By Stu Hackel
The inevitable differences between the NHL owners and players on core economic issues finally got some articulation in the aftermath of Thursday’s collective bargaining negotiations. Commissioner Gary Bettman didn’t use the “L word,” but he came pretty damn close.
So while the two sides will continue working on the non-economic parts of the CBA, those matters will be the sideshow compared to the action in the center ring of this circus. That part of the discussions will resume on Tuesday in Toronto when the NHLPA offers its counter-proposal to the owners’ opening shot of salary rollbacks and contractual givebacks. The chasm between what each side wants from the agreement was given its voice on Thursday when the players presented their objections to the owners’ proposed system of revenue sharing.
Asked how far apart the sides are, NHLPA Executive Director Don Fehr responded, “There’s a meaningful gulf there.”
Bettman: “We obviously have a wide gap to bridge on a whole host of issues.”
No, this is not encouraging. And while many people think that a lockout-shortened season would likely begin with the Winter Classic on January 1, there are reasons to think again.
With both sides acknowledging after their two-hour meeting that they are looking at the next CBA in very different terms, the chances of the season beginning in October as scheduled seems dimmer now than at any time since their discussions began last month. And while Fehr has said on numerous occasions, including Thursday, that there’s nothing that legally prevents the players from going to training camp and starting the season without a contract — “if there is a lockout, someone has to choose to do that,” he noted — Bettman’s remarks seemed to lean toward the owners making that choice.
“I reconfirmed something that the union has been told multiple times over the last nine to 12 months,” Bettman told reporters. “Namely, that time is getting short and the owners are not prepared to operate under this collective bargaining agreement for another season, so we need to get to making a deal and doing it soon. And we believe there’s ample time for the parties to get together and make a deal and that’s what we’re going to be working towards.”
Asked if Sept. 15 was a hard deadline, Bettman responded, “Our efforts are going to be devoted to trying to make a deal.” He then reiterated that owners have no desire to operate under the current CBA.
However, NHL spokesman Frank Brown said in an e-mail to Eben Novy-Williams of Bloomberg News that it was “not wrong” to interpret Bettman’s remarks as implying that the NHL would lock out its players without a new deal. Brown stressed, however, that Bettman never referred directly to a lockout in his remarks. Nevertheless, the implication was clear.
In the eyes of many fans — who merely want to see hockey and not suffer through another lockout only seven years after an entire season was wiped out — the fact that one side would prevent the schedule from starting on time while the other says it would be happy to keep skating and keep talking clearly paints the owners as the bad guys. The owners’ side has tried to make the case that there’s a deal to be reached, but the players have been dragging their feet and are happy to allow the CBA to expire on Sept. 15 in order to make the owners look like the villains.
Those perceptions may or may not be accurate but, regardless, they are not the heart of what divides the two sides. They seem to have fundamentally opposed views on the core economics of the league. The NHL views the problem as rooted in the players getting too much of the business’s revenue and that the team owners are spending too much on salaries. The NHLPA counters that the way to assist franchises that are having trouble paying expenses is for the clubs to share more of their revenue. The league maintains it already has meaningful revenue sharing and plans to enhance it. The players respond that the owners’ plans to enhance it will come entirely from the salary cuts the league wants to impose, not from the wealthy clubs’ coffers.
During the talks on Thursday, the NHLPA made a presentation that was directly related to the owners’ proposed revenue sharing system which the NHL linked to its proposed new salary cap that would cut the players’ share of revenue from the current 57 percent to somewhere between 46 percent and 43 percent.
As Fehr said, “It didn’t look to us like (the NHL’s suggested form of revenue sharing) was the way to go.”
The players’ primary objection? After examining league’s proposal, the PA determined that the money the NHL planned to distribute to less-wealthy clubs would, in practical terms, not be funded by the wealthy clubs but with money derived from cutting salaries. “The most important thing from our standpoint is that, essentially, all the revenue sharing payments made by individual teams they get back, and then some, in reduced player salary,” Fehr said.
As the PA sees it, under the NHL plan, it’s the players who would shoulder the economic burden of the league’s enhanced revenue sharing plan. That’s not going to acceptable to them.
“We’re not close on that issue (revenue sharing),” Bettman agreed, “and, frankly, revenue sharing is part of the bigger economic picture.” From the owners’ point of view, that bigger picture focuses on salary reduction. “The fundamental proposal, our initial proposal, is that we need to be paying out less in player costs,” Bettman said.
So the two sides differ philosophically on how to solve the league’s purported economic problems, but this is a league that has experienced record revenue growth in the past seven years, most recently $3.3 billion. Of course, the NHL’s record revenues still don’t put it anywhere near the other major pro leagues. The NFL leads the pack with $11 billion. Major League Baseball takes in around $7 billion. The NBA is closest to the NHL, with $3.8 billion, but its expenses per club are far lower. The NBA has far fewer players under contract and all the associated costs are lower; consequently, the NBA is far more profitable than the NHL.
But you probably didn’t come here for the economic news. You came for the “Whether Forecast,” as in whether training camps will open and the season will start as scheduled on Oct. 11.
A lot of people believe we’re headed for a lockout and truncated season; Toronto media personage Howard Berger, for example, wrote on his blog on Friday that a “hockey executive whose name is familiar to any person with even casual interest in the sport said: ‘Forget about watching the NHL until the new year. There is virtually no chance our league will open for business until Jan. 1. Detroit and Toronto will play the first game of the season, outdoors, in Ann Arbor, Mich. You can pretty much expect that a 60-game schedule will follow with the current playoff structure of four rounds. That’s the best-case scenario right now. I can’t imagine our league starting up at any point in October, November or December.’”
That’s a common belief. But why?
Why should we expect the season to somehow magically materialize by the New Year?
Because that’s when the NBC TV schedule starts and the big money rolls in, comes the answer. But that’s not when the NBC schedule starts. It begins the day after Thanksgiving. But what about the big NBC money? Won’t that tempt the owners to settle earlier? Guess again.
According to Larry Brooks in The New York Post, NBC pays the NHL between $150 million and $160 million whether there’s a lockout or not. But the NHL can’t forgo the Winter Classic can it, the big hype at The Big House and all that? Well, why not? The big buildup is part of the big hype at The Big House, but with no season beforehand, there won’t be any HBO 24/7, the best promotion this game gets. The Winter Classic and all its accompanying festivities could easily wait until the next full season. [UPDATE: Jeff Z. Klein reported in The New York Times that the NHL has a clause in its agreement with the University of Michigan for rental of Michigan Stadium that allows for the league to cancel the game and forfeit only $100,000 of the $3 million rental fee.]
Berger believes that the NHLPA will fold when the New Year rolls around, that the owners “will bring the players to their knees once again. That is no slight toward the NHLPA membership or its proven, battle-hardened leader. It’s just that players want to play” and don’t want to lose time on their careers.
I think my old friend Howie is underestimating the work that Fehr has done in educating and organizing the NHLPA.
Won’t the owners feel the pinch of lost revenue if the games aren’t played? As David Shoalts writes in Friday’s Globe and Mail, “Because the NHL bounced back with seven consecutive years of revenue growth after wiping out an entire season, many owners were convinced they can do it again. With the players better educated this time around and more determined, it is not a recipe for a full season.”
In fact — unless the two sides can figure out how to mesh their contrasting views of where the business should go — it may be a recipe for no season at all.
COMMENTING GUIDELINES: We encourage engaging, diverse and meaningful commentary and hope you will join the discussion. We also encourage, but do not require, that you use your real name. Please keep comments on-topic and relevant to the original post. To foster healthy discussion, we will review all comments BEFORE they are posted. We expect a basic level of civility toward each other and the subjects of this blog. Disagreements are fine, but mutual respect is a must. Comments will not be approved if they contain profanity (including the use of abbreviations and punctuation marks instead of letters); any abusive language or personal attacks including insults, name-calling, threats, harassment, libel and slander; hateful, racist, sexist, religious or ethnically offensive language; or efforts to promote commercial products or solicitations of any kind, including links that drive traffic to your own website. Flagrant or repeat offenders run the risk of being banned from commenting.