2012 CBA Negotiations Thread

[Kin]

If you then take away the net profit of the top 5 grossing teams, the numbers look gawd awful.

Well, as I pointed out earlier, that's what strikes me as being so insane about the NHL's stance. They don't want to really address the revenue disparity but want to maintain the ridiculousness of tying everyone's expenses together. It's a profitable league but the problem, of course, is that the league isn't a business.

 

[Corn Flake]

Talk about a razor thin profit margin. Less than 4% of revenue is net profit, based on $3.1b in revenue.  $3.8 mil average per team.  If you then take away the net profit of the top 5 grossing teams, the numbers look gawd awful.

And, if the Canadian dollar drops more than a few cents against the US dollar, that profit margin is almost all gone. If it drops significantly, the league runs at a loss.

If you then take away the net profit of the top 5 grossing teams, the numbers look gawd awful.

Well, as I pointed out earlier, that's what strikes me as being so insane about the NHL's stance. They don't want to really address the revenue disparity but want to maintain the ridiculousness of tying everyone's expenses together. It's a profitable league but the problem, of course, is that the league isn't a business.

;D oh you guys.  it's like having a rep from the PA and the league in the room right here with us.

 

[Kin]

;D oh you guys.  it's like having a rep from the PA and the league in the room right here with us.

Feh. I wish the PA was taking my stance. Viva la revolucion, indeed.

 

[princedpw]

I know what Fehr should be doing, but is he?

There's no reason to think that he isn't. The reason the MLBPA has been so successful, by far the most successful of the major sports unions, is that they've involved and educated players and, most importantly, took stands the players were behind. There's no real reason for Fehr to come to the NHL and abandon those principles.

I was trying to compute how a lost season would impact a large fragment of the players as best I could instead of just assuming Fehr's strategy was best.  Also, I understand, of course, that even if he plans to fold he can't show his hand too soon.  So any analysis I do now is really about what he should be doing before the season is cancelled.

If you want to help out and give me some superior, specific parameters to plug in, that would be great.  What is the career length of the median voting NHLPA member if not 4 years?  How much does a lost lockout year reduce their career length?

I was just pointing out that the numbers you were using didn't really match up with the source you provided. The source you used had the median NHL player's career as being 86 games over the course of four seasons, whereas your math seemed to be based on the idea that the median player's career being four full seasons.

So based on that a missed year would cost your median player 21.5 games. But, again, I'm not sure that's all that relevant to who the members of the PA actually are. I'm sorry if you don't think that's helpful but my point isn't that your numbers are wrong but that the fundamental premise is flawed.

It sounds to me like you are just questioning the parameters, not the algorithm.  I also question the parameters and would like to validate them somehow.  Hence the post.  Probably the easiest and most robust thing to do is to just compute the payout for players that 1-6 seasons using one of the players proposals vs. the owners proposal and see where the break-even point is.  If the players don't break even after 6 seasons then they basically just lose pay if a season is lost since after 5-6 seasons they roughly get to 50-50 which coincides with the owners proposal.

By the way, as long as the hypothetical player is paid roughly the same in each season, the math works out the same regardless of whether they play 8 or 80 games each year.

I took a stab at answering some of that here:
http://www.tmlfans.ca/community/index.php?topic=716.msg89650#msg89650

Recently, this was reported
http://www.nhl.com/ice/news.htm?id=643748
"The so called 50-50 deal, plus honoring current contracts proposed by the NHL Players' Association earlier today is being misrepresented," Deputy Commissioner Bill Daly said in a statement. "It is not a 50-50 deal. It is, most likely a 56- to 57-percent deal in Year One and never gets to 50 percent during the proposed five-year term of the agreement.

"The proposal contemplates paying the players approximately $650 million outside of the players' share," he continued. "In effect, the Union is proposing to change the accounting rules to be able to say '50-50,' when in reality it is not. The Union told us that they had not yet 'run the numbers.' We did."

So they're bickering over $650 mil in transition to 50/50.

Another way of calculating that:
$3,100 mil is revenue for a season. 50% of that is $1,550 mil for players salary for next season.

$650mil bicker amt/$1550mil for season = 41.9% of the season

41.9% of 82 games = 34.4 games missed is the rough break even point ... IF and only IF they get the league to cave in at the end and pay them all of the $650 mil - which the league has rejected.

Again, very roughly, if the players sit out beyond 16-20 games or so, they're very probably losing money they will NEVER get back over their career.

Thanks.  That's a nice way to look at things.

 

[Frank E]

If you then take away the net profit of the top 5 grossing teams, the numbers look gawd awful.

Well, as I pointed out earlier, that's what strikes me as being so insane about the NHL's stance. They don't want to really address the revenue disparity but want to maintain the ridiculousness of tying everyone's expenses together. It's a profitable league but the problem, of course, is that the league isn't a business.

I agree with most of this, but I thought that the league had addressed the disparity with that $200 million revenue sharing fund they put in their last offer.

 

[Frank E]

Again, very roughly, if the players sit out beyond 16-20 games or so, they're very probably losing money they will NEVER get back over their career.

The players need to understand this math.  Honestly, when you're negotiating, you really need to understand your net gain and loss position.

The owners have years and years to recoup their monies, and have franchise valuations that will increase significantly if they can get a more favourable labour contract...players have about 4-5 years.

Ignoring this is just being a lousy negotiator...but I'm sure Fehr has gone over this math with them. 

At this point, you cut the best deal you can, and you move on.  Delaying further is really not in the best interest of the players.

If the league all of a sudden gets super profitable, well then you've got some ammo come next negotiations since the owners won't want to miss any games at all.

 

[Kin]

I agree with most of this, but I thought that the league had addressed the disparity with that $200 million revenue sharing fund they put in their last offer.

That amounts to what...6% of league wide revenues? I don't think that meaningfully addresses those disparities, no.

 

[Frank E]

I agree with most of this, but I thought that the league had addressed the disparity with that $200 million revenue sharing fund they put in their last offer.

That amounts to what...6% of league wide revenues? I don't think that meaningfully addresses those disparities, no.

Well not really, because that $200 mil is coming from the 10 or so richest teams that can actually afford to pay into it since the others aren't really making any money, or are losing  money. 

And that money will go direct to bottom line, meaning that there are no fixed or variable expenses attached to that revenue...so essentially, it's $200 mil to the bottom line of 10 or so teams, which equates to $20 mil per team.

I think that is significant.  I mean it may not entirely solve the problem, but I don't think it's meant to "fix" their profitability problems.

 

[Kin]

Well not really, because that $200 mil is coming from the 10 or so richest teams that can actually afford to pay into it since the others aren't really making any money, or are losing  money.

And that money will go direct to bottom line, meaning that there are no fixed or variable expenses attached to that revenue...so essentially, it's $200 mil to the bottom line of 10 or so teams, which equates to $20 mil per team.

With all due respect, I don't think you've read the actual proposal. The league proposes that "at least" 50% of the 200 million will come from the top 10 teams. The balance, presumably, to come from the rest of the league. Likewise, there are no actual specifics as to how it would be distributed outside of saying that the money will be distributed by a committee. In fact, part of the proposal is that the restrictions on teams in the top half of the league in terms of revenue receiving revenue sharing cash would be gone.

 

[Frank E]

Well not really, because that $200 mil is coming from the 10 or so richest teams that can actually afford to pay into it since the others aren't really making any money, or are losing  money.

And that money will go direct to bottom line, meaning that there are no fixed or variable expenses attached to that revenue...so essentially, it's $200 mil to the bottom line of 10 or so teams, which equates to $20 mil per team.

With all due respect, I don't think you've read the actual proposal. The league proposes that "at least" 50% of the 200 million will come from the top 10 teams. The balance, presumably, to come from the rest of the league. Likewise, there are no actual specifics as to how it would be distributed outside of saying that the money will be distributed by a committee. In fact, part of the proposal is that the restrictions on teams in the top half of the league in terms of revenue receiving revenue sharing cash would be gone.

You are correct, I haven't read it in depth.

From NHL.com

Revenue Sharing
The NHL has proposed to increase the Revenue Sharing pool for 2012/13 to $200 million (assuming League-wide revenues of $3.303 Billion), representing an approximately 33% increase over the amount that will be distributed on account of 2011/12. This enhanced amount is at least comparable to the levels of revenue sharing in the NBA and MLB, and will be adjusted proportionately upward or downward based on Actual HRR results in future seasons.

At least 50% of the Revenue Sharing pool will be funded by the Top 10 Revenue Grossing teams. The remainder of the Revenue Sharing pool will be funded from League- and Playoff-generated revenues.  The Revenue Sharing pool will be redistributed to those Clubs who are in the most need in order to enable those teams to have sufficient resources on hand to compete for and compensate Players within the Payroll Range, and otherwise to provide a basis for their continued financial stability. In this regard, we are proposing to commit for the next two years revenue sharing payments to recipient Clubs that are equivalent to or greater than what those Clubs will receive on account of the 2011/12 season. The effect should be to continue -- and even improve -- the historic and unprecedented quality of play and level of competitive balance we have jointly been able to achieve during the period of the recently expired CBA.

All Clubs in the NHL except the top 10 Revenue Grossing Clubs will now be eligible for Revenue Sharing, including Clubs in large media markets who were previously ineligible (such as Anaheim, New Jersey and the New York Islanders, among others). Further, our proposal eliminates some of the current "business performance" thresholds that had the effect of materially reducing the amounts a Club might otherwise qualify to receive in revenue sharing. Instead, under-performing Clubs will be expected to enhance their business planning capabilities, will be provided on-site assistance to meet enhanced business objectives and will be provided with much greater counseling as to "best practices" in business operations.

In addition, we have proposed the formation of a functioning and active Revenue Sharing Committee, on which the NHLPA will have representation and will have an opportunity to provide input, to determine the best and most effective distribution of revenue sharing funds.

 

[Kin]

At least 50% of the Revenue Sharing pool will be funded by the Top 10 Revenue Grossing teams. The remainder of the Revenue Sharing pool will be funded from League- and Playoff-generated revenues.  The Revenue Sharing pool will be redistributed to those Clubs who are in the most need in order to enable those teams to have sufficient resources on hand to compete for and compensate Players within the Payroll Range, and otherwise to provide a basis for their continued financial stability.

Huh. So they'll take money from teams according to their means but distribute it according to a team's needs. I've read that bright idea somewhere before, I'm sure of it. Jack Welch? Milton Friedman? Adam Smith? Some captain of industry, no doubt.

 

[cw]

I know what Fehr should be doing, but is he?

There's no reason to think that he isn't. The reason the MLBPA has been so successful, by far the most successful of the major sports unions, is that they've involved and educated players and, most importantly, took stands the players were behind. There's no real reason for Fehr to come to the NHL and abandon those principles.

I was trying to compute how a lost season would impact a large fragment of the players as best I could instead of just assuming Fehr's strategy was best.  Also, I understand, of course, that even if he plans to fold he can't show his hand too soon.  So any analysis I do now is really about what he should be doing before the season is cancelled.

If you want to help out and give me some superior, specific parameters to plug in, that would be great.  What is the career length of the median voting NHLPA member if not 4 years?  How much does a lost lockout year reduce their career length?

I was just pointing out that the numbers you were using didn't really match up with the source you provided. The source you used had the median NHL player's career as being 86 games over the course of four seasons, whereas your math seemed to be based on the idea that the median player's career being four full seasons.

So based on that a missed year would cost your median player 21.5 games. But, again, I'm not sure that's all that relevant to who the members of the PA actually are. I'm sorry if you don't think that's helpful but my point isn't that your numbers are wrong but that the fundamental premise is flawed.

It sounds to me like you are just questioning the parameters, not the algorithm.  I also question the parameters and would like to validate them somehow.  Hence the post.  Probably the easiest and most robust thing to do is to just compute the payout for players that 1-6 seasons using one of the players proposals vs. the owners proposal and see where the break-even point is.  If the players don't break even after 6 seasons then they basically just lose pay if a season is lost since after 5-6 seasons they roughly get to 50-50 which coincides with the owners proposal.

By the way, as long as the hypothetical player is paid roughly the same in each season, the math works out the same regardless of whether they play 8 or 80 games each year.

I took a stab at answering some of that here:
http://www.tmlfans.ca/community/index.php?topic=716.msg89650#msg89650

Recently, this was reported
http://www.nhl.com/ice/news.htm?id=643748
"The so called 50-50 deal, plus honoring current contracts proposed by the NHL Players' Association earlier today is being misrepresented," Deputy Commissioner Bill Daly said in a statement. "It is not a 50-50 deal. It is, most likely a 56- to 57-percent deal in Year One and never gets to 50 percent during the proposed five-year term of the agreement.

"The proposal contemplates paying the players approximately $650 million outside of the players' share," he continued. "In effect, the Union is proposing to change the accounting rules to be able to say '50-50,' when in reality it is not. The Union told us that they had not yet 'run the numbers.' We did."

So they're bickering over $650 mil in transition to 50/50.

Another way of calculating that:
$3,100 mil is revenue for a season. 50% of that is $1,550 mil for players salary for next season.

$650mil bicker amt/$1550mil for season = 41.9% of the season

41.9% of 82 games = 34.4 games missed is the rough break even point ... IF and only IF they get the league to cave in at the end and pay them all of the $650 mil - which the league has rejected.

Again, very roughly, if the players sit out beyond 16-20 games or so, they're very probably losing money they will NEVER get back over their career.

Thanks.  That's a nice way to look at things.

I realize there are some other issues but this is basically an argument about money and this particular economic issue of % revenue split and transition to it has been at the core of their disagreement. It's the major item because it's where the lion's share of the dough is and unlike other potential clause changes, this applies to every current player.

Let's say they compromise and split the difference. If the players miss 8-10 games arriving at that compromise, their bank accounts gain effectively nothing. Anything beyond that in games lost until they reach that compromise and the players lose.

So we are approaching the probable approximate line for "stupid" financially for each player in the next few weeks or so.

Having said that, during the last lockout, the bickering over total revenue was about 5% of Levitt vs Forbes - and was the key point aside from the philosophical cap issue which was being tinkered with as the season slipped away. It had been overcome with the offer of joint audits but the players ignored that at the time. That same calculation back then came down to a smaller number of missed games before break even. And then they sat out a year to get effectively nothing - blowing over $1 mil each on average. So collectively and historically, they're not beyond the potential realm of "stupid".

Hopefully, Donald Fehr is smarter than Goodenow. I think he is. We'll probably find out one way or the other in the next few weeks.

I'd rather the players I'm a fan of not taking a beating like they did the last time. And I'm all for a fair deal for both parties. Hopefully, they get there soon.

 

[GhostofPotvin29]

Well this sounds optimistic.

Darren Dreger ‏@DarrenDreger

When asked if the CBA negotiation is about to go into a deep freeze, B. Daly said "I suspect so. Back to the drawing board. Unfortunate."

Oh, and once more, screw you NHL:

Darren Dreger ‏@DarrenDreger

The union has offered to meet, but, unless PA is willing to work off NHL's offer, Daly says there's no reason to meet.

 

[maplesyrup]

Go Ice Pirates!

 

[Redleaf]

Well this sounds optimistic.

Darren Dreger ‏@DarrenDreger

When asked if the CBA negotiation is about to go into a deep freeze, B. Daly said "I suspect so. Back to the drawing board. Unfortunate."

Oh, and once more, screw you NHL:

Darren Dreger ‏@DarrenDreger

The union has offered to meet, but, unless PA is willing to work off NHL's offer, Daly says there's no reason to meet.

It's always darkest just before the dawn. 

 

[bustaheims]

Darren Dreger ‏@DarrenDreger

The union has offered to meet, but, unless PA is willing to work off NHL's offer, Daly says there's no reason to meet.

In a way, the league is right - not necessarily in being so intransigent about working off their proposal, but, if both parties are not even speaking the same language (which, right now, they're not) or show some willingness to speak the same language, there's no reason to negotiate, because it will only lead to both sides getting more frustrated with the other.

 

[OldTimeHockey]

Darren Dreger ‏@DarrenDreger

The union has offered to meet, but, unless PA is willing to work off NHL's offer, Daly says there's no reason to meet.

In a way, the league is right - not necessarily in being so intransigent about working off their proposal, but, if both parties are not even speaking the same language (which, right now, they're not) or show some willingness to speak the same language, there's no reason to negotiate, because it will only lead to both sides getting more frustrated with the other.

Man, Bettman certainly has you under his thumb doesn't he?

And even if Daly is correct in the statement he's made, there is absolutely no reason to make the statement other than to try and win over public support. It's petty and childish and provides no help in coming to a solution.

I've said before, and I'll say it again, if these two sides can not stop the publicity tour, there will be no deal.

Though I much prefer Fehr's approach. He seems to be upfront an honest, while Bettman tries to give us the 'puppy-dog' eyes every time he doesn't get his way.

 

[Kin]

And even if Daly is correct in the statement he's made, there is absolutely no reason to make the statement other than to try and win over public support. It's petty and childish and provides no help in coming to a solution.

I don't know if I agree with that. Well, the first part anyway. I think a "reason" to say what he did is that it's true. Right now, the two sides seem pretty locked into where they are. If there isn't some sort of movement on one side or the other than "negotiations" will really just amount to arguing and as someone who is well versed in the difference between the two, arguments aren't productive.

I know there's a tendency for people to think that this is an easily solvable thing but it might not be. The differences between where the league is and where the players are is pretty significant and it very well may take missed paychecks or the long term damage to the league of an extended lockout to prompt movement.

 

[Chev-boyar-sky]

Well this sounds optimistic.

Darren Dreger ‏@DarrenDreger

When asked if the CBA negotiation is about to go into a deep freeze, B. Daly said "I suspect so. Back to the drawing board. Unfortunate."

Oh, and once more, screw you NHL:

Darren Dreger ‏@DarrenDreger

The union has offered to meet, but, unless PA is willing to work off NHL's offer, Daly says there's no reason to meet.

It's always darkest just before the dawn. 

Or as they say in the markets regarding companies that people think are about to go bankrupt:

It's always darkest before it's pitch black. 

 

[caver]

The league seems to be taking the "brick wall" stance. Come and talk about our deal or don't talk at all. This marriage needs a counselor. Arbitration anyone?