Published on September 5th, 2012 | by James Conley2
NHLPA Proposal: Revenue Sharing, Salary Rollback Provisions Affect Penguins
Flanked by the likes of Alexander Ovechkin, Sidney Crosby and Steven Stamkos, NHL Player’s Association Executive Director Donald Fehr announced the players’ first answer to the NHL’s proposed collective bargaining agreement, issued in July.
The NHLPA’s counterproposal to the league’s initial CBA recommendations, made nearly one month after the league submitted its first proposal, was less a counter to the massive changes proposed by the league’s owners and more an alternative.
Certainly, after seven years of record growth and annual revenues reaching more than $3.3 billion in 2012, the current arrangement seems to suit the players just fine.
According to Travis Hughes at SB Nation, the first proposal was even willing to remit players’ share of hockey-related revenues (HRR) over the next three seasons in exchange for a stronger revenue sharing structure that would allow the league’s 20-or-so financially struggling teams a way to keep their heads above water.
In terms of moving towards a lockout, the player’s proposal does far more to prevent a work stoppage than the extreme terms of the deal proposed by league owners.
Some of the major known points of the NHLPA presentation:
- 3-Year CBA with an option to extend the terms of the current agreement for a fourth season
- Reduction in current 57 percent share of HRR so long as revenue continues climbing upward
- Hard or Soft Salary Cap will remain in place, with the latter being supplemented by a luxury tax
- Revenue Sharing as a means of keeping underperforming teams in the black—as much as $250 million over 3 years
- Few Proposed Changes to Player Contracts despite significant changes proposed by owners
- As much as $455 million in reduced compensation over 3 years given maintained revenue growth
Where might the Penguins stand in all this? Ownership and management will never make their personal aims public (especially when solidarity among owners is at such a PR premium), but Pittsburgh should stand to do well from an agreement that comes as close as possible to the status quo.
According to Forbes, the Penguins have posted operating losses in each of the last two seasons for which figures have been made available—a $1.6 million loss in 2010 and a $200,000 loss in 2011.
While Pittsburgh’s revenues and team valuations have increased every year, the operating profit/loss has decreased as player salaries have gone up significantly.
Until the specific terms of the NHLPA’s proposed revenue sharing system are revealed, it can’t be known whether teams which pay most heavily into the pool will be determined by value or by operating profit/loss.
However, it’s important to note that the current system has allowed the Penguins to be salary competitive with divisional financial heavyweights in Philadelphia and New York, to retain their most valuable would-be free agent (Crosby) and has rewarded them as a club which spends to a reasonable cap ceiling.
For as much as the NHL brand has grown since the lockout, the Penguins brand is one of two or three to outpace the league in terms of growth and local footprint.
Significant overhaul of the system that allow that sort of sustained growth to occur might prevent it from continuing.
Image sjsharktank @ flickr