NHL: Exploring the Ratified CBA Extension

As we know, the NHL and NHLPA each ratified a four-year extension of the Collective Bargaining Agreement on Friday. That sets the stage not only for a return to play but for a good degree of labour peace through 2025-2026.

There are details that both sides definitely won’t and don’t like. But that’s par for the course in the time of COVID-19 and now, with training camp set to go Monday for 24 teams, getting down to business is the order of the day.

The CBA provides a number of things for both sides.

At the top of that list is confidence for the owners. With NHL revenue taking a drubbing over the pandemic, that confidence is essential. We’ll have a flat salary cap at $81.5 million next season and won’t see much fluctuation on that through the term of this CBA extension. The CBA does detail the cap can “increase incrementally” if revenues reach certain thresholds.

The players have agreed to defer 10 percent of their salaries for the 2020-2021 season. Those deferments will be shelled out in equal payments over three seasons commencing in 2022-2023.

The players will have escrow capped at 20 percent for the 2020-2021 season, so that’s a start. Escrow in hockey terms refers to the percentage of money withheld from player salaries and placed in an account in order to calculate the prescribed 50/50 split that makes up hockey-related revenue. Those numbers will decrease each year through the life of the deal.

Obviously, the players want a lower percentage on escrow, so swallowing 20 percent at this point is part of what has to be given up if we’re going to see hockey on the ice sooner rather than later.

There is one more escrow-related clause that dictates a year will be added to the CBA if, after the 2024-2025 season, players’ escrow debt exceeds $125 million but is less than $250 million.

The NHL has agreed to increase the minimum salary and the maximum entry level salary. By the time players are entering the league from the 2026 NHL Entry Draft, that entry level salary will be a million dollars.

The players also agreed to Olympic participation in 2022 and 2026.

The league will have to recover from this COVID-19 nightmare and this CBA has many provisions to aid that process. It avoids what would’ve been labour upheaval in 2022 and what surely would’ve been a round of player buyouts, complete with a lower cap. That, at the very least, is a start.

Image: NHL

Published by Dr. Pucksworth

Doctor of Puckanomics.

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