Michael Russo has covered the National Hockey League since 1995. He has covered the Minnesota Wild for the Star Tribune since 2005, after 10 years of covering the Florida Panthers for the Sun-Sentinel. He uses “Russo’s Rants” to feed a wide-ranging hockey-centric discussion with readers, and can be heard weekly on KFAN (100.3 FM) radio and seen weekly on Fox Sports North.

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Charts obtained by Star Tribune show how far apart NHL believes it is from NHLPA

Posted by: Michael Russo under Wild off-season news Updated: November 16, 2012 - 6:59 PM

Over the past few days, I have talked to a handful of players who have indicated how unfair it is that the NHL Players’ Association has essentially agreed to a 50/50 split, yet now the NHL was moving the goalposts and won’t negotiate the contractual changes the league is seeking.

I made some calls to see if the former was true because I had been given a different impression – that the NHLPA doesn't get to 50/50 over the course of its proposal, especially when one considers the potential loss of revenue this year due to the lockout after last year’s record $3.303 billion.

I have obtained a series of charts that the NHL presented the NHLPA based off the union’s most recent economic proposal (see below). If you look at the NHL's numbers, you can see why the league says the NHL and NHLPA aren't as close on a core economic model as Executive Director Donald Fehr indicated last Friday night during a news conference.

Last Friday before talks between the NHL and NHLPA broke off, the NHL prepared and provided the union a series of charts to demonstrate what it felt the existing economic proposal from the NHLPA would mean based on the league’s current situation and the damage already done to the business due to the lockout.

The NHL used four different assumptions in terms of lost hockey related revenue (HRR) this year, the most conservative being 10% off of last year’s $3.303 billion -- but also 12.5% down, 15% down and 17.5% down. Given where the NHL is, and with more cancelations coming up early next week, the NHL actually feels a more realistic view at this point is 25% down.

In any event, the NHL assumed that in Year 2, it would recover to 2011-12 HRR levels plus 2.5%. In Years 3, 4 and 5, the NHL assumed 5% growth year-over-year.

Using those four assumptions, and what the NHL says is the union’s “guaranteed” players share dollars of $1.916 billion in Year 1 and growing by 1.75% in every year, the NHL demonstrated that the applicable players’ shares over the five years of the union’s proposal ranges anywhere from a low of 64.4% to a high of 70.3% in Year 1, and falls gradually to 52.4% by the last year of the deal the players are proposing.

So regardless of loss assumptions, the NHLPA never gets to 50/50 over the course of its proposal, according to the NHL charts.

“The issue of how you deal with damage from the lockout is a tough one, particularly since it is impossible to know the extent of the damage," NHLPA Special Counsel Steve Fehr said in an email. "What we have suggested to the owners several times is that we put aside that issue for the moment and concentrate upon the overall structure of the deal. If we do that, based upon the last proposals from each side, we think the parties are much closer than they have ever been on the economics. If we could bridge that gap, then we could come back quickly to the lockout damage issue. For whatever reason, the owners have declined to do that, and seem to be intent on portraying the parties as further apart than we think we are.”

The NHLPA has previously indicated the players shouldn’t be responsible for the damage of starting this lockout. That may be fair.

Regardless though, what all these numbers prove at the very least is that the longer this lockout goes, the harder the math equation will be to solve. Damage to league revenue becomes more and more severe with each passing day. That complicates absolutely everything, which is why an end to the lockout just doesn't seem in sight.

Under the NHL’s most recent proposal, the league wishes to go immediately from a 57/43 split in favor of the players to 50/50. Had there been a normal season and year-to-year growth of 5%, 50/50 would have been $149 million less last year’s $1.883 billion player share in 2012-13 and another $62 million less than $1.883 billion in 2013-14. The league says it would “make whole” that money by reimbursing the players in two deferred, lump-sum payments, plus 2% interest. Had there been a normal season and year-to-year growth of 5%, there would be no shortfall in 2014-15 and essentially the league says the two sides would be caught up.

The NHLPA has made clear that this math does not honor in full every contract mutually agreed to with owners and thus is unacceptable.

Here are the charts:

NHLPA PLAYERS' SHARE PROPOSAL OF NOV. 9 UNDER DIFFERENT REVENUE GROWTH ASSUMPTIONS ILLUSTRATIONS

TABLE 1

GROWTH FACTOR   -10.0% 13.9% 5.0% 5.0% 5.0%
  2011-12 12-13 13-14 14-15 15-16 16-17
HRR 3,303B 2,973 3,386 3,555 3,733 3,919
APPLICABLE PCT. 57.0% 64.4% 57.6% 55.8% 54.1% 52.4%
PLAYERS' SHARE 1,883 1,916 1,949 1,983 2,018 2,053
NHL at 50% 1,486 1,693 1,777 1,866 1,960
Make-Whole 149M 62 ---- ---- ----
    1,635 1,755 1,777 1,866 1,960
Difference 280 194 206 152 94 Total
926M
Players' Share VOY % Inc. 1.75% 1.75% 1.75% 1.75% 1.75%

TABLE 2

GROWTH FACTOR   -12.5% 17.1% 5.0% 5.0% 5.0%
  2011-12 12-13 13-14 14-15 15-16 16-17
HRR 3,303B 2,890 3,386 3,555 3,733 3,919
APPLICABLE PCT. 57.0% 66.3% 57.6% 55.8% 54.1% 52.4%
PLAYERS' SHARE 1,883 1,916 1,949 1,983 2,018 2,053
NHL at 50% 1,445 1,693 1,777 1,866 1,960
Make-Whole 149M 62 ---- ---- ----
    1,594 1,755 1,777 1,866 1,960
Difference 322 194 206 152 94 Total
967M
Players' Share VOY % Inc. 1.75% 1.75% 1.75% 1.75% 1.75%

TABLE 3

GROWTH FACTOR   -15.0% 20.6% 5.0% 5.0% 5.0%
  2011-12 12-13 13-14 14-15 15-16 16-17
HRR 3,303B 2,808 3,386 3,555 3,733 3,919
APPLICABLE PCT. 57.0% 68.2% 57.6% 55.8% 54.1% 52.4%
PLAYERS' SHARE 1,883 1,916 1,949 1,983 2,018 2,053
NHL at 50% 1,404B 1,693 1,777 1,866 1,960
Make-Whole 149M 62 ---- ---- ----
    1,553 1,755 1,777 1,866 1,960
Difference 363M 194 206 152 94 Total
1,009B
Players' Share VOY % Inc. 1.75% 1.75% 1.75% 1.75% 1.75%

TABLE 4

GROWTH FACTOR   -17.5% 24.2% 5.0% 5.0% 5.0%
  2011-12 12-13 13-14 14-15 15-16 16-17
HRR 3,303B 2,725 3,386 3,555 3,733 3,919
APPLICABLE PCT. 57.0% 70.3% 57.6% 55.8% 54.1% 52.4%
PLAYERS' SHARE 1,883 1,916 1,949 1,983 2,018 2,053
NHL at 50% 1,362 1,693 1,777 1,866 1,960
Make-Whole 149M 62 ---- ---- ----
    1,511 1,755 1,777 1,866 1,960
Difference 404 194 206 152 94 Total
1,050B
Players' Share VOY % Inc. 1.75% 1.75% 1.75% 1.75% 1.75%


Where do we stand now? Not firm ground.

After Donald Fehr reportedly told NHL Commissioner Gary Bettman he didn't know how to proceed from here, Bettman suggested taking a two-week break from negotiations.

In an email to the Star Tribune last night, Deputy Commissioner Bill Daly said: "I find it incredible that the Union is suggesting that we are somehow "close" to a deal. They have utterly refused to negotiate for months. They have made essentially one proposal -- five times. They continue to request a "guaranteed" Players Share as part of the next agreement and we repeatedly tell them maybe they should get a reality check. And in the mean time, maybe they can make their position clear to us on 50-50, on the make-whole and on Player Contracting issues."

In a statement, NHLPA special counsel Steve Fehr said, "Of course everyone on the players' side wants to reach an agreement. The players have offered the owners concessions worth about a billion dollars. What exactly have the owners offered the players? We believe that it is more likely that we will make progress if we meet than if we don't. So we are ready to meet. If indeed they do not want to meet, it will be at least the third time in the last three months that they have shut down the dialogue, saying they will not meet unless the players meet their preconditions. What does that tell you about their interest in resolving this?"

Daly and Steve Fehr did talk today. No meetings are planned.

Talks broke off Sunday after a 90-minute meeting in New York. It followed four days of meetings last week that ended poorly Friday during a short meeting and heated exchange between a few players and owners.

Games have been canceled until Nov. 30, but more games will be scrapped next week. Players missed their third paycheck Thursday.

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