Written by Jonathan Smith
My CBA suggestion is not as strict as the NHL desires nor is it as free as the Union wants. But I think it could work. The restriction on payroll isn’t as stringent as the league is aiming for. But there are many mechanisms that will slow the growth of the salaries and negate the use of simple payroll additions to build a team. Player contracts will have to be managed by the GM’s for the financial picture to work. But, as oppose to the expired CBA, the terms of this CBA makes the contracts and payrolls much more manageable. Changes include payroll specifications, free agency, buyout responsibilities, revenue sharing and profit sharing.
1 – Immediate Changes (or, immediately agreed upon changes):
· The NHL and NHLPA agree to the on-ice improvements outlined at the conclusion of this CBA proposal
· The NHL agrees to reduce the games played in the regular season to 70 games (in 2006-2007 season) and in the preseason to a maximum of 6 games (in 05-06)
· The Calendar of the Regular season shall be standardized (with the exception of possible Olympic and World Cup years). The season will start on the first Thursday of October and end 179 days later (180 on leap years). Consequently, the earliest Start-end dates would be Oct. 1st- Mar. 28th and the latest start-end dates would be Oct. 7- Apr. 3rd. Therefore the regular season will not be any longer than 180 days (1 game every 2.57 days) (05-06)
· The NHL and NHLPA agree to participate every three to four years in a best-on-best world tournament. In the years in which there are Winter Olympics, the participation may be in the Olympics. If not the Olympics, the tournament will be the World Cup.
· The NHLPA agree to roll back all contracts by 10%; in accordance to the 8.5% reduction in games played (pre and regular season). (Immediately)
· All payroll restrictions begin to take effect for the 2005-2006 season.
· The NHL and NHLPA agree to reduce the playing roster by 2 players to 18, for the regular season only. As well, the NHL and NHLPA agree to reduce the pre-trade deadline active roster to 21-players. Rosters remain unlimited post-trade deadline and the playing roster shall return to 20 players for the post-season. This will virtually eliminate fourth liners for the season enabling more talented players and teams to perform while providing more depth during the crash and bang of the long playoffs. (In 05-06)
· The NHL and NHLPA agree to hire, similar to the hiring process of the league arbitrator, an independent auditor, or firm, to examine each team’s financial records and the league’s as a whole, in a confidential manner, at the end of each season. Any team deemed to be dishonest according to the specific guidelines agreed upon, shall be accessed a $1, 000,000 fine for the first offense, and any subsequent offense increasing by 100%. The funds shall be given 50% to the NHLPA and the remaining to the “honest” teams. (Immediately)
2 – Salary and Payroll Agreement
The NHL and NHLPA will agree to a salary system that entails no specific team payroll limitations but specific financial and privilege penalties. Further, the two sides agree to a specified league-wide limit on player compensation.
Minimum payroll: All teams must maintain a payroll of at least $ 24 million to participate in any taxation redistribution procedures.
Tax Threshold: Teams, who do not wish to pay a payroll tax, must maintain a payroll that does not exceed $35 million. Any team who fails to do so will be subject to specific financial penalties.
Maximum Payroll (with exemption): No team can exceed a seasonal payroll of $50M, with only one exemption. This exemption being the excess money being agreed upon in a contract under the counter-offer format (see Section 3). Player compensation for payroll purposes consists of proportioned signing bonuses, individually negotiated player performance bonuses, and base salary.
Payroll Infractions: Any team who does not comply with the aforementioned payroll limitations shall pay a payroll tax on the exceeding sums.
· For the first $10 million over $35M: Teams must pay $1 for every dollar in which they are over.
· For sums past the initial $10M, teams must pay $2 for every dollar in which they are over.
Privilege Penalties: Any team whose payroll exceeds the $50M payroll limit (excluding the one exception) will receive a warning for its first offense; but a second offence shall see its upcoming first round pick in the amateur draft revoked. A third offense, within two years of the second or four years of the first, will result in a limit to that specific team’s payroll for next season (see next item). Any further offense within a period of 3 years of the third offense will result in the repeat of these two punishments, in the same succession. Teams receive a clearance of the punishment cycle once three consecutive seasons in which no payroll infraction has occurred.
Free Agency/Trade Market Restrictions: Any team who, within two years of the second offense or four years of the initial offense, has its payroll over $50M, without the counter offer exception included, for a third occasion will have its payroll specifically restricted for the upcoming season. Teams will be subject to a payroll limit (for the upcoming season) below $50M that is equivalent to the amount in excess of the $50M league limit (see example below)
Teams who fail to oblige by this restriction will have its upcoming off-season activity restricted:
Teams will be restricted in making additions to their roster from outside the organization (signings/trades of players not in organization as at June 1st of that year). The restriction will be equivalent to 25% of [the team’s excess payroll over its restriction limit] subtracted from [the restriction limit]. This activity limitation represents the total in new additions (full contract, not just upcoming year’s salaries), NOT NET ADDITIONS. Teams who lose players cannot use the loss of the payroll salaries to increase their addition capacity.
For example, if Team A has a payroll of $55M in year 1, and is over the $50M for the third time within the appropriate time period, its payroll will be restricted to $45M for Year 2. If, that team has, in Year 2, a payroll totally $48M, thereby violating the regulation, it will be subject to further punishment outlined as follows:
Its addition activity will, therefore, be limited to $10.5M in total contract commitment addition between June 1st and October 1st (post-Year 2 summer) ($45M-$3M excess=$42M * 25% = 10.5M). Team A will not be able to sign/trade for players from outside its organization to contracts totalling, through the life of all the contracts, over $10.5M. By contrast (which is a primary benefit of this systematic calculation) a team in the same situation ending with a $50M payroll in Year 2,after the same restriction was place upon it, will be limited to $10M. Teams who spend more than other teams over the threshold will get restricted more in their off-season activity.
Calculation of Payroll Tax Funds: During the course of the season, the league shall partake in three scheduled payroll surveys with the clubs. During these surveys, the teams shall forward their amount of player payroll for all players with the team (active players and injured players). The total will then be pro-rated to the standard 21-man roster. The dates will be the following (subject to negotiations): November 1st, January 15th, and the first post-trade deadline day. The average of the three payroll surveys will be used to calculate the payroll tax, if any, payable to the league.
Distribution of the Payroll Tax Funds: Once the sum of the payroll tax is calculated and all fees are gathered, all teams who have a payroll below $50M (including the exception) and above $24M will participate in the distribution program.
· 75% of the funds will be divided evenly to all teams with a payroll between $24M and $35M.
· While all teams with a payroll between $35M and $50M will receive an equal portion of the remaining 25%.
· Teams with a payroll of less than $24M and greater than $50M will not be involved in the distribution program.
Guaranteed Player Share: The League and the Association guarantees that the total payout to all NHL contracted players (base salaries, signing bonuses and individually negotiated performance bonuses) shall remain within a percentage range in relation to overall league revenues. Total player payout shall not exceed 60% of gross league revenue nor shall it fall below 50% of the gross league revenue. This does not include the player’s share of the Team and league-wide profit sharing Program. (See point 6).
Distribution of Reimbursements: When either side is entitled to a reimbursement, the amount shall be decided by the receiving side. For the league side, the reimbursement amount shall be divided into two sums: 30% and 70%. The greater sum shall be divided equally among all teams whose payroll falls on or below the would-be payroll average (according to the 55% proportion). The other 30% shall be divided equally among the teams who have a higher payroll than the would-be average.
3 – Free Agency
The league and association shall come to terms with specific rules and agreements concerning free agency guidelines that will eliminate guaranteed raises and limit player restriction.
Free Agency Status
The league will agree to lower the age of unrestricted free agency by up to 6 years and to encourage restricted free agent signings by lessening the impact felt on a team’s future by offering restricted free agents offer sheets.
Free agency categories:
Group I (no ties with any NHL club):
· Players who were not tendered a qualifying offer, and were thus released into unrestricted free agency without team compensation or matching options.
· Players who, given the mandatory release fee and denied on waivers, were bought out before the conclusion of their contract and are not subject to compensation or matching.
Group II (right to match/compensation): Players under the age of 32, and with less than 8 NHL seasons played, who have been offered an appropriate qualifying offer from their respective teams and are thus subject to compensation from any team signing them to an offer sheet.
Qualifying offers must have the following value:
· Players with less than 6 NHL seasons experience: 60% of last seasonal salary
· Players with at least 6 NHL seasons experience: 75% of last seasonal salary
· Players of any experience: 125% of last season salary *
* Teams may tender a qualifying offer of 125% of the player’s last seasonal salary once for each player. If there is no contractual agreement in place between the club and the player, or no offer sheet has been signed with any other club, by September 1st, the qualifying offer goes into effect as a one-year contract. Players may only experience this once per team, and a maximum of twice in his career.
– Teams have 7 days to render a decision between matching the offer or accepting compensation.
Compensation for Group II free agents:
The maximum compensation for signing a Group II free agent is a club’s previous first round pick, the following first round pick, an active player* within the same salary range of the player’s old salary, and one second round pick from the team signing the free agent to the team losing the free agent.
· Less than 1 million: Next 3rd round pick
· 1,000,001-2,100,000: Next 2 2nd round picks and Next 3rd round pick
· 2,100,001-3,000,000: Next 2 1st rounds pick, 2 2nd round picks, in alternating years.
· 3,000,001-4,225,000: Previous first round Pick, next first round pick, next 2nd round pick.
· 4,225,001-5,500,000: Previous first round pick, next first round pick and similar salaried player*. Add a second round pick for anything higher than $5.5 M per year.
*The salary for the salary range purpose is the per year average, including a proportioned signing bonus attached to each year, if any.
* The range will be +/- 25% of the free agent’s previous salary.
* A player within the same salary range, averaged out for the remaining years on his contract, to the last seasonal salary of the Group II free agent in question. If teams cannot come to an agreement of which such player is to be included, both shall submit a list of players and the league shall do a lottery to choose the player. Teams cannot, under this compensation package, substitute one player for two or more players equalling the salary range.
However, teams may modify the compensation package as a whole at their choosing.
Group III (right to counter-offer/no compensation): Players with at least 8 seasons of NHL experience age, under the age of 32 years and have opted into Group III free agency by June 15th. These players are free to sign with any team and are not subject to any compensation whatsoever, but the originating team retains the right to offer a no-obligation counter-offer contract within 7 days.
· Upon signing an “intent to sign” sheet, the Group III free agent and the new team must leave the former team 7 days to offer a counter offer. Upon reception of this counter offer, the player has 24 hours to choose which offer, and which team, he shall sign with. Once the decision is made, it is final and the losing team is not subject to any compensation. Once the player signs an “intent to sign” sheet, all negotiations stop with any other team, including the intended team; only negotiations with the former team may continue.
· Originating teams have the option of offering raises and signing bonuses exceeding the maximums and will have any amount that is in excess to what the intended team offered exempted from the payroll maximum.
· Players, who choose not to opt into Group III free agency by June 15th, shall be classified as a Group II free agent.
Group IV (no rights/no compensation): Players over the age of 32 years. They are not subject to compensation or counter offers. They may sign with whomever they choose.
4- Player Contracts
Entry Level Contracts: Players drafted into the league must sign a 4-year entry level contract with their drafting club. There shall be a base salary cap in effect, in accordance to their draft position and draft year. As well, a cap on all bonuses (performance and signing) will be proportioned to the yearly base salary.
· Top 10 Draftees: Maximum of 80% of average NHL salary in draft season.
· Other 1st round picks: Maximum of 65% of average NHL salary.
· Rest of Draftees: Maximum of 50% of average NHL salary.
· Bonus Maximum: 35% yearly of the player’s annual salary.
Raises (except Group IV free agents): All players cannot receive a year to year raise (last salary of expired contract to first year of new contract) exceeding the following*:
· Players with less than 6 seasons experience: 30%.
· Players between 6 and 9 seasons experience: 35%
· Players with over 9 seasons experience: 40%.
*Teams who are counter-offering in order to try and re-sign a Group III free agent, after he had signed an “intent to sign” sheet with another club, may offer an initial raise of up to 10% over the limit.
Furthermore, in the subsequent years in the contract, the year to year raise cannot exceed,*:
· Players with less than 6 seasons experience: 5%.
· Players between 6 and 9 seasons experience: 7.5%
· Players with over 9 seasons experience: 10%.
Salary is in terms of base salary plus proportioned signing bonus.
*Teams who are counter-offering in order to try and re-sign a Group III free agent, after he had signed an “intent to sign” sheet with another club, may offer a yearly raise of up to 5% over the limit to that player.
Bonuses (except Group IV free agents): Signing bonuses offered to players in contracts shall be attached, for payroll purposes, evenly throughout the life of the contract.
Signing bonuses cannot exceed:
· Players with less than 6 seasons experience: 2.5%.
· Players between 6 and 9 seasons experience: 5%
· Players with over 9 seasons experience: 7.5%
of the total value of the full-term contract (in base salary), excluding option years.
* Signing bonuses offered in counter offers for Group III free agents may exceed the limit as high as 5%
But, overall bonuses (signing and performance) cannot exceed:
· Players with less than 6 seasons experience: 25%.
· Players between 6 and 9 seasons experience: 20%
· Players with over 9 seasons experience: 15%.
of the yearly average salary.
* Performance bonuses in counter offers for Group III free agents may exceed the limit as high as 10%.
Without Contract: Any player without a contract as of October 1st may not participate in the NHL season.
Minor League Clause: All players with less than 6 years of NHL experience must have a minor league clause written into their contract. This allows the club to send the player into the minor leagues without using waivers. The player’s salary is reduced to 1/5 of its value while in the minors.
Trade Restriction: All players who have played at least 10 seasons in the league and 4 seasons with his current team may place a limit on teams to which he would be traded to. The lists must contain no more than 10 teams. These players cannot be traded between the end of the trading period until July 15th to any team. Lists must be formulated by July 1st and can be altered only once and must be done so by December 1st. Teams must be given a weeks notice for an alteration. All lists shall remain confidential and any links are subject to disciplinary action. Absolute no-trade clauses may only be given to 12 year veterans or 10-year veterans by teams offering counter offers to Group III free agents.
Contract Buyout: Teams may buyout the contract of a player without any further financial commitment, other than:
Players with less than 6 seasons experience: a one-time release payment equal to 15% of the upcoming seasonal base salary, 5% of any additional years’ salaries and any outstanding signing bonuses. Players between 6 and 9 seasons experience: a one-time release payment equal to 20% of the upcoming seasonal base salary, 7.5% of any additional years’ salaries and any outstanding signing bonuses. Players with over 9 seasons experience: a one-time release payment equal to 25% of the upcoming seasonal base salary, 10% of any additional years’ salaries and any outstanding signing bonuses. All buyouts must be done between June 1st and October 1st. Players go on a 72-hour waiver list and any team may place a claim. After the period, if multiple teams have placed a claim, the player has 24 hours to choose which team he shall join. If no claim was made, the player becomes a Group I free agent.
Arbitration: Players with at least 5 seasons of NHL experience may bring his team into an arbitration process. Teams may bring players with at least 6 seasons of NHL experience into arbitration. An individual player can only call upon arbitration up to twice in his career, and a team can only bring the player to arbitration once. The case shall be heard by three arbitrators and the argument of both parties will be based on a majority vote among the three arbitrators. The decision will be based on one of the two proposals. Teams may refuse the decision, if they were brought into arbitration by the player. If so, the team retains Group II rights with the player up until 75% of the arbitrators’ decision and retains Group III rights entirely. Player’s may refuse the arbitrator’s decision if they were brought to arbitration by the team. If so, the qualifying offer automatically takes into effect. Both parties have 24 hours to accept or decline the decision.
5 – Revenue Sharing:
Teams forfeit 35% of the gate revenues, local broadcasting revenues, and specific sponsorship revenues for the season to a league-wide pool.
· At the end of the season, the pool is summed up and divided among the teams:
· 45% of the pool is divided among the bottom third of the league in terms of revenue.
· 35% of the pool is divided among the middle third of the league in terms of revenue.
· 20% of the pool is divided among the top third of the league in terms of revenue.
6 – Profit Sharing
At the conclusion of each season, the league and each of its clubs shall forfeit a fixed percentage of its profits towards the player’s association and towards the non profit generating teams. Profits represent operating net income, above and beyond all expenses and financial obligations, including shares from league tax redistribution and revenue sharing.
Each profit-generating team shall be entitled to 65% of its operating profit, which must be equivalent to no less 10% of its payroll. If this requirement is not met, that club will not be involved in the profit sharing program.
Any surplus thereafter will be divided according to the following:
· 15% to the club’s players
· 20% to a league profit pool.
Upon reception of each profit-generating clubs’ share, the league shall distribute the profit pool as following:
· 40% divided equally to each of the non-profit generating clubs