The 2019-20 NHL Season came to close on September 28, when the Tampa Bay Lightning hoisted the Stanley Cup. Almost immediately after the game ended, the question on many hockey fans’ minds was “When will the 2020-21 season start?”
Initially, the plan was for the 2020-21 season to start on January 1, but as labor talks, number of games, international policies, and much more have left both the league and the player’s association (NHLPA) out in the cold. TSN’s Frank Seravalli reported Friday that the league is now planning to start the next season in abbreviated fashion in mid-January, with training camps set to start on January 1 or 2.
Here, we’ll take a look at what has caused the delays in returning to play, and the likelihood of a January return to play.
Less Money, More Problems
Easily the biggest hindrance in returning to play is determining the revenue split between the players and owners. This may be the most boring issue for hockey fans regarding return to play, but it is also the most important point of the conversation. I’ll try to keep this as brief as possible, but background information is critical to understanding the current situation.
The ongoing COVID-19 pandemic is preventing fans from attending games in-person, which hits the owners’ and players’ pocketbooks alike. According to Forbes and the Seattle Times, approximately 75% of NHL revenue comes from ticket sales and game-day affiliated merchandising and concessions. It is unclear whether stadiums will be allowed to have fans in the building in any capacity during the upcoming season.
Complicating matters further is the use of escrow to ensure a 50-50 revenue split between the players and owners, as laid out in the Collective Bargaining Agreement (CBA) between the NHL and NHLPA. Without getting overly technical, a percentage of players’ salaries are withheld each season in escrow until revenue numbers are finalized, which also correlates to the league salary cap for the following season. If the total salary payout to the players equates to more than 50% of revenue, the players return some of their salary to the owners from the money in escrow. If player salaries equate to less than 50% of revenue, which is exceptionally rare, money from escrow is returned to the players to fill their contract values, then back to the owners to complete the split.
For salary cap purposes, player contracts are based on the Average Annual Value (AAV) of their contracts. Depending on the contract, a player’s take home pay can be higher or lower than their AAV. For example, in the upcoming season, Washington Capitals forward T.J. Oshie* has a cap hit of $5.75 million. However, his actual salary for the upcoming season is $4.5 million. Oshie’s teammate Nicklas Backstrom has a cap hit of $9.2 million, but Backstrom’s actual salary is $12 million. Because player salaries often exceed the salary cap, all players pay a percentage of their salary into escrow, ensuring the 50-50 revenue split at the end of the season.
When the NHL and NHLPA agreed to return to play to complete the 2019-20 season, the players made concessions in a Memorandum of Understanding (MOU) to the CBA including agreeing to pay 20% of their salaries into escrow for 2020-21 (up from 12.5% in 2018-19), and to defer 10% of their contracts for 2020-21, which would be returned incrementally between 2022 and 2025, with more favorable escrow withholding rates throughout those years. They also agreed to flat salary cap until revenue reaches $4.8 billion. The flat cap means future free agents won’t see the same lucrative contacts as we’ve seen in recent years.
Earlier this week, commissioner Gary Bettman sent shockwaves throughout the hockey world by saying the assumptions the league made this summer while establishing pandemic/return to play guidelines were “not applicable anymore,” and that the “players owe us more than anyone imagined.” Bettman also reiterated that the league is “not attempting to renegotiate” the already-agreed-upon terms of the MOU. However, realizing the massive revenue cuts the league will face this season, both from the lack of game-day revenue and the shortened season, the NHL asked players to defer even more of their salary than before, and have threatened a cancellation of the season if terms are not met.
Players are already planning to play at 72% of the contract values for the upcoming season. According to Allan Walsh of Octagon Hockey, these additional concessions could be as much as $300 million from the players, and the league could invoke Force Majeure if their terms are not met as grounds to cancel the season.
The saving grace for the players may be a clause in the CBA which prevents the owners/league from issuing a lockout and canceling the season. Article 7.1(b) states “Neither the League nor any Club shall engage in a lockout during the term of this Agreement.” If the NHL were to lockout the players, they would be in direct violation of the CBA, and could open themselves up to legal complications which would reach far beyond the end of the pandemic. It’s highly unlikely the NHL goes this route, but if the league did claim Force Majeure, the legal battles which would occur as a result would be devastating to the future of professional hockey.
Additionally, there will be a slight increase to revenue as the Seattle Kraken enter the league. The Kraken are paying a $650 million expansion fee, along with a $10 million application fee. While all of that is considered “Hockey-Related Revenue” and is eligible for revenue splitting, that amount will only provide a modest buffer to the rest of the lost revenue.
What Would the Shortened Season Look Like?
Assuming labor issues are resolved in time, the NHL submitted a proposal to the NHLPA for a 52- to 56-game season, beginning in mid-January. These talks are believed to be completely outside the realm of any labor talks. For the revenue-related reasons listed above, the more games played, the better.
According to TSN, the seven teams who were not involved in the NHL’s 24-team return to play “bubbles,” would have the option to start their training camps one week earlier in late December. The Detroit Red Wings, Ottawa Senators, San Jose Sharks, Los Angeles Kings, Anaheim Ducks, Buffalo Sabres, and New Jersey Devils have not played since March 12, when the league paused the season during the first wave of the pandemic.
Both the league and the players want the season to end by July so the 2021-22 season could be a full 82 games and start in early October, as they did pre-pandemic. Additionally, as part of the MOU, NHL players can participate in the 2022 Winter Olympics in Beijing, after participation was not allowed for the 2018 Olympics in PyeongChang. Avoiding delays and shutdowns to the season is paramount for Olympic participation.
There hasn’t been an announcement of “bubble cities” being used again for a return to play, so for now, teams can plan to play in their home arenas. However, that could change, and playoff bubbles would likely be used once again, should the season get that far.
Don’t be surprised if teams also look into playing games in outdoor venues for a chance to increase fan capacities. Because the coronavirus doesn’t spread as easily outdoors, hosting outdoor games could also allow teams to recoup some of the lost revenue. It is unclear whether the use of outdoor venues is something that will need to be decided before returning to the ice, but it has been reported the Boston Bruins, Ducks, Kings, and Pittsburgh Penguins have all explored the option.
The Canadian Conference?
Since the pandemic started, the U.S.-Canada border has remained closed to all non-essential travel. Unfortunately, this would include NHL travel for the foreseeable future. If the border remains closed, Canadian teams would only be able to play each other, which provides scheduling and playoff scenario nightmares.
ESPN’s Greg Wyshynski reported on what the proposed realignment might look like here:
— Greg Wyshynski (@wyshynski) November 19, 2020
While the Canadian rivalries remain intact, some prominent NHL rivalries, such as Flyers-Penguins, Blackhawks-Wild, Maple Leafs-Sabres, and more, would temporarily disappear with the restructure.
Again, the NHL has not announced a firm division realignment for the 2020-21 season, and Wyshynski’s realignment is purely hypothetical at this point. That said, if the league goes forward with a mid-January start date, we should expect an announcement within the next week or two. The clock is ticking, and with each passing day, the number of potential games decreases.
* Salary information sourced from capfriendly.com.