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Oops: Gary Bettman and the NHL guessed really wrong on last season’s revenue – Pension Plan Puppets

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5 years ago

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Today, Bob McKenzie revealed the share of escrow returned to players for the 2018-2019 season:

This story is always presented as one of escrow deductions, unhappy players and contracts that never pay out at face value. That’s just the effect, though; the cause is bad guessing by the league on future earnings. And the guess on the 2018-2019 revenue was a whopper of a bad one.

Here’s how the NHL works regarding the 50-50 split and the salary cap:

  1. Sometime in June, the NHL sets a cap for each team based on their estimate of expected revenue growth over the current year’s actual figures, which they have in draft form by the summer. The NHL year is July 1 to June 30.
  2. The NHLPA votes to inflate that salary cap by an amount up to 5%. The bigger the cap, the bigger the free agent signings, and this vote is usually a few weeks before July 1.
  3. The final cap number is announced and then, before the new season starts, an escrow % is agreed upon between the NHL and the NHLPA.
  4. Escrow comes off of every NHL players’ salary cheques for the entire season, and then it sits in a bank account, idling away, usually for almost a full calendar year.
  5. After June 30, the NHL teams have to report their Hockey Related Revenue (HRR), as outlined in the NHL CBA to the league. The league assembles all those figures, confirms the various teams are doing it accurately and correctly (glances at Detroit), and figures out the total HRR that was actually earned. This legitimately takes a lot of time. And the NHLPA has to sign off on all of this as well.
  6. The full HRR number is split 50-50, and if that 50% number is at or more than the salary cap projection, everyone is thrilled, and the players get all of their escrow back. Not only that, the owners have to top that up with some extra money. If the 50% number is less than the revenue estimate, only some of the escrow goes to the players with the rest going to the owners.
  7. A full year after the hockey season ends, everyone has in their hands their fair share of their earnings from that year.

The players haven’t received more than their escrow amount back in ten years, and they have actually received very little of it lately. Travis Yost covered this last summer, and included this chart:

For 2019, then, that number is just under 10%, according to McKenzie. Not as terrible as some years, but still a far cry from the more reasonable numbers pre-lockout. This means that the guess the NHL made on the 2018-2019 salary cap was overly optimistic.

That season saw the NHLPA draw back from applying a big inflator as they had previously. Once bitten, twice shy:

So this bad guess is almost entirely on the NHL itself. No one can ever accurately predict the future, as we have now all learned in the hardest way, but the NHL has been giving glowing predictions for years, and failing to meet them.

Commissioner Bettman said the League is projecting revenue growth to be between 7 percent and 8.5 percent from last season to this season.

”We’re having healthy growth,” Commissioner Bettman said.

Bettman said that in June 2018, but just three months into the 2018-2019 season, that was already understood to be overly optimistic:

It now seems that if they’d stuck with the 11.5% number, they would have just squeaked through without the players ending up owing back salary at the end of the season, but only just.

Players express their displeasure with this state of affairs by attacking escrow itself, not the revenue projections and the attendant poor growth in the NHL’s product that are the real culprits. Like most of us, they see the world through their own lens. GMs of wealthy teams chafe at the restrictions of the salary cap and want to spend, spend, spend. Fans want the cap abolished, and enthusiasts will tell you about luxury taxes for hours.

Everyone just handwaves away the reality that many NHL teams aren’t profitable with a salary cap, and could be totally nonviable without it. A reduced NHL makes less HRR, the cap goes down, the players make less, and teams struggle harder to pay for the players they want.

But underlying all of that is that Gary Bettman, in the Hockey Hall of Fame as a Builder, has been guessing wrong on how healthy the NHL’s growth is for a long time. No one is going to blame him for not foreseeing the asteroid that smashed a hole in the 2019-2020 HRR. Even if there is a resumption and a playoffs, the final accounting on this season won’t be pretty. But soon, the NHL’s job, in concert with the NHLPA, will be to guess about next year.

The ground they’re building from to make that guess has a big crater in it, and they have to largely disregard that. The other asteroid, the one labelled “severe economic recession”, hasn’t hit yet, but that will also make guessing next year’s revenue a difficult task.

Teams have players under multi-year contracts, and that entire system is built around the expectation that the salary cap won’t fall year over year. But what if it does? There’s a widespread, yet false belief that next year’s salary cap must be tied to this season’s real revenues. The reality is, the NHL will need to come up with a number that they have some legitimate hope of hitting, that won’t require an escrow of astronomical proportions, but will allow teams with a lot of salary already committed to keep operating successfully.

All the teams that make up the NHL need to be able to put the most exciting product on the ice next season they’ve ever produced. They need the biggest bounce-back year since that team came last, drafted first overall and made the playoffs the next season.

The NBC TV rights deal is up for renewal at the end of next season in the summer of 2021, and the NHL has been banking on that deal going way up. The expect the revenue jump to start a period of even healthier growth while the salary cap surges. So have individual players. All these short-term RFA deals happened last season for a reason. Their agents all expect the year after next to be the golden year with huge money for everyone and a big jump in the cap.

To get that golden year, the 2020-2021 season needs to be one where more goes right than goes wrong. If it doesn’t, the escrow bugbear will only get bigger in the players’ minds, and the next CBA might not appear quite as painlessly as it has seemed it might up until now.

No pressure, Gary, you just need to do a better job of setting the revenue projection and actually growing the NHL to achieve it than you’ve ever done before. Earn that spot in the Hall.

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Jays reliever Green and Canadian slugger O’Neill nominated for comeback player award

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9 hours ago

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October 21, 2024

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NEW YORK – Toronto Blue Jays reliever Chad Green and Canadian slugger Tyler O’Neill of the Boston Red Sox were named finalists for the Major League Baseball Players’ Association’s American League comeback player award on Monday.

Chicago White Sox left-hander Garrett Crochet was the other nominee.

New York Yankees outfielder Aaron Judge, Los Angeles Dodgers designated hitter Shohei Ohtani and Kansas City Royals shortstop Bobby Witt Jr. were named player of the year finalists.

The award winners, selected via player voting, will be named Saturday before Game 2 of the World Series.

Green, who missed most of the 2022 and ’23 seasons after undergoing Tommy John surgery, was a high-leverage option for the Blue Jays this past season and filled in at closer over the second half of the campaign.

The right-hander converted his first 16 save opportunities and finished the year with a 4-6 record, 17 saves and a 3.21 earned-run average over 53 appearances.

O’Neill, a native of Burnaby, B.C., also endured back-to-back injury-plagued seasons in ’22 and ’23.

After being traded to the Red Sox in the off-season, O’Neill set an MLB record by hitting a homer in his fifth straight Opening Day. He finished with 31 homers on the year and had an OPS of .847.

This report by The Canadian Press was first published Oct. 21, 2024.

The Canadian Press. All rights reserved.

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Duke’s Cooper Flagg makes preseason AP All-America team as ACC, Big 12, SEC each place 2 players

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11 hours ago

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October 21, 2024

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Alabama’s Mark Sears and North Carolina‘s RJ Davis looked into the possibility of leaving for the NBA before deciding to return for another college season.

Their decisions helped their teams earn top-10 rankings in the AP Top 25 and earned both players some preseason honors, too.

Sears was a near-unanimous selection for The Associated Press preseason All-America men’s basketball team released Monday, earning all but one vote from a 55-person national media panel. Davis was right behind him, nabbing 51 votes.

They were joined by Kansas big man Hunter Dickinson, Auburn forward Johni Broome, Arizona guard Caleb Love and Duke freshman Cooper Flagg. Love and Flagg tied for the final spot, creating a six-man team that includes only the ACC, Big 12 and SEC.

Alabama twin bill

Sears was a key cog in the Crimson Tide’s first trip to the Final Four a year ago, orchestrating one of college basketball’s highest-scoring teams.

The 6-foot-1 guard was named a second-team AP All-America after averaging 21.5 points, 4.2 rebounds and 4.0 assists. He was the first Division I player in 31 years to have 795 points, 150 rebounds, 145 assists and 95 three-pointers in a single season while breaking the Alabama single-season record with 26 games with at least 20 points.

Sears worked out for NBA scouts during the offseason before deciding to return to Alabama, earning the Crimson Tide a No. 2 ranking in the preseason AP Top 25.

“I saw the team that we had and I wanted to be a part of it, and bring home Alabama’s first national championship in basketball,” Sears said.

Across the state at rival Auburn, Broome made a quick decision about his future, announcing in April that he would be back for a fifth season.

The 6-10 forward was a third-team AP All-American last season after averaging 16.5 points and 8.5 rebounds while shooting nearly 55% from the floor. With an eye on an NBA future, Broome worked hard on his perimeter shooting during the offseason and his return earned Auburn a No. 11 preseason ranking.

“My main goal is a team goal, which is to win the national championship, to make it as far as I can in March Madness,” Broome said. “When a team shines, everyone shines individually.”

Along Tobacco Road

Like Sears, Davis has similar aspirations after opting to return for his fifth season at North Carolina.

The 6-foot guard was an AP All-American last season and the ACC player of the year after averaging 21.1 points, 3.6 rebounds and 3.5 assists on a team that reached the Sweet 16 of the NCAA Tournament. Davis enters this year within reach of former North Carolina big man Tyler Hansbrough’s all-time ACC scoring record.

“I know there’s more work to be done,” Davis said. “I know my jersey’s not going up until I leave. So there’s some more records to break and some more work to be done. I’m satisfied but I’m not satisfied, if that makes sense.”

Up the road at Duke, Flagg was the only underclassman on the preseason All-America team after arriving with tons of hype. The 6-9 swingman was the No. 1-rated high school recruit out of Newport, Maine and has been projected as the No. 1 overall pick in the NBA draft.

Flagg has the skills of a guard, but can also play inside and has worked hard on his perimeter shooting, giving him the potential to be one of college basketball’s most versatile players. He’s part of a stellar recruiting class that has No. 7 Duke eyeing a deep March run.

Big 12 duo

Dickinson was the biggest move in the transfer portal last spring after leaving Michigan for Kansas. The 7-2 center lived up to the billing, averaging 17.9 points and 10.9 rebounds while leading the Jayhawks back to the NCAA Tournament.

With Dickinson’s return and an influx of talented transfers, Kansas is ranked No. 1 going into the season that begins Nov. 4.

Love’s decision to return for a second season at No. 10 Arizona has ratcheted up expectations in the desert for the Big 12 rival of Kansas.

The athletic 6-4 guard had a high-scoring career at North Carolina and continued it after transferring to Arizona last season. He was the Pac-12 player of the year and a third-team All-American after averaging 18 points per game and making 92 3-pointers.

Love tested the NBA waters this summer before deciding to return.

“He’s had a very successful college career thus far,” Arizona coach Tommy Lloyd said. “He’s kind of this last generation of player that’s going to get better with this extra year, and so I just encourage him to take advantage of it.”

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Browns QB Deshaun Watson ruptured his Achilles tendon and is out for the season, AP source says

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11 hours ago

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October 21, 2024

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CLEVELAND (AP) — Browns quarterback Deshaun Watson will miss the rest of Cleveland‘s season after rupturing his right Achilles tendon on Sunday against Cincinnati, a person familiar with the situation told The Associated Press on Monday.

Watson was injured on a non-contact play in the second quarter of Cleveland’s 21-14 loss to the Bengals.

Watson will soon undergo surgery, said the person who spoke on condition of anonymity because the team has not announced the results of imaging tests taken on his leg.

It’s the second significant injury in two seasons for Watson, who broke the glenoid (socket) bone in his throwing shoulder last year.

The 29-year-old Watson went down without being touched on a draw play late in the first half. His right leg buckled and Watson collapsed to the turf. TV replays showed his calf rippling, consistent with an Achilles injury.

As he laid on the ground, there was cheering by some Cleveland fans, leading to some of Watson’s teammates criticizing that behavior during the team’s fifth straight loss.

The injury is yet another twist in Watson’s divisive stay with the Browns.

Cleveland traded three first-round draft picks to Houston and signed him to a fully guaranteed $230 million in 2022. The deal came amid Watson being accused by more than two dozen women of sexual assault and harassment during massage therapy sessions. He settled civil lawsuits in all but one of those cases.

Watson was suspended by the NFL for his first 11 games with the Browns and then made just six starts last season before hurting his shoulder.

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AP NFL:

The Canadian Press. All rights reserved.

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