I find nothing more frustrating than labor disputes
in sports. Fat cat owners sit down with
players, themselves part of the famed 1% in America, to discuss how they can
best split up the money. Make no mistake
about it, economics drive every sports labor dispute. Which sheckels go to whom dominates these
discussions, and the NHL has been no different.
The main issue at play: splitting up hockey-related
revenue. In the NBA and NFL, the players
and owners split revenue approximately 50-50, an “industry precedent” that NHL
owners would like to follow. Not so
fast, because what exactly does hockey-related revenue mean? No one knows.
NHLPA president Donald Fehr knows he can’t explain it to reporters and
the wider public, and thus far the only information boils down to a desire by
the owners to take more out of hockey-related revenue. In essence, redefine the term itself. Doing so would limit the pie from which the
owners and players share, which can only hurt the players in a revenue-sharing
agreement. As if that wasn’t enough, the
percentage of sharing also occupies a prominent place in these
negotiations. The NHLPA currently
receives 57% of that revenue, a holdover from the previous CBA after the lost
2004 season. Owners, predictably, want
to decrease that share.
After that question, an interesting development
shows in the various proposals of both sides: a salary cap. After 2004, the NHL and NHLPA agreed to a
salary cap which limits, by definition, the amount that players can make. Entering these negotiations, NHL owners
pushed for a decrease in that salary cap but wanted to increase the lump sum to
be shared with the NHLPA from $150 to $190 million. Sounds great in principle, but the NHLPA contends
revenue sharing should not come at the expense of player salaries. Remind you of the current debt debate in
politics now?
While the cap issue sounds like a big deal, the
NHLPA deserves credit for not panicking.
The original NHLPA proposal included the salary cap structure and
proposed decreasing the cap incrementally ever year over the duration of their
proposed agreement. For those who
remember the 2004 lockout, the proposals from both sides tried to fundamentally
change the league’s structure. That the
players accept the need for some salary cap should be acknowledged by owners as
accommodating and a starting point for common ground.
But, like all lockouts, the tension within the ranks
of ownership also plays a role here. Big
market clubs want to capitalize on record NHL revenues to keep more of it away
from the players. Hence, the proposals
for decreasing the definition of “hockey-related revenue” and lowering the
salary cap. Small market franchises, as
always in these situations, seem to be behind the bigger owners…for now. The reason for solidarity now: owners make
their payday when they sell their teams.
Since 2004, according to Forbes, the average NHL franchise’s value
increased by 47 percent. That’s a huge
return for ownership, so any plan to bundle more value into a franchise will be
accepted on their end, unless the players can drive a wedge in that thinking.
And it appears they have done so. A little-known part of the players’
association proposal calls for an Industry Growth Fund, which would pool money
from big market teams. That pool would
then be paid out to the smaller, more risky franchises in a manner determined
by the commissioner’s office. As far as
constructive proposals go, that sure looks good on paper. Small market teams need that kind of support,
especially if the NHLPA can agree to a slightly reduced cap but a greater
revenue-sharing sum between them and the owners. Nothing better to puff up Bettman’s chest
than the ability to divvy out funds as he wishes, right?
What’s the common denominator in all this:
money. Plain and simple, the green stuff
runs the sports world. Both sides look
to defend their own interests in this case, and who can blame them?
Normally, I am generally on the side of the owners
when it comes to lockouts, for a few reasons.
First, owners buy the team, provide flights, medical attention, and
amenities to players, and must suffer any losses the franchise incurs over a
given period. In other words, owners
adopt all the financial risk in the business side of the equation. Given that, players should not have a say in
how the franchise is run, since they represent the employee to Grand Poobah
Employer, the owner. Concordantly
speaking, revenue sharing makes no sense.
At what other place of employment could you be entitled to 57 percent of
revenue coming directly from your work?
Unfortunately, this isn’t any other store, firm, or
multinational company. While owners bear
the financial burden, players bear physical burdens that need
compensation. Second to football,
gameplay in hockey contains the most contact of any sport. Players will be injured, and while their
medical expenses may be paid for, the team will not necessarily be under any
obligation to keep them on the roster. Current
American labor laws (and any sense of fairness) dictate players (as employees)
receive compensation according to their risk while at work. If you put your health on the line every day
at work, you’d want something back right?
But the follow-on question should be, “yes, but would I walk out of work
if it didn’t have that attention?” On
that score, it’s tough to know.
Sports holds a unique cultural space, a subject most
everyone likes and can discuss. The amount
of folks who need sports as a release, escape, or source of entertainment
likely dwarfs those who will vote this November. To that end, players and owners need to drop
the farce of negotiations, broken talks, and threats. For one, it helps them not at all. A missed season means missed paychecks for
players and missed revenue for owners.
Second, fans cannot see these games, deflating public interest as
spectators substitute better products (i.e. the NBA) for hockey. Finally, the NHL experienced record revenues
last year. The lockout could not come at
a worse time.
Make no mistake; the owners likely will get what
they want. Perhaps to varying degrees,
but they will. Owners can last longer
than players since many of them maintain other businesses separate from the
franchise. The NFL and NBA lockouts of
last year bore out the same trend, as owners increased their revenue sharing
slice at the expense of the players.
And who suffers?
We do. Hockey fans, diehard
puckheads, kids with the middle name “Brodeur”… all suffer. No matter who wins, we bear the brunt in some
way. Should the players maintain some
semblance of the status quo, how do you think owners make up for any shortfall? That’s right: ticket prices, parking fees,
and concessions all play into that equation.
Should the owners win, fans will not have the opportunity to see as many
stars play together (a model that has lifted the boat of the NBA in recent
years) due to cap restrictions.
I understand, sports is a business and realities
confront every business. But, pointless
negotiations with no compromise, depriving spectators of a sport/product they
love, are unacceptable. The owners need
to get serious. The Industry Growth Fund
represents common ground for the two sides as does the willingness of players
to operate under a salary cap. That
should be leveraged. Step #2: Ask Gary
Bettman to step down as commissioner. I
never understood why so many boo Bettman when his mug shows on the Jumbotron, but
now I know has not led the league successfully.
His Sun Belt strategy (placing franchises in nontraditional markets) has
paid some dividends but those franchises are slowly moving back up north (see
Atlanta last year and Phoenix in years to come). What’s worse, should a lockout happen this
month, Bettman will have presided over three such work stoppages in his
tenure. Put a fork in him and can him,
please.
Above all, the madness needs to stop. Owners need to figure out the players have a
desire to make a mutually beneficial deal.
They also should understand tinkering with definitions that even sniff
of cash will not be well-received and can only clog the process. On this one, I’m willing to accept a lower
salary cap and higher revenues for owners with the same definition of
hockey-related revenue. Integrate the
Industry Growth Fund and let’s get back to hockey.
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