Full text of NHL/NHLPA MOU for new 2020 CBA - analysis and discussion

[SI]

Not sure where to ask this question so coming here first-

88 m as the Cap limit - does this mean the revenue hope is about 5.6 billion (32x88)?

If so, the league projected about 6 billion this past season. With UTAH creating more revenue than AZ and no more Covid debt - could we see a revenue of 7B and if so will that mean a cap in 2025 that is closer 98 than just the 5%?

 

[Drumman44]

Not sure where to ask this question so coming here first-

88 m as the Cap limit - does this mean the revenue hope is about 5.6 billion (32x88)?

If so, the league projected about 6 billion this past season. With UTAH creating more revenue than AZ and no more Covid debt - could we see a revenue of 7B and if so will that mean a cap in 2025 that is closer 98 than just the 5%?

Isn’t there a lid on the percentage increase per year? Can’t go up more than 5%?

 

[SI]

Isn’t there a lid on the percentage increase per year? Can’t go up more than 5%?

Yes a 5% max increase stipulated in the MOU, but if revenue is climbing up to 7 B and if they only increase up to the max we could see an even larger leap once the new CBA is agreed upon.

 

[Golden_Jet]

Not sure where to ask this question so coming here first-

88 m as the Cap limit - does this mean the revenue hope is about 5.6 billion (32x88)?

If so, the league projected about 6 billion this past season. With UTAH creating more revenue than AZ and no more Covid debt - could we see a revenue of 7B and if so will that mean a cap in 2025 that is closer 98 than just the 5%?

No, it’s calculated differently
Cap is calculated as the midpoint (100%),
88 million is max cap(115%), the minimum cap is 85%.

Then there are some other things not in calculation, ie benefits to players, plus others (think this might be in the 300 million range.)

Think they anticipate about $93 m next year. To go over 5% number, needs approval from both sides.
Likely not going over 5% much imo because likely increases escrow.

 

[LadyStanley]

https://thehockeynews.com/nhl/toronto-maple-leafs/latest-news/why-the-nhlpa-hasnt-released-dates-for-arbitration-cases-like-maple-leafs-connor-dewar-this-year

In a change of policy, the NHLPA is not releasing schedule of arbitration hearings. Public won't know dates until award announcement (unless Insiders informed).

 

[LadyStanley]

https://x.com/i/web/status/1814661345192608023

As it's a player-elected arbitration, the team gets their term, nominally.

 

[SI]

No, it’s calculated differently
Cap is calculated as the midpoint (100%),
88 million is max cap(115%), the minimum cap is 85%.

Then there are some other things not in calculation, ie benefits to players, plus others (think this might be in the 300 million range.)

Think they anticipate about $93 m next year. To go over 5% number, needs approval from both sides.
Likely not going over 5% much imo because likely increases escrow.

what is the equation?

According to Allan Walsh the league made 6.8 B in HHR last season.

Say, the league makes 7 B next season - making the mid point 3.5. Wouldn’t that be over the 50/50 share? Even with benefits?

 

[Golden_Jet]

what is the equation?

According to Allan Walsh the league made 6.8 B in HHR last season.

Say, the league makes 7 B next season - making the mid point 3.5. Wouldn’t that be over the 50/50 share? Even with benefits?

I don’t remember exactly without going reading the CBA and MOU again. You’ll find the answer in there. Just recall generalities.
Next year will be 93 million plus 5% (assuming revenues stay good, could be slightly higher if both sides agree. This year agreed to round up to nearest million.)

 

[SI]

I don’t remember exactly without going reading the CBA and MOU again. You’ll find the answer in there. Just recall generalities.
Next year will be 93 million plus 5% (assuming revenues stay good, could be slightly higher if both sides agree. This year agreed to round up to nearest million.)

Yes, I know all that.

My question is what is the equation? How do they get to that number?
I understand that both sides agreed to not go above 5% on upper cap and to go above that both sides must agree.

However, the math does not add up to me.
If the HHR revenue was 6.8 B - I assume with Utah (and no Arizona) and no more Covid debt that number could be over 7 B.

 

[mouser]

Yes, I know all that.

My question is what is the equation? How do they get to that number?
I understand that both sides agreed to not go above 5% on upper cap and to go above that both sides must agree.

However, the math does not add up to me.
If the HHR revenue was 6.8 B - I assume with Utah (and no Arizona) and no more Covid debt that number could be over 7 B.

Walsh didn’t say HRR was $6.8B, he copied a Sportico article which estimates league revenue. And even then revenue is not necessarily equal to HRR.

Reportedly the salary cap this season would have been roughly $93m if there wasn’t a 5% limit. Running the math backward and using a $200-300m estimate for non-salary benefits that results in 2022-23 HRR somewhere around $5.7B to $5.8B.

Did 2023-24 HRR jump from that figure to $6.8B? Possible but I’d expect something more in the 5% or slightly higher range.

 

[SI]

Walsh didn’t say HRR was $6.8B, he copied a Sportico article which estimates league revenue. And even then revenue is not necessarily equal to HRR.

Reportedly the salary cap this season would have been roughly $93m if there wasn’t a 5% limit. Running the math backward and using a $200-300m estimate for non-salary benefits that results in 2022-23 HRR somewhere around $5.7B to $5.8B.

Did 2023-24 HRR jump from that figure to $6.8B? Possible but I’d expect something more in the 5% or slightly higher range.

Daly reported a revenue projection of 6.2 B during the playoffs. Also, I cannot remember where I read it, but the league was going to release 3% of the 6% escrow back to the players since projections were so strong.
Is this correct?

I guess I assume when they project revenue I assume it is hockey related revenue. However, your comment above also validates my feelings that the cap is much lower than it should be - last season as well as this upcoming season, moreover, It will certainly be even wider after next season with the inclusion of what UTAH brings to the league as well as no longer paying off the COVID debt.

There are so many teams at the upper limit, fielding teams under 23 and utilizing LTIR because the cap should be higher.

Is it safe to assume we may see a GIANT jump once a new CBA is signed in a couple of years?

Also, my original question - what is the equation? Is the equation - 50% Projected Revenue = upper Cap x 32 teams + benefits?

 

[mouser]

Daly reported a revenue projection of 6.2 B during the playoffs. Also, I cannot remember where I read it, but the league was going to release 3% of the 6% escrow back to the players since projections were so strong.
Is this correct?

I guess I assume when they project revenue I assume it is hockey related revenue. However, your comment above also validates my feelings that the cap is much lower than it should be - last season as well as this upcoming season, moreover, It will certainly be even wider after next season with the inclusion of what UTAH brings to the league as well as no longer paying off the COVID debt.

There are so many teams at the upper limit, fielding teams under 23 and utilizing LTIR because the cap should be higher.

Is it safe to assume we may see a GIANT jump once a new CBA is signed in a couple of years?

Also, my original question - what is the equation? Is the equation - 50% Projected Revenue = upper Cap x 32 teams + benefits?

Not sure we'll see a "giant" jump. I expect we'll see a couple years of 5%+ increases until slowing back down to the historical 4% average.

Equation: midpoint = ((50% * HRR) - non salary benefits of $200-300m) / 32 teams. The cap ceiling is 115% of the midpoint and the floor is 85% of the midpoint.

If HRR this season is $6.2B, with $300m in non-salary benefits that would work out to a $100m cap ceiling for 2025-26--revenue is used from two seasons beforehand. The PA also wants to keep Escrow to effective 0%, so I could see them increase to say $94-96m next season then back to the historical 4-5% growth rate. Of course a lot of this is going to depend on whether the current inflation growth is curbed or not.

 

[SI]

Not sure we'll see a "giant" jump. I expect we'll see a couple years of 5%+ increases until slowing back down to the historical 4% average.

Equation: midpoint = ((50 * HRR) - benefits of $200-300m) / 32 teams. The cap ceiling is 115% of the midpoint and the floor is 85% of the midpoint.

If HRR this season is $6.2B, with $300m in non-salary benefits that would work out to a $100m cap ceiling for 2025-26--revenue is used from two seasons beforehand. The PA also wants to keep Escrow to effective 0%, so I could see them increase to say $94-96m next season then back to the historical 4-5% growth rate. Of course a lot of this is going to depend on whether the current inflation growth is curbed or not.

Thank you for these in bold.

The giant jump could be with the new CBA, especially if they do not go above the 5% max.

IMO, we could see revenue over 7B next season and the following season over 7.5, which could eliminate the need for escrow which right now is 6%.

If the Cap for 2025-26 is 93 - when the new CBA is signed in the summer of 2026 we could see a cap of 100 -105 m for 2026-27 (depending on if the escrow is eliminated or stays below 6%) which would be a giant jump.

 

[LadyStanley]

I can't see players wanting to do anything to increase escrow.

 

[LadyStanley]

https://x.com/i/web/status/1818343477257613356

And completed days before last possible hearing/award.

 

[LadyStanley]

https://x.com/i/web/status/1824158170631041271

Guessing the NHL may have to complete their investigation and impose any penalty/suspension they deem appropriate before he'd be eligible to return to play.

 

[LadyStanley]

https://x.com/i/web/status/1825889303844557304

 

[LadyStanley]

https://x.com/i/web/status/1829688563069296999

Nice

 

[uncleben]

In light of this:

Sources: Hurricanes and Seth Jarvis agree to $63.2 million contract with unique deferred structure

The Carolina Hurricanes and restricted free agent Seth Jarvis have agreed to terms on a new eight-year, $63.2 million contract,...

www.dailyfaceoff.com

The Carolina Hurricanes and restricted free agent Seth Jarvis have agreed to terms on a new eight-year, $63.2 million contract, sources tell Daily Faceoff. It’s an important piece of business for the Canes, locking up the heartbeat of their team for the foreseeable future, but the way the contract is structured may be important business for the NHL’s other 31 clubs.

That’s because Jarvis’ new deal is set to become one of the first in NHL history to have a salary cap hit substantially lower than the typical average annual value because he was willing to defer salary.

Nearly every NHL contract in the salary cap era, since 2005, has been prescribed a simple cap hit: Take the total dollars ($63.2 million) and divide it by the length of the deal (eight years) and you arrive at $7.9 million per year on the team’s salary cap chart. With this deal, Jarvis will land on the Canes’ books at approximately $7.5 million per year, a savings of $400,000 each season.

Can somebody break this down for me? My brain is just not firing today, I'm too exhausted lol

"Deferred Salary" means any Paragraph 1 NHL Salary that is earned during the term of an SPC during which the services attributable to that Paragraph 1 NHL Salary are performed, but is not paid until after the expiration of such SPC. By definition, Deferred Salary that is earned during the term of such an SPC may not be paid until after the expiration of such SPC. Player Salary denominated as "Deferred" but payable within the term of the SPC shall be counted in the League Year in which the Player Salary is paid and shall not be treated as Deferred Salary. For purposes of calculating a Club's Upper Limit and Lower Limit, as well as the Players' Share, Deferred Salary shall be counted as Player Salary in the League Year in which the Player performs the services for which it is earned, at the Deferred Salary's present value at 1-Year LIBOR plus one and one-quarter (1.25) percent at the time the SPC is registered (unless the Deferred Salary is to be paid with interest, in which case it shall be counted in the League Year in which the Player performs the services for which it is earned, at the Deferred Salary's stated cash amount). Other than Deferred Salary or Deferred Bonuses as set forth below, any other compensation must be paid in the year that it is earned.

Does that bold part not imply deferred payment is counted as part of the cap hit in the year it is being deferred from? And in that case, how would Jarvis be getting a lowered cap hit?

EDIT: Coming back to it, they're talking about league calculations, not necessarily the player's individual hit against their team's specific upper limit, yeah?

 

[mouser]

In light of this:

Sources: Hurricanes and Seth Jarvis agree to $63.2 million contract with unique deferred structure

The Carolina Hurricanes and restricted free agent Seth Jarvis have agreed to terms on a new eight-year, $63.2 million contract,...

www.dailyfaceoff.com

Can somebody break this down for me? My brain is just not firing today, I'm too exhausted lol

Does that bold part not imply deferred payment is counted as part of the cap hit in the year it is being deferred from? And in that case, how would Jarvis be getting a lowered cap hit?

EDIT: Coming back to it, they're talking about league calculations, not necessarily the player's individual hit against their team's specific upper limit, yeah?

- The deferred money hits the cap, but what happens is the NPV (Net Present Value) of the deferred payment is calculated in the year(s) it is earned in the contract. All deferred payments must be assigned to one of more of years 1-8, and the contract structure must abide by the CBA year to year variance restrictions.

For example with Jacob Slavin's contract, what happened is:
- Total payment over Slavin's contract is $51.69M. Which would be a $6.461M AAV.
- Per reports the year 7 bonus of $4.55M is being deferred to year 9. This causes the NPV of the year 7 bonus to be $520k lower, for a total of $4.03M against the cap.
- The total valuation of the contract is thus reduced to $51.17M, which comes out to a $6.396M AAV.
- Total cap savings were $520k / 8 years = $65k per year.

Per reports the Jarvis contract has somewhere around $3.2M in NPV discounts. The exact AAV and deferred details have yet to be published. This should mean one or more of the payments has been deferred a longer period of time than Slavin's example contract.

There will be no cap hit for Jarvis in year 9 when he receives his deferred money--the cap hit will have been "prepaid" somewhere in years 1-8 at the NPV discount rate. Jarvis's deferred payment will be subject to Escrow in year 9--all payments to players are subject to Escrow in the season the payment is actually made.

 

[LadyStanley]

Following Johnny Gaudreau's death, I was wondering how his family will be "set", cap impact.

CBA 23.2 requires $1m/player life insurance policy plus "accidental death policy" which pays out one season's annual base salary (up to $15m). (So in Johnny's case, per PuckPedia, should already have been paid the $2m signing bonus/season. Insurance should payout base salary of $7.75m.)

23.6c Spouse has the option of continuing their life and health insurance (covered by team/league) for their lifetime.

(Per 23.1 looks like insurance payouts are US IRS tax free. IANAL so will defer that to a tax lawyer for specific answer.)

I don't find any specific clauses relating to not playing due to death and cap impact (IOW nothing came up with searching for "death" or "dead"). My assumption is that the cap hit "goes away" (except that which was already paid as signing bonus in this case).

 

[mouser]

Following Johnny Gaudreau's death, I was wondering how his family will be "set", cap impact.

CBA 23.2 requires $1m/player life insurance policy plus "accidental death policy" which pays out one season's annual base salary (up to $15m). (So in Johnny's case, per PuckPedia, should already have been paid the $2m signing bonus/season. Insurance should payout base salary of $7.75m.)

23.6c Spouse has the option of continuing their life and health insurance (covered by team/league) for their lifetime.

(Per 23.1 looks like insurance payouts are US IRS tax free. IANAL so will defer that to a tax lawyer for specific answer.)

I don't find any specific clauses relating to not playing due to death and cap impact (IOW nothing came up with searching for "death" or "dead"). My assumption is that the cap hit "goes away" (except that which was already paid as signing bonus in this case).

One important unanswered question with Gaudreau is whether his cycling would qualify as off-season cardio training in preparation to play hockey? If Yes that should mean that his contract is fully guaranteed as his death would have occurred during the course of his employment as a hockey player. Same principle that an off-season injury is guaranteed if the injury is related to hockey training/fitness in preparation for the season.

 

[McGarnagle]

Following Johnny Gaudreau's death, I was wondering how his family will be "set", cap impact.

CBA 23.2 requires $1m/player life insurance policy plus "accidental death policy" which pays out one season's annual base salary (up to $15m). (So in Johnny's case, per PuckPedia, should already have been paid the $2m signing bonus/season. Insurance should payout base salary of $7.75m.)

23.6c Spouse has the option of continuing their life and health insurance (covered by team/league) for their lifetime.

(Per 23.1 looks like insurance payouts are US IRS tax free. IANAL so will defer that to a tax lawyer for specific answer.)

I don't find any specific clauses relating to not playing due to death and cap impact (IOW nothing came up with searching for "death" or "dead"). My assumption is that the cap hit "goes away" (except that which was already paid as signing bonus in this case).

I was curious about how this would work. Can't figure out if a death wuold render the contract null and void vis-a-vis the cap, or if they're in like permanent LTIR mode where the CBJ have to be under the cap by $7.75m at the start of every season before finalizing other contracts or something.

Only comparable I can remember is when Reggie Lewis passed away in 1993, there was no precedent or verbiage in the CBA at the time for a situation like that so David Stern just insisted that his contract still counted toward the Celtics' salary cap for the remainder of its term. But I'm sure subsequent CBAs in both leagues have addressed that.

 

[mouser]

I was curious about how this would work. Can't figure out if a death wuold render the contract null and void vis-a-vis the cap, or if they're in like permanent LTIR mode where the CBJ have to be under the cap by $7.75m at the start of every season before finalizing other contracts or something.

Only comparable I can remember is when Reggie Lewis passed away in 1993, there was no precedent or verbiage in the CBA at the time for a situation like that so David Stern just insisted that his contract still counted toward the Celtics' salary cap for the remainder of its term. But I'm sure subsequent CBAs in both leagues have addressed that.

Death would render the contract null and void if the death was unrelated to the player’s employment by the team as a hockey player. For example Derek Boogaard signed a four year contract with the Rangers starting in the 2010-11 season and later passed away in May of 2011 from an overdose. Boogaard’s contract was voided and his estate received no further salary, though the contract included life insurance which may have been collected by the estate.

As I noted a couple posts earlier, Gaudreau’s activity of cycling when he died could be considered related to training for the hockey season. The CBA only says contracts are guaranteed against injury, there’s no mention of guarantee against death. But it would seem a very legal stretch to me if the NHL or a team were to argue the contract of a player dying in a game isn’t guaranteed, but a player injured in a game is. So by default I assume any guarantee of a contract against injury in a covered activity would also cover against death in a covered activity. The death was caused by injury.

 

[mouser]

Additional details on Gaudreau:

- As noted earlier it's possible Gaudreau's contract may be fully guaranteed during his cycling, TBD.
- $1m life insurance policy, per the CBA
- If the contract is not fully guaranteed he should still receive:
-- His 2024-25 salary of $7.75m is covered by insurance, per the CBA.
-- $10m in signing bonuses, $2m in each of the remaining 5 seasons on the contract.

If the contract isn't guaranteed and the signing bonuses are still due then they should hit the cap each season for Columbus. The 2024-25 salary would not count against the cap as it is covered by an insurance policy rather than paid directly by the team.

It's also possible that Guadreau took out additional contract and/or life insurance beyond that minimums provided in the CBA.