SBD/November 8, 2012/Leagues and Governing Bodies

NHL Lockout, Day 54: Latest Talks Focus On Revenue Sharing, "Make Whole" Provision

Revenue sharing and the NHL's "make whole" mechanism to pay players the full value of their contracts "dominated six hours of conversation Wednesday when representatives of the league and the NHL Players' Assn. met for the second straight day at an undisclosed site in New York," according to Helene Elliott of the L.A. TIMES. The two sides plan to meet today, "again avoiding media scrutiny." Sources said that the sides "have reached the stage of real negotiation instead of one side expecting the other to capitulate, and that the process will be slow as they test wills." The "make whole" issue "hinges on players' objections to losing money by making hefty escrow payments as they transition from last season's 57% of hockey-related revenue to 50%." The NHL said that it would "repay them with deferred money, but in its last offer those payments would have counted against players' future earnings." Resolving that difference "has been thorny" (L.A. TIMES, 11/8). The AP's Ira Podell notes eight players attended yesterday's talks, "five fewer than Tuesday." The NHLPA said that Penguins C Sidney Crosby and others left N.Y. "to try to avoid the impending snowstorm that hit the area." Podell writes, "Time is becoming a bigger factor every day a deal isn't reached." Whether any of the games that have been called off through Nov. 30 "can be rescheduled if an agreement is made soon hasn't been determined." But the NHL already has said that a "full 82-game season won't be played" (AP, 11/8).

MIXED EMOTIONS: In New Jersey, Tom Gulitti notes what was "expected to be a pivotal day in negotiations got off to a late start." The meeting was scheduled to begin at 1:00pm ET, "but did not get under way until approximately 3:30 p.m." A source said that the union "requested the delay to do 'internal prep work'" (Bergen RECORD, 11/8). The GLOBE & MAIL's David Shoalts notes while the "sense of optimism around the NHL labour talks on Wednesday was less than the previous day, the fact both sides said discussions will continue Thursday was taken as a good sign" (GLOBE & MAIL, 11/8). Bruins RW Tyler Seguin yesterday said, "It's all positive right now. We're meeting and obviously people heard how long the meeting was yesterday and I think currently we're in a meeting again. So it's looking better" (CSNNE.com, 11/7). However, Sportsnet analyst Doug MacLean tweeted, "Hate to say this but just told by person in the know that yesterday was as close to a waste of time as you can get. Hope today is better" (N.Y. DAILY NEWS, 11/8).

A SNAIL'S PACE: In Toronto, Kevin McGran notes the "most contentious issue -- paying players their salaries in full while at the same time getting the two sides to share hockey-related revenue 50-50 -- got only a brief airing on Wednesday evening." More talks are planned for today but "there is a feeling among some on the league side that the pace is too slow." Complicating matters is "how to assess the damage to HRR done by the lockout." Even if the league "pays the players who are over the cap in full through some other mechanism, the league is also sure to ask the players to absorb half the lost revenue from their share, which players may view as a 'make-whole' loophole" (TORONTO STAR, 11/8). In Tampa, Damian Cristodero wrote one of the "most important" aspects of the dispute for players "is that current contracts are honored.” Lightning C Vincent Lecavalier yesterday said, "You sign a deal, the honorable thing to do is keep your word.” Cristodero wrote there is "still a raw nerve: players took a 24 percent pay cut after the 2004-05 lockout." Lecavalier: "Guys don't want to go through that again. You sign something. It's a mutual agreement. It should be honored” (TAMPABAY.com, 11/7). In Philadelphia, Frank Seravalli notes each day the lockout "drags on results in more revenue lost for both sides." The longer it goes, the two sides "will be willing to lose a billion to save a couple hundred million" (PHILADELPHIA DAILY NEWS, 11/8).

GETTING DOWN TO THE DETAILS: In N.Y., Larry Brooks cites sources as saying that the “make-whole” proposal presented by the league to the NHLPA "shifted the responsibility for honoring existing contracts away from the players and onto the league." The offer "is believed to include deferred payments." It is "not known whether make-whole would apply to only the first two years of existing contracts or whether it would cover the length of all existing contracts." The difference the "first two years -- before any pro-rating for this season -- is approximately" $211M. It is "believed that the NHLPA is proposing a 'soft landing' under which the players’ share would gradually diminish and reach 50 percent by Year 3 or 4 of the labor agreement." Sources said that the NHLPA "during Tuesday’s seven-hour session stated its opposition to all of the NHL’s proposed systems changes." Sources added that the league "expressed willingness to negotiate these items in addition to, for the first time, amnesty buyouts." Sources also said that the NHL "will not insist on contract terms limits but is committed to ending dramatically front-loaded deals that, in the league’s belief, have a deleterious effect on small-market clubs’ ability to compete" (N.Y. POST, 11/8).

OTHER LEAGUES SERVE AS EXAMPLE: Also in N.Y., Jeff Klein notes the NBA lockout of '11 "may provide a clue as to how" the "make whole" obstacle may be overcome. When the NBA lockout was settled, the "league’s owners honored existing player contracts." The language in the new CBA guaranteed that salaries signed previously "shall continue to be calculated in accordance with the salary cap rules that were in existence at the time the contract was entered into." That is the language the NHLPA "wants in a new agreement with the league." Both sides "may have softened their stance in the current round of talks, and the NBA’s experience may offer a solution" (N.Y. TIMES, 11/8).
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