Wednesday, August 29, 2012

NHL Lockout, Part II

pariseweb Zach Parise has hockey   and Minnesota   in his blood

One of these two people is Zach Praise. Which one it is, I do not know because I don't follow hockey nearly close enough. Apparently though, there is a team known as the Minnesota Wild. Last I knew there was a Minnesota hockey team, it was then the North Stars. That has changed since the 1994 lockout apparently. One of these two people (the Zach one) signed a $98 million 13 year contract deal with the Minnesota Wild. I am still trying to figure out who is the other.

So what is the hockey lockout all about?

It's all about the Benjamins. Or the Loonies. Since it is hockey after all. Or put a better way, its about coming to an agreement that saves owners from themselves. They want to win. Badly. So what do they do? Offer huge contracts to star players that they can not possibly afford. I don't doubt this kid has talent, but will he have talent 13 years from now? That's hard to say - but he will be paid almost $100 million either way. By putting restrictions on the players union, they are really restricting the owners extravagance. Making sure that the owners do not run their own franchises into the ground.

Three ways the owners are trying to do this and possible solutions for each that is fairer to the players:

1) The owners wants to get rid of guaranteed contracts. This is what the NFL has. Teams can let players go with little financial penalty. Basically, players are locked into their contracts but the teams are not. If a player's value rises significantly, they become underpaid and have to live with it. If a player's value drops significantly, they get cut. This is not exactly fair for both parties.

The NBA has a creative solution to this problem: An Amnesty clause. When a player is waived through amnesty, then the player still gets the full salary but the player's salary does not count towards the salary cap and going over does not count towards the luxury tax. The player goes up for auction with other teams bidding on him. The winner pays a part of the salary and original team pays the rest. Example: Brendan Haywood.

The benefits of this are: that the player still gets paid; the bad contract is less baggage for the team; the richer teams can inject more money into the league; and the poorer teams can buy quality players at bargain prices.

2) Each team has both a cap on salaries and a floor. Going both over and under means really harsh penalties to the point where it just is not done. Small market teams want to get rid of the floor, so that they can cut costs if need be. The players don't like this because it means less money to go around for the average player. As money keeps shifting towards the stars, the average players are the ones who lose out. Perhaps by relaxing the penalties on both sides and applying NBA style luxury taxes to teams that go over, then the total money will even out ... except that inequality between big market and small market teams in the league would increase. There exist other mechanisms to equal that out though. Luxury tax revenues can be re-distributed to poorer teams and the best teams can get more difficult schedules the following season (like in the NFL).

3) Changing the revenue split. The NHL has a current split of 57-43 towards the players. The NBA went from 55-45 to about 50-50. The NFL went from 53-47 to the the other way around, but it will be more like 50-50 in practice.

The owners opened up negotiations of flipping the current split in the other direction towards the owners. That is a gigantic pay cut for NHL players - to go from 57 percent revenue to 43 percent revenue. "Experts" predict a negotiated settlement to end up somewhere in the 47-50 range mirroring the NBA and NFL agreements - but that still is a huge pay cut. A better away around this is changing how the league defines "revenues", then completely flipping the ratio. Or even, do a slow adjustment phase as opposed to a sudden significant drop. By holding the total revenue spent on players constant while giving the league time to become wealthier, then a slow re-distribution of percentages can happen without disrupting current player contracts.

I also caught wind that the Minnesota Wild also signed Ryan Suter to a 13 year, $98 million deal that mirrored Zach Praise's. Is that who the other person in the photo is?

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