Oct 23rd, 2012 by kokress
BY: PAT VANHALL
Yet another professional sports league with the same legal problems. Following in line with the NBA and NFL, the current collective bargaining agreement (CBA) for the NHL expired on September 15, 2012 and both sides are currently still far apart on many issues, as negotiations have currently stalled.1 The NHL and its Players Association (NHLPA) are currently at an impasse in their fight over contract terms and money with numerous legal implications that will linger, no matter what outcome the negotiations may bring.
Bottom line: It’s all about the money. Under the last CBA, the players held a 57% share of all NHL revenues.2 This is too high according to the league (The League’s latest offer included a 50-50 split3) and is substantially higher than other professional sports leagues like the NBA (50-50 split) and the NFL (players share is somewhere around 47%).4 The players would like a better revenue sharing system to make up for the financial woes that some teams are facing. And the league would like to put a cap on the length of players’ contracts (currently contracts have no limit) in the neighborhood of six to seven years.5 These are three of the main issues that need to be resolved.
When the CBA expired on the 15th, the NHL’s contract with the players expired with it. So what does this mean? The league is no longer allowed to use the image or marks of the players.6 Even the official NHL store had to remove all player-related merchandise, including jerseys, which can now only be sold without names on the backs.7 Most importantly, this means that the players are no longer bound by any contract with the league and are free to explore opportunities to play abroad.
This last aspect poses the biggest threat to the league’s bargaining power, as the overseas hockey market is stronger than most sports. The Kontinental Hockey League (KHL) of Russia, the Swiss A-League and the Swedish Elite League have all drawn the interest of some of the NHL’s biggest stars. Alex Ovechkin, Evgeni Malkin, Joe Thornton and Rick Nash all joined clubs just days after the work stoppage began.8 With less than a quarter of the league’s players actually coming from the United States9 the vast majority of current players in the NHL have international ties, making their transition of playing overseas that much easier. This exodus of players has a potential long lasting effect on the NHL.
In order to legally protect themselves, every player that signed a deal to play abroad during the lock out has an “out clause” that allows them to return to the NHL if/when the season returns,10 however the decision to return to the NHL is entirely up to the player. If the NHL slashes current player contracts, some players may opt to stay with their international teams and face any penalties for breaking their NHL contract. So what would these players face? Any player that chooses to stay abroad will likely be in violation of their contract with their NHL team as long as they were under contract before the lockout started.11 Some international leagues also have agreements with the NHL in regards to honoring each other’s player contracts, so the player and even the team he is playing for would likely be in breach of contract in that aspect as well.12 Lastly, at request of the NHL, the International Ice Hockey Federation may withhold these players from playing in the next winter Olympics based on their actions.13
So what kind of effect does the new CBA have on current player contracts in terms of money owed and length of the contract? In the past, the implementation of a new CBA has not had a retroactive impact on any current player contract and it seems from the most recent offer from the NHL (made on October 15, 2012) that will still be the case for this new CBA. However, the latest offer does have a somewhat retroactive punishment on the teams that have offered lengthy front or back loaded contracts to players.14 This was one issue that the NHL wanted to address in the new CBA and because the League likely knew that the Players Association would not agree to a retroactive contract punishment on the players (limiting terms of money or duration that was agreed to prior to the expiration of the CBA), they decided to deal with the issue the only other way; by going after the teams.
The terms of the lengthy contracts that we saw players enter into last year (Kovalchuk 17 years, Weber 14 years, Parise and Suter 13 years) will still remain the same for the players, but the teams that offered these contracts are now subject to paying a rather large cap charge regardless of where or whether the player is still playing.15 According to the new CBA, the cap charge16 will travel with the player if he gets traded, but if that player retired or stopped playing before the end of his contract the cap charge for the remaining years on his contract will now revert back the team that entered into the original contract.17 This is clearly an attempt by the NHL to deter teams from entering into these lengthy player contracts.
Sources close to the negotiations believe that the season hangs in the balance of whether or not the NHLPA rejects or counters this latest proposal from the League. Just when hockey seemed to be heating up and making a return to relevance, with ratings showing the best viewer-average the Stanley Cup playoffs had seen in the previous 10 years,18the CBA expires and the league is put back on ice.
- NHL imposes league-wide lockout, ESPN.com, http://espn.go.com/nhl/story/_/id/8382911/nhl-officially-locks-players-cba-expires (last visit October 2, 2012). ↩
- NHL Lockout in 2012? A Look at the Issues, Proicehockey.about.com, http://proicehockey.about.com/od/nhlnewsscoresstats/a/Nhl-Lockout-In-2012-A-Look-At-The-Issues.htm (last visit October 2, 2012). ↩
- NHLPA to Respond to New CBA Offer, sportsillustrated.com, http://sportsillustrated.cnn.com/2012/hockey/nhl/10/17/new.cba.proposal.released.ap/index.html?eref=sircrc (last visit October 22, 2012). ↩
- Id. ↩
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- Supra at Note 1. ↩
- Id. ↩
- Players Could Have Sweden Option, ESPN.com, http://espn.go.com/nhl/story/_/id/8406424/swedish-elite-league-option-locked-players (last visit October 2, 2012). ↩
- Players Stats, NHL.com, http://www.nhl.com/ice/playerstats.htm?fetchKey=20122ALLSASALL&viewName=summary&sort=points&pg=1 (last visit October 2, 2012). ↩
- Ovechkin: ‘If our contracts get slashed, I will have to think whether to return there or not,’ washingtonpost.com, http://www.washingtonpost.com/blogs/capitals-insider/post/ovechkin-if-our-contracts-get-slashed-i-will-have-to-think-whether-to-return-there-or-not/2012/09/19/5be8989a-0270-11e2-9b24-ff730c7f6312_blog.html (last visit October 17, 2012). ↩
- Id. ↩
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- NHL Proposal targets circumvention, targets teams, Yahoo.com, http://news.yahoo.com/blogs/nhl-puck-daddy/death-salary-cap-cheaters-nhl-proposal-targets-circumvention-163333529–nhl.html (last visit October 17, 2012). ↩
- Full Text of New NHL CBA Proposal, nydailynews.com, http://www.nydailynews.com/blogs/rangers/2012/10/read-full-text-of-new-nhl-cba-proposal-released-after-don-fehrs-letter-to-players-an (last visit October 17, 2012). ↩
- The cap charge is the amount of money that a team is forced to pay a player and that amount goes towards the team’s overall salary cap (overall salary cap is still being discussed in the negotiations). ↩
- Id. ↩
- Stanley Cup Finals TV Ratings, SBNation.com, http://www.sbnation.com/nhl/2012/6/13/3083145/stanley-cup-finals-tv-ratings-2012-series-hits-lowest-numbers-since (last visit October 2, 2012). ↩