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NHL Commissioner Gary Bettman launched the Bat Signal at the end of general managers’ meetings on Wednesday, publicly letting new NHL Players’ Association executive director Marty Walsh know he’s ready to negotiate on the league’s most burning issue: the salary cap increase for next season.
In other words, Game On. Walsh is expected to officially succeed Donald Fehr as head of the players’ union on Monday, his first day on the job after leaving his government post as US Secretary of Labor. And how next season’s salary cap is negotiated will be the first major window into how the relationship could unfold between Bettman and the fifth union counterpart in his term. As the first forays go, this one will be interesting.
To the letter of the extension of the NHL-NHLPA collective agreement negotiated in 2020, Bettman does not have do anything. He told reporters in Florida on Wednesday that players’ remaining debt to owners from pandemic damages is expected to « approach $100 million, within that range » by the end of this season.
If even $1 is owed on the debt, the CBA is asking for a slight $1 million salary cap increase next season, which is why the 32 general managers left the meeting with $83.5 million as waiting. However, Bettman left the door open for a bigger raise, saying for the first time that the NHL was open to « discussion. »
“I guess there is always a possibility of negotiation once the new executive director of the Players Association [starts]but subject to that, it looks like the cap will go up by $1 million,” Bettman told reporters.
Anyone who has spent time with Bettman is smart enough to know that a negotiation is just that. Even if the majority of your owners and all players want it, and it’s better for the game as a whole, why give a salary cap increase for free when you could get something out of it? Few people on the planet understand leverage better than Bettman.
So the question leaving Florida is: what is Bettman looking for in return?
The belief is that Bettman has his eye on something in particular. NHL sources say Bettman would consider raising the salary cap beyond the CBA-mandated million dollars if there was also a resolution to existing and unresolved NHLPA hockey-related revenue claims that remain open for several seasons. Complaints are relatively common in the audit process to ensure an exact 50-50 split is split as required by the ABC; league sources were unclear on the exact amount of the dispute or the validity of the claims.
But to summarize for simplicity, the gist of Bettman’s conversation with Walsh might go something like this: If the NHLPA is willing to drop these demands, we can talk about a salary cap increase. It’s impossible to know Walsh’s position, not even at work yet.
Meanwhile, it appears Bettman threw a red herring on Wednesday, dangling buzzwords he knew would grab the attention of every NHL player. His warning was that raising the salary cap next season could also increase the amount of escrow withheld from players’ paychecks.
« We’re hearing from players and others that there might be value in having this. [negotiation] », Bettman said. « But one thing to keep in mind: if we’re going to raise the ceiling and [the debt] has not been paid, then we will have to consider increasing the escrow rates.
As part of the 2020 CBA extension, players have negotiated a six percent escrow hold cap for the next three seasons. This was a big deal for players, who had uncapped holdback quarters ranging from 12 to 18 percent of their paychecks. But that 6% cap was also based on a few things, including projections that debt would persist through those seasons due to pandemic-related revenue losses.
With league-wide revenue rebounding stronger than expected, that $1.2 billion debt was paid off faster than anyone could have originally imagined. Once that debt is fully repaid, the CBA calls for each season’s salary cap to be tied to revenue projections again, as it was in CBAs of the previous cap era.
So that means that until the debt is paid off, which the most reasonable projections say won’t be by the end of this season, next season will still be played under an artificially low salary cap. Picking up on the breadcrumb trail left by Bettman on Wednesday, who said that if removed, the cap would increase by about $4.5 million next season, it stands to reason that the salary cap could increase by 3 to $3.5 million without needing to increase next season’s six percent escrow cap. That’s why his comments, which would surely upset NHL players, were a bit of a red herring.
Bettman now knows that many owners want to see the salary cap on a significant upward trajectory now that between 85% and 95% of the debt has been paid off. He’s set up a win for them, a win for GMs, and a public win for Walsh and the players for not raising the escrow cap – as long as they don’t ask too many questions.
There are many ways to reach the end goal. Place your bets where you can, but if you’re a fan of a team that currently lives and dies with every nickel on the salary cap, Wednesday marked a day to be sure a fourth straight season of a flat cap will not come to pass.