July 16, 2005: The National Hockey League and its players union, the NHLPA, reach an agreement for a new collective bargaining agreement, effectively ending the lockout that had consumed what should have been the entire 2004-2005 season. The news was met with joy from both fans and advertisers alike; not only was hockey back, but it was set to enter a new era of financial prosperity and more importantly, parity among its members. With the introduction of a salary cap and revenue sharing, gone were the days of the big-market "have" teams like the New York Rangers and Toronto Maple Leafs being able to outspend the small-market "have-nots" such as the Phoenix Coyotes, Edmonton Oilers and Florida Panthers to name a few, on bringing in top end talent through free agency, and retaining promising young players looking for big money deals. The owners had protected not only themselves from rising player salaries, but their fellow owners as well due to the perceived stability of revenue sharing. The consensus was that the players had been crushed in negotiations, according to the sports media, and would now be forced to take smaller, more affordable deals. Fast forward to 2012, and it is clear that very little, if any, of this has come true. The Flyers, Rangers, and Red Wings of the league are still certainly the "haves" while the Predators and Islanders of the league are firmly entrenched in the "have-not" camp. GM's have gotten salary cap circumvention down to an art, and dole out ridiculous long-term, front-loaded contracts on a yearly basis. And as for those poor, poor players who got beat out in the CBA negotiations? Well, they're doing better than ever, and one needs to look no further than the massive $98 million contracts handed out to Ryan Suter and Zach Parise by the Minnesota Wild a few weeks ago, or perhaps the $110 million offer sheet given to Shea Weber from, surprise, surprise, the Philadelphia Flyers. These examples are why the NHL's proposal for the new CBA and its sweeping changes, from a reduction in player revenues to capping contracts at a length of five years, is a very promising step in the right direction to truly rid the NHL of the massive disparities between its teams, and keeping players signed to reasonable contracts.
Plus ça change, plus c'est la même chose.
For those of you who don't quite understand the French language, that means "the more things change, the more they stay the same". This is resoundingly true when one looks at the current state of franchises of the National Hockey League. Pre-lockout there were many teams, mainly in small markets, that were losing money, with both the Ottawa Senators and Buffalo Sabres, teams located in hockey markets, declaring bankruptcy less than two years before the work stoppage. The Quebec Nordiques had moved to Colorado, the Hartford Whalers to Carolina and the Winnipeg Jets to Phoenix. The Edmonton Oilers came to within inches of leaving town; things were clearly not working from a profit perspective. At the end of the '04-'05 lockout, the owners assured fans that with revenue-sharing in place, these sorts of things would be over, and now all teams would be financially successful regardless of their location. It doesn't take an economist to see that this is not the case, with the Dallas Stars having been through bankruptcy, the Phoenix Coyotes still in bankruptcy, and the Atlanta Thrashers ceasing to exist entirely, moving to Winnipeg to become the Jets 2.0.
The similarities are even more startling when looking at which teams attract the top end talent, and which teams, despite the salary cap, are still forced to give up their best players to big spenders. The obvious example here is the Nashville Predators, and the terrible offseason their fans have had to endure. A team built from the back end up, their superstar defensive duo may both be in opposing uniforms before the week is over. Ryan Suter left for the sum of $98 million to join forces with Zach Parise in Minnesota, while Shea Weber, arguably the most dominant defenseman in the league, could be leaving the Preds for Philadelphia, and a nice big $110 million contract. This is precisely the problem with the "new" NHL; it's almost the exact same as the old one. The Predators are a relatively budget team who likely do not make a fraction of the money that the Flyers do. They have a smaller arena, a cheaper tv contract and are situated in what many would not consider a hockey market. They can not afford to spend up to the cap every single year, the exact opposite of the Flyers. They routinely give out massive front-loaded contracts, first to Jeff Carter and Mike Richards, and once they thought they could not win with those players, managed to deal them, only to give a massive contract to their new goalie (and philosopher), and now an offer sheet to Weber. The deal would pay Weber $52 million in signing bonuses in the first four years alone. 52 million. For a team like Nashville, that is a very bitter, and expensive, pill to swallow, no matter which way you look at it. This is a clear example of the rampant cap circumvention employed by various GM's, which get the big money out of the way immediately and drop down to peanuts for the final years of a contract, freeing up cash for the team for years, at least in Ilya Kovalchuk's case, that the player may very well be retired for.
After reading all this, it may seem rather silly that I'm in favour of the new CBA proposals, but this is because in the bigger picture, it would appear that most of the alterations would greatly help the smaller markets rather than the big ones, and the league clearly needs to change from its current ways. Clearly it is far from perfect. Very far. But it should really only be taken as a jumping off point, rather than necessities to a new deal. Will the owners succeed in getting everything they want? Of course not. However it is a promising direction they have set, beginning with the reduction of player salaries. The owners want the players, who currently make a rather large 57% of league revenues, to drop down to 46%. In a league where 18 of its 30 teams lost money last season, this is a necessary step. Clearly this is not going to happen, but anyone who has ever negotiated before should easily see that this is the league shooting for around a 50/50 split, which by most accounts seems pretty fair. Next, the five-year limit on contracts that would effectively end the cap circumvention craze. This seems a little far-fetched, but the idea of a limit on contract length is certainly a welcome addition that could definitely prevent the ridiculous $22 million first year (bonuses included) to $1 million in the last year contracts that Parise and Suter have, among others. If this is in fact included in the next CBA, I would imagine it to be closer to the seven-year mark, if not longer, as once again, the five-year suggestion should just be taken as the jumping off point. Next is the suggestion for restricted free agency to be extended from seven years to ten, which goes hand in hand with the suggestion of entry level contracts being extended from three years to five. These would have the effects of lowering young players salaries and making them easier to retain for a longer amount of time, rewarding teams that build through the draft such as Detroit and Edmonton, allowing them to complement their young players with more expensive older free agents, while GM's that make offer sheets (ahem...Philly) and trade their picks away (*coughBURKEcough*) would be forced to re-evaluate their way of doing business. Finally, there's the proposal that all salary arbitration be removed. This is something I just can not see happening, and seems extremely selfish by the owners. Under the current CBA, any restricted free agent who makes over $1 million is not entitled to a raise until they are unrestricted, unless of course they go to arbitration. Couple this with the proposal to extend RFA years up to ten, and it seems as though the owners are shooting for the moon (and extremely low salaries) with this one. Regardless, there's lots of good content to work with moving forward to the new CBA, so one can only wait and see how the NHLPA reacts to it.
The last lockout was supposed to be the beginning of a new era, where teams would prosper and players would make reasonable salaries. However that future, for the most part, didn't pan out, as more teams are losing money than making it, and every free agency turns into a bidding war. There is a clear line between the rich and poor in the NHL, and the players are certainly not on the poor side. The general managers of the league have managed to exploit just about every possible loophole in the current CBA, and continue to do so, even with a new one looming. The proposed changes are extreme, but certainly a step in the right direction. Unless major changes do happen though, things will stay the same as they are now, which is pretty much the same as they were before the first lockout. The Rangers will still buy all the best players while their upstate counterparts, the Islanders, still won't even be able to afford a new arena. Nashville will continue to have their homegrown talent picked off by the wealthy teams, and GM's will continue to front-load contracts. I don't want another lockout, in fact nobody does, but if that's what it's going to take for real parity and profitability in the National Hockey League, well then I guess it's something worth waiting for.
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