The Glass Eye: The NHL Lockout
The NHL’s contract with the Players’ Association expires on September 15 – and as of this writing, it appears inevitable that we are headed for yet another NHL lockout. You may recall that the NHL lost an entire season to a lockout in 2004-05 – I’m going to look at the situation then as compared to now, and explain why I think this move is completely unwarranted.
In 2004, the NHL was in trouble. There was no salary cap and no revenue sharing – which meant there was a HUGE divide between rich and poor teams. Pittsburgh and Buffalo had just gone through bankruptcy and other franchises were nearly as insolvent. In addition, the game itself was suffering from too much ‘clutch and grab’ defense – scoring was way down, as was creativity. I think just about everyone realized that the league needed a ‘reset’ – except the players’ union, which was suffering from poor leadership and unrealistic bargaining goals. The owners at the time claimed it made more fiscal sense for them to shut down for a season than to play – and while that certainly was NOT true for some teams, I believe it probably was true for many.
In short, while I found the idea of losing an entire season distasteful and avoidable, in the end that lost season did a lot of good for the game. The implementation of a salary cap and limited revenue sharing ensured that every team had a chance at financial and on-ice success if they made good management decisions, while the implementation of a ‘salary floor’ and a guarantee that players would receive 54% (it has since climbed to 57%) of all revenue meant that the players were guaranteed to share in any growth the league enjoyed. Additionally, the league made a concerted effort to enforce the rules against holding, hooking and interference – which immediately paid dividends on the ice in terms of faster pace, more creativity, and higher scoring.
The salary cap also gave a lot more teams a realistic shot at the title: from 1995-2003 the Red Wings, Devils, or Avalanche won eight out of nine seasons. Since the lockout there have been seven different champions in seven seasons – and twelve different finalists as well! This has led to much higher fan interest, and league-record revenues: $3.3 BILLION in 2011-12 (the first year post-lockout revenues were about $2.2 billion). Let’s see…fan interest is at an all-time high, revenues are up 50% in seven years…and the owners want to shut the league down AGAIN??
Now, let me give some defense of the owners: while the league as a whole is now profitable, it’s still a case of the ‘haves and the have-nots’. According to Forbes estimates (and keep in mind they are only ESTIMATES, but after reading them I think they’re pretty close), the league had a collective profit of $280 million last year – 10 richest teams accounted for almost all of that. The low-revenue teams such as Phoenix, Columbus, and the NY Islanders actually lost money and see no way to compete in the current environment.
Also, while the idea of a salary floor seems commendable on the surface – to force teams to try to compete – it also hampers a team’s ability to completely rebuild. A team like the Islanders would be better served to go below that ‘floor’ and save money for a year or two, when the team actually can contend, rather than be forced to spend the money on a middling free-agent just to get above the salary minimum.
OK, having said all that…the owners did this to themselves. They absolutely ‘won’ the last contract dispute, getting all kinds of cost containments – then they spent the next seven years finding every loophole they could in their own system. Just this summer, while their commissioner was singing the blues about revenue and the problems in the game, the NHL’s top five free agents signed contracts with an average length of 10 years and an average payout of $73 million! How can the league dole out these kinds of contracts, then complain that the owners need more revenue? Why are the players responsible for solving the huge (and growing) revenue disparity between the rich and poor teams? Doesn’t this seem more like an owner-vs.-owner rather than an owner-vs. player problem?
My solutions to the impasse:
1.) Figure out a more aggressive revenue sharing plan. The NFL figured out early on that revenue sharing is key to a healthy league – the teams NEED each other. If contraction isn’t an option – and in most cases it is not, for various reasons – then the league has to do its part to strengthen the weakest teams.
2.) The players should get 52-54% of revenues. I’m ok with the idea that 57% might be a bit high…but anything less than 50% strikes me as completely unfair. After all, I have yet to ever buy a ticket to watch an owner – I feel very strongly that the players are the show and should get the majority of the revenue. I have no issue with owners making a profit – it IS a business, after all – but the players should get theirs first. The owners have asked the players to roll back to 46%, and that to me is ridiculous.
3.) Lower the salary floor (or allow an exception once every three years), and shorten the maximum contract length. These 10+ year contracts have great potential to be huge problems in the end – the list of players who retain elite effectiveness past age 35 is short indeed.
4.) Last but not least – as a gesture of good faith, the owners should NOT lock out the players and should continue to negotiate during the season. Both sides have ample reasons to make a deal – there’s a LOT of money at stake, and the potential for long-term damage from a work stoppage, especially a lengthy one, is significant.
These are solvable problems – and while they are significant, I do not see these issues as serious enough to warrant a work stoppage. I sincerely hope that the owners do not let their greed cloud their judgment. Both sides need to remember that the collateral damage (arena workers, season ticket holders, etc.) could be extensive. There’s enough money to go around – figure it out.
Dave Glass can be reached at firstname.lastname@example.org.