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Don't expect locked-out NHL players to flock to Europe

It starts with a big escrow cheque coming next month.


NHLPA executive director Donald Fehr and NHL players face the press following labour negotiations last month. (Photo: Chris Young/CP)

It’s no surprise that National Hockey League players are eyeing Europe as their league edges closer to another labour stoppage.

After all, their interest comes with some history: during the last lockout, nearly 400 NHL players signed with European clubs. Going overseas was their best option for playing hockey—and making money—once their NHL paycheques evaporated.

This time around, don’t count on the same mass exodus in the event of a lockout.

Sure, a healthy number of NHLers would sign cross-Atlantic contracts. But their financial motive for signing overseas is weaker than it was eight years ago, while two of Europe’s best leagues aren’t offering the same opportunities.

During the last labour stoppage, NHL players received a monthly stipend from the players’ union, which totaled US$10,000 for November and December, followed by monthly payments between $5,000 and $10,000.

October’s escrow payment will make that stipend plan look like chump change.

The NHL Players’ Association is expecting members to receive an escrow payment in mid-October that’s roughly 8% of last year’s salaries. Under the expiring collective bargaining agreement, a portion of NHL salaries is held in escrow, which ensures that players are paid their fixed rate of league revenues—in this case, 57% of revenues for the 2011-12 season.

The escrow payment could tide players over during the opening weeks of a lockout. The average return will total just under $200,000, assuming commissioner Gary Bettman’s estimate that the average NHL player earns $2.45 million per season. For someone like Alexander Ovechkin, whose salary last season was $9 million, his escrow payment will be more than $700,000.

In other words, the mid-October escrow cheques will often rival or surpass the cash being offered by European clubs.

When it comes to European teams, there’s a wide gap between the haves and have-nots. One on hand,  Russian Superleague team Ak Bars Kazan spent a rumoured (though highly unlikely) $50 million to $60 million during the last lockout on superstars like Vincent Lecavalier, Dany Heatley and Ilya Kovalchuk. While Lecavalier missed out on the $4.375 million payday he was due for the cancelled NHL season, his tax-free Russian salary of $300,000 per month was a decent financial rebound.

On the other hand, take Manny Legace, the former Detroit Red Wings goaltender.

Legace spent the lockout with Russia’s Khimik club and was paid on a per-game basis. He wouldn’t discuss his salary with The New York Times, but said his first two games were part of an unpaid trial period. In total, his Russian contract “would all come to much less than he had been earning at Detroit,” the article said.

For the most part, European salary figures were shrouded in mystery, though it’s widely assumed that most players only recouped a small percentage of their NHL salaries by playing overseas. In some cases, players were “only receiving meals and lodging,” according to a Time magazine article.

For the upcoming season, European leagues are stemming the potential flow of NHLers to their teams, most notably in Russia and Sweden, where two of the most popular overseas options are based.

Sweden, for instance, is no longer an option for NHL players seeking part-year deals with out-clauses.

“The owners of the [Swedish Elite League] decided some weeks ago that they would not allow short-term contracts if there would be any lockout in the NHL,” said Jörgen Lindgren, the league’s CEO, in a conversation with Canadian Business. “[NHL players] are more than welcome to come and play in Sweden, in the Elite League, but they should fulfill the season with a one-year contract.”

Lindgren said the decision was a difficult one to make. During the last lockout, his league received good publicity when NHL players flocked to Sweden. But there was also a downside.

“As we know, you have the financial part—which was, to some extent, a hit to a lot of teams,” said Lindgren. “Especially because you had to insure all the players.”

When asked if the SEL would reconsider its NHL rental rule, Lindgren said: “Not at the moment.”

In Russia’s Kontinental Hockey League, teams would be permitted to sign three NHL players, only one of whom can be non-Russian. Of course, that’s different from eight years ago, when Ak Bars Kazan filled half its roster with notable names from the NHL. Estimates vary, but most reports believe that somewhere between 70 and 100 NHL players suited up in the Russian Superleague (the predecessor to the KHL) during the last lockout.

As it stands, the KHL’s 26 teams could admit a maximum of 78 locked-out NHLers. Only 20 non-Russian players could sign with the league’s Russian teams. A KHL spokesperson told Canadian Business that the league’s six non-Russian teams “will have the opportunity to summon more than one foreign NHLer,” though each of them is still limited to three locked-out players.

That said, could the KHL reverse its ruling and allow more NHLers on its clubs? Slava Malamud, a correspondent for Russian newspaper Sport-Express, said it’s possible.

“Well, in Russia we have a saying: ‘The strictness of our laws is greatly compensated by the lack of necessity to follow them,’” he said via email. “In other words, if the KHL wanted to back out of its own rule, it could do it, even in mid-season. This may happen sometime in January, if it becomes apparent that the lockout may kill the whole NHL season.”

But one problem, said Malamud, is that the KHL has a shorter schedule this year and starts its playoffs in February. “This is done to minimize the chances of Russian players getting hurt before the 2014 Olympics,” he wrote. “With such a short season, it may be tricky for the league to quickly change the rule and have itself a signing frenzy with only a month or so left before the playoffs.”

Of course, there’s a contingent of NHL players that would sign overseas no matter what, if only to keep in shape during a lockout. Still, their options are narrower than eight years ago.

As of now, Sweden is off the table and Russia seems like a good option for Russian players, but few others.

The SEL and KHL could change their restrictions, but even then, a sizable escrow cheque is coming next month—about one month after the lockout would start—so the financial argument for going to Europe is potentially weaker.

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