Despite the attempts of sports talk radio call-in programming, spouting poorly formed opinions on the current National Hockey League labor presumably reached its zenith of stupidity back in September when Canada’s Donald Trump suggested that NHL owners should simply fire all the players, sign replacements with incentive-laden contracts and be done with the matter entirely. Not to be advised by what is rational, hyperbolic commentary on the lockout – with outlooks ranging from the implementation of indentured servitude for players to guillotine sprees for the aristocratic owners – has continued to emerge, much to the detriment of the impressionable.
Thinking beyond sports, it seems that the more severe the conflict, the less likely a true victor is to emerge. In hockey, we have come to expect identifiable winners and losers. In fact, since the introduction of the shoot-out, each contest in the NHL can only result in win and lose outcomes. And so, as hockey fans turn desperate for the thrill of competition, we find ourselves taking sides in a dispute about dollars rather than goals, and aligning ourselves with negotiators in a similarly vicarious sense to how we once followed the sport.
In order to understand the dispute, a little bit of background information is necessary. First of all, we must recognize that when a player in the NHL agrees to a guaranteed contract for a particular amount of money, the dollar figure is not absolute; it is relative to the revenue that the entire league earns. So, what we refer to as a $5 million contract is actually an agreement for five million shares of a percentage of the league’s revenue. The value of each share isn’t determined until the end of the season.
In 2011/2012, the players earned 57 per cent of league revenue. Initially, the NHL wanted to restructure the new CBA so that the players received only 43 per cent for the coming season. They have since relented, with Commissioner Gary Bettman admitting that the low ball offer was a tactic to move toward a more even split.
I think the view some have of our first offer is fairly naive as it relates to collective bargaining. A sophisticated negotiator would have looked at it and said, ‘Obviously they want a 50-50 split.’ If we’re at 57 and they propose 43, they must be telegraphing where they want to end. If your intention was to use it in an inflammatory way, you could do that. If your intention was to make a deal, you could pretty much chart out what the course should be.
In addition to restructuring the players’ share of what is referred to as hockey related revenue, the NHL also proposed modifications to what is considered hockey related revenue, a proposal that would further reduce the figure from which the players draw their salaries. This creates another contentious issue for negotiations because existing contracts would not be worth as much as they were originally intended. Compensation would have to be assigned as part of any change.
While the percentage split remains the biggest issue in negotiations for the owners, others include setting maximum terms for new player contracts, eliminating signing bonuses, extending entry-level contracts and increasing the qualification for unrestricted free agency. Their goal is to make owning an NHL team profitable for every owner, pointing to such things as thirteen out of thirty teams reporting a negative operating income for the last season.
The National Hockey League Players Association, not surprisingly, was fine with the arrangement agreed to in the previous collective bargaining agreement when league revenue increased at a far higher rate than what the owners anticipated, leading to the players earning an escalated 57 per cent of league revenue. In their most recent proposal to the owners, the NHLPA agreed to an even split of hockey related revenue in the next CBA, but with a larger amount of money for transitional payments than what their opposition would prefer.
In justifying their stance, the union points to seventeen out of thirty teams operating at a profit, and the large increase in overall revenue over the last few years. It also looks at the reported operating income critically, suggesting that it is often in the best interest of franchises to adjust their finances so that generally profitable ventures appear as though they are operating at a loss, when in fact, they are not. This is perhaps best seen in a team like the Florida Panthers, who reported a loss of $12 million last season, while the conglomerate that it is involved with in terms of ownership reported yet another year of profit.
All the while, owners generally benefit from increases in equity on a yearly basis, as it almost always proves financially beneficial to own a sports franchise. If an owner truly does not agree with the direction toward which the league heads, they can always opt out, sell the franchise for a far greater price than they originally bought it, and enjoy the profits. This is a luxury not afforded to the players.
However, with this in their arsenal, the NHLPA has recommended increased revenue sharing among the clubs to satiate the opposition’s goal of making ownership profitable for everyone. It is a suggestion at which the owners have largely balked, leading the union to flirt with the idea of decertification, which would allow the players to sue the owners in court under anti-trust law. By disbanding the union, as was done in recent labor negotiations in both the National Basketball Association and National Football League, the players risk losing the protection offered to them under labor law, such as guaranteed contracts, pensions, health benefits and more. However, as a union, the owners are allowed to lock out the players, not as a union, it becomes an illegal group boycott punishable by severe financial damages.
With the hope of avoiding an already ugly situation from getting even more unpleasant, both sides have agreed to further negotiations with the assistance of a mediator. While it is unknown as to how this will develop, it is assumed that observers of the process will no longer be updated on the progress of the negotiations while under mediation.
So, as discussions “go dark,” we, as hockey fans, are left to wonder not only about the future of the game, but also our own interest in this ongoing struggle.
Falling short of endorsing collusion, when one examines the demands of owners, outside of a redistribution of revenue, the issues seem to be of the variety that would be better solved by hiring smarter management rather than a harder stance in negotiations. The owners desire increased restrictions to essentially protect themselves from their own general managers.
We have the same people who approved long-term contracts to players like Ilya Kovalchuck, Zach Parise, Ryan Suter, and Shea Weber, not only demanding that they pay them as much as ten per cent less after already agreeing to the deals, but also insisting that they be protected in the future from the risks that such contracts offer. I am unsure as to whether this is a better example of bad faith or sheer stupidity.
Prior to this, I was of the belief that the NHL was a competition; that one team signing a player to a bad contract was good for the 29 other teams. Why would ownership want restrictions in place to level the playing field in an already salary capped system? A bad contract signed by your competitor should be considered good for you. The cap already in place diminishes concerns over dramatic salary escalation, and so I fail to see the need for such protections as being more important than the need for common sense when handing out contracts in the first place.
Nonetheless, there exists a feeling among fans that millionaire players should accept what is offered to them by billionaire owners. I understand the sentiment, but cannot find reason to support it. It is easier for the great many of us to relate to players before owners, but only in so far as them having an employer. We cannot extend our empathy past this because the great many of us earn far less than a typical hockey player. So, while it is originally easier for us to put ourselves in the players’ skates, it becomes progressively difficult to keep those skates on our feet. We realize the players’ perspective, but do not see it fully, resulting in something of a shock as to why they would refuse to be paid more than most of us could possibly imagine receiving.
Arguments supporting ownership suggest that the sport has to be profitable in order for them to be expected to provide fans with the hockey that they desire. However, this stance assumes that the owners alone are the ones providing fans with hockey. That is simply not the case. It is an equal partnership with the owners facilitating the sought after viewing of player talent.
Pro-ownership arguments would also be better received if the National Hockey League were verging on bankruptcy. However, this is not an auto union making outrageous demands of a manufacturer on the brink of going out of business. It is a largely profitable industry, especially for a few select teams at the top, which has the power to solve its supposed problems through increased revenue sharing without exploiting the talent on which it depends to make its product desirable in the first place.
This is what NHL ownership either fails to realize or refuses to admit: players are necessary, and fair payment of their services is a requirement. While we wait to see if decertification is a threat or a genuine avenue of consideration for the players, we witness a disturbing lack of good faith in the negotiations from the side of the owners.
Aside from admitting to making unfair proposals and attempting to unfairly adjust contracts that were signed mere months ago, the owners have taken a hard line approach to negotiations, refusing to discuss NHLPA proposals and threatening offers off of the table. All the while, the players have made concessions, essentially agreeing to a seven per cent decrease in salaries despite record revenues.
At the beginning of this article, I suggested that in our unfulfilled desire for competitive hockey, we have taken to picking sides in an off-ice dispute much like we would an on-ice contest. This is somewhat misleading because if we were to accurately envision this labor dispute as a game of hockey it would be a match between a talented team of All-Stars that represent everything we love about the game and a privileged roster of goons whose tactics would make the Broad Street Bullies quiver in fear.
Kevin O’Leary Tells The NHL To Fire All Players. [CBC]
Escrow A Nasty Word To NHL Players. [Globe And Mail]
NHL Commissioner Discusses Lockout Issues. [Winnipeg Free Press]
Making Sense Of Hockey-Related Revenue. [CBC]
Complete NHLPA Offer To The NHL. [ESPN]
NHL Valuations. [Forbes]:
2012 NHL Lockout: Creative Business Structure, Profitability, The NHL And The Florida Panthers. [Defending Big D]
Answers To NHLPA’s Decertification Questions. [CBC]
Why You Should Support The NHL Owners. [Arctic Ice Hockey]
The Glass Eye: NHL Self-Destruction. [Gant Daily]