Recently PuckPedia, a tremendous resource for salary cap and CBA information, published an Agent Poll.
They canvassed 25 National Hockey League agents, on an array of questions centered around the CBA. Agents have a unique perspective on the issues that concern NHL players, so they have good insight on what players would most like to see changed.
I’m going to add my thoughts on the matter, but I encourage you to read the full poll linked above.
One question was regarding what age players should be drafted, and another about when they should be represented by an agent. Unsurprisingly the majority of votes were to keep things the same.
Thinking about Connor McDavid and Auston Matthews, they could have played in the NHL a year earlier. McDavid had a higher points per game in the OHL than anyone had in 20 years prior. Matthews was 2nd in the NLA in points per game, easily outpacing guys like Damien Brunner who were fresh out of the NHL. Some people may have an appetite for an NHL version of ‘exceptional status’ but for the overwhelming majority of players, they’re not ready before 18. In my opinion it is not an idea that would survive very long in NHL circles, however we’ve seen players like Rasmus Dahlin take much larger roles in the SHL at a young age in recent years.
On the other side of the argument, moving the draft age back to 19 would give teams an additional year to evaluate, and the players another year to develop. Every season there are late bloomers passed over in the draft, and every year there are players selected that have already been through a draft or two. Egor Korshkov and Adam Brooks are prime examples.
There are major challenges in potentially changing the draft age, such as an unreasonably small draft class if the age is increased. That alone likely keeps the draft age where it stands now, regardless of if there is a compelling argument to change it.
Scouting has been constantly improving as teams gain access to more tools, and occasionally we see players taken in the later rounds that can have an immediate impact. Jesper Bratt, for example, had a 35 point rookie season at 18 after being taken in the 6th round of the draft.
In the case of shortening ELCs, I think there is more of an argument to be made. The Entry Level System already has provisions for one and two year ELC, exclusively for older players.
Currently only 42.7% of non-ELC contracts exceed 2 years in length, and nearly half of that consists of contracts 6 years or longer. I use this range, as a 3 year ELC can take 5 years to complete, the result of the Entry Level Slide.
Therein lies the issue, that an 18 year old can only sign a 3 year contract that has the potential to keep them from the negotiating table until they’re 23. That is the sacrifice they must make to ensure a signing bonus as soon as possible, in many cases the motivating factor for a young player to put pen to paper.
It also limits these players to a 2-way contract, meaning they have a different salary for playing in minor leagues. On ELCs the minor league salary is capped at $70,000. If ELCs were shorter, players would have an opportunity to negotiate a higher AHL salary if they have yet to graduate to the NHL.
For GMs shorter ELCs would mean less risk when signing players out of the CHL. For example there is Riley Stotts, a 3rd round pick of the Leafs who has yet to receive an ELC. If the Leafs wanted to sign him they would need to commit to a 3 year deal, which would expire when Stotts is 23. Instead the Leafs have attempted to sign players of his calibre like JJ Piccinich or Tony Cameranesi to AHL deals, where they can determine what the player’s upside is.
In short, the 3 year ELC is a tool for teams to keep players cost-controlled in the early stages of their career. Many players would earn more if they could negotiate sooner, and for that reason owners will resist the idea.
I’ve mentioned the maximum AHL salary of $70k, but even the max NHL salary of $925,000 is a point of contention. The 2013 CBA didn’t change the Entry Level System, so since 2005 the max ELC is only 1.09x more. In the same timespan league minimum is 1.56x higher, and the salary cap is 2.09x higher. Entry Level players have continually taken up larger roles over the past few years, without any change in maximum compensation.
Assuming the rules surrounding buried salary doesn’t change, by the time the next CBA rolls around a $1.125m ELC could still be buried. That would be 1.22x more than the current max, still seemingly underrepresenting the ceilings of first round picks. Other pro sports leagues have had set compensation based on draft position, perhaps that is something the Players Association can explore.
PuckPedia asked agents the one element of the CBA they want to change, and the top answer was earlier UFA. This makes intuitive sense, as exclusive negotiating rights serve to prevent open-market bidding, which drives up the price of a player.
I’m intrigued that this was the top answer though, and it proves that it will be a sticking point in the negotiation of the upcoming Collective Bargaining Agreement. Top players, depth players, even the AHL has continually gotten younger. Nearly 2/3rds of players under NHL contract are younger than 27, the typical age where a player reaches free agency.
Players can achieve Unrestricted Free Agency before age 27 by accruing 7 professional seasons, essentially they have to play in the NHL as a teenager. As you might expect very few players actually reach free agency this way, as the talent required to play in the best league in the world as a teenager often translates to a long term contract after their ELC.
So if the UFA age should be lowered, what age should it be? Looking at the CBA, 25 seems to be an appropriate age. Group 6 Free Agency is for players who have at least three years of pro experience, and have not met a minimum threshold for NHL games played. This makes players from 25-27 UFAs, such as Austin Czarnik in 2018, and potentially Carson Soucy this summer.
Between the 7 year rule and Group 6 free agency, 25 is currently the youngest age the mechanisms of the CBA allow for a player to reach the open market. Considering the average skater’s prime is almost certainly before that, it would make sense for the PA to push for UFA at 25.
The 3rd answer for what agents most want to change, involves escrow. I get the feeling that many people, including players, do not understand escrow. The very mention of the word can spark intense debate in hockey circles, but escrow is crucial to ensuring a 50/50 revenue split.
I don’t blame players for resenting escrow, they agree to a dollar value and have to see dollars shaved away before the tax man can even take his cut. The thing they must understand, though, is that escrow is what allowed them sign for that dollar value in the first place.
Owners and players split 50/50 anything that is considered ‘Hockey Related Revenue’. Contract values are pre-determined, but the HRR generated is subject to change, as we are currently witnessing. Escrow is the flexibility that allows this agreement to continue, think of it like the common area of a Venn Diagram.
Every offseason the NHLPA decides if they will use their option to inflate the salary cap by a predetermined percentage. Once that is done a midpoint is set based on the prior year’s HRR, and the cap is set 15% above, the floor 15% below. If on average teams are above this midpoint, the NHL pays excess salary into an escrow account. There are many other factors that play into escrow, but it ensures that the owners are paid the same amount as the players.
Of course it also works the other way, if the majority of teams are below the midpoint the owners will contribute to the escrow account. At the end of the season if the owners are up, the escrow would be paid out to the players rather than vice-versa, which we are accustomed to.
Without escrow, every season would have to work that way, or the contract agreements would have to be based upon a percentage of HRR. In simpler terms the salary cap would be lower, and many players would be unable to negotiate deals with a face value as high as they currently are.
Going back to the perception from players, there seems to be a disconnect between the necessity of escrow and the loss of income. Many players talk about the need to get rid of escrow, but there are no players talking about lowering the salary cap. I want to make clear that this is not a criticism of the players, their job is to play hockey and they hire agents to worry about contract details.
Still, when eliminating escrow is one of the top issues amongst agents there has to be an understanding of what the mechanism exists to achieve. The league went to great lengths to secure owners 50% of revenue, right or wrong that is something I don’t see changing anytime soon. If the goal is to eliminate escrow, the only other variable to achieve that is how much the players sign for.
In my humble opinion the focus should be shifted from eliminating escrow, to reducing it. I see it as vital to the HRR split, however 15% of your annual income is too much to be uncertain about. One idea I’ve discussed in the past is tightening the floor and ceiling to 10% of the midpoint. This would force underperforming teams to spend more on players, and limit how much top teams can exceed the midpoint. In turn the salaries of teams would be more tightly grouped around the midpoint, reducing the magnitude of escrow and potentially increasing parity.
Topping both categories, by a wide margin, is one of the last 2 Leafs GMs. You can probably guess which is which.
I unfortunately haven’t been able to sit in on any contract negotiations so it’s tough to give input, but Kyle Dubas has signed a total of 74 players (many of those ELCs). I’m going to make a leap and say that not every agent who voted for him, has negotiated with him.
The Toronto Maple Leafs are the most covered team in hockey, love it or hate it. In Toronto when a contract doesn’t work out, everyone knows about it. William Nylander and Mitch Marner’s contracts are likely amongst the most speculated upon, ever. Whether they are good or bad is going to be answered at the end, but for now the notoriety is enough to bring Kyle Dubas to the forefront of any discussion on weak negotiators.
I don’t believe that reputation has been earned, but in the case of Lou Lamoriello, his reputation has been. Lou has been unwavering in his vision of building a successful hockey team, and it has worked multiple times. For the Leafs he secured many years of Morgan Rielly, Frederik Andersen, and Nazem Kadri below market value. His negotiating acumen is tried and true, respected across the industry. The question is, with an evolving league, will Lou’s hard-nosed managerial style continue to result in success? Perhaps Matthew Barzal will be the ultimate test.
I generally dislike talking about ‘bad’ contracts, players dedicate their entire lives to make it to the NHL just to have people ridicule them for the amount of compensation they get. They can only sign contracts they’re offered, the onus is on the GM to decide if they are worthwhile.
Still, the hard cap system ties the value of players directly to their cap hit. There is no way to properly evaluate a player in the modern NHL without considering their salary. What I found interesting about many of the contracts voted on as “the worst from a team perspective” was that they are still producing at a high rate. The commonality of LTIRetiring players who no longer produce at their desired rate means that players struggling with injury difficulties are not as much of a handicap to the team as a good player with too much term.
Erik Karlsson and Jeff Skinner receiving multiple votes is evidence of that, they both play a huge role on their respective teams. The trouble is that when they underperform their contracts, they will still be one of the top options on their teams, unable to be filed away on LTIR. This issue is magnified for goaltenders, as there are only two positions on the active roster for them. Carey Price, Sergei Bobrovsky, and Henrik Lundqvist received votes, because the moment they are no longer the top option for their team they represent a massive, unmovable contract obligation.
With the cap set to stagnate at the very least, compliance buyouts have become a topic of conversation. This would show which contracts NHL GMs most want to get rid of, but it also depends on the direction of the team. In a hypothetical where a team has Milan Lucic and Jeff Skinner, which one they opt to buy out might depend on if the team is a contender or not. A playoff team might see Skinner as a former 40 goal man who can help them in the short term, preferring to buy out Lucic for some short term relief, and the chance to upgrade their team right now. A bottom feeder might prefer to live with the short term impact of Lucic’s contract, in order to avoid Skinner’s higher cap hit for the next 7 years.
The top answer from agents, was to expand the European and Asian markets. This is the areas where the NHL has the most potential for growth, so naturally its what the beneficiaries would like most. There are billions of potential hockey fans in Asia, and the NHL has already taken preliminary steps in the direction of exposing hockey to more people there. The 2022 winter Olympics in Beijing would be a grand opportunity for those potential fans to see, on their own soil, the world’s best players.
I was certainly fortunate to be able to experience that in 2010, where Sidney Crosby’s golden goal captivated millions of Canadians. The moral of the story is that more exposure leads to more fans, and the more the merrier!
The next idea was gambling, it may be under the radar but sports betting is about to take the NHL by storm. Virginia recently became the 22nd state to legalize sports betting, and the NHL is working on its infrastructure to generate profit off gambling.
My understanding, though nothing official, is that the player tracking will be shelved until next season https://t.co/Rc6LuheEMF
— Pierre LeBrun (@PierreVLeBrun) May 20, 2020
Player tracking may be on the back burner for now, but the NHL will have buyers lined up for that data, partially due to sports betting. This is a rare scenario where the league can introduce an entirely new revenue stream to HRR, rather than expanding an existing one.
A new TV deal was also amongst the top responses, and rightfully so. The players these agents represent, produce one of the best sport products in the world. At some point the NHL needs to do more to increase viewership in the United States, where they trail behind the other major North American sports. The American broadcasting deal in the NHL expires after 2021-22, and the NHL can very reasonably expect to double the current annual value. Considering broadcast rights make up such a large chunk of HRR, this would likely incite the largest cap jump the NHL has seen since the introduction of the hard cap in 2005.
Any time the NHL’s CBA is open for negotiation, there is the potential that NHL games are not played. We’re currently experiencing what that feels like, and I’ll summarize what that feels like in case the NHL has forgotten: It sucks.
I’ve lived through two NHL lockouts, the full 2004-05 season, and part of the 2012-13 season. I think it’s a sentiment all fans share, that they never want to go through it again. If either side, the NHL or the NHLPA, decide that they want to leverage playing hockey in negotiations, it had better be for good reason.
Luckily for hockey fans, the consensus amongst agents was overwhelmingly that there will not be a lockout at the expiration of this CBA in 2022. The fact that the CBA is set to expire in 2022 and not this summer is an extremely promising sign. In prior lockouts the NHL used the option to open CBA negotiations early, whereas in this CBA both parties declined to use that option.
Much of the owners concerns revolve around HRR distribution, in 2005 they fought to introduce a salary cap and define HRR, in 2013 they negotiated 50% of HRR. It seems with that, the owners are mostly satisfied. This appears to be the players’ turn to come to the table, and they have plenty of legitimate grievances.
From the perspective of a fan, a work stoppage is less likely because the players have such short careers now. Missing a season of work can mean missing out on a huge percentage of players career earnings.
All told, the league is in for some big changes in the coming years. In 2020 and 2021, the NHL will be forced to evolve and adapt around COVID-19, just as the rest of the world will. In 2021 the NHL will welcome their 32nd team, potentially capping off an age of expansion that has pushed elite talent across the continent. In 2022 they will negotiate a new Collective Bargaining Agreement, the third of the salary cap era.
If they can carefully navigate all of that, there is a new TV deal and an increased cap waiting on the horizon. For now, in a time of purgatory, we wait. Hopefully when it is safe to do so the NHL comes back stronger than ever, and we will be here to watch hockey once again.