According to Larry Brooks, the NHL is seeking additional financial concessions from the NHLPA in Return to Play negotiations for the 2020-21 season to the tune of an additional 13 percent in salary deferral.
— Larry Brooks (@NYP_Brooksie) November 17, 2020
When the NHL resumed play in the summer for the playoffs, both the NHLPA and NHL came to a joint agreement in which both parties signed off on a plan for “Return to Play” and a six-year extension of the collective bargaining agreement. Given that the 2019-20 season was shortened due to COVID-19 and there were no guarantees that 2020-21 would be a full season with fans, the players agreed on a 10 percent deferral in salary for the upcoming season and a cap on escrow at 20 percent.
But with more uncertainty abound given the spiking number of COVID-19 cases heading into the winter months, there’s no guarantee the season will start on time, and it is unlikely fans will be in the building. The NHL’s revenue is driven primarily by money collected at home games, and empty arena games would impact the financial situation projected back in the summer. So now the league is looking for the players to help share that “burden”.
The new proposal per Eliotte Friedman, “would drop the players’ 2020-21 gross pay to about 62 per cent while eliminating the need to pro-rate. As you can imagine, the reaction was mixed, ranging from ‘why alter a deal that was made a few months ago?’ to ‘not playing is a worse result.’ (Payment schedule will be key.) It’s also possible the figure could be negotiated.”
But there are some potential problems with a 23% deferral as pointed out by PuckPedia.
With @NYP_Brooksie reporting deferral ask is up to 23% total, there are 26 players who cannot defer 23% of comp this season even if all of their salary is deferred. This is due to large signing bonuses.
— PuckPedia (@PuckPedia) November 17, 2020
Due to the fact that there a number of high profile players who collect a small salary during the season after having already been paid a fat July 1 signing bonus, there are 26 players who can’t defer 23% of their total compensation. Artemiy Panarin, Chris Kreider, and Jacob Trouba are the three Rangers who made the list, with Panarin’s being the fourth-largest gap in deferral vs. base of the players listed.
The players can’t be in a position where they aren’t collecting a salary, because not collecting a salary means money isn’t being kicked into escrow which is used to true up both sides’ split of revenue at the end of the year. For more on that, check out this story from Hockey-Graphs.
With December just around the corner, the clock is ticking to reach an agreement so that a training camp could start on time. But it begs the question of whether or not they should be starting in January, probably not if you asked me, given everything else going on in the world.
But with that said, I expect some arrangement will be reached, because the NHL wants to be in a position of strength when negotiating the next United States TV rights deal, and a big part of that is making sure the season is played, televised, and completed before the Summer Olympic games which kick off on July 23, 2021 in Tokyo.
I’m not sure if there will be some provisions made that involve signing bonuses already paid, or future bonuses scheduled to be paid. This is all weird territory so who really knows? But in all likelihood, I could see a proposal that gets to a point where the deferral equation doesn’t leave a deficit, which would be slightly more than the 10% cut the players already agreed to. I imagine we will learn more about this topic very soon, so stay tuned for more information as it becomes available.