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NHL Adjusts Recapture Penalties

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With the NHL set to ratify a new extension for the Collective Bargaining Agreement, labor peace will be guaranteed for at least the next six years. That comes as very welcome news for hockey fans that have been waiting to see their favorite players back on the ice for several months. With any CBA negotiation, however, small changes will be made that benefit one side or the other—the NHL and NHLPA.

One of those changes, as reported by Michael Russo of The Athletic and explained by Frank Seravalli in his latest piece for TSN, is to the rules governing recapture penalties. Previously, a complicated formula would force substantial cap penalties onto teams if a player with a front-loaded contract retired before its expiration. Now, that penalty cannot eclipse the original contract’s cap hit in a single year.

So far only Roberto Luongo has created such penalties with his retirement last year.

When Luongo hung up his pads, the Vancouver Canucks and Florida Panthers were each forced to deal with penalties against their salary cap, with the former suffering the bigger charge. The Canucks have a $3.033MM penalty through the 2021-22 season and unfortunately will not receive any relief from this rule change given Luongo’s cap hit was $5.33MM.

The biggest winner (if you can even call it that) out of this new change may be the Nashville Predators, who were in danger of a potential ~$24.6MM cap charge if Shea Weber had retired just before the 2025-26 season. That number will now not eclipse the $7.86MM cap hit he carries, though that means it would be spread out over several years as the entire penalty must still be paid eventually.

The Minnesota Wild are another team who could be affected, given the front-loaded nature of contracts signed by Ryan Suter and Zach Parise in 2012. Those deals don’t expire until 2025 but will have paid out $88MM of the initial $98MM guarantee by the end of next season.

Seravalli has a comprehensive list of the other changes, but they include an increase to minimum salaries and a rule that no-trade clauses will remain in contracts even if the player is traded before the clause kicks in. Previously, the acquiring team was given the option to honor them—something the Predators chose not to do when they acquired P.K. Subban in 2016, days before the clause kicked in.

NHL, NHLPA Reach CBA Extension

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The NHL and NHLPA have a tentative agreement in place for the memorandum of understanding on the CBA, per TSN’s Bob McKenzie. The NHL and NHLPA have both announced the deal.

The owners and the players must ratify the agreement with a vote, but this is definitely trending in a positive direction. Ratification could happen as soon as the end of this week, but there is no set deadline, per McKenzie. Per the agreement, Phase 3 will begin as planned on July 13, followed by travel to hub cities on July 26 and the beginning of play on August 1.

The full press release from the NHLPA reads as follows: “The National Hockey League (NHL) and National Hockey League Players’ Association (NHLPA) have reached a tentative agreement on a Return to Play Plan and Memorandum of Understanding (MOU) that adds an additional four years to the term of the current Collective Bargaining Agreement and includes transition rules and a new critical dates calendar. As part of the tentative agreement, the following dates have been established: July 13  start of formal training camps; July 26  Clubs travel to hub cities; August 1  start of Qualifying Round. The tentative agreement is now subject to approval by the NHL’s Board of Governors, as well as the NHLPA’s Executive Board followed by the full NHLPA membership. The respective review and approval processes will take place over the next few days and there will be no further comment until those processes are completed.”

Given the troubled history between these two sides, that they could come to an agreement without a work stoppage under these rushed and dynamic conditions speaks volumes. The extended CBA will now expire on September 15, 2026, per NHL.com.  There are still plenty of hurdles ahead before August 1, but for now, it appears that the NHL will return in less than a month’s time.

Latest On Impact Of Coronavirus On NHL, CBA Talks

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With the NHL’s report today announcing 23 confirmed cases of coronavirus out of the 396 players in camp, data points are emerging that might reveal the NHL’s risk tolerance as it returns to play. Still, we remain in the dark about what it would take to shut the whole thing down, per the Athletic’s Justin Bourne. Presumably, so long as the integrity of the competition remains intact, games will go on – the adjudication of that line provides a ton of interpretability, however. It’s rote for teams to lose a player or two before the playoffs due to injury, but there would never be a threshold for cancellation prior to coronavirus. Terms of a shutdown are said to have been defined in the recent agreement between the NHL and NHLPA, even if we don’t yet know its definition. More from Bourne and elsewhere around the NHL:

  • Bourne adds an interesting wrinkle, noting that with so many players from the Toronto area, the threat of breaking the bubble is greater in Toronto where family and friends are the temptations versus the alluring entertainment options of, say, Vegas. It’s nice to think that all players and staff will adhere to the strict rules of the hub quarantine, it’s also likely unrealistic.
  • Bourne also touches on some details of the proposed CBA. With the help of The Athletic’s Jonathan Willis, Bourne notes that entry-level contracts are expected to see a bump in pay, a surprising evolution that obviously benefits young players in a strictly financial sense. But the pay increase may also incentivize teams to prioritize veterans on minimum deals over a max ELC prospect. The balance between paying young players an acceptable wage and washing out the market for minimum-wage vets is a complicated relationship in all sports, but if the proposed increase holds, NHL clubs could find increased value in a minimum-price veteran.
  • NHL Players have until next Tuesday, July 13th (the start of Phase 3) to opt-out of the 24-team playoff, veteran NHL writer John Shannon reminds us. A number of players in the NBA and MLB have chosen to opt-out of the season, but we haven’t heard as much of those rumblings from the NHL. It’s been presupposed that the culture of toughness would attach a stigma to players electing not to play, but we should find out for sure within the next week.
  • Shannon also notes that Oiler’s owner Daryl Katz played a key role in moving the NHL’s hub location from Las Vegas to Edmonton (via Twitter). Katz spoke to the NHL Board about the safety benefits of hosting play in Edmonton, and he was apparently convincing. The surging number of coronavirus cases in Nevada surely played a role as well.

NHL, NHLPA Hoping To Finalize CBA, Return To Play Agreement Saturday

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The NHL and NHLPA are hoping that they will finalize a six-year CBA agreement today along with a tentative agreement on Phase 3/4 protocols as well as a critical calendar, according to TSN’s Bob McKenzie. Assuming it’s both finalized and ratified, it should provide the league some long-term economic stability with all the issues that have surrounded the league since the COVID-19 pandemic began.

Assuming the new CBA is agreed on today, it would need to be ratified by the Board of Governors and the full membership of the NHLPA, where the players would get 72 hours, starting Monday.

While some details were leaked yesterday, TSN’s Frank Severalli notes a few more additions to return-to-play discussions as well as other CBA changes:

  • Dates for Phase 3/4 will be finalized with trainings camps scheduled to open on July 13. Teams will then be expected to report to their hub cities in either Toronto or Edmonton by July 26 and games expected to begin on Aug. 1. Assuming there are no setbacks, the Stanley Cup should be awarded in the first week of October. The second phase of the draft lottery is expected to be held on Aug. 10 immediately after the play-in series is over. The NHL draft is expected to be in mid-October, with free agency starting on Nov. 1.
  • Players can opt out of the 24-team tournament for any reason without penalty and will receive a playoff share regardless. Bonus pool money has also doubled with players who lose in the play-in round receiving $20K, while the Stanley Cup winners would receive $240K.
  • As reported earlier, Olympic participation for NHL players will be included for the 2022 Beijing Olympics as well as the 2026 Milan Olympics, pending negotiations with the IOC and IIHF.
  • There will be no changes to signing bonuses. It was believed the NHL was trying to limit signing bonuses in the next CBA to no more than 50 percent of the total contract, but this will not take place.
  • Players will now also be allowed to rehab from long-term injuries from any where they want, unless the team can prove it’s not possible from that location.
  • Teams will also no longer have to place players playing in Europe on waivers when they wish to return to the NHL. That was an issue back in 2013 for Ryan O’Reilly, who opted to play in the KHL while holding out for a new deal while with the Colorado Avalanche. The Calgary Flames signed him to an offer sheet. However, had Colorado opted not to match the offer, the Flames would have been forced to place him on waivers since he was playing overseas before he returned and likely would have lost him.

 

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.

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