Both Donald Fehr and Gary Bettman agree on one thing – there is “a wide gap,” as the NHL commissioner put it – between the owners and the players in their labour negotiations.
One month to the day when the collective agreement expires, Bettman squelched any optimism he and the owners found the first proposal put forward by Fehr, the executive director of the NHL Players’ Association, as a basis for negotiation.
“I think it’s fair to say the sides are still far apart and have different views of the world,” Bettman said Wednesday after he delivered the owners’ response to the players. Full negotiations are not scheduled to resume until next Wednesday and the NHL commissioner hinted darkly that time is running short to prevent a lockout.
What is interesting, though, is that it may be more than the players who have a different view of how the NHL owners can solve their biggest problem – the gap between the profits of the league’s wealthiest teams and the relentless losses of its poorest. Some of the owners of those weaker teams may share the players’ philosophy that lower salaries combined with greater revenue-sharing from the rich teams are the way to prosperity in hockey. But they are not numerous or strong enough to influence their peers.
When the players’ proposal was given to the owners on Tuesday there was much optimism in union quarters. They offered not only to remain under a hard salary cap, which the owners won after the 2004-05 season was lost to a lockout, but to take less money by reducing their share of league revenue. They also called for more revenue sharing from the richest teams, which is where the proposal went off the rails as far as some owners may be concerned.
Some people connected with the NHLPA believe once Bettman and his negotiating team digested the proposal it was quickly shared with the 30 league owners. Then Bettman took a quick poll. It would have been the sensible thing for any leader to do.
What is clear, those union people believe, is that the players’ proposal was loudly shouted down by the rich teams who were asked to increase their contributions to revenue-sharing by more than $50-million to $250-million per year. Wealthy owners like Jeremy Jacobs of the Boston Bruins, the chairman of the board of governors, and Ed Snider of the Philadelphia Flyers carry a lot of weight at the governors’ table.
At least some union types were hoping the small-revenue owners, who were so influential seven years ago when the cap system was forced on the players, would speak loudly enough to force a consensus to at least negotiate from the players’ opening position.
Instead, Bettman made it clear the owners believe their opening demand is the way to go – cut player salaries by 24 per cent by chopping their share of league revenue from 57 per cent to the equivalent of 43, take away salary arbitration, increase the eligibility for free agency and limit contract terms to five years.
Once the players crunched the numbers, they realized this would put $450-million (all currency U.S.) a year into the owners’ pockets, based on last season’s NHL revenue of $3.3-billion. Of course, there would still be the same old problem – most of that money would go to the rich guys.
“There’s a pretty substantial monetary gulf there,” Fehr said. “When you start with the proposal the owners made how could it be otherwise?”
The players offered to cap their salary increases for the next three years by no longer linking the salary cap directly to league revenue. Thus the owners would keep a greater share of the revenue.
By the NHLPA’s estimation, the owners would realize a gain of $465-million (all currency U.S.) but it would be spread over three years if revenue continues to grow at the same rate it has in the seven years since the lockout. If the league revenue grows as quickly as it has in the last two years, about 21 per cent, then the owners could save more than $800-million.
Under the current agreement, the players receive 57 per cent of the NHL’s hockey-related revenue (HRR). In the first year of the players’ offer, this share would drop to between 52 and 54 per cent.
The union also proposed a couple of exceptions to the cap. Lower-revenue teams would be allowed to trade up to $4-million in cap space and they would be awarded extra draft picks that could be traded or sold if they were not used.
But Bettman grumbled the players should look at the NBA and NFL, where the players agreed to reduce their take to 50 per cent or less in recent agreements.
This brought a sharp response from Fehr, who noted Bettman did not mention Major League Baseball. The union leader said this was a glaring omission since baseball is the only sport with no salary cap, a great deal of revenue-sharing and no labour strife over the last 15 years.
“What the players have said is every sport has its own economics. They’re self-contained and you have to negotiate within that context,” Fehr said.
Besides, the union leader said, the salary cap “is a system the owners insisted on and got enormous concessions from the players with the stated expectation that would fix things. Their position now is it didn’t fix things.
“From the players’ standpoint it doesn’t necessarily follow that, okay, the players get paid a lot less.”