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The CBA: The Owner's first proposal, the salary cap and the Leafs

Hysteria!!!!! The leaked information about the owners’ first proposal has hit the media and the owners appear to be bat shit crazy. I like the quick little summary in Puck Daddy.

I am not exactly sure what the owners were thinking. In my mind, I see the 30 owners (wait...I know there are only 29 owners right now, but I am including Gary Bettman as the owner of the Phoenix Coyotes, of course) and they are all sitting around smoking cigars, sipping cognac in some oak-paneled country club backroom. They are laughing like hell and scribbling a list of demands on the back of a cocktail napkin. Cigar smoke is pouring out of Bettman's nose as he maniacally laughs out loud and slaps owners on the back with encouragement. Wait, maybe it is not cigar smoke, just the smoke that normally trickles out of the snout of Beelzebub. The cocktail napkin is handed off to his minion, Bill Daly, who runs off, types it up, and he then produces a copy for each owner. Gary produces a large knife, each owner takes a turn slicing open their own fingertips, and they sign their pact in blood. "The NHL players will shake with fear!! They will sign immediately and we will have crushed them!" pronounces Gary Bettman, while the owners all chant in unison “Crush them! Crush them!”.

Well, maybe that is not exactly the way things played out. Perhaps this is simply the initial proposal. Guess what, the owners are going to start low-balling. Shocking. Let’s not forget that the intention is to start negotiations, and they will make some concessions once the NHLPA submits a (likely equally crazy) counter proposal. Maybe this will go on and on and on. Hopefully, they owners and NHLPA will come together on a deal before games are lost, since we all remember how fun that lost season thing worked out last time.

It is interesting to finally see where the owners are starting from. The five major points the owners have apparently spelled out include:

1. Reduce players' hockey-related revenues to 46% from 57 %.

2. 10 seasons in the NHL before being eligible for unrestricted free agency.

3. Contracts limited to 5 years.

4. No more salary arbitration.

5. Entry-level contract are 5 years long instead of 3.

Point number one is very intriguing. Points 2-5 are basically just an attempt to limit the ridiculous contracts that are floating around right now. Proposing limits to the length of the contract terms while also limiting the number of young players earning big bucks is no surprise. I can see some serious negotiations happening and some middle ground being found here. It should not come as a big surprise that the owners want to do something about runaway salaries (even if you are one of the people that argue that the general managers the owners employ are actually responsible for them).

The reduction of the hockey-related revenues is what really caught me off guard, not because it is a big surprise that the owners would want to claw back some of the money distributed to players across the league, but the size of the bite they are trying to take. Again, this is just the first volley. I get that. But asking for a reduction from 57% to 46%? That takes some onions.

So what impact would this actually have? I did some math, or my best attempt at math, using some salary cap information spelled out in this article from the Globe and Mail. As stated, the NHL generated around $3.3 billion, and this figure is used to establish the cap. Using the current formula, the players would receive 57% of this revenue, or around $1.8 billion. If the percentage is trimmed to 46%, the players would split up around $1.4 billion. More importantly, the cap would move from the $70.3 million maximum that GMs are currently playing with, down to somewhere closer to $58 million. This is how I got there using the formula from the article:

Current calculation using 57%:

Midpoint: ($3.3-billion x .57) - $90-million in benefits / 30 teams = $59.7-million

Inflator: 59.7-million x 1.05 = $62.7-million

Cap: $62.7-million + $8-million = estimated $70- to $71-million

Revised calculation using 46%:

Midpoint: ($3.3-billion x .46) - $90-million in benefits / 30 teams = $47.6-million

Inflator: 47.6-million x 1.05 = $49.98-million

Cap: $49.98-million + $8-million = estimated $57.98-million

The players would never agree to this, but the impact of this new salary cap would be significant. As of today, there are 13 teams that would be over the cap (including your beloved Maple Leafs). According to CapGeek, The Leafs have a payroll of $58,353,333, but that only includes 19 roster players. If you presume that Kulemin, Scrivens and Franson sign, and another contract is added from the minors to bring the roster up to 23 players, the Leafs payroll would increase by around $5 million, and all things being equal, some minor player movement would be required to get under the cap.

On the other hand, teams like Boston and the nouveau riche Minnesota Wild would have to trim around $10-12 million from their current payrolls. Ouch. In other words, they would have to reduce their payroll by around 22%. Sound drastic? The Leafs had to reduce their payroll by 41% in order to meet the new salary cap of around $39 million in 2004-05. Granted, the team was assisted with this chop by the rollback of every player’s salary. It also meant the end of the line for Alex Mogilny, Brian Leetch, Ron Francis, Owen Nolan, Michael Renberg, Gary Robertsand Joe Nieuwendyk from the Blue and White. They were replaced by Jason Allison, Alexander Khavanov, Mariusz Czerkawski and the corpse of Eric Lindros. So, um….yeah. You may also recall that the Leafs have not made the playoffs since then.

OK, 46% is not likely to be the figure that is actually used to calculate the cap (unless the owners decide they are OK with waiting until 2013-14 to start playing again). What would a more realistic figure be? If you want to use the NBA as a yardstick, the latest lockout included slashing the players’ portion of the Basketball Related Income from 57% that was allocated in the 2005 CBA to 51.15% in 2012. If you noticed, 57% in 2005 for the NBA players was the same figure the NHL players are currently rolling with, well good for you.

Let’s pretend the NHL follows the NBA model (do you think Gary Bettman has any kind of relationship with David Stern? Oh…wait…yes they do). If the NHL adopts a 51.15% split, that would put the cap around $64 million. This would be dangerous territory for the Habs ($63,897,976 payroll for 23 players), Sharks ($64,629,167 for 20),Flames($66,668,332), Canucks ($67,153,333 for 22), Wild ($69,423,867 for 24) and Bruins ($69,922,143 for 23). The Leafs are currently at $58,353,333, but as I mentioned above, they still need to fill a few roster spots and that might eat up most of the $64 million. Still, the team would be in a much better situation than in 2004-05.

At the end of the day, it is way too early to start speculating on where the cap will be and the impact on current rosters. Still, it is a lot of fun to have a look and play around with the figures to see where teams will fall. It is also fun to engage in a little Schadenfreude while considering how Chuck Fletcher will have to squirm and scramble to fit both Parise and Suter under the new cap system (hint: this may involve Dany Heatley suiting up for the Houston Aeros…see, I told you this can be fun!).

PensionPlanPuppets.com is a fan community that allows members to post their own thoughts and opinions on the Toronto Maple Leafs and hockey in general. These views and thoughts may not be shared by the editor of PensionPlanPuppets.com.

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