COMMENTARY: The labor dispute between the National Hockey League and the National Hockey League Players Association is nearing its 100th day, and the two sides are not only miles apart in their positions on a new Collective Bargaining Agreement, no negotiating sessions are on the horizon whatsoever. Meanwhile, the two sides are heading for litigation. Here are some thoughts and analysis regarding why we’ve reached this point.
LOS ANGELES — The National Hockey League lockout is now in its 99th day, and still, there is no end in sight.
Meanwhile, the NHLPA has voted overwhelmingly to authorize its leadership to disclaim interest or decertify the union.
Add to that NHL Commissioner Gary Bettman declaring that unless a 48-game season can be played, there will be no 2012-13 season, we are a little over two weeks from what appears to be yet another embarrassing catastrophe, courtesy of Bettman.
Indeed, his tenure as Commissioner has been a pathetic, embarrassing failure of meteoric proportions.
To be sure, the NHL has expanded to thirty teams under his watch. Adjustments to the rules have gotten rid of much of the clutching and grabbing that bogged down the game so much. Revenues have also grown under his watch, now surpassing $3 billion annually—Bettman gets credit for those accomplishments.
However, even after acknowledging that the NHLPA bears some responsibility for the current stalemate, all the positives on Bettman’s record have been completely obliterated by three lockouts during his tenure.
In 1994-95, the first lockout resulted in the loss of half the season. In 2004-05, the entire season was cancelled.
This time around, the end game is still playing out, but the 2012-13 season is hurtling towards oblivion as you read this, and as each day passes, it looks more and more like it will reach its very final destination.
Despite the fact that Bettman is the Commissioner, and must bear the brunt of the blame, he is not alone. In fact, he was hired by NHL owners, some of whom are very much behind his “lockout first, negotiate later” collective bargaining strategy. Even worse, they are complicit in the fact that they failed to get the deal they needed during the last CBA negotiations in 2004-05, even though they held all the cards and secured what would be considered a blowout victory if we were talking about a hockey game. Indeed, the owners forced the players to capitulate, getting everything they wanted.
Perhaps worst of all, Bettman and the owners bear a dubious distinction, as they are responsible for the NHL being the only professional sports league to lose an entire season due to labor strife.
If that doesn’t epitomize the terms, dumb, foolish, arrogant, and incompetent, I don’t know what does.
Arguably, one of the biggest underlying issues in the NHL’s collective bargaining is revenue sharing, which was little more than a joke in the last CBA. The NHLPA wants the league to adopt a more robust plan to help the teams at the bottom of the ladder, and you can bet that the owners of teams at the high end of that ladder are balking at giving up more of their revenues. In fact, one could argue that the increase in revenue sharing proposed by the owners would be funded primarily by their proposed decrease in player salaries.
Of course, all this goes back to getting it wrong in 2005, even though Bettman declared that they got the right deal.
“We knew we were at the stage where we had to make the right deal,” he said. “That’s why it took as long as it did. Rushing to get in half or 40 percent of the season, at the cost of not getting the right deal, would not have been worth it.”
“I know the league’s future is bright, and this will be to the benefit of the game,” he added. “We had no choice but to get it right.”
But it is now crystal-clear that Bettman and the owners got it wrong. To be sure, the NHL would not be at the brink of losing its second season due to labor strife if they had gotten it right in 2005.
The other elephant in the room is the fact that the NHL under Bettman was overzealous in its efforts to expand to its current thirty teams. In fact, several teams are losing money, even though the league reported “record revenues” in every year since the adoption of their last CBA.
One look at those two huge elephants in the room tells much of the story about why the NHL has come to a complete standstill:
- Several teams are losing money, primarily due to the fact that the NHL foolishly expanded into markets that would not support a team enough to be financially viable.
- Owners of profitable teams are more than reticent to give up their hard-earned revenues to help prop up teams on shaky financial ground.
If you were wondering why I said that Bettman and the owners epitomize the terms, “dumb,” “foolish,” “arrogant,” and “incompetent,” those two points above should clear things up for you.
That said, the owners are all multi-millionaires and in a few cases, billionaires, and people who have earned that much money are definitely not stupid. However, even the smartest people are not immune from suffering from complete brain-lock from time to time, and the evidence seems to be rather incriminating, in this case.
In fact, all one has to do is to examine the CBA’s of the three major professional sports leagues in the United States (does the NHL count as a major professional sports league, given that it is little more than a niche sport in the United States? Debatable, yes, but that’s for another story).
In the current CBA’s of each of those leagues, owners won major concessions from their respective players unions. But each league was wise enough to agree to significant revenue sharing, unlike the NHL.
In Major League Baseball, their current five-year CBA includes a luxury tax on teams with the highest payrolls, with the money being distributed to lower-revenue teams.
Indications are that the revenue sharing in baseball is not always having the desired impact, in terms of competitiveness, but it does appear to be working, in terms of league and team finances.
The National Basketball Association, which locked out its players for 149 days prior to the 2011-12 season, was able to reach an agreement with its players union in mid-November 2011, after the union decertified, and filed an anti-trust lawsuit. The new, abbreviated season began on the following Christmas Day.
In their new CBA, NBA owners won significant concessions from the players, with their salaries dropping from 57 percent of league revenues in the previous CBA, to 51.15 percent in 2011-12, and 49-51 percent in following seasons.
But like Major League Baseball, the NBA already had significant revenue sharing in their previous CBA, and in their current agreement, they tripled it from what it was previously. In addition, the NBA luxury tax could increase (depending on the circumstances, which will not be detailed here) for teams with payrolls exceeding the tax threshold, compared to the tax in the previous CBA. In other words, considerably more money will be shared with lower-revenue teams.
In their new agreement, the National Football League also won major concessions from their players union, with their share of the revenue dropping from 50 percent in the previous CBA to an average of 47 percent.
But once again, the NFL has revenue sharing, with a ten percent tax on locally-generated revenues (sale of luxury suites, concessions, parking—anything other than revenues from television contracts, media deals, league-wide sponsorships, other shared revenues), which is distributed to the lowest-revenue teams.
Something that stands out from looking at the current CBA’s in those sports is that owners won major concessions from their players in the NBA and NFL, and you can bet NHL owners took their cue from that. After all, if NBA and NFL owners could demand that their players take a considerably smaller piece of the pie, and then win those concessions, why couldn’t they do the same with NHL players?
But more glaring is the fact that each of the three major professional sports leagues have some sort of significant revenue sharing in place, and have for a number of years. Meanwhile, the NHL, led by Bettman and the owners, is just barely starting to talk about that in a meaningful way as 2012 comes to a close.
Revenue sharing is not the biggest issue in the current CBA talks. However, it plays a major role. The lack of foresight in that regard by Bettman and the owners has resulted in three lockouts, one lost season, one partial season, and the likely loss of another season, all during NHL Commissioner Gary Bettman’s tenure.
Dumb, foolish, arrogant and incompetent.
Need I say more?
Stick tap to HabsAddict.com for mentioning this story on their site.
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