Friday, December 07, 2007

IIHF Player Transfer Deal Likely Dying

The NHL has a deal negotiated through the International Ice Hockey Federation (IIHF) that governs the co-existence of international leagues. Its most significant point is that leagues will honor each other's contracts. If the NHL signs a player who is under contract to another league (this can only be done during a prescribed period in the summer), then transfer fees are paid to the country that developed the player. The European Leagues have complained that these transfer fees are far too low and they lose their best players without adequate compensation. The NHL has always negotiated this deal in a "take it or leave it" fashion and Russia has chosen to leave it.

This decision has worked well for Russia. They still lose some top players (such as Evgeni Malkin) with no compensation, but they have managed to reduce the number of Russians in the NHL and thus increase the number of Russians who play in Russia. This is because players in the North America who are unhappy with their situation can jump back to Russia at any time during the season. This is particularly likely when a player in on a two-way contract playing in the AHL. Any player in the AHL must clear re-entry waivers to get called up if they are making more than $100,000 in the minors. Thus any player who is ever going to get called up from the AHL has a de facto salary cap of $100,000, which is a salary they will easily exceed in the Russian Elite League. Thus a player in the North American minors is losing money by not playing in Russia. This means that many good NHL prospects such as Igor Grigorenko or Roman Voloshenko who could likely have significant NHL careers never get started because they return home while they are still in the minors.

Seeing the Russian success without a transfer deal, Sweden has announced that they will opt out of the current deal on January 1st, 2008. It is expected that Finland and the Czech Republic will join them. In the future, there could very likely be a large reduction in players from Europe in the NHL (and not just Russia) because of this. The NHL will be weaker because of the reduction of their talent pool.

Possible solutions exist for the NHL including much higher player transfer fees in a new deal. Possibly fees could be negotiated on a player by player basis (which would be well upwards of a million dollars for top players). It is also possible that the remaining parts of the IIHF deal, which govern other points of international play, could be used as bargaining chips to secure a deal. For example, the NHL might offer a World Cup tournament with the best players in the world to be played in Europe with revenue going to the European nations (whether top NHL players would take part during their "summer holiday" is an open question). It is not clear that the other European nations would be able to offer the same level of salaries that Russia offers to their players, thus reducing the number of NHL calibre players they draw, but some of the players who would otherwise be in the NHL will be lost.

The NHL talent pool will weaken significantly with the cancel of the IIHF player transfer deal. Hockey in Europe will be strengthened. No longer will there be one league where all the best players in the world come to play. That is a sad development for fans who have become accustomed to seeing the NHL as the world's elite hockey league.

You forget one very important thing. It is american dollar. Ten years ago, czech team get 100000$ for the player and club made a little revenue. Dollar was 40,- CZK, so it was about 4mil. CZK. Now dollar is 17,- CZK and when the club gets the same 100000$, its 60% less than before(and expenses rapidly rise due to economic boom in Czech rep., salaries are 2x higher and energy costs 4x more).Training of czech player from age 7 till 18 costs about 2,5mil.CZK from the club. Now the players are leaving to NHL for money, that don´t even cover players training. If the payment will not rise, clubs will not sign agreement again. Without european players would quality of NHL fall (30 is too many clubs for only north american players and european free agents).
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