The National Hockey League (NHL or League) has officially begun its new season. As pucks dropped across the NHL Saturday night, a new collective bargaining agreement (CBA) was in effect. Negotiating the agreement led to a lockout which lasted more than one hundred days[1] and had far reaching costs (as discussed here). Much of the previous CBA will remain unchanged, however, there have been some important changes made to certain aspects of the relationship between the League and the National Hockey League Players Association (NHLPA or Union). These changes are highlighted below.
The new CBA is a ten-year agreement[2], making it the longest agreement to be signed between the League and the Union[3]. Each side has a right to terminate the agreement in 2019[4].
Two of the central sticking points during negotiations – the division of hockey-related revenue and a pension plan for players – were resolved through the new agreement[5]. Under the previous CBA hockey-related revenue (HRR) was divided with a slight advantage for the players, who received 57%[6]. The new agreement splits HRR evenly between the players and the League[7]. Additionally, a defined benefit pension plan will be created[8]. A defined benefit plan is one that provides recipients with retirement benefits for the remainder of their lives[9].
Along with a new split in HRR, the agreement creates a new structure for revenue sharing, including the creation of a Revenue Sharing Oversight Committee (the Committee)[10]. The revenue sharing pool will equal 6.055% of HRR per year and will obtain half of its funds from the ten teams that have the highest gross revenue[11]. The remainder of the funds will be made up of money from league revenue and gate receipts for playoff games[12]. The Committee will control the revenue sharing program and will exercise oversight authority over any team that generates less than 75% of the league average in gate revenues[13]. The new agreement also creates an Industry Growth Fund (the Fund) which will provide assistance to any team that is struggling with generating revenue[14].
Individual player contracts (called Specific Player Contracts or SPCs) will remain the same for the remainder of the 2012-13 season, despite the shortened season[15]. After the end of this season, any player contract that provides for a lower salary for any given season that is lower than the minimum salary for that season will be adjusted so that the player receives the minimum[16]. The minimum salary begins at $525,000 and increases to $550,000 for next season[17]. After that, it increases by an additional $25,000 every two years until it jumps by $75,000 between the 2016-17 and 2017-18 seasons[18]. It then increases by $50,000 every other year until the end of the contract[19]. After four seasons players will be eligible for salary arbitration under the system that existed in the previous CBA[20]. The existing system of free agency is also carried over to the new agreement, meaning after seven seasons or at the age of 27 players become free agents and are able to talk to any team[21].
In addition to minimum salaries for individual players, the new CBA creates payroll ranges for the teams[22]. The upper limit, midpoint, and lower limit are set for the first two seasons, after which the three amounts are set through a formula[23].
The new CBA divides the discussion of discipline into two distinct sections – on-ice discipline and off-ice discipline[24]. The amount of fines that may be levied against a player for on-ice infractions is increased[25]. Further, the new agreement provides for an appeals process players can access if they are subject to discipline[26]. The first step in appealing on-ice discipline is going to the Commissioner; in certain cases, there may be an additional right to have an appeal heard by a neutral arbitrator[27]. There are a number of reasons a player may be disciplined for off-ice conduct, including participating in conduct that can ultimately harm the game of hockey[28]. In such a case a player may be subject to a range of penalties, from suspension to paying a fine to the nullification of the player’s contract[29]. If a player wishes to appeal discipline for off-ice conduct, the appeal goes directly to a neutral arbitrator[30]. The standard of review for all disciplinary appeals is substantial evidence[31]
The final major area covered by the new CBA is health and safety concerns. The agreement begins by tackling substance abuse through a review of the Substance Abuse and Behavioral Health Program (the Program)[32]. A player who tests positive for drugs at “dangerous levels” must be referred to the program; the agreement sets a deadline by which the Program must create a definition of “dangerous levels[33].” The list of banned substances is expanded and the testing program is expanded[34]. Additionally, the parties commit to a study of HGH testing[35], something that has been controversial in many professional sports. Players will now be subject to four types of testing: testing during training camp, “team testing” during the regular season, random individual testing (which can occur at any point, including during the off-season), and testing based on reasonable belief the player is using a banned substance[36]. In order for the final type of testing to be utilized, probable cause must exist[37]. Importantly, a player who refuses to comply with drug testing is seen as having tested positive[38]. The strict liability provisions found in the old CBA remain in effect but the new agreement changes the defenses available to players who test positive[39].
The new CBA creates an Owner-Player Relations Committee which will meet at least twice each year to discuss a multitude of issues that affect both parties and the game of hockey as a whole[40]. Given the difficulty the two parties seemed to have during the most recent negotiations and lockout, this type of committee will hopefully help to foster a better working relationship between the League and the Union.
The remainder of the changes deal with issues like how a team may conduct fitness testing, how long training camps may last, the number of days off players get during the season, the amount of insurance coverage players and their families are eligible to receive, and other playing conditions[41].
The new CBA between the NHL and the NHLPA alters some significant portions of the relationship between the parties. It is a document of compromise. The players lost 7% of the HRR they received under the old agreement and the owners had to agree to the creation of a defined benefit pension plan. However, each side received in return something that was important to it. It will be interesting to see how some of the open-ended issues are resolved (i.e.: testing for HGH) and how the new provisions end up impacting the game.
[1] Katie Strang, NHL, union have tentative agreement, ESPN, January 8, 2013, available at http://www.espn.go.com/nhl/story/_/id/8817955/nhl-nhlpa-reach-tentative-agreement.
[2] NHLPA, Summary of Terms, January 10, 2013, available at http://www.cdn.agilitycms.com/nhlpacom/PDF/Summary-of-Terms-1-10-13.pdf.
[3] NHLPA Staff, NHL, NHLPA Sign Collective Bargaining Agreement, Press Release, January 12, 2013, available at http://www.nhlpa.com/news/nhl-nhlpa-sign-collective-bargaining-agreement.
[4] NHLPA, Summary of Terms, supra at note 2.
[5] Rick Baert, NHL players score new defined benefit plan, Pensions & Investments, January 21, 2013, available at http://www.pionline.com/article/20130121/PRINTSUB/301219982/nhl-players-score-new-defined-benefit-plan.
[6] Steve Zipay, NHL, players reach tentative deal; ratification would end lockout, Newsday, January 6, 2013, available at http://www.newsday.com/sports/hockey/nhl-players-reach-tentative-deal-ratification-would-end-lockout-1.4412276.
[7] NHLPA, Summary of Terms, supra at note 2.
[9] Colleen E. Medill, Introduction to Employee Benefits Law: Policy and Practice (2011).
[10] NHLPA, Summary of Terms, supra at note 2.
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