Thursday, July 20, 2006
Incentives Matter Dept.
"We've tried to do what's right for the 700 guys and put our association in the right direction." -- Trevor Linden
With arbitration hearings starting today for ~47 players, I thought I'd bore you all by pointing out that the interests of the majority of NHLPA members would be best served if the players lost every single ruling.
I've gone over this before, but since total player compensation is fixed by the CBA, every dollar from any individual contract comes straight off the bottom line of every other player. More for the other guy means less for you, period. This is from Article 12 (Arbitration) of the CBA:
Participation at the Hearings.
A player shall be represented at the Hearing by the NHLPA unless the NHLPA chooses to delegate its authority in whole or in part, with the Player's consent, to the Player's Representative.
So for the next week, the NHLPA is in a position where it is supposed to advocate for the financial interest of a small minority of its members at the direct expense of a large majority of its members. If you're Daniel Briere, you gotta be feeling great right now, no?
The wording of that clause certainly suggests that it's up to the union, not the player, whether the player's interest is represented by his own personal agent. I don't know how it works in practice, but if I'm (say) Joffrey Lupul, I'm doing whatever I can to ensure that my agent is in that room, since he actually has a financial incentive to win.
APPENDIX:
It's tempting to sort of shrug at this; I'm not trying or expecting to elicit outrage (ooooh, if Ladislav Nagy wins his case, that's one less ivory back-scratcher for Alexei Yashin). But I'll take a quick run at the financial implications for, as a random example, new NHLPA Executive Committee member Wade Redden.
- Total player compensation will be ~$1.2B, which is ~54% of ~$2.2B in NHL revenues
- Redden makes $6.5M, which is ~(1/185th) of total player compensation, i.e. for every $185 in player compensation given to someone else, Redden pays $1.
- I count 43 players remaining on the arbitration list. There's not too many elite guys; I'm guessing for most of them, the difference between what they're requesting and what the club is offering is about ~$500k. For the bigger names (Briere, Hemsky, Nagy, etc.) that difference might be closer to $1M. I'm just going to flat out guess that the avg. difference is $600k
- In other words, the grand total difference between asked and offered for the 43 players is about $25.8M.
- So, if every player won their case, the amount surrendered by Wade Redden would be:
$25.8M x (1/185) = $140,000
You can scale that figure up and down for every other player under contract in the league.
The one saving grace for players headed into arbitration hearings is that the NHLPA does have one major incentive to perform well, and that's self-preservation. If the PA is not perceived by individual players as committed advocates on their behalf, then the rumbles will really start to grow about exactly what it is they're good for anyway. Negotiating a % once every few years? Administering a retirement plan?
# posted by Matt @ 11:39 am 
Comments:
Great post Matt. An even more interesting perspective would be to look at how much in relative % some of the UFA signings have taken. i.e. if there were a cap reduction at some point -- Zdeno Chara now has an even greater %tge of the overall salaries.
You make a good point about what the arbitration might cost Wade Redden. How much has Wade Redden cost others?
This is bang on.
In the last month we've heard a bunch about the crazy contracts going out there. But I feel every crazy contract now has a built in premium because the agents/players know they will have to give some back. If every team spent to the cap, every player would be giving a lot back.
The mathematics of the new CBA are such that it really is dumb to pay the head of your association $2.5 million American dollars to do what he does. I am sure I am more than qualified to perform that same function. And, I'm just throwing this out there, but I'm prepared to do it for, say, 10% of what they are paying the guy who is doing it now. And I'll pay my assistant out of my own salary, too. Pretty sweet deal, if you ask me ....
I think Peter & Tyler are probably both right to some extent. What is the NHLPA's role between now and the next CBA? Or more pointedly, what are some examples of things Ted Saskin might do until then that could benefit the membership as a whole, not just shuffle money around amongst the membership?
The one thing I can think of is to fight the league/clubs (if applicable) regarding certain Revenues that the League does not consider Hockey-Related but that the PA thinks should be. That said, that portion of the CBA isn't exactly fuzzy; it looks like the lawyers really did their job beforehand in identifying what does and does not qualify as HRR.
Is there anything else? Tyler?
pfff. Whatever. I only have 20 years at the bar so I guess Ted deserves ten times what I'd do it for.
It's not about qualifications, I'm sure Ted has lots of them. It's about what the value of his contribution is.
The lawyers who got gigs being the leaders of players' associations have some of the richest gigs in lawyerdom. I'm not sure any of them truly earn those paycheques.
I only have 20 years at the bar
Just to clarify, which bar did you mean? I have about 13 years at the bar, but I'm not a lawyer.
More than 20 at that bar ...
A guy like Saskin does not do much lawyering anyway. His function is really managing and educating a large group of fairly unsophisticated guys. He's more manager than lawyer (though I think he needs to know his way around a contract. But only one conteract, really). The tough legal stuff is contracted out.
I think his salary raises the question of what is the value of work. I'm not sure any lawyer in the world is worth 2 grand an hour (US) plus benefits, but maybe I'm just jealous.
That was my point in a roundabout sort of way. Elite professional athletes have unique skills that can command a high income (though we can argue about the value of many of them).
But a guy like Ted Saskin has a skill set which is not particularly unique and can be replaced. Union leaders in other employment sectors managing much larger groups make a fraction of what he makes.
Goodenow did make a big difference on player salaries, and maybe earned a big fat fee for that, though you could argue that player salaries were unfairly depressed in the Eagleson time period and lots of other guys could have done what Bob did.
Interesting discussion. I do know that a couple of football players (I think one of them is Peyton Manning) pay their agents a flat hourly fee for just that reason. If the contract isn't that difficult to negotiate, why pay them a percentage? After all, it isn't as though it takes that much longer to write down a bigger contract number.
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Great post Matt. An even more interesting perspective would be to look at how much in relative % some of the UFA signings have taken. i.e. if there were a cap reduction at some point -- Zdeno Chara now has an even greater %tge of the overall salaries.
You make a good point about what the arbitration might cost Wade Redden. How much has Wade Redden cost others?
# posted by 
: July 20, 2006 1:34 pm
: July 20, 2006 1:34 pm This is bang on.
In the last month we've heard a bunch about the crazy contracts going out there. But I feel every crazy contract now has a built in premium because the agents/players know they will have to give some back. If every team spent to the cap, every player would be giving a lot back.
The mathematics of the new CBA are such that it really is dumb to pay the head of your association $2.5 million American dollars to do what he does. I am sure I am more than qualified to perform that same function. And, I'm just throwing this out there, but I'm prepared to do it for, say, 10% of what they are paying the guy who is doing it now. And I'll pay my assistant out of my own salary, too. Pretty sweet deal, if you ask me ....
# posted by : July 20, 2006 1:40 pm
: July 20, 2006 1:40 pm I think Peter & Tyler are probably both right to some extent. What is the NHLPA's role between now and the next CBA? Or more pointedly, what are some examples of things Ted Saskin might do until then that could benefit the membership as a whole, not just shuffle money around amongst the membership?
The one thing I can think of is to fight the league/clubs (if applicable) regarding certain Revenues that the League does not consider Hockey-Related but that the PA thinks should be. That said, that portion of the CBA isn't exactly fuzzy; it looks like the lawyers really did their job beforehand in identifying what does and does not qualify as HRR.
Is there anything else? Tyler?
pfff. Whatever. I only have 20 years at the bar so I guess Ted deserves ten times what I'd do it for.
It's not about qualifications, I'm sure Ted has lots of them. It's about what the value of his contribution is.
The lawyers who got gigs being the leaders of players' associations have some of the richest gigs in lawyerdom. I'm not sure any of them truly earn those paycheques.
# posted by : July 20, 2006 3:24 pm
: July 20, 2006 3:24 pm I only have 20 years at the bar
Just to clarify, which bar did you mean? I have about 13 years at the bar, but I'm not a lawyer.
More than 20 at that bar ...
A guy like Saskin does not do much lawyering anyway. His function is really managing and educating a large group of fairly unsophisticated guys. He's more manager than lawyer (though I think he needs to know his way around a contract. But only one conteract, really). The tough legal stuff is contracted out.
I think his salary raises the question of what is the value of work. I'm not sure any lawyer in the world is worth 2 grand an hour (US) plus benefits, but maybe I'm just jealous.
# posted by : July 20, 2006 3:43 pm
: July 20, 2006 3:43 pm That was my point in a roundabout sort of way. Elite professional athletes have unique skills that can command a high income (though we can argue about the value of many of them).
But a guy like Ted Saskin has a skill set which is not particularly unique and can be replaced. Union leaders in other employment sectors managing much larger groups make a fraction of what he makes.
Goodenow did make a big difference on player salaries, and maybe earned a big fat fee for that, though you could argue that player salaries were unfairly depressed in the Eagleson time period and lots of other guys could have done what Bob did.
# posted by : July 20, 2006 4:09 pm
: July 20, 2006 4:09 pm Interesting discussion. I do know that a couple of football players (I think one of them is Peyton Manning) pay their agents a flat hourly fee for just that reason. If the contract isn't that difficult to negotiate, why pay them a percentage? After all, it isn't as though it takes that much longer to write down a bigger contract number.
# posted by : July 20, 2006 7:02 pm
: July 20, 2006 7:02 pm Post a Comment
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