The NHL and players are closing in on a new collective bargaining agreement that includes remedies for the league’s loss of revenue due to the closure of the coronavirus, sources confirmed to ESPN on Friday.
A source indicated that a memorandum of understanding could be announced “as soon as Sunday.” But that moment was characterized by another source as “really fast.”
The National Hockey League Players Association is expected to vote on both a new CBA and the return-to-play protocols that would restart the 2019-20 season this summer, and that would require a vote involving all of its members. That had not happened until Friday night. Among the issues related to the return to the game were the approval of security protocols and the two “central” cities that will host 24 teams in the Stanley Cup playoffs.
The NHL and NHLPA declined to comment.
According to sources, the framework discussed for a CBA extension would be around six years. Two of those years would cover the 2020-21 and 2021-22 seasons, before the current CBA expired in September 2022. Sources said there was some leeway in that timeframe, and that another framework being discussed was a little longer.
There was progress in a new CBA before the league halted its season on March 12 due to the COVID-19 pandemic, but major financial problems had yet to be resolved. The huge loss of hockey-related revenue due to the leisurely season, and the proposal to restart the postseason on empty arenas, drastically changed the financial landscape for both owners and players. Both sides wanted clarity on how to handle these losses, which are expected to last until next season, before playing again.
A major problem is the security deposit. The current financial system in the NHL involves a 50-50 income split between players and owners. The escrow system, which requires a retention percentage of players’ paychecks each season, maintains that balance by funneling money to owners in the event of an income deficit or returning it to players after the season.
For players, trust is their hottest problem. New York Rangers star Artemi Panarin said Thursday that if the custody system is not fixed, “we as players cannot inform the camp to resume play without an agreement.”
With the loss of income this season, it was speculated that the security deposit could increase up to 35% for the players. For a point of comparison, the retention of the escrow for 2018-19 was 12.9%, with 3.25% returned to players. The official deposit loss for players that season was 9.65%.
But the current CBA framework being discussed includes a custody limit of around 20% for the first two seasons of the deal. After that, it would revert to the traditional custodial system, as the league’s revenue is expected to be bolstered by a new broadcast rights contract in the US and the windfall of the new team in Seattle, which some They have projected to be a top 10 NHL revenue team.
Another reason the escrow is expected to decrease is that the NHL would freeze its salary cap for the next two seasons, at around $ 81.5 million. You could then increase it by just $ 1 million in 2022-23, keeping new contracts below that limit.
A source on the players’ side said the salary cap may not be tied to earnings until near the end of CBA. There is a theory that with the frozen cap and additional revenue from the Seattle television and franchise deal, the escrow could potentially drop in single digits for players in a few years.
Another factor at play for the 2021-22 season, as first reported by Sportsnet, is a 10% salary deferral for players.
The 10% wage deferment was somewhat supported by both sides of the negotiating table. With neighborhood custody set at 20% next season, that money would be paid out to players under what is supposed to be a lower custody rate in two years. It’s not a pay drop, like what players experienced in the 2005 lockout. Players get that money back and will keep more than they would get with next season’s sizable escrow rate.
From the owners’ perspective, this helps with cash flow, as they will pay players 10% less next season.
Another possible change to escrow for 2020-21 is when homeowners would receive their payments. With the assumption that 20% of player withholdings would go to the owners, due to lost revenue from the closing of COVID-19, players could release that money before it is paid on deposit rather than at the end of the season, thus giving teams more cash flow during the season.
One of the most eye-catching topics at the upcoming CBA will be an agreement on the international game, and specifically whether the NHL will return to the Olympics after skipping the 2018 Winter Games. As of Friday, there was no clarity on that status.
The NHL and NHLPA have designated July 10 as the date for the third phase of their return-to-game plan with the opening of training camps, but various sources have told ESPN that a delay in that opening would not be A surprise, given the enormity of what is on the negotiating table and with the players still returning to their home cities from abroad.
While progress has been made on the labor front, there is still a lot of debate among players about whether to complete the season. One player told ESPN this week that he believed he was “50-50 in wanting to play again, due to security precautions, travel and logistics. Especially now with these cases on the rise, it appears that more kids with families are skeptical. “
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