Hockey fans everywhere had to be nervous about what the future holds for the game after Montreal Canadiens’ owner George Gillett was recently quoted as saying: “But it is still a very difficult business when you have your player payroll at 54 or 55 percent of your total revenue.”
If Gillett’s comments are an accurate reflection of what other owners think, then it is hard to be optimistic that a work stoppage can be avoided when the current CBA expires on Sept. 15, 2011 (the players have the right to extend the agreement by one year or terminate it two years early).
At the current pace of revenue growth, the players will be receiving almost exactly 57 percent of revenues in 2010-11 (the players were at 55.6 percent in 2006-07 and the percentage rises as league revenues do), which presumably would make it an even more difficult business for the owners.
On the other hand, Gillett himself appears to have things relatively easy compared to the majority of his colleagues. According to Forbes.com, the Montreal Canadiens had revenue of $109 million (U.S.) last season. With a 2006-07 payroll of approximately $42 million (U.S.), the Canadiens were spending only 38.5 percent of their revenue on player payroll.
That figure actually puts the Canadiens more in line with the average Major League Baseball team that spent, on average, 41 percent of its revenue on player payroll.
Does anyone else find it ironic that NHL players earn nearly 56 percent of its league’s revenues under what some have criticized as being a poor agreement for the players, while MLB players earn only 41 percent of its league’s revenues under an agreement generally perceived to be the most player-friendly in sports?
In any event, baseball is the outlier when it comes to the four major North American team sports. NBA and NFL players take home about 57 percent of their respective league’s revenues.
YOUNG AND WEALTHY There has been a recent trend for teams to lock up their top young players to long-term contracts at significant dollars. Among the players who recently signed contract extensions beginning next season are Ottawa’s Jason Spezza, Los Angeles’ Dustin Brown and Minnesota’s Brent Burns.
As such, there has been a significant shift in the demographics of the game’s highest paid players. In 2003-04, the last season prior to the lockout, there were 84 players who were compensated at $4 million or higher. Among those 86, only one (Joe Thornton) was 24 or younger as of January 1, 2004. Another 15 were between the ages of 25 and 29.
Now fast forward to the 2008-09 season. There are 86 players scheduled to make at least $4 million that season. Using ages as of January 1, 2009, there are six players aged 24 and younger in that salary bracket and another 24 who will be 25 to 29 years of age.
To summarize, in 2003-04 only 18.6 percent of the highest paid players were less than 30 years of age. For 2008-09 that number currently sits at 34.9 percent – nearly double the old rate.
The number of youngsters earning at least $4 million next season will grow even further once players such as Washington’s Alex Ovechkin and Calgary’s Dion Phaneuf sign extensions or new contracts next summer. Anaheim’s Ryan Getzlaf and Corey Perry, Nashville’s Shea Weber and Philadelphia’s Mike Richards are other players in the under-24 age group in line for significant raises.
CASE CLOSED Spezza, Brown and Burns are three players who would have had salary arbitration rights this coming summer had they not signed extensions.
Combined with the reduction in unrestricted free agency age to 27 this season, this recent trend of locking up young players will mean fewer salary arbitration filings in the summer of 2008 than normal.
After a record of 69 players filed in the summer of 2006, there were just 29 filings last summer (only seven cases made it to hearing). Don’t be surprised if that number drops to the low 20s this time around.
A quick glance around the league reveals the following players as strong candidates for salary arbitration: Florida’s Jay Bouwmeester, Toronto’s Matt Stajan, Nashville’s Martin Erat, St. Louis’ Brad Boyes, Chicago’s Patrick Sharp, Buffalo’s Paul Gaustad, Ottawa’s Antoine Vermette and Columbus’ Pascal Leclaire.
Salary arbitration hearings will be held in Toronto from July 21-August 4.
Rand Simon is an NHLPA certified agent. He has spent the past 14 years with Newport Sports Management Inc.