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Volume 20 No. 42
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Fate of CBA hinges on economic issues

Officials say it’s too early to know if NHL or union will opt out in two years

While NHL and NHL Players’ Association officials say it’s too early to know whether there will be a work stoppage in a few years, there are clouds on the horizon as both sides examine ways to change the economics in the current labor deal.

Historically, most sports work stoppages have come when one side or the other sought economic concessions, and that appears to be the case here: NHL owners are looking at a new definition for the revenue they share with players, and the union is possibly seeking changes to escrow.

“The players will consider before we get to bargaining next — whenever it occurs — a wide range of things and I am sure a number of them will have to do with eliminating or reducing escrow or potential escrow,” NHLPA Executive Director Donald Fehr said.

Escrow is used to ensure that players get exactly 50 percent of hockey-related revenue, as dictated by the CBA. A percentage, based on projections and adjusted during the season, is withheld from players’ paychecks and put into an escrow, which is divided among players and owners once the final hockey-related revenue figure is determined. The withholding rate was 15.5 percent last season but has not yet been set for this season.

Meanwhile, the owners want to take a look at how hockey-related revenue is defined, said NHL Deputy Commissioner Bill Daly, to create “clarity.”

“The parties need to create ‘black and white’ on what’s in and what’s out of HRR,” Daly said.

Hockey-related revenue was first defined in the CBA that ended the 2004-05 lockout, when the league shut down an entire season to get a salary cap, as well as the escrow.

“Ultimately, the players are always going to want to include more and the league and the clubs are always going to want to include less,” Daly said.

Fehr expressed doubt that a new definition of hockey-related revenue proposed by the league could be something that would be good for players.

“You don’t have to be a genius to figure it out,” he said. “Saying, ‘We want to change the definition,’ is very likely a euphemism for saying, ‘We want to reduce the players’ share.’ Now, will it come to that? Who knows?”

The current NHL CBA expires Sept. 15, 2022, but both sides have the ability to opt out in September 2019. If either the NHL or NHLPA gives notice, the CBA will expire Sept. 15, 2020.

Both Daly and Fehr said it was too early to say whether the owners or players would opt out.

Daly said the agreement was working well overall. “Certainly, there are things we would like to change in the CBA, but that’s always going to be the case,” he said.

Fehr said the opt-out is something “we’ll be talking to them about over the next year, year and a half.”

Hockey has a history of strikes and lockouts. The last agreement was reached in January 2013 following a 119-day lockout, after the owners asked for the players’ share to be reduced from 57 percent to 50 percent. The players ultimately agreed to this to end the lockout.

Over the past year the players and the union have expressed their displeasure over the NHL’s decision not to allow players to participate in the 2018 Olympics. Fehr would not comment on what would happen if a player tried to play in the Winter Games in Pyeongchang next year.

But Daly said the NHL does not expect to have a problem with the issue because the league has been assured by the International Ice Hockey Federation that it will not allow a NHL player under contract to participate in the Olympics without permission.

The league and the union have been working together on new initiatives to grow additional revenue through their own international events, including the World Cup of Hockey and preseason games in China last month.

“In many ways, I don’t think our relationship with the players association has ever been stronger,” Daly said. “For the most part, this union ‘gets it’ in ways previous administrations of the union may not have.” He said Fehr and NHL Commissioner Gary Bettman have forged a good working relationship.

Fehr said that the NHLPA has been able to work with the league in areas in which both sides have found common ground.

“I certainly hope that we make an agreement,” Fehr said. “The optimum is to try to get an agreement done at a point in time at which you don’t have a substantial risk of a stoppage and you don’t interrupt the business.”

But Fehr noted that there has been a history of lockouts in sports with a salary cap for the past few years, with the exception of the NBA, which agreed to a seven-year CBA with the National Basketball Players Association in 2016.
“The only sport over the last two decades that has been stable in terms of labor negotiations, that is to say, no strikes or no lockouts, is baseball,” Fehr said, adding that it’s also the only sport without a salary cap. “And having a cap, one of the unfortunate things about it is it creates incentives on the management side for stoppages.”

Fehr became executive director of the NHLPA in 2010, after leading the MLB Players Association for 25 years. Given his personal history — he led players through the 1994-95 MLB strike — there’s been speculation that hockey players would, at some point, try to remove the NHL salary cap.

Asked about that, Fehr said, “Oh, I am not going to comment on that. It’s way premature.”