%.  This means that contract values (statistics cash values of players) are hard to compare year over year, let alone across multiple years.

What would be more interesting -- and make things easier to compare -- would be to write contracts in terms of percentages of the cap.  So you wouldn't pay Jason Spezza $7 million, you'd pay him 8% of the cap.   Which, if the rules above applied, would help keep the damage being done to a franchise right out in public where the League can get a good sniff of it.

This won't happen because it would mean the owners would have to pay their stars more.

In the same vein something has to be done about the cap floor.  If the league really wants the smaller market teams to survive (forget succeed, just survive) without a revolving door of ownership, they have to make the smaller teams more able to spend to their budgets.

Revenue Sharing

Frankly, I think revenue sharing has no place in the CBA.  Once the gross revenue split(s) between the players and teams are decided, what the owners decide to do between themselves with whats left in terms of revenue splitting is their business.

The whole point of the cap was to ensure that the smaller teams have better access to big name/big skill players and have a better chance at overall success.  I think the wild-wild-west nature of the playoffs runs, where entry-into or failure-to-make the playoffs happens by hairs of points, plus the fact that there has not been much in terms of a dynastic hockey power, since the CBA marks this as overall a success.

On the other hand, franchises are always going to be unequal.  Not every franchise is going to be blessed with a history-steeped, hockey-mad, population dense area surrounding not only its arena but its city and region.  Frankly if the last thirty years can't blow MLSE's profitability out of the water, nothing ever will.  At the same time, Phoenix is putting a winning team on the ice but can't make it at the box office.  New Jersey made it to the finals, but I read that their owner is having finding the proverbial nickels to rub together -- which is a problem with the ownership, not the franchise, but still a problem for those in the front office.  In general, I read that there are potentially ten clubs that will lose less money if hockey is not played than they will if it is.  That's a third of the league, and there's no way you can consider that healthy long-term.

With all due respect to the fans of these franchises in trouble -- at some point the league is going to have to decide if the costs of carrying weaker owners/markets/franchises is really worth it in the long run.  There are options -- new owners, moving franchises to new markets, or outright revoking the franchises -- but bleeding the rich to keep tilting at arenas in the f---ing desert is not a long term recipe for success.

In general, revenue sharing only makes sense if you think the league really needs the number of teams that it has, in the locations it currently has.  And I don't.

But the bottom line is where I started: franchise revenue sharing has no place in the CBA.  What the owners/league decides to do with their share of the revenues should be entirely up to them.

Player Discipline

Overall the spinning-wheel-o-justice is not really any worse than it has been.  For all the guff I give Brendan Shanahan for his unwillingness to swing the Shahana-ban hammer more, he's been willing to stand up on YouTube and explain most of his non-actions.  This is the first step of improvement, and I hope that he (or whomever follows along after him) continues this reaching out to the fans and players to explain the league's actions.

I would prefer that "intent" wasn't ever an excuse for application of discipline, or lack there of.  There's no intent cop-out for off-side or delay-of-game.  There shouldn't be intent cop-out for head-shots.

I would like to see more serious fines for player violations.  $2500 is pocket change for too many of these guys.  Fines should be proportional to both the offense and the salary earned.

Related, I would also like to see fines levelled more at bench and front-office staff for repeat on-ice offenders.  At some point the teams have to take responsibility for the fact that they are employing some of these guys because -- not in spite of, but because -- of their willingness to indulge in hackery and goonery.  Which may be fine, but if we are fining and suspending the player, I'd like to see management held responsible too.


The move of Atlanta to Winnipeg proves the point about revenue sharing, and that the League gets it, at least after a fashion.  The league was better off with strong support in a small market than with tepid or no support in a large market.

That said, the League needs more flexibility on realignment if and when franchises moved.  With the exception of leaving the East and West unbalanced in terms of playoffs and franchise numbers, the last realignment plan had several good points I would have liked to see:
  • a better playoffs format, with more variety in the potential opponent seeding
  • every team visiting every other team at least once per year
  • Winnipeg in the West where they belong
I totally get why the NHLPA blocked the realignment over the winter.  But specifically some kind of  realignment has to happen as part of this CBA to deal with Winnipeg.  But in general the league needs more flexibility to deal with franchise movement.

In Conclusion

Most of these issues are probably orthoganal to everyone at the CBA's bargaining table except possibly the League.  The players want to look after themselves, and the owners want to look after themselves.

If anything, the NHLPA has a better long-term perspective since the majority of the players understand that their stay in the league is necessarily brief, and the PA especially has to protect the interests of the future members before they are actually members.  By contrast, the owners probably delude themselves that they'll either stay in this forever minting money or sell-up to some bigger sucker, at which point the mess becomes someone else's problem.

The only potential grown-ups at the table are the League -- and only potentially, since they dance to the tunes played by the owners.  But the squabbling over these issues isn't doing the long term viability of the League any good.

NHL Hockey is enjoying some of its best success ever.  The League just needs to be careful that in an attempt to slice up the current pie they don't make it difficult to keep growing the pie larger.

Overall though I'll say we'll see some movement on these issues, some movement against these issues, and some movement on issues I know nothing about.

And I predict that which this CBA has expired, some of the owners will have dug themselves a different hole they expect the players of the day to dig them out of.


The section on Revenue Sharing was lifted pretty much verbatim from a comment I left on this Sens Shot article on the subject.  Jared Crozier has posted a comprehensive dissection of my arguments listed in that comment.  He and I are approaching the discussion from different viewpoints; it is natural we have different ideas on the way forward.