The Latest NHL CBA News Update – May 27, 2012.

Roundup and analysis of the latest NHL CBA news and opinions.  

“Does the NHL’s CBA notice mean another lockout?” – Stu Hackel, SI.com, May 17, 2012.

Hackel revisited a November 2011 interview with Michael Ozanian of Forbes.com, who noted while NHL franchise values have increased by 47 percent since 2005, too many clubs still lose money.

Ozanian believes the league must move toward either a 48 percent revenue share for the players akin to that of the NFL, or a 50-50 split as per the recent NBA agreement.

But as Hackel pointed out, that isn’t taking into account the NHL owners don’t share enough of their revenue amongst themselves to off-set the problem. In his opinion, if the league continues to shift the burden onto the players without improving their current revenue sharing system, there could be problems when CBA talks begin.

SPECTOR’S NOTE: That’s going to be the key sticking point in the next round of talks. The league negotiators will push for a reduction of the players’ share of revenue, while the PA will seek others means to address the problem, including an improvement in the current method of revenue-sharing. 

Jets could be greatly affected by deal.” – Gary Lawless, Winnipeg Free Press, May 19, 2012.

Lawless examined how a new CBA could affect a “middle-of-the-pack team in terms of revenue and the business model” created by the Winnipeg Jets under the current CBA.

He reported the Jets will “wind up somewhere between 15th and 11th in hockey-related revenue among the 30 NHL teams, and spent around $51 million in payroll, which was 25th overall.”

The Jets raised ticket prices three percent across the board for next season, while the NHL salary cap could jump by 10 percent for next season to $69 million. Their ticket revenue this season was around $50 million, so the projected increase in labor costs will outstrip that three percent hike.

Lawless believes in “a gate-driven league with as many broken franchises as the NHL has, meaningful revenue sharing isn’t possible” under the current system, as the wealthiest teams (he singled out Toronto and Philadelphia) won’t share the bulk of their ticket money with teams like Phoenix and Florida.

SPECTOR’S NOTE: Well, that’s not necessarily true. They were “sharing” it the past the past three years with the Coyotes, and the past two with the Dallas Stars, as the league took over interim stewardship of those franchises while they sought new owners. So, in the short-term, big market owners will share revenue, but they aren’t keen to make that a permanent arrangement. 

Lawless didn’t come right out and say what system he believes would best serve the Jets, other than it should be one which gives the team the best chance to compete for a championship. 

The current system is what Bettman and the team owners promised would deliver that very thing when it was implemented back in 2005. They won’t demolish it, since it is their baby, but they do wish to improve upon it. For teams like the Jets, anything which slows the increase in player salaries is what True North Sports and Entertainment will probably embrace.

Owners can blame themselves.” – Bucky Gleason, The Buffalo News, May 20, 2012.

The headline says it all, as Gleason put the blame for the problems under the current CBA squarely where it belongs, at the feet of the team owners.

Gleason pointed out the league and the team owners will have a difficult time complaining about a CBA they essentially drafted and forced upon the players seven years ago. He doubted the league gets much sympathy from the fans this time around if they attempt another lockout.

He also sounded a note of optimism, believing both sides could reach an agreement without compromising another season, because this time, there’s too much money at stake now.

SPECTOR’S NOTE: Can’t add anything to Gleason’s comments. He’s absolutely right where the blame for the current discrepancies lie. It’s nothing new. The owners were also to blame for the problems under the previous CBA, too.

NHL players need to keep their heads up for upcoming talks with the league” – Tony Gallagher, Vancouver Province, May 21, 2012.

Gallagher reported the efforts of NHLPA director Donald Fehr to get the players involved and on side will determine how he approaches negotiations with the league.

In addition to the owners seeking a reduction in the players’ share of revenue, Gallagher believes they’ll also seek an increase in the eligibility of UFA status to age 29, term limits on player contracts, lowering of the salary cap floor and narrowing the gap between the cap floor and ceiling.

Gallagher also suggested it could be a bumpy ride for league commissioner Gary Bettman if he pushed his wealthy franchises too much on revenue-sharing.

The biggest issue for the players is elimination of the escrow clause, though Gallagher pointed out if that happens, another means will have to be found to make sure the correct percentages are paid to both sides. Like most observers, he believes Fehr will push for more revenue-sharing.

Gallagher beleives the easiest solution would be a system whereby the players share is between 52-54% while the wealthier teams could share more with their poorest cousins, but it appears the team owners will push for the players to carry the burden again.

SPECTOR’S NOTE: If the two sides are actually willing to negotiate and avoid a work stoppage, the solution suggested by Gallagher could become reality. Ultimately, that depends upon the league’s willingness to negotiate rather than bully, and if the players aren’t willing to knuckle under to the league’s anticipated hard-line demands. 

If the league plays hardball, and the players tell Fehr to get the best deal he can without risking the loss of the season, then the next CBA could see the players get between 46-48% of revenue, escrow remain intact, no significant improvements to revenue sharing, the eligibility age for UFA status jumps to 29, and five-year term limits on contracts becomes reality. 

And if that happens, the league will once again have a pyrrhic victory, for all they’ll achieve is kicking the can on the real issue – the need for improved revenue-sharing – down the road for another few years. 

Stanley Cup playoffs prelude to ‘samurai’ labour showdown” – Rick Westhead, Toronto Star, May 25, 2012.

Westhead reported Fehr expects negotiations with the league to begin in the next few weeks. Player agent Mike Liut claimed the PA director has been warning the players the owners will “come at us with Ginsu knives on the end of samurai swords”.

Fehr also acknowledged Bettman enters negotiations on a confident footing, pointing out the commissioner’s recent comments at a sports business conference where he claimed NHL revenue was the same the season following the 2004-05 lockout as it was the season before the lockout.

To Fehr, that suggests the owners believe they have a complete monopoly, thus they don’t believe another work stoppage will have any adverse effect upon their revenue.

Westhead noted the PA would still have leverage, among which is decertification, which if approved would render the league’s lockout illegal.

Another issue could be the unhappiness with small market team owners over the current revenue-sharing, which could prove a wedge between them and their big market peers.

Former NHLPA executive Glenn Healy, meanwhile, expressed doubt Fehr grasped the difference between hockey players and baseball players from a business and labor standpoint. Toronto player agent Anton Thun, however, considered that criticism unjustified, noting Fehr’s taken the time to listen to the players and keep them informed, unlike the previous PA leadership.

If another work stoppage occurs, Westhead suggested the league and PA risk jeopardizing their revenue streams, pointing out the surge in revenue in recent years, due in part to a record 23 sponsors, and a lucrative new contract with NBC Sports.

Westhead reported several player agents and former league officials believe a lockout could last until early December, pointing out January is a key month, as that’s when the 2013 Winter Classic takes place.

He also cited a marketing executive who said the league shouldn’t take their recent gains for granted and believe they could easily rebound from another lockout.

SPECTOR’S NOTE: Westhead was at the vanguard of reporting the PA’s internal problems following the lockout, so I recommend following him over the course of the next round of CBA talks. 

Fehr’s comments regarding the owners’ monopolistic attitude toward their product could well govern how they approach the next round of negotiations, because if they remain as united as they were last time, they’ll feel they can wait out the players without significant consequences to their revenue. 

That being said, there is considerable more money at stake this time around, and neither side should assume that there won’t be any consequences just because they didn’t suffer any decline last time around. 

I believe Healy’s concern is unjustified. Fehr is more than aware that he’s dealing with a different culture, which is why he’s spent the past two years immersing himself in it, meeting regularly with the players to keep them abreast of the PA’s plans, as well as determining the players’ needs. 

As for decertification, that was suggested during the last lockout and never came to pass, and I doubt it will become reality this time. Michael McCann of Sports Illustrated did an excellent job explaining the ramifications and why the threat of decertification didn’t work in the recent NFL and NBA labor negotiations.  

Westhead makes a great point about January being a critical month as it could cost the league the 2013 Winter Classic. This year’s match between the Red Wings and Maple Leafs could generate the largest audience in the short history of the Classic, drawing upon the fan bases of two of the league’s oldest and most popular teams. Cancelling that game would be a serious hit to the league’s revenue, even if they were to begin the season after it. 

If a work stoppage is not resolved before January, it creates the fear among the fan base another season could be lost. That could not only test the nerve of both sides, but also runs the risk of alienating the fans. Yes, they came back last time, but if there’s a second potential season-killing lockout, that could be a serious test to fan devotion. 

3 Comments

  1. Is relocation a possibility for any of the teams and for which ones?

  2. Thanks for the update Lyle!

  3. If the NHL dares go the lock out route again this time.They better know that they may not get as much support from the fanbase as they did in the last negociations.

    As most will see it as trying to correct their mistakes on the back of the players. How can one say the players are gready, when the owners are spending like drunken sailors. The cap system did not solve all of the problems it was suppose to.Cost certainty, what a joke that was. Bettman created a two headed monster, now he will be looking to slay it in the next CBA.