The next NHL CBA has to endure plenty of legalese before it can be ratified, but a few of the document's major points broke Sunday. How will they affect the Penguins?
Just in time for Groundhog Day, the NHL will have its 2012 season after all.
The NHL and NHLPA announced a mutual framework for the next Collective Bargaining Agreement in the wee hours of Sunday morning. The announcement came after more than 16 hours of talks brokered by federal mediator and NHL Hall of Famer-to-be Scot Beckenbaugh and a weary corps of lawyers on either side of the lockout table found their eventual, merciful common ground.
Teams are preparing for a crash-course training camp ahead of an expected start to the season on January 15 or 19, the former possibly providing a 50-game schedule, the latter a 48-game ticket.
While the framework of the CBA has been agreed upon largely enough that the sides will allow their legal teams to iron out the details, a few of the deal's major points broke Sunday morning. The details are listed below, sourced from NBC's ProHockeyTalk blog.
How will the new CBA provisions affect the Penguins?
Salary Cap & Year-Two Cap Reduction
This was one of the most hotly contested issues in the process. In the days leading up to Sunday's settlement, the league reportedly wanted a second-year cap reduction to $60 million while the players sought a number closer to $65 million (the sides had previously agreed on an annual cap ceiling tied to 50-50 revenue share and a $70.2 million cap for this year).
In the end, the players may have won on this front partly because of owners who'd have to bend mightily to get their teams to a $60 million roster next fall. The number has been set at $64.3 million, the same number as the 2011-12 campaign.
For the Penguins, these numbers explain much of last summer. The Staal and Michalek deals have to be viewed, in part, as salary dumps made in anticipation of such a scenario. Pittsburgh's pursuit of Zach Parise seemed genuinely competitive, but outside of Parise they made little effort to sign even fringe talent at the forward position.
Pittsburgh seemed to know this reduction would be the case. As it stands, they'll be compliant with next year's cap, and maybe even without exercising their amnesty buyouts. In the short term, Shero has almost $10 million in cap space to play with at this season's trade deadline. That'll be the date to keep an eye on.
Contract Term Limits & Annual Salary Variance
The sides reportedly agreed on contract term limits, an issue that had plagued both owners' wallets and the PA's escrow system under the last agreement. Deals are to be limited to seven years for free agents, eight years for a team re-signing its own player to an extension.
Salary variance is another item aimed at torpedoing the front-loaded deals which undermined the last CBA. Under the variance terms, a player's deal may not drop below 50 percent of the value of its most-expensive season, nor can it vary by more than 35 percent in any year-to-year period.
This is one that might typically not affect the Penguins. Ray Shero has only awarded one "retirement contract" in his tenure (Crosby's no-brainer 12-year extension), but the team has a number of its own superstar contracts about to reach expiration.
It can be safely assumed that Evgeni Malkin will receive an 8-year extension, probably shortly after he becomes eligible to negotiate a new deal this June. His AAV may be even higher than Crosby's $8.7 million AAV deal due to the new term limits. In any case, the Penguins aren't letting him get away.
Where the term limits will be interesting is in the case of a player like Kris Letang, whose contract also expires after the 2013-14 year. Teams are going to have to account for what might have been a longer term under the old deal with a higher total value under the new one. Does that mean a player like Letang goes because of Malkin's assumed max deal? It could. It'll also take a season or two of free agency to see what the new rules do to the PA's middle class, where players may not have earned many years or maximum dollars under the old system.
This one's a little tougher to figure out. The revenue sharing pool under the old CBA called for $150 million annually—that number has jumped to $200 million per year, and will rise relative to annual league revenues.
Additionally, all clubs received a weighted amount of money under the old deal while not every team paid into it. That, also, is set to change.
Pittsburgh is somewhere in the middle of the big-market have and small-market have-not classes. They rank near the top of the league in franchise valuation ($288 million, 9th in NHL) and revenues ($120 million in 2012, according to Forbes), but have posted modest operating incomes in the past five years due to expenditures such as payments toward the construction of CONSOL Energy Center and consistently spending to or near to the salary cap ceiling.
The Penguins aren't likely to gain from the new revenue sharing pool, but if payments into the system are based on profits, and not revenues, they may prove to be one of the most laissez-faire clubs in the NHL going forward.
A big out for teams which will have to drop $6 million or more to be cap compliant in 2013, clubs may use two amnesty buyouts for players which weigh heavily on their books.
The buyouts begin this offseason and may be used before either of the next two seasons. Players reportedly may be bought out for two-thirds of the value of their contract. The money paid will count against the PA's share of HRR and will not be counted against an individual team's salary cap service.
Pittsburgh is already in great position cap-wise, having cleared $10 million annually with the trades of Jordan Staal and Zbynek Michalek. However, Paul Martin ($5 million per season for three more years) is an obvious candidate for buyout status.
Should the Penguins decide to spend on their currently-thin forward group and lean on their up-and-coming defense prospects as affordable alternatives to current players like Martin, they might exercise their buyouts after all.
As the roster stands now, it's hard to see the Penguins using their buyouts except as luxury measures. Ray Shero and Jason Botterill have this team nicely positioned to deal with the post-lockout salary cap.