Friday, February 22, 2013

TSN Article: Pistorius - Jail Time, the Charges & Why It’s Not A Surprise He Was Released On Bail

I wrote an article for TSN explaining why we should not be surprised that Oscar Pistorius was granted bail earlier today. I also address his potential jail time, the charges, why the bail hearing is not the trial and the fact that this will not be a jury trial.

Tuesday, February 19, 2013

Oscar Pistorius - Full Affidavit

Here is a full copy of the Oscar Pistorius affidavit, which is his account of what happened that night.

It was presented today at his bail hearing. Under South African criminal law, Pistorius needed to show exceptional circumstances warranting his release on bail given the gravity of the crime. However, his lawyers have argued that the crime is being too harshly categorized and for that reason the onus should not be on him to justify his release.

Tuesday, February 12, 2013

New NHL CBA: The Changing Salary Floor & The Disincentive To Dress Young Players

By Fraser Blair

One of the concepts that I wrote about in the first piece about the Tim Thomas trade was the salary cap’s Lower Level (the salary floor). Under the new CBA, the way teams will approach the Lower Level will be significantly different due to 2 changes in the operating structure of the payroll range system.

First, beginning in the 2014-2015 season the Upper and Lower Limits of the payroll range (the cap floor and the ceiling) will no longer be calculated using the current formula. The current formula adds or subtracts $8 million from the salary midpoint in order to determine the Lower and Upper Levels. The salary midpoint is determined by the following steps: (1) multiply hockey related revenue (HRR) by the player’s share; (2) subtract player benefits from (1); (3) divide the figure from (1) and (2) by the number of teams.

Midpoint = [(HRR*0.50)-Benefits] / 30 teams

Note: The previous formula also adjusted the midpoint upwards by 5% each season. The NHLPA CBA summary mentions a growth factor but doesn’t specify the amount.

Last season, the salary midpoint was roughly $56.3 million. As a result, the Upper Limit was $64.3 million and the Lower Limit $44.3 million.

The Upper and Lower Limits will still be calculated based on the cap midpoint under the new formula, but those figures will be determined by adding or subtracting 15% instead of $8 million.

Regarding the Lower Limit, the two systems would produce the same results if the salary midpoint were $53.33 million. At all midpoints below, $8 million exceeds 15%. Conversely, as the midpoint rises the cap floor is lower under the new formula than it would be under the previous system.

This appears to be a moderate victory for low revenue teams. Under the new CBA, the Lower Level will be lower than it would have been under the previous system. Furthermore, once the salary midpoint reaches $69 million, (likely between years 6 and 7 of the CBA assuming 5% revenue growth) the difference between the new and old formulas for calculating the Lower Level will be $2.35 million. That’s not an insignificant amount of money, though I’m sure the owners of the Florida Panthers and the New York Islanders would still tell you it’s too high. They may be right, but that’s not the point here.

Although the Lower Level won’t be increasing as much as it did in the past, the second change to the Lower Level system will make it harder for teams to reach the salary floor. According to the NHLPA summary, performance bonuses will no longer count in the calculation of a team’s Lower Level. This provision was featured for the first time in the NHLPA’s CBA proposal on October 17, 2012, and it’s not surprising that the players fought for it its inclusion.

Since 2005, Clubs have been able to offer performance bonuses to certain types of players. Performance bonuses are almost always offered to high draft picks and free agents who sign and Entry Level Contract (ELC). Under the old CBA, teams could offer up to $2.85 million in performance bonuses to players on their ELCs. Those bonuses counted towards the calculation of the Club’s Upper and Lower Level salary requirements but will no longer be counted towards the floor.

Performance bonuses were governed by Exhibit 5 to the previous CBA, and were broken down into two categories. The first category, Individual “A” Bonuses are linked to individual player accomplishments. There are nine categories of “A” Bonuses for forwards, ten for defencemen and eight for goalies. For skaters, the bonus categories include Ice time, goals, assists, points, points per game, plus-minus, blocked shots (defencemen only), selection to the All-Rookie team, selection to the NHL All-Star Game, NHL All-Star Game MVP. For goalies, in addition to the All-Rookie and All Star Game bonuses, the categories are Goals Against Average, Save Percentage, Wins and Shutouts.

The maximum value of any of these bonuses is $212,500, and a player cannot receive more than $850,000 in cumulative Individual “A” Bonuses. In other words, the ELC of a forward may contain $212,500 in bonuses for all nine categories, but if he hits on more than four, he’ll only receive $850,000.

The second category, Individual “B” Bonuses are bonuses payable in respect of League Wide Awards and Performance. The “B” Bonus categories are also listed in Exhibit 5 and the maximum value of any player’s “B” Bonuses in a single season cannot exceed $2 million. However, the CBA allows teams to negotiate the amounts payable individually with their players. For example, a most generous ELC will entitle the player to a $2 million bonus upon any of the following:

•   winning the Conn Smythe trophy
•   being named a 1st or 2nd Team All Star
•   finishing, 5th in balloting for the Hart, Norris, Selke, Richard or Vezina,
•   finishing 10th in scoring and/or
•   finishing 10th in points per game

***Note: Individual “B” bonuses in respect of winning the Calder Trophy ($212,500) and the Lady Byng ($150,000) are also permitted, but Clubs may not negotiate bonuses in excess of the stated amounts.

The bonus requirements can and likely are more strenuous for most players, although players like Justin Schultz who signed their ELCs as UFAs and players with a realistic chance of playing in the KHL may have enough leverage to negotiate better bonus packages. Even at the most generous end, it seems highly unlikely that a player on his ELC would reach the full value of his Individual “B” Bonus ceiling in each of his first three seasons.

I spoke with prominent player agent Andrew Scott of Octagon and he corroborated this theory for me. Mr. Scott told me that outside of the elite young players (think Sydney Crosby, Evgeni Malkin and Alexander Ovechkin), players on their ELC do not obtain the full value of their performance bonuses.

Given this, it’s safe to say that Clubs in need of reaching the Lower Level were able to gain a financial advantage under the old rules by, at least in part, writing large and unreachable performance bonuses into their ELCs.

For example, let’s take the case of Ryan Nugent-Hopkins of the Edmonton Oilers. Nugent-Hopkins received the full range of Individual “A” and “B” bonuses and we’ll assume for the sake or erring on the conservative side that he obtained the full permissible bonus for each category. We’ll consider the Individual “A” bonuses first.

Ryan Nugent-Hopkins: 2012 Statistics

ATOI/EDM Forwards
All Rookie
All Star
All Star MVP

Nugent-Hopkins qualified for the PPG bonus, the ice time bonus, the All Rookie Bonus and the All Star Bonus. As a result, the maximum he would have received in Individual “A” bonuses last season was $850,000 As a result of not scoring 20 goals, notching 35 assists, finishing amongst the top-3 forwards in plus/minus or winning the MVP of the All Star game, Nugent-Hopkins did not qualify for those bonuses.

Turning to the Individual “B” bonuses, Nugent-Hopkins won the Calder Trophy and we’ll assume that the Oilers paid him a bonus of $212,500 for that trophy. He did not qualify for any of the other “B” bonus categories.

In sum, the most Nugent-Hopkins could have earned from Individual “A” and “B” bonuses in 2012 was $1,062,500. When we add in his salary ($925,000) and his signing bonus ($92,500), we get a maximum total value of $2,080,000. That figure is $1,695,000 below his cap hit.

This is already getting to be a long piece, so I’m not going to go through the other Oilers currently playing under ELCs (though it’s important to note that Jordan Eberle likely qualified for all of his $312,500 performance bonus money). However, it would appear to be the case that outside of the elite players alluded to by Mr. Scott, players on their ELCs do not hit on the full range of available performance bonuses.

With each of the last three first overall picks and Justin Schultz on their roster, the Oilers are probably the extreme end of the bonus spectrum. But the point here is that some teams have been able to gain a financial advantage through the performance bonus system by tying largely unreachable bonuses to ELCs.

Looking ahead to next year, the Edmonton Oilers’ cap hit of $44.5 million contains about $8.5 million for performance bonuses. With at least 7 roster spots to fill, the Oilers won’t have trouble reaching the floor.

The New York Islanders, on the other hand, will be an interesting club to monitor next season. With $29 million committed to 12 players, the Islanders will have to spread the remaining $15 million amongst the 9 (or so) roster spots available. Again, it’s not that this amount will be difficult to fill, but they won’t be able to rely on their prospects to carry the cap load the way the Oilers have in the past. Under the old rules, the cap hits of several near-NHL ready prospects like Griffin Reinhart (bonus: $2.35M), Brock Nelson (bonus: $1.925M), Nino Neiderreiter (bonus: $1.925M), Ryan Strome (bonus: $850,000) Mike Halmo (bonus: $850,000) and Calvin de Haan (bonus: $600,000), would have totaled $13.8 million. Under the new regime, the maximum value of those players relative to the Lower Level is only $5.3 million.

General Manager Garth Snow will have to walk the difficult line of ensuring a sound development for his Club’s prospects and making sure he reaches the floor. Perhaps this indicates that the trade for Tim Thomas was made for the purpose of reaching next season’s Lower Level. f Snow can slide Thomas’ contract to next season because of his suspension (which he will likely try to do) and avoid an NHLPA grievance for cap circumvention (which will form the subject of Part 2 of my Tim Thomas series), then he’s a lot closer to the Lower Level.

In conclusion, this is a bad provision for the fans who will have to wait longer in some cases to see their team’s top prospects wear an NHL uniform. There just isn’t the same business (non-hockey) incentive for floor teams to dress their young players as there used to be. 

On the other hand, this was a really shrewd inclusion by the NHLPA. The likely result is that floor teams will have to spend more money on veteran players in order to reach the lower limit.

Friday, February 8, 2013

Part 1 - Tim Thomas Trade: Circumvention of CBA?

By Fraser Blair

(Part 1 of 2 Part analysis the Tim Thomas trade. Part 1 examines the trade itself. Part 2 will examine the possibility of a circumvention grievance if Thomas’ contract slides into the 2013-2014). 

The trade of Tim Thomas is perhaps the most interesting trade from a non-hockey perspective since the implementation of the salary cap in 2005. This trade has absolutely nothing to do with on-ice affairs of the Boston Bruins or the New York Islanders but has everything to do with the NHL’s ever-rising Lower Limit salary threshold (or salary floor). 

Getting to the Lower Limit is increasingly difficult for low revenue teams and in recent years, some of these teams have taken creative approaches to minimize the financial implications of reaching the floor. GM Garth Snow and the New York Islanders took the creativity to a new level yesterday by acquiring the suspended Thomas from the Boston Bruins in exchange for a conditional 2nd round pick in 2014 or 2015. The pick will go to Boston if Thomas plays in at least one game for the Islanders or a team he's traded to. 

Since he's suspended, Thomas hasn't been paid by Boston and his contract did not count against the Bruins’ Upper Limit calculation. However, Section 50(10)(c) of the CBA required the Bruins to maintain enough cap space to accommodate Thomas in the event that he returned. It reads: 
“For Players that are suspended, either by a Club or by the League, the Player Salary and Bonuses that are not paid to such Players shall not count against a Club’s Upper Limit or against the Players’ Share for the duration of the suspension, but the Club must have Payroll Room for such Player’s Player Salary and Bonuses in order for such Player to be able to return to Play for the Club.” 
So the Bruins have been forced to keep their salary cap commitments $5 million below the Upper Limit because of Thomas even though his salary doesn't technically count towards the salary cap. It’s a subtle but important distinction that becomes relevant when we assess the different implications of this trade for the Islanders. Put another way, if Thomas’ cap hit won’t technically count towards New York’s Upper Limit, how does it help that team reach the Lower Limit? 

Well, the inclusion of the term “Upper Limit” and the exclusion of the term “Lower Limit” in Section 50 would seem to allow Thomas’ cap hit to count towards the floor but not the top end of the cap. In other words, Thomas’ cap hit counts towards the team’s Lower Limit but not its Upper Limit. Convenient for both the Bruins and Isles.

This seems a bit strange. It would be interesting to see the outcome of a grievance initiated by the NHLPA on the basis that the same rules should apply to the calculation of a Club’s Upper Limit as they do to a Club’s Lower Limit. 

Here's the NHLPA's argument: You can’t reach the Upper Limit until you cross the Lower Limit, and therefore the same rules that apply in determining whether a Club has complied with the Upper Limit should apply in determining whether a Club has complied with the Lower Limit. By extension, the Thomas’ cap hit should not count towards the Islanders’ Lower Limit because the CBA does not count it towards the Upper Limit.  

That reasoning works - but the issue is the language of the CBA is probably determinative of this question. It seems that the specific inclusion/exclusion of the words Upper/Lower Limit was intentional and designed to enable Clubs near the Lower Limit to take advantage of this strange rule that counts cap hits like Thomas’ on one hand (in determining whether the Club has reached the Lower Limit) but not the other (in determining whether the Club has breached the Upper Limit). The language is clear and if the agreement favoured the NHLPA’s logic, it would have been written differently.

Although the Islanders appear to be trade appears to be one designed to avoid spending money, a circumvention grievance pursuant to Section 26 is unlikely to be successful for two reasons.  

First, whether the circumvention rules apply to a trade is questionable. The spirit of the Section 26 is directed towards Circumvention in player contracting. The language is written in a way that would certainly allow for argument, but this argument would be highly technical and formalistic.  

Secondly, even if Section 26 did apply the Islanders haven’t committed Circumvention. As Eric Duhatschek pointedout today’s Globe and Mail, the Islanders had already reached the Lower Level by the time they acquired Thomas yesterday. Lubomir Visnovsky’s return to the Club earlier this week put the Islanders above the Lower Level. In this regard, the Club showed some savviness and may have protected against a grievance by not using Tim Thomas to get to the salary floor. 

Thursday, February 7, 2013

TSN Radio Clip: A-Rod, Braun, Melky, Lance & PEDs

I joined Scott MacCarthur at TSN Radio. We talked Alex Rodriguez, Melky Cabrera, Lance Armstrong, Barry Bonds, Roger Clemens and PEDs.

I got all riled up. And justifiably so.

I got angry just writing this entry.

Click here to listen.

Wednesday, February 6, 2013

CTV National News Clip: Lance Armstrong & Possibility of Criminal Charges

I join Jennifer Burke at CTV National News to discuss the possibility of criminal charges materializing against Lance Armstrong.

Lance is going to be busy on the legal side for a while.

Click here to watch.