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Lockout Over: NHL and NHLPA Reach CBA Agreement

January 7th, 2013 at 8:44 AM
By Matthew Heimlich

Early Sunday morning, the NHL and NHLPA struck a deal on a new ten-year CBA, with a mutual opt-out provision after eight years.  Some of the major provisions are as follows:

- The players' revenue share will decrease from its current level of 57% to 50% for the duration of the agreement.  A projection of how this would look like at 5% growth can be found here.  

-  The salary cap and floor will start at $70.2 million and $44 million respectively for this season, to ease teams into the new system.  However, in Year Two of the deal, the cap  will drop to $64.3 million and while the floor remains at $44 million, giving smaller market teams more financial flexibility.  

-  Each team is allowed two amnesty buyouts (one after this season and next season).  The buyouts will count against the team's overall share of revenue, but not against the salary cap.  This provision allows for teams to buy out contracts that might prevent them from coming in under the new, lower salary cap in the first years of the CBA.

-  For the duration of a player's contract, their salary cannot vary by more than 35% from one year to the next and the final year cannot vary by more than 50% from the highest salaried year.  The 35% annual variance, while seemingly quite high, is drastically mitigated by the 50% overall variance.  An illustration of sample contracts under these new constrictures can be found here.

-  Term limits for free agents will be set at seven years and eight years if a team is re-signing its own player.  The owners got what they wanted, which was financial incentive players who were drafted and developed by a team to stay there.  However, having the "home team advantage" only being one extra year still allows players to look for and obtain viable deals on the open market.

- All 14 teams who did not make the playoffs will be eligible for the first overall pick in a draft.  However, teams with worse records will have a statistical advantage the lottery system.  This provision eliminates the current practice where only the bottom four teams can vie for the number one pick.

-  The supplemental disciplinary system will essentially remain in place, with Brendan Shanahan presiding over any suspensions and Bettman hearing any appeals.  However, a neutral third party would decide appeals for suspensions of six games or more.  The need for an independent appeals systems for suspensions was discussed here at length, and while not perfect, this is a positive improvement for the players.

- Revenue sharing among teams will increase to $200 million.  This was a sticking point for the players from the onset of negotiations.  Increased revenue sharing might allow some of the teams going through financial difficulties to reach profitability or at least prevent some additional losses.

-  Teams can only walk away from salary arbitration if the award is more than $3.5 million.  This is an interesting wrinkle that again helps teams retain their own players and prevents players from entering the free agency pool.

-  The NHL will draft and adopt a defined benefit plan for the players.  This was an important issue for the players, because it helps to secure the financial future in a league where the average career is 2.9 seasons.

The lockout has lasted 113 days.  The season will be either 48 or 50 games and will likely begin sometime next week.  

Tags: Law, Sports, Sports Law

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