Saturday, December 18, 2004


The NHL situation

Y'know when millionaires argue with billionaires over who gets what, it makes me ill. Especially when the solution is so easy.

The NHLPA made an admirable effort at reconciliation with their 24% salary rollback but, when you think about it, any salary rollback is a hugely limited solution, since player agents will ensure that the players get their 24% back with interest next contract negotiation. Also, the hard salary cap doesn't solve anything either, since agents, players and owners will make sure there are loopholes in the cap so large even Tie Domi could stickhandle through them.

So what to do?

The problem, I think, lies in the astronomical raises players receive every contract. How many times have we seen players double their annual salary when they sign a new contract or an extension? If the league focused on controlling raises, they could gain cost certainty. Here's my proposal:

** Start with a salary clawback as follows:

Annual Salary Clawback
Up to $500,000/yr. None
$500,000 - $999,999 5%
$1 million - $2 million 15%
$2 million - $4 million 25%
> $4 million 35%

That gets money off the table and provides immediate relief to small-market teams.

** Next, change the minimum salary to $300,000.

** Introduce increase ceilings as follows:

Years in league Max. Raise/year
0 - 4 20%
5 - 9 30%
10+ No raise limit

** Leave arbitration alone, except to stipulate that the maximum arbitration award is 20% above the previous year's salary.

** Place a ceiling on signing bonuses in the first 10 years of no more than 3X the total salary in the first five years and 2X salary in the next 5 years.

** After the first 10 years, it's a totally open market.

This creates a max salary structure as follows (for players entering the league in 2005/2006):
Yr. 0 = $300,000
Yr. 1 = $360,000
Yr. 2 = $432,000
Yr. 3 = $518,400
Yr. 4 = $655,200
============Raises up to 30%===================
Yr. 5 = $852,000
Yr. 6 = $1,107,000
Yr. 7 = $1,450,000
Yr. 8 = $1,863,000
Yr. 9 = $2,431,000

Signing bonuses push this up, but it should still be very workable. More importantly, it should allow teams to keep their young players rather than watch them spend their prime years with another team. This will also allow players to build deeper community ties and, hopefully in the end, bring more fans out to the games.

Also, since the tenth year a player is in the league removes the earning constraint, he is able to get one last huge contract before retiring (assuming the player enters the league at age 19 or 20). Therefore, the owners are forced to exercise fiscal restraint early and will only provide "home run" contracts to those who have earned them through longevity and experience.

I dunno if this would work, but I don't see a lot of holes in it. I encourage anyone interested in hockey and its economics to comment. Maybe we can come up with a real, working solution that we could try to give to someone who can do something tangible with it.