NHL Labor Talks Could Head for Lockout As Initial League Proposal Not Way to Open Dialogue


July 16, 2012

NHL Labor Talks Could Head for Lockout As Initial League Proposal Not Way to Open DialogueBy now, there’s been a full weekend to digest the first salvo fired in the latest labor clash between the NHL and the NHL Players’ Association. Or at least it could have been if the owners’ initial proposal hadn’t been so completely unpalatable.

Going into these negotiations, there was room for optimism. Surely after the damage done to the game by the last owners’ lockout that wiped out the entire 2004-05 season, both sides would do everything possible to make sure such a travesty didn’t happen again.

That doesn’t seem so certain now. While the aggressive nature of that initial proposal doesn’t guarantee there will be a work stoppage, it definitely doesn’t add any confidence that one will be avoided.

It could be argued that it was only natural for the owners to open with a bid asking for the sky to leave room to come down to the asking price they really are seeking. The problem with that theory is that this proposal was so onerous that it doesn’t appear to even be an offer in good faith. It’s one thing to pad the price of what you’re selling to leave room to negotiate. It’s another to price it so high that potential buyers won’t even bother to stop and look.

That’s what this offer did by calling for the players’ share of league revenues to drop from 57 percent to 46 percent, the elimination of signing bonuses and salary arbitration, extension of entry-level contracts from three years to five, limiting all contracts to five years and pushing back unrestricted free agency from after seven years of service to 10.

Dropping the players’ share to 46 percent would put the cap at $52.5 million, which is nearly $2 million less than the current floor of $54.2 million. Based on the numbers at CapGeek.com, 20 of the league’s 30 teams would already be over that adjusted cap. The Bruins, with a league-high $69.9 million in salary commitments, would have to dismantle much of the roster Peter Chiarelli has worked so hard to keep together since winning the Cup in 2011.

At this point, about the only thing the NHLPA can do in response to this proposal is come back with an equally ridiculous counterproposal. Maybe if they called for 65 percent of revenue and unrestricted free agency after three years, then at least the two extremes could be far enough apart to find a middle ground that would be fair and reasonable. Or both proposals could be dismissed completely and the sides could start over and get down to some serious negotiating along legitimate lines. 

Almost always when labor disputes arise in sports, many fans side with ownership. As illogical as it may seem, many people tend to resent the millions the athletes make without ever giving a second thought to the billions the owners possess. But the owners may have overplayed their hand in the public relations battle this time around.

Despite shuttering an entire season for the first time in major professional sports, the fans came back to the NHL following the lockout. That loyalty, combined with the players’ concessions in the creation of a new salary cap system, led to record revenues for seven straight years.

It didn’t lead to the complete “cost certainty” the league sought because teams started finding ways to circumvent the cap almost immediately. And it certainly didn’t produce the dramatic reduction in ticket prices Gary Bettman promised heading into the lockout. On the contrary, average NHL ticket prices have risen from $43.57 in the final year before the lockout in 2003-04 to $57.10 in 2011-12. But it did lead to more revenue than the league has ever seen.

Now the sides have to decide how to continue to split that ever-growing pie without a lockout, which could bring those profits crashing back down for everyone involved.

That revenue split is the main issue of contention, and the league’s desire to drop the players’ portion from its current level of 57 percent is their primary objective.

Much has been made of the fact that the NHL players receive a higher percentage than the players in the NFL and NBA, who each came out of lockouts within the last year with share around 48 and 50 percent, respectively. But the NHL players’ percentage only got that high because of how much money the league was making.

Under the current CBA, the players received just 54 percent as long as league revenues stayed below $2.2 billion per year. That went up to 55 percent with annual revenues between $2.2 billion and $2.4 billion, 56 percent with revenues between $2.4 billion and $2.7 billion and 57 percent only after league revenues exceeded $2.7 billion in a single year. Last year’s revenues? A record $3.3 billion.

Both sides are making money under this system. The players’ percentage has increased only because the overall pie has gotten bigger. Since that last lockout and the implementation of this current CBA, league revenues have gone up approximately 50 percent, while player salaries have risen about 15 percent.

If that isn’t enough for the owners, then maybe they need to start looking at themselves. League-wide revenues are soaring, but not all markets are experiencing that growth. Greater revenue sharing and perhaps a much closer look at what current markets are truly viable should be the first order of business.

Simply taking away from the players once again with a more punitive system isn’t the answer, and proposals like this initial one aren’t the way to start the kind of dialogue needed to find a solution to avoid a work stoppage no one can afford.

Have a question for Douglas Flynn? Send it to him via Twitter at @douglasflynn or send it here. He will pick a few questions to answer every week for his mailbag.

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