The Glass Eye: NHL Self-Destruction

The NHL Lockout is now 74 days old…and unfortunately, I see no resolution in sight. All games have been canceled through December 14, and the All-Star Game has been scrapped as well (though I count that as a positive development). What’s going on here?

Greed, pure and simple – and as I see it, mainly on the owners’ side. I’ve been involved in several negotiations in the past few years, and typically they involve a lot of give-and-take…and when the process is completed, neither side is completely satisfied with the deal. That’s the art of compromise, and that’s how fair deals generally get done.

One would think that in the world of sports, where one side is completely comprised of billionaire businessmen who own teams as a ‘hobby’ while the other side is comprised of professional athletes who make an average salary over $1 million, both sides would have a vested interest in not ‘killing the golden goose’. Certainly, I think neither side comes off as sympathetic as, say, a typical manufacturing union battle where the workers make $50,000 per year and the owners are struggling to stay afloat due to rising costs.

No, in major professional sports there’s PLENTY of money to go around if everyone learns to get along and share it wisely. Even in baseball, which has no salary cap and fairly limited revenue sharing, more money is flowing into the game than ever thanks to record attendance and TV contracts…and there has not been a labor stoppage in 18 years. Furthermore, given the relative peace between baseball owners and players and the good faith that has developed over the past two decades, I fully expect a winning Pirate season to occur long before the next MLB work stoppage – both sides have wisely realized that there’s no reason to threaten the health of the game via a strike or lockout, and they’ve managed to work out their issues through good old-fashioned bargaining and compromise.

The NFL has a similar history of not destroying their seasons  – they have not lost a regular-season game due to a labor dispute since 1987, although they did have a training-camp lockout in 2011 – and again, both sides recognize that the NFL’s unparalleled popularity and mammoth TV deals ensure that both player salaries and owner profits will continue to increase over the next several years – as they have dramatically over the past two decades.

The NHL, on the other hand, seems hell-bent on destroying its own brand. Despite having the lowest revenue and smallest market share among the four major sports, the NHL has had more work stoppages in the last 20 years than all the other sports put together. The NHL locked out its players in 1994-95, losing almost half of that season (the 82-game schedule was pared to 48 games, and started in January) – and then another lockout wiped out the 2004-05 season completely, which was unprecedented in North American sports. Seven years later, the NHL once again has imposed a lockout, and once again stands on the precipice of losing an entire season – and at BEST, we’re looking at a 50-60 game season similar to 1995.

Let me just get this right out there: I put at least 80% of this on the owners. They forced the loss of the 04-05 season due to their desire to get ‘cost certainty’ – which was a fancy way of describing a hard salary cap – and they got their wish, the 2005 labor deal represented in almost every way a major win for the owners and HUGE concessions by the players. Seven years later, with revenues up 50% since 2005 and a league that’s as healthy as it’s ever been overall, the league has once again LOCKED OUT the players (keep in mind, in EVERY one of these labor disputes the players have wanted to keep playing – the owners have locked them out every single time), and it appears to me that they are once again determined to win EVERY aspect of the negotiation, with almost no sign of compromise.

Let’s examine the current state of affairs: the NHL wanted the players to take a drastically reduced share of revenue, dropping from 57% last season to 50% going forward. The players have agreed to this in principle. This represents a HUGE win for ownership, and one would expect that they would soften their stance on other issues such as contract length and free-agency. Instead, the owners are describing the revenue split and contract issues as ‘linked’, and demanding that the players move their way on ALL issues.

In addition (and this is the most galling issue to me), the owners have asked for the new revenue split to be applied to existing contracts – including contracts they just handed out this past summer! Why would a player who just signed a $96 million contract, assuming it was negotiated in good faith, voluntarily agree to reduce it by 10-15% a few months later? How is that good-faith negotiation? Would YOU accept that if you were a player? I sure would not, especially given the amount of money flowing into the league in 2012.

There’s another unspoken issue – even owners of ‘break-even’ teams are making money, because the value of ALL professional franchises has been on a steady climb for 20 years as well. Mario Lemieux bought the Penguins in 1999 for $107 million – today the franchise is estimated by Forbes to be worth $232 million, and I suspect that’s conservative. The owners can ALWAYS sell out and make money if they don’t like the direction the league is headed – the vast majority of NHL players do not have similarly lucrative options.

The truth is, there’s DEFINITELY enough money in the league for all 30 teams to be healthy – but owners have to share with each other, as NFL owners long ago learned to do, for the sake of the league as a whole. Teams like Boston, New York, and Philly are wildly profitable and could share significant revenue while still showing healthy bottom lines/profit for their owners. However, this would be an owner-vs-owner fight, and it is far easier to simply bully the players to give up more money.

So, we end up where the league is today – owners bullying players, and a more unified set of players who really are just tired of being pushed around deciding to push back. Where’s the compromise? I think the outline of a deal is well within reach – one that can’t really even be called a ‘compromise’ as much as another win for the owners given the 50-50 revenue split – but until the owners regain their collective sanity and recognize that their own greed may destroy everything, I don’t see this dispute ending. We may not have a 12-13 season after all.

Dave Glass can be reached at buggyracer@verizon.net.

 

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