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The CBA Debate
Part 1 of 4
10/4/04 - From the Publishers of the Hockey Alliance

There is no greater issue facing the fans, players, and owners of the NHL than the expiration of the current collective bargaining agreement. Both the player's union and the owners are waging a war for public opinion, considered fairly vital in case of a long term labor shortage. Fans find themselves, as always, stuck in the middle with no represented voice at the CBA negotiation table. Fans have to look past the propaganda and rhetoric spewing from league and union offices in an attempt to understand the issues being raised. The divide among fans who are lining up either behind the players, the owners or themselves is fairly strong and has sparked many interesting debates this summer. The following is a debate between Hockey Alliance publishers, representing both sides of the agument. Contributors include:

The debate was triggered by an article written by Lyle Richardson for This conversation is a good example of the kind of debate NHL fans are having this summer and shows the kind of passion fans have for the league and the game of hockey. The conversation is picked up after discussion about the article had begun.

This is Part 1 of 4

D’Arcy McGrath: You (Lyle) say you're not in the NHLPA camp, but I have to admit it sure seems that way when you read your article. If that wasn't your intention I'd be more careful in the future because it really read like an anti-owner, pro-union piece - quite likely the reason you were attacked.

To me "fault" is a futile exercise in this case for two reasons.1) Even if the owners did fail to take advantage of the pact as it stood it was still the players that benefitted.2) If the system doesn't work it doesn't work. At the end of the day that's all you have The opening the books comment was interesting ... the NHLPA came out refuting the Levitt report the day it was released but now, several months later, they haven't given any detail as to why it was wrong or to what degree. That seems to suggest that they either can't refute it in detail, or once they did the differences were negligible. Assuming the 270 million number is ballpark close, then the roll back needed to fix the game is actually in the 21% range, making the players 5% offer a PR stunt more than a tangible step towards a pact.

Anyway ... not trying to start a war. Just my thoughts.

Lyle Richardson : D'Arcy
If you've read all of my articles on this topic, you'll find I've taken the NHLPA to task as well. Find attached one example. In my latest, I was merely pointing out some of what I consider to be Bettman's hypocrisy about the union not conducting meaningful discussions, yet he rejected out of hand the union's proposal back in October. Perhaps I'm being naive, but I fail to see what harm it would do for the league to simply open it's books to the union to justify it's claims.

I keep hearing all this talk of "greedy players destroying the league", and while there is some truth to it, the simple fact remains is that it's the owners who paid those salaries and abused the current CBA. In examining the history of the NHL labour talks and this current CBA, it's apparent to me that the owners are more deserving of blame for creating this situation. Again, given their track record, it's worth bearing in mind whenever one cites the NHL's "cost certainty" solution (whatever that is) as the only feasible one. The players benefited under the current CBA because the owners abused it. The players claim they like the current system the way it, so why doesn't the NHL and the owners wake up to that fact and use it as it was originally intended by the owners - to get player salaries under control. Like I said, how are we to trust this bunch to put a supposedly "better system" into place when they abused the current system?

D’Arcy McGrath: Fair enough ... But I think that's the thing. You have to make it idiot proof in pro sports because some owners don't treat it as a business. If they did treat it as a business the players wouldn't like the current system and the owners would. Bottom line? The blame is irrelevant, only the result matters, and this system doesn't work because the mistakes of a few move the market for the whole group. I'd say 90% of the ownership groups have followed in line to remain competitive having had no choice because of benchmarks set by an owner that was over zealous. Players say they want a free market economy, but really they don't. A free market economy that puts the industry out of business will always adjust if it's not sustainable. They don't want that. They want owners to continue to put a gun in their own mouths and keep the gravy train rolling. Ideally, words like "cap" or "cost certainty" are never needed if everyone had to follow one basic rule ... DON'T LOSE MONEY. But until that time you need to protect the smart owners from the idiots or the whole system moves up and destroys the golden goose (where we are now). If you're interested Lyle, here's an article I wrote last week looking at the numbers of sitting out a full season.

Lyle Richardson : The points raised in your articles are good ones, but I doubt we'll see a player revolt against the union heads. Indeed, I suggest the power lies not with the owners in this case, but the players. I base this on two factors. One, the amount of money most of the players, particularly the veterans, have made in recent years, and the options open to the players in case of a lockout. The average salary has gone up in ten years from over $500K to $1.8 million. Last summer, an article in the Detroit News noted how the average NHL player is said to have roughly $2 million in savings, plus they can draw on a $1.5 billion union "war chest" they've amassed to ride out a prolonged lockout. They also have a a union controlled investment account worth hundreds of millions of dollars, as well as royalties from player trading cards, video and computer games, magazines and other merchandising.

The article cited one case in point: Dominik Hasek, who is a multi-millionaire who hasn't lived like one during his 12-year NHL career. Reporter Rick Westhead wrote Hasek spent most of that time living in a $180,000 home in Amherst, NY, which he sold three years ago after he was dealt to the Red Wings. He's never bought a car, instead driving Dodge Durangos or Caravans borrowed from local dealers, who in turn get the bonus of the additional business Hasek's promotion brought them. One agent, Rich Winter, bragged to the Toronto Sun that his clients could be comfortable for "five to 75 years", whilst agent JP Barry noted clients such as Jaromir Jagr, Mats Sundin and Daniel Alfredsson make millions of dollars but "live like they are making $400,000 or $500,000." These agents are pointing out that a shutdown will hurt the owners more than the players. Obviously, not all the players are in the same boat as those on the high end of the pay scale, but again, with half the players in the NHL earning over a million dollars last season, and others earning between $700K-$900K last season, the majority are in pretty good shape to ride out a lengthy lockout. And don't forget, the players today have more options than they did ten years ago, when none of them were expecting a work stoppage, let alone a prolonged one. Some of them have businesses, including their own endorsement deals in their local cities.

For many players, Europe beckons. Indeed, it won't break the hearts of the European players, who are a sizeable contingent. A chance to go home and play for a year or two would make a welcome respite. Yes, they won't make as much money as they would in the NHL, but it's still not chickenfeed by anyone's standards. If they play in Russia, they won't be taxed on their salaries.

Then there's the option of doing what Wayne Gretzky and his buddies did by putting on "barnstorming" tours. You can argue that they won't be as popular or make as much money, but there would be a marketplace for them for fans starved of pro hockey. Folks can talk of fan boycotts until the cows come home, but a lot of fans would pay the money to turn out to watch their favourite players playing the equivalent of a touring All-Star game. Indeed, we're already hearing stories of players making plans to play in Europe next fall, and of the NHLPA possibly setting up an open-air game at the Skydome this winter. I realize the owners don't make their living solely off their NHL franchises, but after a year of nothing coming in for them, I fail to see where they'd be in better shape to wait out the players. At some point, I believe the pressure falls more on them than it would the players. And you've got to remember that the owners won't be as united as the players. There's already talk that there are divisions between the big and small market owners, much as there was during the lockout of 1994. At some point, the losses they'll take will hit them far worse than anything the players will face.

D’Arcy McGrath: Lyle I couldn't disagree more. The players have all the pressure. All of it. Not one ownership group in the NHL has hockey as it's true business, in each case the sport is either a hobby or a small piece of a larger entertainment magnet. The numbers the NHL have supported, numbers that have been confirmed in the Calgary case by the players by the way, suggest an owner will actually stand to lose less money by not playing than by sticking under the current CBA scheme. Add to that the fact that Bettman has a 75% veto override on the ownership group meaning 23 teams have to disagree with his intentions to get a deal that falls outside of his road map for cost certainty ... the union has no such controls.

There are two major factors in this negotiation that should put a lot of pressure on the players.

  1. They are basically conceding that things have to roll back ... a slippery perch to start a negotiation and
  2. The finite career length of NHL hockey players.

Players talk about how their brothers went to war and sacrificed for them in 1994, but in the end that didn't happen. They missed half a season and then ushered in the largest salary escalation period in NHL history. That's not a sacrifice it's a boon, and they know it. Things will hold tight for a few months, but then cracks will start to form in the player foundation. I'm almost sure of it.

Lyle Richardson : I'm not suggesting the players won't feel any pressure if a lockout goes beyond Christmas, but the facts that I noted clearly indicate these guys are in much better shape to ride out a lengthy lockout than you give them credit for. In the short term, yes, the owners will lose less money if there's a lockout, but they're still going to lose money. I've already heard that some of the small market owners are genuinely concerned about a season-long lockout because of the impact such a lockout could have on the gate once the league returns to action. Meanwhile, I've heard little to suggest the players will crack if a lockout goes past Christmas or beyond.

A few of the star veterans would like to avoid that happening for personal career reasons, and some have publicly stated they feel some salaries have gotten too expensive, but they're all determined to stand with Goodenow on this. I have an important contact within the NHLPA (and no, it's not the janitor or a secretary), and when I questioned him on the impact of veteran players on the negotiations, here's what he had to say: "I can assure you that, thus far, the effect appears to be the opposite of the one you raise as a possibility. Many of these veteran players endured the last lockout and have been guiding voices in speaking with the younger players.

As they are so well respected, they have been an asset in helping players understand the realities that this situation presents. Their experience in invaluable, and a number of players have gone on record saying that they are comfortable missing time in the twilight of their careers if it means upholding principles they’ve worked hard for and valued for so many years." While the players back in 1994 did have concerns over the possibility of losing the season, in the end they held firm and trusted Goodenow. They've done very well under the current system that was brought about in part by him, and they're more willing now to trust him to get a good deal in place.

I can't stress enough the fact the players are far more educated than they were in 1994 on labour talks and the fact that they're in better shape financially now than they were back then, as I clearly noted in the points I made in my last e-mail. I'm surprised you didn't address those, but those are facts that cannot be ignored. Essentially the players union has stated they are willing to address the need to bring salaries under some form of control, barring a cap. That's hardly a "slippery perch", but rather a willingness in my opinion to negotiate. The league refused to even address the union's October proposal, dismissing it outright as "unworkable", yet Bettman has offered up nothing of substance other than "cost certainty", which he's yet to go into detail about, other to suggest a cap is one option but not the only one. Whatever it is, the league knows what it wants to put into place, and thus far have shown no willingness to even negotiate on any part of the union's proposal.

And while NHL careers are finite, the players want to get a deal they can that will best compensate them during that career. Already we've seen several instances of players staging year-long absences to get what they want. For all of them to miss a year, when they've got a $1.5 billion war chest saved up, an average of $2 million each in savings, a union controlled investment account worth hundreds of millions of dollars, as well as royalties from player trading cards, video and computer games, magazines and other merchandising upon which to draw on, isn't going to hurt them as badly as you think. That's not taking into account income from private endorsements, businesses and playing in Europe. Meanwhile, I'm already hearing reports that many of the small-market owners are poised to butt heads with their big-market counterparts, which is what also happened during the 1994 lockout (I refer to Bruce Dowbiggin's excellent book, "Money Players").

Both sides felt pressure back in 1994, but in the end, it was the owners who, with the most to lose, voted in the current CBA. I still feel the owners will have more to lose if a lockout last for a year than the players, and I still believe that they'll be the ones who'll concede first. After all, that's what they did in 1992 and 1995.

In the end, the real losers will be the team employees who were laid off for that period, and the millions of hockey fans who won't have a season to follow.

Frank Thorpe: I understand what the NHLPA is saying but it's a situation of cutting of their nose to spite their face. The NHL is in some serious shape. It's on life support and ANY work stoppage could be the end of the league or hurt it past repair.

I'm glad the Union has their war chest and players have their savings. It might be the last time they see money for a long time. Playing in Europe is an
option, but how many players have that opportunity? There are only a certain number of teams with a certain number of openings.

A 5% reduction in salary is a joke. The owners have every right to laugh that off the table. Right now salaries comprise 76% of all the revenues of the teams. The is 10-20% higher then the 3 other major leagues. How can the players justify this? Yes the owners created the problem but they are trying to rectify it, whereas the players want to rearrange the deck chairs on the Titantic.

I hate Bettman and think he is a reason for a lot of the woes of the NHL. But this is a situation where the owners have to stand together on. The NFL and the NBA have salary caps. Major League Baseball has a luxury tax, what makes the NHLPA and it's members think they are above those other leagues? What's funny is all 3 of those leagues are a lot more successful then the NHL.

What aggravates me the most with this whole situation is everybody's blind eye to the real financial problems of the NHL. The league is losing money. The NHLPA has yet to provide any evidence to the contrary. I hope they enjoy the WHA and Europe, because if this lasts a year that might be the only place they can play. I agree with you, the NHL is in serious shape. But who let it get that way?

Part 2 will be published on Wednesday

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