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NHLPA Counter Offer: What's the Bottom Line?

June 22, 2012; Pittsburgh, PA, USA; NHL Commissioner Gary Bettman on stage at the 2012 NHL Draft at CONSOL Energy Center.  Mandatory Credit: Charles LeClaire-US PRESSWIRE
June 22, 2012; Pittsburgh, PA, USA; NHL Commissioner Gary Bettman on stage at the 2012 NHL Draft at CONSOL Energy Center. Mandatory Credit: Charles LeClaire-US PRESSWIRE

It's pretty tough to compare the NHL owner's initial offer to the NHLPA's counteroffer. The owner's offered a straightforward player/league revenue split of 46%. (Although that is somewhat complicated by some changes in how the league revenue is to be calculated which favours the owners). The player's counteroffer does not calculate the players cut in terms of a straightforward league revenue split. Instead it relies on a fixed increase based on last seasons total payroll. The amount of which is spelled out in this article, via the CBC:

So in the first year, salaries can only increase two per cent from the $1.87 million in total payroll in 2011-12, by four per cent the second year and by six per cent in the third year. In the fourth season, the players want the option to revert to the old system.

The $1.87 million stated is obviously a typo. That should read $1.87 billion.

The question I was left with is how do these two proposals compare in terms of the bottom line?

Basic disclaimer here: I'm no accountant. I'm not certain that all my steps here are correct. If you think I've done something wrong let me know.

The table below provides a breakdown of the numbers. I'll walk through each of the columns:

  • The cap is salary cap taken from Wikipedia.
  • The cap (NHLPA proposal) is cap amount proposed in the players counter offer. It is calculated by the $1.87 billion divided by 30 teams and increased by 2, 4 & 6 percent per year.
  • The increase is the historic % increase in cap year to year. The average annual increase is the same thing averaged (difference between 12/13 and 05/06 divided by 8).
  • The league revenue given was not available to me so it was calculated using the cap amount and the players % which is included in the CBA and is given by:
  • The players' share will be 54% to the extent League revenues in any year are below $2.2 billion; 55% when League revenues are between $2.2 billion and $2.4 billion; 56% when League revenues are between $2.4 billion and $2.7 billion, and 57% when League revenues in any year exceed $2.7 billion.

Based on the NHL website here.

  • The % increase is the annual increase in league revenue per year. The average annual increase is also shown.
  • The projected league revenue is estimated by assuming the average annual increase in league revenue of 10.1% continues.
  • The players % is the percent of total revenue provide to the players. Last year it was 57%.
  • OK, here's the part we're really after. The proj % players share is the amount of league revenue provided to the players based on the players counter proposal. It is a calculated from the players proposal of $1.87 billion (plus annual increases) as a percentage of the projected league revenue. That amount 51% next year, 47% the year after, and 44% the year after that. The players proposal reverts back to 57% in year 4.
  • The final column shows the leagues proposal of 46% players split.

yr cap (M) cap (NHLPA proposal) increase average annual increase cap league revenue (calc) (M) % increase average annual increase revenue projected league revenue (M) players % proj % players share initial NHL proposal
05/06 $39.0 $2,167 54%
06/07 $44.0 12.8% $2,400 10.8% 55%
07/08 $50.3 14.3% $2,695 12.3% 56%
08/09 $56.7 12.7% $2,984 10.7% 57%
09/10 $56.8 0.2% $2,989 0.2% 57%
10/11 $59.4 4.6% $3,126 4.6% 57%
11/12 $64.3 8.2% $3,384 8.2% 57%
12/13 (projected) $70.2 9.2% 11.4% $3,695 9.2% 10.1% 57%
12/13 $63.6 $3,725 51% 46%
$64.8 $4,100 47% 46%
14/15 $66.1 $4,514 44% 46%
beyond 57% 46%

So in plain english, the league is offering its players 46% down from the previous 57%. (The NBA is currently at 50% and the NFL at 46-48%).

The players have countered with a offer that was not based on a simple players to owners split, but works out to 51%, 47% and 44% for the players.

However, in the 4th year the players share reverts back to the very player friendly 57% split.

I have yet to see length of contract stated. The longer that 57% number stands the more it favours the players.

One last point: Michael Grange at Sportsnet seems to be suggesting the split is close to 54.4%:

Put another way, the owners’ plan would give the players 43.3 per cent of HRR, rolling salaries back by 24 per cent immediately. The players proposal would get them about 54.4 per cent of HRR and allow them to keep every cent of their current contracts.

This is a bit higher than the calculation I've done above shows.