Looking back at the agreement of '95

Sunday, July 20, 2003

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When the NHL and the NHLPA begin negotiations on a new a labor agreement, there will be some similarities to the last time the two sides met at the bargaining table. League commissioner Gary Bettman and union leader Bob Goodenow will be there again. And so will the key issue -- team payrolls.

Heading into the negotiations back in the mid-1990's owners were concerned about escalating payrolls. In 1990-91 the NHL average player salary was $271,000. In 1993-94, the last season before the agreement was reached, the average player salary had shot up to over $572,000.

Current NHL CBA

*Signed January 13, 1995 *Expires September 15, 2004 *Agreement has been extended twice *Average NHL player salary for the 1993-94 season: $572,161 *Average NHL player salary for the 2002-03 season: $1.79 million

Even before negotiations began the owners insisted on a salary cap to curb the growth in player salaries. It was rejected by the players.

The owners softened their stance, offering a luxury tax that would that would require teams to pay a penalty for exceeding a predetermined salary ceiling. Players balked at that too. The owners continued to alter the ceiling and the players continued to resist.

Towards the end of the negotiations the owners had offered a salary ceiling of $18 million for each team. The players said no, arguing that the Buffalo Sabres had four players combined who made $11 million.

Dave Poulin, who was a player with the Washington Capitals at the time, explained the players' rationale: "We keep hearing that our salaries won't drop, but with an $18 million cap and a 24-man roster, there would have been $7 million for the other 20 guys."

The players also argued that if Buffalo paid those remaining 20 players more than $7 million the team would be taxed and profits would suffer.

With a deadline looming (Friday January 13, 1995) that would have canceled the entire 1994-95 season, the owners finally dropped the luxury tax idea and the negotiations moved towards completion.

In the end, the owners gave in because they were afraid of seeing an entire season go down the drain.

"I think the board understood this fully: that if we wanted a cap or a tax, it would have required losing the season, at least," Bettman said at the time. "And as a result, I think the board, the owners, were comfortable that this agreement wasn't worth the rest of the season."

The players did grant some concessions as well, allowing the rookie salary cap to drop from $1 million to $850,000 for players drafted in 1995. Under the agreement, that cap would rise to more than a $1 million again by 1999.

The eligible age for unrestricted free agency would rise from 30 to 32 and eventually drop to age 31 by the summer of 1998.

New salary arbitration rules would take effect, including an option for teams to walk away from an agreement they found excessive.

In the end, the two sides reached an agreement just before the noon deadline on January 13, 1995. A majority of players on each of the 26 teams voted for approval. The vote among owners was 19-7 in favor of the agreement.

It all meant that the 78th NHL season, which had been delayed by a 103-day lockout, would begin the following week. The season, which would last 104 days, was shortened to 48 games and there would only be intraconference matchups.

On opening night in 1995 the New York Rangers raised their Stanley Cup banner from the previous season. In the last game of the playoffs that season the New Jersey Devils would skate the Cup for the first time in franchise history after sweeping the Detroit Red Wings.

Since then the Rangers' free agent spending sprees have become the poster child for the problem of escalating salaries. The Devils, who have the Cup two more times since, have become a model of fiscal responsibility.

Next season Mike Modano and Bill Guerin combined will make almost $18 million, basically the equivalent of the proposed salary ceiling proposed by the owners during the last negotiations.

Jaromir Jagr makes more than $11 million That is the combined salary of those four Buffalo players that became a sticking point in the last round of bargaining.

But the teams have seen their value increase as well. In 1995 Detroit was the most valued NHL franchise at $126 million. By 2002 that had more than doubled to $266 million. The Dallas Stars, valued at $53 million in 1995, were valued at $254 million in 2002.

All of this has set the stage for what is expect to be a bitter battle over the future economic landscape of the league. We'll have a look at the next round of negotiations in our next report.

Then and now

Here's a look at the ten highest player salaries in 1994-95 and 2002-03 and a look at the ten most valued NHL franchises in both 1995 and 2002.

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