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2018-2019 NHL Thread – Thunderstorm Warning

OK, it is Friday afternoon and I’m clearly not getting any more work done today, so I’m going to lay out my understanding of the escrow process and “make whole” at a high level. Bear with me. If you guys think I am misunderstanding anything, let me know, I’m trying to understand how this would work.

So the players (and I assume the teams) pay a portion of their earnings into escrow accounts. At the end of the year, it is determined what the annual revenue total was, and the escrow accounts are used to ensure a 57/43 split. So if GMs have committed more than 57% to players, the players don’t get the full value of their contract for that year as they don’t get their full escrow payment back. If GMs have committed less than 57% to players, the players get more than the value of their contract to get to a 57% split.

From what I’ve read, over the term of the last CBA, the players got about 97% of their salaries. So, averaging over time, GMs tended to commit around 57% of revenue to player contracts.

Let’s say next season they are able to get to a 50/50 split somehow. The NHL makes $4B, so $2B is allocated to the players. Since GMs seem to be close to the split, let’s say they committed $2B to the players. The players paid, maybe, 10% into escrow. So there is $200MM in escrow that will be refunded in full to the players to get them to $2B.

Now, let’s say there are deferred payments due to “make whole.” The players have still paid in $200MM of their $2B in contracts to escrow. The players would be getting the $2B that is their 50% share. But, before the distributions are made, they need to pay off the deferred payments associated with “make whole” to players under contract this season. So part of that $200MM is paid to “make whole,” and whatever is left is refunded to the players. So all players would be getting less than their 2013-2014 contracted salary, and less than they would be getting if there wasn’t that “make whole” provision.

It seems players that sign a contract under the new CBA will be screwed the most. The escrow payments they made from their contracted salary will be used to pay off “make whole” for the other players and they only get a portion back.

Meanwhile the owners are getting the same $2B (50/50 split) that they would've gotten if salaries were rolled back. The league figured out a way to make an offer and say "no rollbacks" without giving up a single cent. Sketchy.

Am I missing something?
No, that is pretty much how I understand it. I just think it's a bit hypocritical of players who have signed front loaded contracts that can take real dollars from other players to complain about a provision that will essentially do the same thing to players who sign future contracts.

The solution should be for the NHLPA to meet owners somewhere in the middle on this make whole provision. The players keep talking about concessions, but they really haven't conceded anything.
 
No, that is pretty much how I understand it. I just think it's a bit hypocritical of players who have signed front loaded contracts that can take real dollars from other players to complain about a provision that will essentially do the same thing to players who sign future contracts.

The players have gotten about 97% of their salaries under the old CBA. So, even with front loaded contracts, they've managed to get most of their salary. What do you think that % will be if the 12% annual rollbacks of salary are thrown into the same pot? I don't think its reaelly comparable.

Players who sign contracts under the new CBA will get screwed the worst, sure, but all players will have their escrow payments used to cover deferred rollbacks before getting that money back. So Ted Leonsis wants to take money out of Ovi's left pocket, put it in his right pocket, and proclaim "ta da! You've been made whole." Again, sketchy, not to mention misleading.
 
Warning: I'm about to get full on business nerd-y in the following posts. So if you're here for hockey and aren't interested in the business aspect, feel free to skip over them. (If you all don't do that anyway with my posts.)

The solution should be for the NHLPA to meet owners somewhere in the middle on this make whole provision. The players keep talking about concessions, but they really haven't conceded anything.

I would love it if the players would negotiate off make whole, if only because it would speed up the process. Bettman is practically begging them to, and has been since October when he cut off talks, but claimed that Fehr could call him to talk about the make whole portion of the offer. (Which leads to the question: from what you know of Bettman, if you are negotiating with him, and he is begging you to do something, what are the chances whatever he wants you to do is in your best interest?)

The league is determined to make "make whole" a real thing. I really think it is a Luntz creation. It is not too complicated, misleading, and comes with an easy to remember name. They are trying to brand their solution. "Make Whole." And they want to negotiate in that framework.

It is also relatively easy to defend against. If they were actually interested in making the contracts whole, it would cost $590MM, according to the NHLPA. And the NHL can't argue with that number, not with any credibility anyway. Because they came up with almost the exact same number. They said, when the players made their offers in October, if they dropped the share to 50/50 but were required to honor all existing contracts, it would cost $600MM outside of the 50/50 split.

But, if you look at the offer from the players, they are not demanding to be made whole. They are offering to take their $1.883B share from last year with a 1.75% growth rate. So they are offering to take a rollback, if it is under their conditions.

The owners are offering up a payment that they say will give the players a flat $1.883B until the 50/50 split exceeds that amount. The players are offering to take $1.883B plus 1.75% until the 50/50 split exceeds that amount. That's how close these guys are, but talks are close to going dark again because neither will negotiate in the others' framework.
 
I understand the frustration towards Fehr, he is certainly holding up the process. But from a pure “I hate Gary Bettman” view, what he’s doing is pretty hilarious. He has completely exposed Bettman’s script for the negotiation process simply by not complying with it.

Bettman initially made an offer that gave 43% of the revenues to the players. The owners never planned to actually give the players only 43%, they wanted the players to negotiate off their past share of 57%. That way the two would make offers back and forth and meet in the middle, at the 50/50 split the owners wanted all along. But Fehr didn’t play along. So the only way Bettman could adhere to the plan as the days ticked by was to straight offer a 50/50 split.

Then Bettman wanted Fehr to negotiate on “make whole.” He wanted Fehr to come back and demand $600MM to cover the players’ rolled back salaries. Then they could negotiate the number and come up with a solution in the middle. But, again, Fehr refused to play off the owners’ script. So they were forced to just offer up whatever middle number they had intended to get at through negotiations.

Reports over the weekend were that the owners’ really expected the players’ to take that last offer. So that is where the league was hoping to end up. Except they had to offer it themselves instead of reaching that point through negotiations. So what do they do now? Unless they saw this coming, for the first time in this whole process, they have been forced off script. I, for one, am curious to see what happens next.

I really hope their backup plan isn’t to torch the whole season. If they do, Fehr may go after the cap. Which would mean that this could, quite seriously, run over into next season.
 
As an update, Gary Bettman not only appeared at the HHOF ceremony, he gave a speech. This was the screenshot of the audience (including two inductees) while he was speaking:

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lol.
 
Just bring in a goddamn arbitrator, give him 100% power to adjudicate on each issue, call it a day, and announce the date the season will commence.
 
It is also relatively easy to defend against. If they were actually interested in making the contracts whole, it would cost $590MM, according to the NHLPA. And the NHL can't argue with that number, not with any credibility anyway. Because they came up with almost the exact same number. They said, when the players made their offers in October, if they dropped the share to 50/50 but were required to honor all existing contracts, it would cost $600MM outside of the 50/50 split.

But, if you look at the offer from the players, they are not demanding to be made whole. They are offering to take their $1.883B share from last year with a 1.75% growth rate. So they are offering to take a rollback, if it is under their conditions.

The owners are offering up a payment that they say will give the players a flat $1.883B until the 50/50 split exceeds that amount. The players are offering to take $1.883B plus 1.75% until the 50/50 split exceeds that amount. That's how close these guys are, but talks are close to going dark again because neither will negotiate in the others' framework.
De-linkage was and is a nonstarter for the owners. Offers by the NHLPA involving de-linkage are just as disingenuous as make whole provisions paid by players for players.
 
De-linkage was and is a nonstarter for the owners. Offers by the NHLPA involving de-linkage are just as disingenuous as make whole provisions paid by players for players.

I was only pointing out how close they are in terms of dollars. Like I said, neither will negotiate in the others' framework.

I'm sure they both understand where the other side stands. They are playing a game, and trying to pull the process to their side, or coax out concessions in return for moving towards the other side, is part of the game.

Though it would be great for a mediator to come in and just say "FFS, drop the gimmick-y solutions and agree to a simple phased-in split, you idiots."

ETA: Are there really any actual non-starters? De-linkage was a non-starter for the owners last time around, until it wasn't. The cap was a non-starter for the players last time around, until it wasn't. Everything has a cost.
 
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No, you're right, there are no actual non-starters. It just might take a lost season to remind the parties of that. I'd like to see them negotiate within an existing framework instead a pursuing the type of changes it took a lost season to attain last time around.
 
I think you'll probably be right that the solution will be in "make whole," Fehr might be negotiating outside of that to push the owners to increase their offered contribution without starting at opposite ends and negotiating to the middle. And the owners are digging in on contract rights to push the players to concede on "make whole." Which honestly makes me a bit optimistic... they're in more of a stare down than a freeze out right now. I hope.
 
Elliotte Friedman has made multiple comparisons to the NBA lockout. And, of course, Bettman is a David Stern protégé. I know approximately jack-all about the NBA beyond what players I liked from their college days. So I decided this morning to do some quick research about the NBA lockout and how it compares to the BS we’re dealing with now (primarily Stern’s tactics and interests).

$4.0B business ($3.3B NHL)
Players making 57% of revenue, owners wanted to bring it down to 50% (ditto NHL)
13 teams making a profit (12 NHL)
Revenue growing at a modest rate (high rate NHL)
Weak revenue sharing program (ditto NHL)
Finger pointing and bitching to the media (ditto NHL)
Lots of fear tactics, including threats that the next offer will be worse (ditto NHL, though not as formal)
Promise of made up deadlines with phantom start dates (ditto NHL)
Commissioner informally offers 50/50 split Oct 4th (NHL formally offers 50/50 split on Oct 16th)
Stern tells the press they’re “finished negotiating” Nov 13th (Daly tells press they are “done making proposals” Nov 14th)
OGBoards NBA lockout thread made it to 20 pages (NHL TBD)

Is Bettman working on Stern’s timeline? If so, they are in the home stretch and negotiating will resume around Thanksgiving.

It seems like the final step for the NBA was the union starting the process of decertification. I have no idea how to predict next steps because I can’t really compare Fehr to his NBA counterpart. But it seems like Stern was just as hardline in his stance and just as negative as Bettman has been, and the NBA had a 66 game season.

Anyway, that’s my long, rambling NHL lockout post of the day.
 
If Bettman steps down next year, that's a win for sure.

I've had similar thoughts as well in comparing the two. I do think the one difference is the bad blood from 2005 for the NHL. I don't think the vitriol was as bad in the NBA as it is in the NHL.
 
True. Though anger from the last lockout applies to fans too. And the NHL is growing much faster than the NBA was, so a missed season could cause more damage in the growth of revenues. Hopefully that wins out over emotion.
 
I'm admittedly a recent NHL fan having started watching the Caps in '08 casually, watching occasionally plus all of the playoffs in '09 to watching every game I could in '10 and '11.

I'm currently watching a Sun Sports replay of the Panthers and Lightning from last year. I really need hockey to come back.
 
And now Bettman wants them to take two weeks off from talking... sigh
 
The hard liners are hovering over the "nuclear" button. I still feel this season is dead.
 
I'll admit it, I have no idea what Bettman is doing with this latest move. Every time the NHL has cut off talks they've had leaks about how this time, the season could be in jeopardy if a deal isn't reached. And there was some of that again earlier this week. Now they're all "nah, we're cool, let's just take a few weeks off, no biggie." What does that do other than expose all their earlier hand-wringing as simply crying wolf?

Love the dueling press releases pointing fingers. AGAIN. Quit it. There is nothing that *we* can do. We can't make Fehr negotiate off the owners' offer. We can't make the owners offer to fully fund their proposed rollback of salaries. Talk to eachother, not the press, you dolts.

Based on their projections, they expect us all to throw $$18.8B their way in the next five years (including the impact of the shortened season). On the owners offer, they are arguing over $380MM. These idiots want us to believe they will cancel the season because they can't figure out how to split the final 2% of revenue.

Even worse, they might actually do it.
 
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