[author] [author_image timthumb=’on’]http://www.puresophistry.com/wp-content/uploads/2012/09/biopic.jpg[/author_image] [author_info]My name is Matt Marchese and I’m a sports junkie! My love for the Toronto Maple Leafs, Toronto Blue Jays, Toronto Raptors, Buffalo Bills and Liverpool Football Club runs deep, but man are they frustrating! So this shows that I’m committed anyway. I played Tier 2 Junior Hockey for 5 years, soccer at the Provincial level, and high school baseball. I’m an avid football fan and golf fan, and above all, a stats geek.[/author_info] [/author]
A Fan’s Guide To The NHL Lockout And A Penny For My Thoughts
It seems like just yesterday that the NHL lost a complete season due to a lockout and here we are again, 8 years later, looking at the prospect of yet another full season without hockey.
When the lockout of 2004-2005 occurred, it was the first time since 1919 that the Stanley Cup was not awarded. That year, the Spanish Influenza wiped out the Stanley Cup Final, causing the Montreal Canadiens and Seattle Metropolitans to
abandon the series, and for the first time in the short history of the Stanley Cup, there would be no winner. This would go down as one of the darkest moments in NHL history, and by no fault of anyone one man or group of greedy owners and
players; until February 16th 2005, when it was announced that the league would be shut down. This was the first time in the history of professional sports that an entire season was lost due to a labour dispute.
Fast forward to present day, where yet another NHL Lockout is upon us. The two figureheads who will duke it out in the negotiating rooms are the NHL’s Gary Bettman and the NHLPA’s Donald Fehr.
Bettman, a New Yorker, who graduated from Cornell University and New York University School Of Law is the Commissioner of the NHL and scapegoat for many of the league’s problems. Gary has been the Commissioner of the league since February 1st 1993 after taking over from Gil Stein, who was the league’s last president (the title changed from President to Commissioner after Stein’s dismissal). Since his appointment as Commissioner, the NHL has grown in size, with the addition of the Nashville Predators, Atlanta Thrashers, Columbus Blue Jackets and Minnesota Wild, while also relocating the Minnesota North Stars to Dallas, the Quebec Nordiques to Denver, the Winnipeg Jets to Phoenix, the Hartford Whalers to North Carolina and the Atlanta Thrashers to Winnipeg. But most importantly, Gary has been involved in the addition of a salary cap and TWO STRAIGHT lockouts at the expiration of a Collective Bargaining Agreement.
Fehr, a graduate of Indiana University and University of Missouri-Kansas School of Law, grew up in little known Prairie Village, Kansas. Donald was a baseball guy for the better part of his professional life, as he was the Executive Director of the MLBPA, schooled under the tutelage of the legendary Marvin Miller. After doing all he could for the MLBPA, he decided to help the fledgling NHLPA as he was named Executive Director in December of 2010. Fehr played a key role in the cancellation of the 1994 World Series, and is known to be a tough negotiator.
Now you know the two men in charge, so here’s what they’re fighting over.
The problem with the negotiations is that there are no real hard numbers to go by, as both sides will tell you a different story. What we do know is that the biggest concern to the NHL is that the players are making too much money off of HRR (Hockey Related Revenue), which is directly tied to the rise and fall of the salary cap. What is HRR you may ask? You have now discovered one of the many problems with these negotiations.
Nobody really knows what HRR entails, as it is something that has to be collectively bargained. One side says one thing, one side says another (this will be an ongoing theme as you can already tell). As of the last Collective Bargaining Agreement (which expired on September 15 th at11:59pm), the players share of the pie was 57%. This percentage is tied to league revenues which in turn determined the maximum amount of money that team’s could pay their players. Seems like a lot doesn’t it? Well it is. Each team based on last year’s revenue, would be able to spend $70.2 Million on players salaries.
Now this is where things will start to get a little hairy, so bear with me here. Not every team makes a profit in the NHL. Actually it’s very far from it.
There are many reports surfacing that around 9 teams consistently make money. Those teams include Toronto, Vancouver, Philadelphia and Detroit just to name a few. After that, there is a group of 8 teams who will make money if the team enjoys a lengthy playoff run. The remaining 13 teams cannot make a profit or even break even for that matter if they tried. A group of teams who are in the bottom part of the profit pool (or lack thereof) qualify for revenue sharing.
Now to explain revenue sharing…
The top grossing teams put money into a pot that is divvied up between the bottom teams to help them spend money up to the salary cap floor, which is the minimum amount that a team can spend (the salary cap floor is set at $16 Million under the salary cap ceiling).Here’s where one of the biggest problems occurs. Teams spending up to the salary cap ceiling in theory should still be able to turn a profit right? Not the case in the NHL.
Teams who “struggle” to get to the cap floor should only spend what they can and no more. This is not how it happens though. The teams who are writing cheques for between $10 Million and $30 Million for losses, should not be spending to the cap ceiling, or anywhere close to that. The problem with the whole salary cap system is not the ceiling, but the floor. Why make a team spend UP TO A MINIMUM total team salary? Doesn’t make any sense. The NHL would argue that it creates parity in the league, but last time I checked, the Columbus Blue Jackets have made the playoffs once in a salary cap world in 8 years.
So I guess, so much for that theory.
The struggling franchises make this system unworkable. Teams like Phoenix, Columbus and Florida lose money every year (and don’t forget that the NHL runs the Coyotes, so each owner is picking up the tab on them) causing the whole system to not work. Bettman doesn’t like to relocate franchises, which he had a hand bringing in. There are three examples in which this is evident. The Nashville Predators were in deep financial trouble and were ready to pull the plug and sell to then billionaire and Research in Motion CEO, Jim Balsillie who would then move the team to Hamilton. That didn’t happen. Then the rumours were that the Phoenix Coyotes would be on the move to Winnipeg, which turned out to be untrue and it was later revealed that the team in question was the Atlanta Thrashers who then moved to the ‘Peg.
Here we are, present day, and the Phoenix Coyotes are still in the same financial trouble as they have been for a long time, with a more than viable market in Quebec City ready to welcome an NHL franchise with open arms. With a thriving Canadian dollar, this seems like a fantastic opportunity for the NHL. But no, not on Gary’s watch will this happen. It almost feels like a pride thing with him. It seems as though his mentality is, “I brought it here and I will keep it here at all costs.” Doesn’t really work as a successful business model does it?
The slate is now clean and there are no limits as to what can be discussed. Maybe the players look at a luxury tax system instead of a hard cap system like they had. The luxury tax system is used in baseball, and looks fairly successful. In a luxury tax system, there is a “soft cap” where you can spend up to that amount with no financial penalty. For every dollar you spend over that “soft cap” number, you are charged $1, which is put into a pool of money and distributed evenly to all the teams who are not spending over the “soft cap” number. Seems like a good idea until the players complain that they will not make as much money as they do now. Why don’t they just go down to 20 teams to make it really work? Well players lose jobs and if you think there is an uproar now, imagine the firestorm after that. It would work from a financial standpoint; that is for damned sure.
With all of this stuff to be considered, successful negotiations will come down to the two men running the show. Gary has kicked the crap out of the heads of the Players’ Association, from Bob Goodenow to Ted Saskin and subsequently to Paul Kelly. But Donald Fehr is no pushover. The vibe that I get is that this more than the owners versus the players, this is Gary Bettman, the old bully on the block versus Donald Fehr, the new prodigy waiting to dethrone the neighbourhood bully.
People will say I’m wrong but I can’t help but feel that way. Bettman looks at Fehr saying, “I saw what you did in baseball, and I’ll be damned if I’m going to let that happen on my watch.”
The whole situation is a scary one as it doesn’t look like we will have hockey any time soon. The players are more unified than ever under Fehr, and it looks like the owners are ready to go shot for shot with them. The last lockout ended because the players caved in to the owners’ wants and needs, I don’t see this happening as long as Donald Fehr is in charge. The players and owners can both say that they want to see the game back on the ice, but I believe that this is so overblown it’s no joke.
How many of the owners own a team as a sole source of income? None. How many players could find work overseas if they really needed to? All of them. Owners cry poor, and then sign players to long-term deals worth over $100 Million. These are the same owners who are now laying off staff because they can only afford to pay the players their bonuses as per their contracts. Seems like a bit of a disconnect right?
Give me a break. For owners, their team is a toy. For the players, the world they are in is a fantasy that many of us could only dream of being in.
If these two groups had to join the rest of us in the real world, the real world would eat them alive.