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Revenue sharing key to NHL CBA talks

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NHLPA executive director Donald Fehr speaks after a CBA session.

NHLPA boss Donald Fehr forced Major League Baseball to accept its current revenue sharing system, but NHL owners aren’t likely to be keen on letting him design a system for them that the players will like. (Sitthixay Ditthavong/AP)

By Stu Hackel

The NHL and NHLPA get together again Tuesday and Wednesday in New York for more talks on a new Collective Bargaining Agreement and perhaps we’ll learn the players’ view on what would be a workable economic system for hockey’s top league.

We already know the broad outlines of the owners’ position — you can read them here — which were presented in a two-page document that Commissioner Gary Bettman slid across the table to NHLPA Executive Director Don Fehr earlier this month. The PA had been looking over the original broad outlines and requested additional financial information from the league in order to craft its response. When Fehr was asked during his press briefing after last Tuesday’s talks (video) when the union might offer its reaction or counter-proposal he responded, “I doubt that it will be weeks — plural. But could it be two? Yeah, it could be two. Could it be less? Yeah, but I can’t tell you.”

Fehr wasn’t especially forthcoming about how the players might respond to the owners’ demand of lowering the salary cap, and his approach has been in line with the tenor of these discussions all along. They have remained civil and even productive, at least on issues that don’t involve the big question: how much more revenue the owners want to take back from the players. Even on the matter of player discipline, something they would like to change and have more voice in, the discussions have remained cordial. Bettman remarked last Tuesday, “The temperature in the room has been good.”

The next day, the league handed the players a more fleshed-out version of its original proposal and in his remarks to the media afterward…

…Fehr again appeared non-antagonistic and tried to put a positive spin on the parts of the negotiations that dealt with non-economic issues. And last Thursday, former defenseman Mathieu Schneider, now a special assistant to Fehr, addressed the media on that day’s discussions, which focused largely on workplace issues, pensions and other matters.

But once the NHLPA responds to the league’s central proposal, it will be the moment when we’ll start to know what the future holds as far as starting next season on time. Lots of twists and turns, potholes and detours will undoubtedly follow, but having each side table its views on what the CBA should look like will get the hard part of this journey underway.

The owners’ position, which is designed to help low-revenue teams achieve stronger financial footing, seeks to roll back player salaries again, as the league did after the lockout of 2004-05. Most observers expect the players to counter with a different approach to helping those teams, one that calls for more revenue sharing.

[UPDATE: The owners proposed their own version of revenue sharing at the talks on Tuesday. “We think we’ve taken steps to make it more inclusive,” Bettman said, although the commissioner said the league’s proposal is “actually quite similar” to the current revenue-sharing system. Fehr wouldn't say if he is encouraged by the revenue-sharing proposal. "We haven't evaluated the changes from current revenue sharing to determine whether we think it's the appropriate thing to do or if it misses the mark in some respect," Fehr said.]

Lots of people (myself included) have discussed increased revenue sharing as one way for the NHL to help struggling clubs without again going after the players’ paychecks. In Tuesday’s Globe and Mail, David Shoalts wonders if it’s the only way. He estimated (as others have) that the owners’ desire to not only lower the players’ share of revenues from 57 percent to 46, but redefine what counts as hockey-related revenue in the CBA would result in the players’ share actually being 43 percent. That’s a big whack and no one expects that to be acceptable on the NHLPA’s side.

Schneider told Shoalts that “If the overall goal is the health of the entire league, then there needs to be some meaningful revenue sharing.” It’s something the other sports engage in far more widely than the NHL and, in the case of Major League Baseball, it was Fehr who helped introduce and design the system.

“When he was head of the Major League Baseball Players Association,” Shoalts wrote, “Fehr was the architect of the revenue sharing that was introduced in 1996. Now, 48 per cent of the revenue of MLB teams is subject to revenue sharing, which includes 31 per cent of the richest teams’ local revenue.” Shoalts goes on to draw some comparisons between the NHL’s limited revenue sharing and that of the other sports, noting that NFL teams share 60 percent. He adds that the NHL’s plan is very convoluted (At Yahoo’s Puck Daddy blog, Greg Wyshynski’s reaction to Shoalts’ description of it was “Oy vey”) and writes, “When the players make their counter-proposal, it is expected to follow the baseball model. This calls for a greater share of the rich teams’ local revenue to go into the pot. This is not expected to thrill the owners.”

No, it won’t, at least not the owners of the league’s richest clubs. “Both a current NHL governor and a former NHL governor admitted the league’s richest teams are not keen even about the limited sharing the exists now,” Shoalts wrote.

It could be, however, that the less well-off clubs might find it more in their interests. The problem with the salary cap system as the NHL currently operates it is that the teams that bring in the lowest revenue still get left behind as the business improves and the cap and floor go up.

Shoats writes, “A prominent sports agent, who asked to remain anonymous because he is not authorized to speak for the players as a group, said revenue sharing is the only answer to the NHL’s problems. He said the NHL’s cap system is doomed to fail because the revenue from the richest teams inflates the salary cap beyond the reach of the poorest teams.”

The agent told Shoalts, “If the NHL owners were smart, they’d say to Fehr, ‘Help us design a system that works for us and you guys can live with,’ and he would come up with a system. All the owners do now is grab more money from the players. That works for a year, revenue goes up and the small markets start choking. Then they limp to the next collective agreement and Bettman promises more cap money for small markets. This is all just like a Ponzi scheme. Unless you meaningfully share revenue, the small markets will die.”

A post earlier this month in which I discussed the Flyers’ offer sheet to Shea Weber included the notion that the real issue in these CBA talks is not how much money the players make, but how much some teams make compared to others. The Weber offer sheet pointed out the disparity between rich and poor clubs and, as the agent who spoke with Shoalts makes clear, so does the salary cap system the way it is currently constituted.

If that gap becomes the main issue in the CBA talks, and if the counter-proposal the NHLPA formulates calls for significantly more revenue sharing, as many expect it will, how understanding will the owners be? The NHLPA might come up with, as the agent suggests, a system that works for the owners as a whole and that the players can live with, but can you imagine the wealthiest NHL teams agreeing to give up more of their revenue when they don’t want to give up the little they do now? If so, you’re getting into John Lennon territory.

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  • Published On Jul 31, 2012
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