In a decision that will affect the New York Rangers and all NHL teams, the NHL Players Association is up against a midnight deadline to decide if they want to opt out of the current Collective Bargaining Agreement (CBA) at the end of this season.
D-day stand for Decision Day. The NHLPA has until to midnight to make a decision that could affect the future of the NHL. If they choose to not opt out of the current CBA , New York Rangers fans are guaranteed three seasons free of any labor strife.
If they opt out, a new contract will have to be negotiated after the end of this season. Considering the league’s recent history, there is reason to fear another work stoppage or lockout.
The big issue for the players is the fact that a percentage of their salaries are held in escrow and could be used to make up a shortfall in the 50/50 NHL revenue split with the owners. Under the CBA, the owners and the players split all hockey revenue 50/50 and if the owners’ share is less, it is made up by the players revenue which is their salaries.
Why is this important to the New York Rangers? It’s all about the salary cap. The salary cap is set each season by the NHL and the NHLPA. This year it is $81.5 million, a lower number than the $83 million that was projected.
The upper limit of the cap is determined by both parties in an effort to keep those escrow payments as low as possible. Higher salaries means the higher likelihood that the players’ share of the revenue will exceed that of the owners and the escrow will be used to make up the difference.
The irony is that when the salary cap is set at a lower level, it hurts players who are looking for new deals because there is limited cap space. Meanwhile it benefits the players already under contract by keeping their escrow payments lower.
And that leads to situations like the one facing the Rangers and restricted free agent Anthony DeAngelo who is looking for higher pay that the team just doesn’t have under the current salary cap.
Owners approved the current deal
The owners already decided to retain the current CBA for three more years and it is the NHLPA that has to decide by the end of today. The NHL has had three lockouts that cost the league huge chunks of three seasons and the 2004-05 lockout that cost the entire season.
There are reasons to assume that NHL revenue will increase greatly in the next few years. The league’s NBC deal ends after the 2021-22 season, but should be renegotiated as early as this season. It currently pays the league $200 million a year and based on what other sports are getting, it should get a huge bump up. The English Premier League doubled its revenue in its last deal and the NBA’s share increased 186% in its last contract.
Not only that, but legal sports betting could vastly increase league revenue. A Nielsen Sports Study commissioned by the American Gaming Association projected annual revenues for the NHL of $216 million from legal sports betting.
The increase in revenues from a new television rights deal as well as sports betting could increase the limits on players salaries substantially. With all of this coming in the next few years, the last thing the owners want is a labor dispute that will set the league back.
The threat of a work stoppage is why players like Artemi Panarin sign contracts that call for an annual salary of $1 million while paying out huge signing bonuses ($13 million in year one). If there is a lockout, salaries are not paid, but signing bonuses are. The deal Mitch Marner signed last week calls for a salary of $700,000 and a signing bonus this year of over $15 million.
So stay tuned for an announcement by the NHLPA sometime today. The two sides have been negotiating and the lack of news indicates that they are making progress.