Hey Buddy Can You Spare A Dime?

PAUL CHIASSON/CP PHOTO

NHLPA Executive Director Paul Kelly responds to a question as Vincent Lecavalier of the Tamapa Bay Lightning, Joe Thornton of the San Jose Sharks and Alex Kovalev of the Montreal Canadiens (l-r), listen during a news conference Friday, January 23, 2009 in Montreal.

MONTREAL--If NHL players didn't understand the ramifications of agreeing to a salary cap linked to league revenues four years ago, they will now.

Each and every player, NHL Players Association boss Paul Kelly said today, should expect a 13.5 per cent pay cut this season because of declining league revenues. The cut takes the form of escrow payments, monies withheld from players to make sure the union collectively does not make more than its share of the money the league takes in.

In all, players will collectively lose about $217 million in pre-tax earnings this season because the league's revenue growth has dropped to about two per cent from 12 per cent a year ago..

"The players aren't happy about it," said Kelly. "But they understand it."

Kelly admitted that in this case, the escrow will have the effect of being a salary rollback the same as that the players were forced to accept after the 2004-05 lockout.

"It does work that way," he said.

What's worse is that the escrow is expected to increase to 20 per cent or more next season when NHL revenues are expected to take a larger hit. The team-by-team salary cap, set at $56.7 million now, is expected to stay at about the same level next season but then is likely to drop substantially for the 2010-11 season, which could be multiple players losing their jobs as salary cap casualties.

In the first three years of escrow payments, the players received all their money back at the end of the season plus a little bit more, and in the other year they got about 98 per cent of it back. League revenues are expected to hit about $2.6 billion this season.

In all, it's clear the general economic downturn has now hit NHL players square in the pocketbook, and hard.

They other piece of tough news the players are expected to have to deal with is that Detroit Red Wings Pavel Datsyuk and Nicklas Lidstrom are expected to be forced to sit out Detroit's first game after this weekend's all-star game for pulling out of the all-star event at the last minute.

"There's a strong likelihood they will not be allowed to play," said Kelly.

Pittsburgh captain Sidney Crosby was apparently so convinced he wouldn't be permitted to play next Wednesday against the Rangers for pulling out of the all-star game that he is expected to arrive in Montreal today and participate in events. It's expected the league will then allow him to play next week without missing a game.

The union officially announced today it would not exercise its right to re-open the current collective bargaining agreement at the end of this season.

Comments

[Daver]

Hy Damien, Habs fan here, never wrote in before but I would like to comment on the league basically suspending Lidstrom and Datsyuk for not attending the all-star game. Is there currently a rule that states the players who are elected/invited to go are legally binded to go? I think the keyword is invited, if it's an invitation, and it gets declined, call up a reserve, it's happened before.

I would like to point out that I believe these players get paid a lot of money to play, and that yes they should be required to attend if they are selected, sorry but it's part of the job.

At the same time though, if I was playing 82 games a year i know I could use the break, so I can understand their point of view.

Basically, if it's not in the rulebook or CBA, the league shouldn't be touching them and if they do, the PA I would think should fight it, but from what I can surmise about Kelly's response, it seems that there is something in there somewhere that states they have to go unless injured.

Any chance you could clear that up for me?

[mcjohn]

What the NHL needs now is a strong Toronto Maple Leafs team to make all the money to share with the rest of the league. Imagine if the Leafs were #1 right now and a favourite to win the cup. You wouldn't be able to get near the ACC on game night, TML jerseys would be the new business casual. Let the refs start fixing games already.

[brad]

Milionaires take a pay cut. OMG no!I don't feel one bit bad for these overpaid jocks. Welcome to the REAL world. lol

[hoofheartz]

Wow, those poor SOBs. I suggest we take up a collection coast to coast and then donate it to the NHLPA.

[James Carson]

Datsyuk and Lidstrom are being suspended one game for sitting out because of injury? Are you kidding me? The Blue Jackets can send out a press release saying that Steve Mason has a bad back a week before the All Star Game and says he won't be attending, and then starts the team's next two games? Why doesn't this rule pertain to the "Youngstars"? Backstrom just said flat out he wasn't going and didn't even provide a reason. An absolute joke.

[Matt Dumas]

Are these guys being officialy suspended by the league for not playing?

[Heevis]

boo-hoo.

[Timothy O'Brien]

This looks really good on the NHL and the players...They are the first union to take the hit, granted it was an already agreed upon through the salery cap, but even still, news of players taking a pay cut will look really good in the peoples mind, it looks good in mine. With alot of people losing their collective jobs and Countries haivng to go in to a deficit, its only right that players look arround them and try to find ways to help, and i beleive that this is one way of doing that....Well done mr. Cox... on breaking the story...

[dEsidEL]

I wonder whether it would have made any difference if the NHL didn't have as many teams as it does in certain US markets that don't seem to have any interest in hockey.

[Ryan]

I don't see how the players can be upset about it. Maybe I don't totally understand the process of holding part of the salaries in escrow. How I see it is that the players wanted to be "profit partners" with the league thereby profiting when the league's profits increase. Thi is obviously a double edged sword though because no one in their right mind will agree to have anyone as a partner when times are good and not when times are bad. So they share in potential profits and potential losses. Fair is fair. you take the good with the bad. I can't bring myself to feel bad because Kabs will only get about 4 mil instead of 4.5 or whatever....you get my point.

[Mark]

It's unfortunate but they still have a job and they are still making a lot of money even with the cut. I'd happily take a 13.5% pay cut if I could have back the job I lost seven months ago.

[Mike2]

I'm confused - if league revenues are up this year (up 2% according to the article), then why do players have to refund some of their salary? I thought they only had to return money if revenues went down? Is it done on a forecast basis instead?

Also, saying that some players may lose their jobs because of a reduction in the salary cap is very misleading. The total number of player jobs will remain the same (unless there is contraction, which is not a salary cap issue). Some players could be bought out or sent to play in the minors, but they will still get paid most or all of their salaries if this happens. In fact, if a player is sent to the minors and is replaced by someone else, this actually leads to increased player salaries (as the team is paying one player his full contracted amount to play in the minors (which doesn't count against the cap) plus another player to take his spot on the big league roster).

[Sean]

A 13.5% pay cut?

Hope the ticket prices go down 13.5% too...

[Scott L]

I agree with Mike2- this article is confusing. If the revenues are still increasing, how do players lose the escrow money? Is Damien saying that the cap was based on 13% growth? They are guaranteed a percentage of league revenues so growth is growth, or is growth really contraction? Damien, please elaborate.

[DamienCox]

Damien here. . .just to respond to Mike2 and Scott L, the total player share of league revenues can't exceed 56 per cent this year. But salaries are set, and in the majority of cases, they are based on contracts signed two or more years ago. So if the total NHLPA take remains the same, and if at 12 per cent growth the players got all their escrow back, it stands to reason that at 2 per cent growth the players share will be more than allowed. Also, about $500 million of the league's estimated $2.6 million projected revenues is based on playoff income, and right now, nobody knows whether the bottom could fall right out of that as the economy worsens. Hope that helps.

[DamienCox]

Damien here again. . .for Matt Dumas and Daver. . .Datsyuk and Lidstrom wouldn't be suspended, per se. They would still be paid, but essentially made ineligible to play in the game following the all-star break. It's not something that's covered in the CBA, leaving the union helpless as long as the players get paid. Oddly enough, most of the players I spoke to at the all-star festivities today were anything but up-in-arms about it.

[ray brewer]

Too bad they didn't have this escrow deal a few seasons back while Mats Overpaid was around..Imagine his distain towards the Leafs had that happened..

I can't imagine how most fans feel towards the players now..Most people called them greedy and self absorbed when the season was canceled a few seasons ago..It looks like they just wanted to play hockey and that Goodenow clown messed it up..

These guys just want to play hockey..

[Leafs4Ever]

As a long time Leafs and hockey fan, back from the days of Sittler, Salming and Palmateer, all I can say is eh... I loved watching hockey on TV, loved going to the game. Even managed to get my wife hooked on hockey. Then came the strike and there was no hockey to be had. Haven't returned to hockey since. I think I've watched maybe 3 games on TV after the strike... and even then, it was as background noise during other activities primarily. A hockey fan for 20 years who hasn't really been interested since... I guess I wasn't the only one to tune out of the league after the strike.

[chris]

Amazing how hockey fans can look up to, and refer to, hockey players as really great guys, a cut or three above other athletes from other sports. That is until their paychecks are factored in, then they're look at as greedy and self-centred as the other athletes they look down on.

[dave]

Poor babies - perhaps ticket prices will come down??? Not.

[JacobLeif]

The union officially announced today it would not exercise its right to re-open the current collective bargaining agreement at the end of this season.

This is the real story... wonder if the NBA experiences something similar when their CBA comes to term.

And I must say, good on the NHLPA for sticking with what works. Not to mention great optics for the MSM. You can't call them greedy, they headed off any labour disruptions very early, even though it will hit the pocket book deeply in the short term.

Probably lose a few 'money' players to Europe in the short term.

[John]

Damien,

I'm clear on the facts of the Wings' players suspensions, but still interested to hear your opinion.

I think it's a good move by the NHL, but it sounded to me like Crosby had to be available all 3 days, and I think that's unreasonable. If a player feels he is unfit to play, then 1 or 2 days of media/corporate partner availability is enough, and then they can get back to whatever doctor they want to see, or just get the rest they need.

It just kind of filters out those who really need rest and treatment from those who want to avoid the weekend.

Any connection, you think, with the P.A. looking to move the all-star game from annual to once or twice every four years, and the apparent disinterest in players attending these events?

[Lewis McClain]

Damian: The part of this deal that bothers me is this. How do you determine the profits of the teams? It is real easy to add expenses that do not exist to a balance sheet. Oh yah.. we only made xxx dollars. Meanwhile some owners house got a remodeling job etc. You get my point. Let me ask this. For example, would you trust the owners of the Leafs with your money?

[Danny Galea]

I feel no pity for the NHL stars who will have to shed a little bit of a salary.

You should see some of these NHL video games. By the third season of a dynasty, most of them are on the sidelines anyways because they want outrageous amounts of money. That is the future for these stars.

[Barb]

Hey Damien, the league and players wouldn't be in this difficulty if Bettman hadn't insisted on awarding teams to cities that don't care about hockey (at least 5 or 6 of them). The sham of giving away tickets to meet their ticket sales targets and guarantee millions in transfers from the solvent teams is a joke. Why does Bettman keep shunning Balsillie who is willing to move these teams into geographic areas which could support the team and not take subsidies from either the richer teams or players? Hell, give Balsillie two or three teams - I'm sure he could make it work!