Peace in our time: the give and take of the new CBA

Folks, I’m in my mid-30s. I’ve covered the Calgary Flames for 10 years and watched them for pretty much my entire life. We’re living in crazy times, once in a lifetime times, and this may be the first time in my recollection that the National Hockey League gets a new collective bargaining agreement without a work stoppage.

How? Seemingly through a cooperative relationship between the owners and the players, and the players playing their hand quite well.

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In 2004, the players said they wouldn’t take a salary cap. Guess what? They lost a season and had a salary cap imposed on them. In 2012, they said they wouldn’t let the owners carve their hockey-related revenue share from 57% down to 50%. Guess what? They lost half a season and got their shared squeezed down to 50%.

But with the league wanting some certainty amidst economic challenges – losing the end of the season and the playoffs would cost them around $1.1 billion in revenues, plus an unclear revenue picture for 2020-21 – the players finally had the upper hand with hefty leverage in negotiations.

The NHLPA membership is risking a lot by playing the post-season – their immediate health potentially, but also unclear future health impacts from potential COVID-19 exposure – as well as simply losing time with their families. They also agreed to a 10% deferral of salary for 2020-21 to help with cashflow for the owners, but they’re getting all the funds paid back with payments in 2023-24, 2024-25 and 2025-26.

So what did they get?

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In terms of this year’s playoffs, two things:

  • Players can opt out of participating in training camp and the playoffs without penalty.
  • For those that do take part, the playoff bonus pool is going to $32 million from the previous level of $16 million. (Is it “danger pay”? Well, yeah.)

Beyond this season, there are a lot of favourable changes.

As we discussed, the salary cap formula is changing. The cap will be flat until league revenues return to their anticipated $4.8 billion level, and the new formula will be based on past revenue growth rather than hopeful future growth. Adding in a cap on escrow will alleviate the major player concern – not getting what they signed for in their contracts – and the clause that the CBA will extend if accumulated escrow debt grows to more than $125 million helps the owners. These changes spread the short-term economic pain around, but in a way that is palatable to the players.

Other changes are also pretty player-centric:

  • The maximum entry-level salary will move from $925,000 to $950,000 (for players drafted in 2022 and 2023), $975,000 (for players drafted in 2024 and 2025) and land at $1 million (for players drafted in 2026). Schedule A bonuses maximums are moving from $850,000 to $1 million, so first overall picks will have the ability to make up to $3 million in ELC bonuses.
  • Minimum salary will go from $700,000 now to $750,000 in 2021-22 and $800,000 in 2025-26.
  • Even if they’re not active when a player is traded, no move and no trade clauses travel will a player when they move. In short: players get the clauses they negotiated.
  • European re-entry waivers are gone, so players signing mid-season from Europe will join the team that they signed with.
  • When a player who signed a contract at age 35 (or older) retires, their cap hit disappears. (This should make it easier for these players to get longer deals and not go year to year.)
  • The cap recapture penalty has been changed. For any players that retire and are subject to a cap recapture penalty, the maximum salary cap charge moving forward will be the players’ normal salary cap hit. (This punishes teams less and in theory leaves more cap available for active players.)
  • Oh, and players can go to the Olympics in 2022 and 2026, pending a deal with the IOC.

Well played, players. Well played.

The expectation is the CBA and Return to Play package will be ratified by the Board of Governors and the players by Friday.

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