“Competition”

Bobby Holik: 5 years, $45M

Constant lockout talk isn’t something that a lot of people like to read about, but a few good reads about the state of the NHL in 2004-05 and even from 1994-95 show something about the key players in the current labour spat.

Bill Daly came out yesterday and said “this is not about ‘winning’ or ‘losing’ a negotiation. This is about finding a solution that preserves the long-term healthy and stability of the League and the game.”

I think for people who know Gary Bettman, they might disagree. As little as the country wants to read about the lockout, I think the off-ice game is somewhat fascinating. I’ve promoted it on a couple of posts before, but I do highly recommend picking up Jonathan Gatehouse’s The Instigator, his new book about Gary Bettman. It’s full of good nuggets about not only Bettman as a person, but also the way the league operates.

Two hundred pages or so isn’t enough to fully capture everything there is to tell about a man, but a few things stick out about Bettman. He’s a fierce competitor, he likes to win. Unlike what Daly said, this is exactly about winning and losing, and Bettman wants to come out ahead for the third time in his three major deals with the Players.

Sergei Fedorov: 5 years, $40M

The problem with Bettman’s tenure is that as good as he’s been for the business side of hockey, he’s underestimated major factors at each turn. In 1994-95, he lost out on getting a cap, but the restrictions placed on free agency at the time had the majority of writers across North America proclaiming a victory for the owners.

Eric Duhatschuk with the Calgary Herald at the time correctly predicted that the agreement “put the onus on owners to run their businesses efficiently.” [1] Bettman’s fault here was the competitive nature of hockey owners. It’s not just that the NHL commissioner wants to win labour wars, but his bosses, the Ed Sniders and Jeremy Jacobses and Mike Illitches want to win Stanley Cups.

By preserving free agency, then-NHLPA head Bob Goodenow guaranteed the rise in salaries. Players coming into the league would take a hit, for sure, with a new rookie cap, but free agency spiralled out of control in the late 1990s and early 2000s thanks to the laws of supply and demand. Bettman’s restrictions on free agency limited the overall number of free agents in the pool, but teams were still willing to pay them.

More from Money Players:

Goodenow had also preserved the concept of scarcity for those free agents who became available and for entry-level players. A keen student of Marvin Miller, Goodenow had noted a telling passage in Miller’s autobiography. “To me,” wrote Miller in A Whole Different Ball Game, “a large supply of free agents each year would defeat one of the purposes of free agency, namely the bidding up of salaries. Luckily, Oakland’s owner Charlie Finley—who generally was ignored—seemed to be the only one smart enough to recognize that opening the flood gates by making all players free agents would work to the owners’ advantage.”

Martin Lapointe: 4 years, $20M

In 2004-05, I’d like to think that Bettman underestimated the increase in the Canadian dollar which was being exchanged at around $0.81 at the time the last agreement was signed in July of 2005. It’s now at par, the $20 bill of American money in my wallet from my weekend in Pittsburgh in June worth no more in Canada than it is in the U.S.. With player costs tied to all revenues, that spiked the league’s revenues while reducing some of the revenues of individual American teams, so they felt the hit. American teams make up most of the league’s structure, and about half of those are the “have not” organizations.

Bettman and the NHL also did not foresee the appearance of cap-circumventing “retirement” contracts that not only had teams paying more for players than they were supposed to under the salary cap, but they were locking players into their teams well into their free agent years. Basically, the system wasn’t designed for competition, whether from the Canadian clubs, or for the idea that owners would look for ways to spend more, just like they had between 1995 and 2004.

Back to The Instigator. Gatehouse quotes Bettman periodically in media appearances from 2005, saying “we can’t afford [the NHLPA's] proposal” and “I was very clear that we weren’t going to make a deal just for the sake of making a deal. If you have problems, you have to fix them.”

Somehow, the system that the NHL proposed wasn’t enough, that tying player salaries explicitly to revenues wasn’t going to withstand an artificial inflation in league growth caused by the collapse of the American dollar. To say the system is broken again is to say that the league didn’t properly fix the problems the last time around. One franchise moved last summer, one is still on the ropes, and there’s no guarantee that the NHL’s proposed system, which keeps revenue sharing at a minimum, does more than prop up bad franchises with the players’ escrow dollars.

Whatever system is imposed, I think the history shows us that Bettman will have won, but that the players will benefit over the course of the deal. The free market wants players to be paid, these owners didn’t buy sports teams because they’re not competitive people. A lot of them want to win and that involves driving up player salary.

Bettman will win. That much is known. I just don’t know what he’s fighting for anymore.

 

[1] That’s Money Players by Bruce Dowbiggin. It is also a great read.

Comments (3)

  1. great read, thanks. be sweet to sit down with bettman & see what he answers to those statements & moreover to hear what the man is thinking at that particular time.

  2. I’m just a bit thrown off as to why they can’t agree to a CBA that last maybe more than 5 years? I understand things change, like the mention of the canadian dollar, but if hockey gets locked out every 5 years.. fans will change sports. I’m already leaning to watching basketball all year even if hockey comes back because I’m pissed off they ruined my awesome pools this year. Also, it would be nice to see these bottom dweller teams shift north of the border. Bettman still makes the owners money and canada is happy (who watches most of the hockey anyways). This turned out to be a wordy, comma filled paragraph.. sorry.

  3. “To say the system is broken again is to say that the league didn’t properly fix the problems the last time around.”

    The only thing wrong with this gem is that it doesn’t read ‘the last two times around.’ In a perfect world, there’d be NHL hockey, and the owners would fire Bettman for failing twice here. Great piece.

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