How the new NHL, NHLPA deal affects the Golden Knights going forward

By Justin Emerson

Wednesday, July 8, 2020 | 2 a.m.

Finalizing the return-to-play procedures hasn’t been the only major occurrence in the NHL over the last week.

The league and the NHL Players Association also hammered out a tentative collective-bargaining-agreement extension, setting the highest level of professional hockey on a path to its longest stretch of uninterrupted labor peace in more than three decades.

The extension of the CBA, which runs through the 2025-2026 season, clarifies the salary cap, sends NHL players to the Olympics, raises the minimum salary and gives cost certainty to escrow withholdings.

Some details have been announced, while others are still being reported.

The two sides have officially agreed to a memorandum of understanding, but it must be ratified by the full players’ union and NHL Board of Governors. That’s expected to happen later this week.

The league had never gone more than 10 years without a lockout since the first players’ strike in 1992. The last lockout, which was in 2012-13 and shortened the season to 48 games, was the fourth work stoppage since the NHLPA’s inception. The big one was in 2004-05, a lockout that wiped out the whole season and established the salary cap.

There’s an obvious caveat that this is all tentative, and the pandemic could still alter anything the league and union have planned. The NHL announced on Monday that it was aware of 35 players testing positive for coronavirus last month.

Still, agreeing to a new CBA without a lockdown should be a celebratory occasion for the NHL. It may not alter the sport’s landscape like the 2005 CBA, but TSN has reported the key points with much still to be announced.

Find a rundown of the details, and how they affect the Golden Knights, below.

Return to play

First and foremost, the league and the union came to an agreement on specific dates for the restart, announcing the schedule on Monday.

Games are scheduled to resume on or about Aug. 1 in the two hub cities selected for the postseason. Multiple reports have pegged those sites as Edmonton and Toronto, split geographically by conference, and therefore sending the Golden Knights to the former.

Those cities will host the qualifying rounds, round-robin and first and second rounds. The Eastern Conference finalists will reportedly head to Edmonton once the postseason is down to four teams.

The conference finals and Stanley Cup Final will reportedly be played in Edmonton, finishing in early October.

Teams are currently participating in optional, small-group workouts at team facilities. Mandatory training camps will begin on Monday, July 13, with teams reporting to their hubs on July 26.

The NHL will complete its draft lottery on Aug. 10 after a previous draw awarded the top overall pick to one of the eight teams that lose in the first round.

The draft will be held in mid-October, with free agency beginning on Nov. 1.

Escrow withholdings

There’s a lot to unpack in the new CBA, and perhaps most important for the players is a cap on escrow.

Escrow is a term thrown around a lot, but to explain it in layman’s terms, the CBA requires a 50-50 split of “hockey-related revenue” between the owners and players.

The contracts of players have a set value so they know how much is coming their way. Cash flow to owners is dependent on a number of things, and one of the biggest is revenue from ticket sales.

To ensure that players and owners collectively receive the same amount of money, part of the players’ paychecks are withheld into an escrow account. At the end of the year, the hockey-related revenue is totaled and divided between the players and owners, using the money in escrow to balance the scales.

Some but not all of the players’ withholdings are often returned while the owners pocket the rest.

But what happens with the pandemic forcing fans away from games and spending money on hockey? Revenue could take as much as a billion-dollar hit that takes years to recover from, and therein lies the problem.

Players feared they could face up to 30 percent withholding for escrow with some revenue projections looking stark for the next few years. Taking a one-third pay cut was a cause for concern.

The CBA could assuage some of the panic as it caps escrow at 20 percent next season with a sliding scale over the life of the deal. In 2021-2022, escrow will fall between 14-18 percent, then 10 percent the next year and 6 percent in the final three years.

Mark Stone ($8 million salary in 2020-2021), Max Pacioretty ($7 million) and Marc-Andre Fleury ($6.5) will each have more than $1 million pulled from their paychecks over the course of next season with no guarantee they’ll get it back.

While players have some certainty about what their paychecks will look like, it’s possible or even likely that revenue will drop next season as the residual effects of the pandemic permeate through the sport. That could affect the biggest portion of the CBA for fans — the salary cap.

Salary cap

The salary cap is tied to revenue in a similar and opposite function as escrow withholdings: If the NHL is making a lot of money, the amount spent on player salaries also increases. If revenues stagnate as expected over the next year, that means the cap is unlikely to rise.

It won’t fall either, though. The new CBA ensures as much.

The agreement mandates that the cap will remain flat next season at $81.5 million. It will be the first time in a non-lockout affected year that the cap will not rise since 2009-2010.

The figure will remain there until hockey-related revenue reaches $4.8 billion, which was the projected number for this season before the pandemic.

The cap rises every year under normal circumstances — traditionally by about 3 percent — with owners and general managers planning on the increase while building their rosters for the long term.

The Golden Knights project to have $5.575 million in cap space with 17 players under contract for next season, according to CapFriendly. They need to work out new contracts for restricted free-agent forwards Chandler Stephenson and Nick Cousins, while forward Tomas Nosek, defensemen Jon Merrill and Deryk Engelland, and goalie Robin Lehner are all unrestricted free agents.

The cap wasn’t going to go up much anyway, but even a 2 percent bump, which has happened every year since the last lockout, would have meant an additional $1.6 million for general manager Kelly McCrimmon to play with. That could be the difference between keeping a player or letting him go.

Olympics

Part of the CBA ensures Olympic participation for the players in Beijing in 2022 and Milan in 2026, something they’ve long wanted. NHL players last participated in the Sochi Olympics in 2014, but disputes over travel costs, insurance, stopping the season and more prevented them from going to PyeongChang in 2018.

In the past, when NHL players attended the Olympics, which are held during the NHL season, there was no All-Star Game or bye week and instead the league paused the season so players could participate. It’s something the NHL doesn’t prefer for many reasons, most notably the facts that there’s no revenue for the league and players can get hurt.