Over the next two commentaries I'll cover the NHL's lockout from two perspectives: 1) The NHL's outlook if the league adopts a NHLPA-driven solution 2) The state of the league if the owners have their way.

Let's start with a look at what the league would look like if the NHLPA wins.

At its simplest level the NHLPA is looking to renegotiate or even maintain the current free-market economic system, which allows players to earn ceiling-less salaries based on their merit and reputation. The NHLPA is worried that by accepting a salary cap it will stifle the revenue generation opportunities for players. In other words they want a system where a Jaromir Jagr can still go out and get an $11 million contract banked on play he hasn't displayed since his Penguin days or allow playoff role-players (i.e. Martin Lapointe) or big defensive shutdown centers (i.e. Bobby Holik) to cash in on the free agent market far above their market value in a controlled cost environment. Holik's 5-yr $45M deal with the Rangers ranks as the NHL's most absurd contract. If the NHL's previous collective bargaining agreement was a TV show Holik's contract would have been the moment where it jumped the shark. As good of a defensive stopper Bruce Bowen, Trent Hassell or Doug Christie are they will be never be among the top 2% paid players in the NBA.

The NHLPA's position throughout these negotiations has been very contradictory. They want a free-market system yet they're unwilling to accept all the stipulations that come with that economic model. In a free-market system nothing is guaranteed. Employers are encouraged to find the cheapest source of labour while maintaining the same level of company productivity. So if an owner can find a cheaper player to do the same job as a higher-priced player then a free-market system should allow that owner to cut the higher-priced player. A true free-market system would relinquish the use of guaranteed contracts. As it stands now the only thing the players are more diametrically opposed to than a salary cap is waving guaranteed contracts.

	Wouldn't it be nice to see breakthrough years happen all the time and not just in contract years? (Source: NHL.com)

Although non-guaranteed contracts have virtually no chance of being passed in the CBA agreement it would make for a much different NHL landscape. As it stands now, if a team wants to cut ties with a player they must pay the player a 2/3 buyout of any money remaining on the contract. If the player is under 26 the team only needs to pay 1/3 of the contract. A non-guaranteed contract structure would allow NHL clubs to cut players and walk away from contracts without any financial burden. It's no secret that most players perform at their highest in the last year of a contract because the prospects of free agency determine a player's market value. The 2003-2004 season was no exception as Miikka Kiprusoff and Martin St. Louis had career years. Just imagine the competitive landscape of a league where players are constantly proving themselves and trying to maintain job security. The product of the games would certainly go up. If by any miracle non-guaranteed contracts were adopted measures would need to be put into place to cap signing bonuses and the percentage of money that could be front-loaded in a contract because you know players would quickly try to exploit those loopholes.

All along the NHLPA's proposal for a CBA agreement has included two key negotiating issues: Salary rollbacks and a luxury tax proposal. By simply offering a one-time Wal-Mart-esque rollback on player salaries the NHLPA is admitting that the costs of player salaries are too high for the amount of revenue the league generates. Player salaries represent roughly 75% of total league revenue. In comparison with other leagues: NFL 64%, MLB 63%, NBA 60%, the NHL's economic structure is completely out of kilter. The rumoured new counter proposal by the NHLPA is said to include a one-time 10% rollback stipend of all salaries. With average team payrolls of $44M last season that equates to roughly a $4.4M savings for each team. Depending on whether you take numbers from the Levitt report or the more favourable numbers presented by Forbes Magazine the rollback will help some teams inch closer to a breakeven point.

	The NHL owners are a lot like Paris Hilton and that's not hot.

The luxury tax proposal is the NHLPA's Beta to the owners' VHS. Both sides concede that they will not accept the other's prominent CBA solution at any cost. The owners preach that a luxury tax will not result in cost certainty. In other words, matching costs to revenues. Without question the owners are at fault for driving player costs to where they are today. Too many poor choices were made in both restricted and unrestricted free agency to deny that the owners were nothing but Paris Hilton with a credit card. If a luxury tax is set up with stringent penalties for exceeding a threshold pay it essentially becomes a salary cap by a different name. The NHLPA's initial luxury tax proposal in early September included a $0.20 on the dollar tax on any team payrolls that exceed $40M. The NHLPA's new offer is said to include an increased offer of $0.75 on the dollar for any payroll above $40M. Looking at last year's team payrolls 14 of the 30 teams exceeded payrolls of $40M. Doing the necessary math based on last year's team salaries, those 14 luxury tax contributors would have doled out $182.56M. If that money is then spread out to the remaining 16 clubs under the luxury tax threshold it equals approximately $11.4M. The NHLPA's new offer is certainly a major step in the right direction.

Overall the NHLPA's solution would curtail some of the team spending. For instance a team like the New York Rangers who spent $77M last year would in essence be spending closer to $105M under the luxury tax proposal and a one-time salary rollback would provide initial relief to some teams. Whether the owners are willing to accept a CBA agreement that doesn't include the words "Salary Cap" is yet to be seen.