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.
$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?

Comments:

Interesting topic. And great Simpson's reference.
 


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 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'll bite. Saskin is a lawyer with 25 years of experience in the area. What do you bring to the table?

I think you can say he's the wrong man for a lot of reasons; qualifications aren't one of them.
 


OOH, look at Tyler stick up for the lawyer. Ooh, I'm a lawyer.
 


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.
 


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.

Now, this I can agree to. I didn't know you were a lawyer when you made that comment Peter - that's a threshold requirement for that position as far as I'm concerned. Experience with labour law would be a requirement as well. As it so happens, Saskin also has a ton of experience on the licensing side; IIRC, he was originally hired on contract with the NHLPA when he was at Goodman's and then eventually ended up going there full-time. Considering that NHLPA licensing revenues have exploded, he's at least got an argument that he's added significant value to the organization in the past.

As to the value he adds at this point in his career - I largely agree with you. Goodenow may well have had an argument but I don't think Saskin does, particularly with this CBA. I can't imagine what value he adds that's worth that kind of money or that someone else couldn't provide 90% of for 10 or 20% of the the cost. Then again, I don't think all that highly of the NHLPA or their work in protecting player's rights either. I think that things are going to blow up at some point and you'll see the NHLPA either disappear or be dramatically reformed, along with the players legal relations to ownership changing dramatically, likely towards something like the EPL.

You had to admit though, there's some kickass irony in the organization that brought you the $3.4MM contract for Roman Hamrlik (a man whose contributions could be easily replaced at 10% of the cose) also being reponsible for the $2.5MM contract for a guy whose contributions could be easily replaced at 10% of the cost.
 


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.
 


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.

Yeah, it's funny. It's not just Saskin though - the vast majority of agents are probably vastly overpaid for their actual contributions to player earnings. Anyone on commission...it's ridiculous. I believe that 3% or 4% is the standard take but think about Roloson's agent for a second. If he makes 3% he made $330K off that contract that Roloson just signed. That's more than some lawyers bill in a year's work. At $250 an hour - and you can get good lawyers for that, that would buy you 1320 hours of legal work.

How long did that contract take? All NHL contracts have to be in a standard form now so there's little to do there. Basically, he needs to read the market, offer good advice and handle negotiations. Wild.
 


Makes you wonder what Boras and Rosenhaus make, doesn't it?
 


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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