So what’s happening with the 2020-21 season?

Photo credit:Stephen R. Sylvanie-USA TODAY Sports

3 years ago

In case you’ve been living under a rock, there are two things you may have noticed. The first is the much-anticipated “second wave” of the COVID-19 pandemic is being experienced throughout much of the world. The second is that despite agreeing to a collective bargaining agreement extension back in July, the status of the 2020-21 NHL season is very much up in the air.

We’ve tried to tackle as many commonly asked questions about what’s happening as we’re able to.

So, if the CBA was extended in July, what’s the hold-up?

Well, the short answer is “money.”

Back in July, the NHL and the NHLPA agreed to two things:

Terms and procedures for a Return to Play for the 2020 post-season
An extension of the existing CBA, a product of the 2012-13 lockout, until the end of the 2025-26 league year

Under the terms of the CBA, players will receive, collectively, no more than 50% of hockey-related revenues in any league year. (We went into the details a bit over the summer.) The salary cap for each given league year is based upon the NHL’s best guess for how revenues will grow, and because it’s based on a guess there’s a mechanism known as escrow that’s used to ensure that the players collectively receive 50% of HRR in a given year – no more and no less.

Now, players hate escrow. NHL players are well-compensated, of course, but escrow sticks in their craw because it reduces their salary below what is on their actual contracts. For much of the past few seasons it’s been in the mid-teens, meaning that players only got paid about 85% of their contracted salary – before taxes and agency cut – and had to wait a couple years to find out if they got any of their withheld pay back.

But I thought the CBA extension fixed the escrow problem?

Sort of.

What was agreed to was an escrow cap – before the percentage floated throughout the year – and it limited escrow to 20% for 2020-21 and linked 2021-22’s escrow to league revenues for 2020-21.

But therein lies one of the challenges: the creation of the escrow cap changed the 50/50 relationship somewhat, in that the players will now collectively receive only 50% of league revenues during the balance of the extension. More than that, because the 2019-20 season was cut short (and the league lost revenues due to losing around 14% of regular season games), the players received well more than 50% of HRR for 2019-20 and as a result the player side will be using escrow to pay down their share until it’s back at 50/50 for both 2019-20 and the years of the CBA extension.

So the escrow problem being solved depends on league revenues rebounding big-time, and quickly.

And revenue is the big question mark?

Bingo.

The NHL owners agreed to the current deal four months ago, when they had no clue what the pandemic would look like later in the year. Yes, there are multiple vaccines coming soon and yes, it seems likely that we’ll have the ability to have fans back in arenas before the end of a proposed 2020-21 season. But if you’re an owner, you’re probably not able to get a clear sense of how many fans, when, and paying how much – and that uncertainty is scary for the NHL owners.

The frustration from the players is this: the NHL owners signed this deal four months ago and probably should’ve anticipated a worst-case scenario when hammering out a deal. The players feel like they met the owners more than halfway already through three mechanisms:

Signing away their final 2019-20 pay-cheques into an escrow account to help pay down their collective escrow debt
The aforementioned escrow cap (at 20%) for 2020-21
A salary deferral of 10%, after escrow, for 2020-21 which effectively reduces a player’s take-home to 72% of what’s on their contracts

(The players will get their deferred pay back, in three equal payments on Oct. 15 of 2022, 2023 and 2024.)

According to Sportsnet’s Elliotte Friedman, two proposals were floated to the players:

Increasing the 2020-21 escrow cap to 25% and deferred salary to 20%.
Leaving escrow where it is, but shifting deferred salary to 26%. (Escrow would be adjusted in later years of the extended CBA, though.)

Both of these proposals nudge actual player salary pay-outs to around 60% for 2020-21.

The owners are scared about revenue uncertainty, particularly in a situation where many of their main businesses have been hammered. The players are frustrated because they feel like (a) they already had a deal and (b) they already gave up a ton to the owners as a show of good faith and now the owners are coming back to the table asking for more.

So what happens now?

Right now, the NHL and NHLPA both have cards they can play.

Paragraph 16.3(a) of the CBA states: “Without the NHLPA’s advance written consent, the Regular Season will be scheduled over a period of not less than 184 days.” With the NHL hoping for a compressed schedule of somewhere between 48 and 60 games, they need the NHLPA to sign off on whatever form that takes.

And while the NHL signed away their ability to reduce player salaries if they run a reduced season – they waived their right to invoke Paragraph 17(c) of the standard players contract that allows them to do so – they didn’t waive their right to invoke the other clauses within that section that relate to them suspending or terminating the season. This is, as you can imagine, the nuclear option and seen as a last resort.

Is it important to hammer out an agreement soon?

Yes.

Logistically, NHL players would like two weeks for training camp – three weeks for the teams that didn’t Return to Play and haven’t had games since March – and players living or playing outside of Canada and playing for Canadian clubs need to quarantine for two weeks after they arrive.

And from the NHL’s standpoint, they want to get as many games in as possible while allowing some wiggle room to schedule make-up games in case COVID-19 outbreaks within teams cause postponements. They would also love to have their playoffs complete before the Summer Olympics begin in mid-July, which would also allow them to be back at a regular schedule for Seattle’s maiden voyage in the NHL in 2021-22.

There’s a lot to figure out, but a lot could change in a hurry.

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