Why NHL players deferring final paychecks might be a good thing

NHL players did not receive their final paychecks of the season and they might not ever get them. But if you're hoping for long-term labor peace between the NHL and NHL Players' Association, that might not be a bad thing.

NHL players were slated to receive their last paychecks of the season April 15, but elected to have them put on hold for a month amid the uncertainty surrounding COVID-19. The NHL Players' Association executive board is voting this weekend on whether or not to extend the deadline further and the feeling is they will kick that particular can down the road again. There are a couple of reasons for this. First, there still isn’t enough clarity on whether or not the league will be able to reconvene this season. Second, and perhaps more importantly, this is part of a much bigger picture that could affect the next collective bargaining agreement between the two sides.

And the fact that it has been deferred once again is actually a good sign, I’m told, because it means there is still healthy dialogue between the two sides.

Here’s where the picture stands according to several people who know the economics of the inner workings of the NHL much better than your trusty correspondent:

* The unpaid final paychecks account for a total of about $120 million.

* In determining the salary cap for this season, the league and the players estimated total revenues to be about $5 billion for 2019-20. With about 85 percent of the regular-season games having been played, the league has collected about $3.9 billion. That leaves the league with a $1.1 billion shortfall, basically $550 million for the owners and the same amount for the players.

* The league believes it can recoup between $400 million and $450 million by playing the playoffs to their completion. That is based largely on TV money and sponsorship. The TV money would come from a revenue-sharing agreement the league and its broadcast partners have when it comes to the playoffs. And the thinking is that if the league were to play games this summer with less competition for eyeballs and an enormous appetite for live sports, that amount would be substantial.

* So let’s stay on the conservative side and say it’s $400 million. Split that equally between the players and the owners and the shortfall is now $350 million per side. If the players were to decline the final paycheck, that would take the total down to about $230 million, which could be spread over a number of seasons. By giving that money back, the players would lessen the financial burden on players who aren’t yet in the league, which makes sense since they shouldn’t be penalized for something that was completely out of their control.

Now, here’s where the CBA talks come in. You’ll remember that both the owners and the players had an option to opt out of the current agreement, but both sides declined, which now means it is set to expire after the 2020-21 season. That doesn’t mean that the two sides can’t continue negotiating a new deal now. In fact, that’s exactly what they’re doing. The COVID-19 pause has changed the landscape and will almost certainly be part of the future negotiations.

It’s pretty likely the shortfall in revenues from this season will become a bargaining chip. The players could propose that the owners eat the large portion of that in exchange for a long-term labor peace. What the owners and commissioner Gary Bettman want is a new agreement that would take effect next season instead of waiting for the CBA to run out in two years. It might be worth the league’s while to consider it, since it is flush with expansion money from Vegas and will be getting more from Seattle that it has not had to share with the players. The total comes to $1.15 billion, $500 million from Vegas and $650 million from Seattle.

If no progress were being made in these talks, the players almost certainly would have elected to collect that last paycheck. So not doing so indicates the two sides are communicating and on good terms, which is good news to anyone who doesn’t want to see any labor disruptions in two years. And the owners can look at it this way. Their wealth is not nearly as dependent on year-by-year profits and losses. Their franchise values appreciate over the years and they can often make that money back when they sell. Many players are the opposite. The money they lose is gone forever and for many of them, there is no appreciation of their franchise. They are, by their very nature, depreciating assets. The young players will get better contracts in future years, particularly stars coming out of entry-level deals, but after their mid-20s, their ability to make more money starts to dwindle.

So, there are a lot of moving parts here. And the fact that the players could elect to keep their final paychecks on hold is a sign that there are much bigger things at play.

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