On a day when the NHL and its teams began the arduous process of making nice with fans and sponsors still hurting over an ugly 113-day lockout, it also became increasingly apparent on Monday that the divides at the bargaining table weren’t only between players and owners.
Among the owners, whose interests can be as disparate as the revenues of the rich and poor teams, the split between big-money franchises and those struggling in less hockey-friendly markets remains.
Already there are concerns this could be an agreement – like the last – that is unable to help those poor teams, many of them the southern expansion franchises that have been a hallmark of NHL commissioner Gary Bettman’s tenure.
As such, satisfaction among the owners is limited mainly to the fact that there will once again be games on the ice.
“I think everyone was a loser in this lockout,” Montreal Canadiens owner Geoff Molson said, ticking off a list of the aggrieved and financially distressed: fans, business owners, club employees, the teams and the league itself. “I think it’s a situation where there are no winners.”
Asked whether he’s satisfied wtih the outcome, Mr. Molson smiled.
“I’m satisfied because we’re playing hockey,” he said.
It’s often said of contentious negotiations that both sides are ultimately left with at least a little residual bitterness, and the agreement-in-principle between the NHL and its players certainly meets that standard.
But rather than simply being a tale of winners and losers who sat on opposite sides of the table, some of this dispute’s resounding unhappiness comes as the result of an inner struggle on one side alone.
Consider the fight over revenue sharing, opposed by the wealthy teams, and another over the rising payroll minimum (or salary floor), opposed by the poor. Meanwhile, this remains a league where the gap between the two appears poised to grow as money pours into the seven Canadian cities and a select few successful American markets, just as it did under the previous collective agreement.
So while owners like Mr. Molson were able to put it more diplomatically for the assembled cameras, this labour stoppage was really about class warfare, on a grand scale.
“Commissioner Bettman represents 30 teams and I think he did the best job he possibly can to represent 30 teams,” Mr. Molson said. “Some teams are in large markets, some teams are in small and mid-size markets, every team has a different set of priorities and it’s not easy to completely satisfy everyone.
“But I think what he has done is to make sure that each team is satisfied to the highest potential of being satisfied. But there are no perfect answers for every team.”
The most visible change to the NHL’s financial system in the new agreement is the salary cap and floor – the maximum and minimum teams can spend on players.
While both will remain tied to league revenues, they will also move more independently of one another than they did in the last deal, when they were set $16-million apart no matter what.
A rise in minimum payrolls created a significant problem for the NHL’s low-revenue teams over the past seven seasons. As the payroll floor – which began at little more than $20-million in 2005 – crested to more than $48-million last season, cash-strapped teams in Phoenix and Florida struggled.
The dramatic rise in payrolls was tied in the old agreement, as in the new, to revenues. Under the old agreement, revenues rose by more than 7 per cent annually between 2005 and 2012, pushing the salary cap over $70-million last summer.
Some teams were able to spend up to the salary cap easily. But in recent seasons, nearly a dozen others have struggled just to cover salaries at the must-meet minimum.
The new deal’s solution is to calculate the ceiling and the floor based on a percentage, not a flat number, with the cap set at 15 per cent above a calculated “midpoint” and the floor 15 per cent below it.
With a salary cap of $65-million, the floor would be $48-million. As revenues rise, the cap will increase as well while the floor gains more slowly.
A gain of $10-million on the cap, for instance, would likely mean the floor goes up $6-million or $7-million.
Whether that subtle change can help teams on the league’s lower end is already being hotly debated within league circles. But aside from shrinking the players’ share of revenues to 50 per cent from 57 per cent, the system that landed the NHL in trouble during the last agreement remains almost untouched.
Those on the players’ side, meanwhile, admit they’re happy they were able to maintain so many aspects of an agreement that calls on all 30 teams to spend in an attempt to compete.
“Logic dictates that if there’s an upper limit, you need a lower limit,” said Ian Pulver, a player agent who helped craft the 2005 collective agreement as associate counsel for the NHLPA. “And there should be sufficient spread between the upper and the lower to let teams be creative and have flexibility with how they want to manage their cap.
“I think that the system is a good one for both parties. It creates competitive balance. The fact that that remains the same is good.”
What isn’t yet know is whether teams on the low end can afford their end of that balancing act. Even with additional revenue sharing – which has increased from $150-million to more than $200-million annually – the fact remains some franchises will likely still be able to spend at will and others will struggle to get by.
The cap, meanwhile, could top $80-million by 2019, bringing with it a $60-million floor that is nearly as high as the 2013-14 cap of $64.3-million.
That leaves this owner-on-owner fight far from decided, with another round potentially coming a decade down the line.
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