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Snapshots: Contract Negotiating, Escrow, Second Draft Lottery

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Trying to negotiate a new contract in the looming new marketplace is going to be tough as the projected salary cap increases aren’t coming for a while like they used to.  Accordingly, how discussions for a new deal occur are likely to change as well.  Speaking with Postmedia’s Jim Matheson, agent Gerry Johansson discussed his approach towards how things may change for a while:

Right now, we’re just giving our players guidance that it could be a tough year. We’re telling them that this is the year to take a deal even if it’s not the one you might want. It’s like musical chairs. There are 100 players and only 75 chairs.

Johansson noted that he doesn’t have many notable players that are slated to become unrestricted free agents in November so his focus will be shifted towards working on extensions for clients like Anaheim’s Ryan Getzlaf and Montreal’s Brendan Gallagher who will be entering the final year of their contracts next season. PuckPedia has a full listing of Johansson’s client list.

Elsewhere around the hockey world:

  • The players have opted to put their final regular season pay into escrow, a decision that had seemed like the probable outcome for a while. Accordingly, the escrow percentage for the season jumped from 14% to 19.55%, notes Gavin Hockey Wealth (Twitter link).  If that seems high, keep in mind that the escrow percentage for the next couple of seasons appears to be slightly higher as the recent CBA talks have that pegged at 20% to help offset the expected drop in league revenues as a result of the pandemic.
  • It doesn’t appear as if we’ll be waiting too long after the completion of the play-in round to know who has the top pick in the 2020 NHL Entry Draft which is tentatively slated to occur sometime in mid-October. In the latest Insider Trading, TSN’s Bob McKenzie reports that the second draft lottery is likely to take place immediately following the conclusion of the best-of-five series which would be around August 10th or 11th.  The second lottery is required after the results of the first lottery revealed that one of the teams that loses in that round will get that top selection with each team having identical one-in-eight chances of winning.

Latest Reported CBA Details

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Although the CBA extension that is part of the NHL’s Return to Play package has not yet been finalized, details have been leaking out in recent days.  Sportsnet’s Elliotte Friedman provides an update on many of the details that haven’t been reported yet.  Here are some of the details although the full article (which includes information about the Olympics and bubble rules) is definitely worth a read:

  • There is a provision for a one-year extension of the agreement if the amount in escrow owed to owners is $125MM or higher.  Otherwise, the extension will expire in 2026.
  • The plan is to begin raising the Upper Limit of the salary cap once revenues reach $4.8B.  Until then, the cap will sit at $81.5MM, the current number.  Once the revenues reach the desired mark, the cap will be based on the revenue total from two years prior which should allow for a bit more certainty when it comes to general managers trying to plan ahead for their roster construction.
  • Draft picks that are conditional on a player re-signing with a team by a certain date will no longer be permitted.  There were a lot of these in recent years but the Players’ Association rightfully noted that this worked against players when it comes to extension talks as the opportunity cost of not having the conditional draft pick had to be factored in.
  • The minimum salary will increase to $750K for next season (one year earlier than originally scheduled in the current agreement) and eventually reach $800K by the expiration of the deal.  The current minimum is $700K.
  • Players that sign multi-year deals at the age of 35 or older will no longer have their cap hit remain on the books if they retire or have their contract terminated.  This is the situation that the Kings find themselves in when it comes to Ilya Kovalchuk.
  • While escrow will be at 20% for next season, it will drop after that.  It should fall between 14-18% for 2021-22, then dip to 10% for 2022-23, and 6% after that.  This is a big change from the current structure where escrow is not limited.
  • Waived trade protection will now automatically stick with a player once traded.  Currently, the acquiring team has the option of honoring the protection but they aren’t required to.
  • There are no limits to signing bonuses while there are some changes to the year-to-year variability rules for front-loaded long-term contracts.  The cap on the maximum variance between the highest and lowest salary in a single season in those deals will now be 35% (currently 50%).

Talks to finalize the new CBA and other protocols remain ongoing with the hope that a Memorandum of Understanding can be reached over the next few days.  Once that happens, the league and Players’ Association (full player vote, not team representatives) will have to vote to ratify the agreement which will take a few days.

Free Agent Period Expected To Open In November

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While we’re still waiting for official word on a CBA Memorandum of Understanding and the final Return to Play protocols, we now at least have an idea of when the free agency period will begin.  TSN’s Bob McKenzie reports (Twitter link) that the agreement to extend expiring contracts runs through October 31st which means that the league is targeting November 1st as the beginning of the 2020-21 calendar which would also serve as the opening day of free agency.

This also means that contract extensions will need to be put on hold as well.  Those deals can’t officially be signed until the player enters the final year of his contract which will now be in November.  Of course, teams can still hold informal discussions between now and then and with a better picture of what the salary cap is going to be for the foreseeable future (no change for the next two years and a $1MM boost to $82.5MM in 2022-23 if the CBA extension is finalized and ratified), those negotiations might be a bit easier with one key variable off the table.

As for players that have an eye on heading overseas for next season where the leagues start up in September, there is some relief on the horizon.  Mollie Walker of the New York Post notes that players that aren’t going to be participating in the playoffs will be allowed to sign deals in other leagues later this month.  That would allow players to catch on with new teams with enough time to be at training camp instead of having to wait and join midway through the season.  With that in mind, we may see a small uptick in player movement once the Return to Play rosters are set.

Snapshots: Amnesty, Lucic, Game Audio, Hajek

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Despite the hopes and dreams of fans around the NHL, the agreed-upon return-to-play conditions and extended CBA is not likely to include any kind of amnesty clause, per TSN’s Bob McKenzie. The assumption that the salary cap will hold at $81.5MM for the next two seasons gave rise to some speculation that the stagnant cap would be augmented by an amnesty provision, but it appears teams will be stuck with the contracts they’ve got on the books. For the Calgary Flames, that means Milan Lucic, writes Todd Cordell of Hockey Buzz. Lucic has three more years on his deal worth $5.25MM per season. The 32-year-old Lucic hardly set the world on fire in his first season in Calgary, notching just 20 points (8 goals, 12 assists) across 68 games. The Flames acquired Lucic and a conditional 3rd round pick for winger James Neal after one disappointing season in Calgary produced just seven goals. The money owed Lucic isn’t exorbitant, but it’s not an ideal price tag for an aging winger entering his mid-thirties. Lucic still played a role on the Flames’ third line, but his days as a 40-60 point scorer appear behind him. Additionally, it’s unclear right now if the Flames will actually receive the third-round pick. To get the pick in this year’s draft, Neal had to score at least 21 goals and record 10 more goals than Lucic. The second condition was qualified, but Neal scored just 19 goals – in a shortened season. Common sense would look at those numbers and say Neal was going to qualify both conditions, but it’s not entirely clear.

  • When the NHL returns to television, the game may look the same – except for the leagues of empty seats in the background – but the audio experience may provide an even more jarring change, per Kevin McGran of The Star. Without access to players, the play-by-play commentators are likely to call games from a studio instead of the arena, and in terms of sideline reporting, well, there won’t be any. Studios are still working on the best way to pump in ambient sound, whether that’s highlighting sounds from the ice or using some kind of fan track. The most entertaining option would almost certainly be to mic the players, but that would require players to curb their vulgarity, which, in the heat of the moment, might be too great an ask.
  • Libor Hajek of the New York Rangers has hired Octagon as his representation, tweets agent Allan Walsh. The young blueliner appeared in 28 games for the Rangers this season, recording five assists but no goals. Walsh also represents NHL players like Marc-Andre Fleury and Brock Boeser.

Next Steps To Finalizing Toronto and Edmonton As Hub Cities

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It’s been a long and arduous journey, and there’s plenty more road left to clear, but it appears as if the NHL and NHLPA have a framework in place to settle all their outstanding issues, writes TSN’s Frank Seravalli. The deal has yet to be finalized, but when it is, it’s expected to include an extension of the current CBA, some of which we went over here, as well as the final details of the return-to-play initiative. Plus, of course, there’s the final announcement about the hub cities.

Multiple sources at the Athletic, however, confirm Bob McKenzie of TSN’s initial report that marked Toronto and Edmonton as the NHL’s chosen locations for hub play, per The Athletic’s Michael Russo. The 12 participating teams from the Western Conference would play in Edmonton, with the 12 Eastern Conference clubs headed to Toronto. Of course, that means that both the Maple Leafs and Oilers will have the “advantage” of playing in their home city. The NHL doesn’t view this as much of an advantage, however, given that fans won’t be in attendance. Besides, there’s at least a chance that neither the Oilers nor the Maple Leafs would advance past the Qualifier round.

Not to mention, there remain obstacles to finalizing the plan as currently constituted. Seravalli kindly laid out the next steps: “Once a deal is finalized, it will require ratification votes from both the NHLPA’s full membership and the NHL’s Board of Governors, which could come as soon as this weekend. A simple majority vote is needed from the NHLPA; a two-thirds vote is required from the BOG.”

Still, after hemming and hawing for weeks to finalize these details, it does appear as if the NHL and NHLPA are close to pulling off the monumental task of coming to an accord in just a manner of days.

Latest On CBA Talks

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While there won’t be a flurry of agreements on contracts for next season today which is often the norm on Canada Day, it appears that significant progress is being made in CBA discussions.  Here is a roundup of the latest news and notes:

  • Signing bonuses that were scheduled for today will be paid and not deferred to the beginning of the next league year, reports TSN’s Bob McKenzie (Twitter link). However, with today being a holiday in Canada and Saturday being one in the United States, the payments may not physically be made until next week.  The escrow rate is still yet to be determined as well.
  • An interim extension has been agreed upon with regards to player contracts that were initially set to expire today, notes TSN’s Frank Seravalli (via Twitter). While not specified, the extension would likely run until the start of the next league year which, as things stand, is likely sometime in mid-to-late October.  Seravalli adds that players will be allowed to opt out of returning to play for the upcoming postseason if they so desire.
  • Players that were hoping to sign entry-level deals and be eligible to play in the play-in round/playoffs will not be able to do so, tweets McKenzie.  However, as CapFriendly points out (Twitter link), today remains the last day for players signed for next season to sign a 2020-21 contract until the opening of the free agent market; it had been June 1st but had been extended.  Barring another extension, a decision will still need to be made on whether those players could sign for this season and burn a year of their contracts without actually playing.
  • Included in the CBA discussions was a cap on capping the year-to-year variability on salaries as well as limit on signing bonuses, reports Sportsnet’s Elliotte Friedman (Twitter thread). Whether or not those were successful remains to be seen.  Meanwhile, Friedman reiterated that the expected salary caps for the upcoming seasons are $81.5MM in 2020-21 and 2021-22 and $82.5MM in 2022-23.  That will certainly present some challenges for teams that already are tight to the current $81.5MM Upper Limit as well as ones that have pending new deals that will take them to that level.

The CBA extension remains a part of the NHL’s Return to Play plan which is expected to also feature more concrete deals of the final two phases of that plan – training camps and the hub cities.  The contenders for those hubs seem to be changing regularly but the most recent forecast has Toronto and Edmonton in the lead although CBC’s Devin Heroux relays (via Twitter) that Toronto Public Health has not been notified of any selection from the league just yet.  This final package, assuming it’s officially agreed upon, will need to be voted on by all of the players and not just the team representatives; that process will take a few days at a minimum.

Olympic Participation Expected To Be Included In Next CBA

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One of the fundamental disagreements between the NHL and NHLPA came to a head back in 2018 when the league decided to not allow its players to go to the 2018 Winter Olympics in Pyeongchang, South Korea.  While the players wanted an opportunity to play in a best-on-best tournament, the league was unable to reach an agreement with the IOC on covering costs and marketing rights and ultimately decided it wasn’t worth shutting things down for more than two weeks midseason to allow NHL players to participate.

Recent comments from the league about the 2022 Olympics in Beijing, China, suggested that the NHL was taking a similar stance but it appears that won’t be the case now.  Sportsnet’s Elliotte Friedman reports that the CBA discussions (which have been gaining steam) would include the players participating in the 2022 Games.  Pierre LeBrun of TSN and The Athletic takes it a step further (Twitter link), indicating that 2026 in Italy (Milan and Cortina) is also currently part of the agreement.  Of course, both added the qualifier of negotiating an agreement with the IOC which isn’t a guarantee given what happened two years ago.

The current pandemic could also play a role in things, not only if it extends for a while yet but also on the schedule for that season.  2020-21 is expected to start in December at the earliest and run some time into the early summer.  Knowing the Olympics cause a sizable gap in the schedule for 2021-22, it’s going to be difficult to bump up the start time for that season with the preceding playoffs running long.  Accordingly, if this comes to fruition, we could be seeing playoff hockey in the summer not just this season (if they are able to get back to action) but for the next two as well.

Latest On Negotiations Between NHL, NHLPA

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We’ve been awaiting the announcement for hub cities for almost a week now, and the wait for the NHL’s final decision will continue until tomorrow at the earliest, per TSN’s Bob McKenzie. Two hub cities will be chosen from the group of Las Vegas, Edmonton, Toronto, Chicago, and Los Angeles. The decision, however, cannot be made in a vacuum, hence the delay. The NHL and NHLPA are also discussing the logistics of phases 3 and 4 of the return to play initiative, as well as particulars of the CBA, tweets Louis Jean of TVA Sports.

Coming to terms on an extension for the Collective Bargaining Agreement is a particularly daunting task given the short timetable and potential long-term impact of any accord. The escrow cap and revenue sharing are significant fiscal negotiations that could hold up a swift agreement between the league and the players. Some players, such as the Rangers’ Artemi Panarin, have been vocal about needing to fix escrow before players report to camp.

There is some cause for urgency, especially with the impending July 1 date for when teams are supposed to pay out signing bonuses. There’s talk of deferment, but nothing conclusive. As it stands today, over $300MM in bonuses are scheduled to be paid out by Wednesday. There is also the issue of the salary cap, which is likely to remain at $81.5MM for the next two seasons, per McKenzie (Twitter links). These issues are not supplemental. Rather, they are some of the most crucial points of negotiation between league owners and the Players’ Association, and it’s far from a done deal that the two sides can compromise.

Snapshots: CBA, Little, Fossier

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Extended labor peace may be at hand, reports ESPN’s Greg Wyshynski. Wyshynski has been told by sources that the NHL and NHLPA are closing in on an agreement to extend the collective bargaining agreement. This new deal would also answer questions as to how the losses incurred as a result of the COVID-19 pause will be remedied. The players are expected to vote soon on both the new CBA and the league’s return-to-play proposal, with both requiring a majority vote from all players. Wyshynski writes that some believe that this vote could occur this weekend, but that other believe that is too optimistic. Regardless, the current CBA’s September 2022 expiration date no longer seems to be much of an issue and the new agreement is expected to be six years in length, maintaining labor peace through the 2025-26 season.

  • Bryan Little will not be back with the Winnipeg Jets this season, writes Paul Friesen of The Winnipeg Sun. The Jets have stated that Little will not return to action even after the league’s pause comes to an end and the postseason tournament begins. Little has been out since November with a concussion and punctured eardrum suffered from a shot to the head. Concussion symptoms had lingered and Little underwent surgery on his ear in March, so under normal conditions he was unlikely to play again this season. However, any hope that this extended pause in the season would allow him to return for the playoffs has been shot down. The good news is that Little tells Friesen that he is “feeling pretty good” and the veteran Jet should be ready to return for the start of next season.
  • The AHL’s Rockford Ice Hogs have made a notable splash, signing University of Maine star Mitchell Fossier to a one-year contract. Fossier, 23, was expected to have some NHL interest but apparently will have to do some more work to get to the top level. At Maine this season, Fossier led the team and set a personal best with 42 points in 34 games as the Black Bears pushed for NCAA Tournament inclusion before the season was shut down. Fossier showed ample scoring ability in his four collegiate seasons and should be able to translate that ability to the pros.

Snapshots: Vancouver, Michigan, CBA

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As hinted at by reports earlier today, Vancouver is officially out as a potential hub city for the NHL postseason. Once considered a favorite along side Las Vegas, the British Columbia metropolis nevertheless ended up as an underwhelming option in the eyes of the league. The club released a statement thanking those whose efforts went into Vancouver’s hub city campaign but acknowledging that they are out of the running. This result is believed to have stemmed from the Vancouver group’s inability to have a plan in place for responding to a positive COVID-19 test that would not lead to a stoppage in play. In Vancouver’s stead, Edmonton and Toronto are expected to receive more attention while Los Angeles and Chicago still remain in the running. By all accounts, Las Vegas has already secured its spot and just one city is left to be determined.

  • The University of Michigan has announced their 2020-21 recruiting class and, while all of these names have previously been revealed over the past few years, the talent involved warrants a reminder. The Wolverines are bringing in an elite group to Ann Arbor next season, headlined by a pair of potential 2020 first-round picks. Neither Thomas Bordeleau nor Brendan Brisson are guaranteed to be selected on Day One, the American forwards stand a good chance of earning a late-round selection. Fellow forward Philippe Lapointe, son of long-time NHLer Martin Lapointe, is also expected to be drafted at some point this year. Goaltender Erik Portillo has already gone through the draft process and landed at No. 67 to the Buffalo Sabres last year. The Swedish prospect may sit for a year, but will certainly start for Michigan at some point soon. Yet, what might be more exciting for Wolverine fans are not the past or present draft products, but the future. Hulking two-way defenseman Owen Power and super skilled center Kent Johnson round out the recruiting class as two of the top prospects available in the 2021 Draft. Michigan will groom them for a season before one or both very likely get the chance to bolt for the NHL in 2021-22.
  • Comments made by New York Rangers superstar Artemi Panarin have brought the escrow issue back to the forefront of NHL labor relations as the league and players’ association continue to work toward a CBA extension. Panarin went so far as to say that players should not report to Phase 3 training camps without a new deal in place that corrects the current escrow crisis. The two side are indeed making progress in CBA talks and Sportsnet’s Elliotte Friedman reports that escrow terms may even be close to complete. Friedman notes relays that a plan is in place that would cap escrow at 20% for the 2020-21 season, but would include a one-season-only 10 per cent salary deferral, protecting owners in the short term while returning money to the players down the road. As part of the agreement though, the salary cap could remain stagnant at the current $81.5MM upper limit for the next three seasons with the potential for it to potentially go up in 2022-23.
  • The New York Post’s Larry Brooks reports that these CBA terms could be packaged with the Return to Play Plan in a vote facing every member of the NHLPA. While recent player movement, especially out of Europe, and participation in voluntary activities would indicate that the players are on board with the proposed Return to Play plan, there is no indication of their feeling on the current escrow and salary cap issues and how that might impact the ability for both key policies to receive a majority vote.

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