NHL owners hate to be told how to run their business, which is the primary reason the NHLPA’s model for solving the lockout – 18 days and counting – is falling largely on deaf ears.
The National Hockey League Players’ Association proposal revolves around an increase in revenue-sharing, tied to a gradual reduction in player salaries, so that any growth that occurs in the years ahead accrues mostly to the owners. It is a system, they believe, would once and for all address the issue of wide gaping economic disparities between the NHL’s richest teams and its poorer cousins.
Thus far, the league has rejected the model out of hand, and a big part of it has to do with the owners’ unwillingness to let their paid employees determine how the business is going to be run.
In general, anyone with the wherewithal to own an NHL team has encountered some business success along the way – which is why they indulge in sports ownership in the first place.
While some teams such as the Toronto Maple Leafs are a licence to print money, there is still a hobby owner quality to the NHL. Terry Pegula (in Buffalo) or Tom Gagliardi (in Dallas), the two most recent owners in the door, are mostly in it because they are fans. It’s a fun business, different from what they’re used to. Nothing in either market would lead you to believe that putting money into the Sabres or the Stars represents a smart business investment.
Still, there is something to be said for listening to your employees’ input. That’s why they put suggestion boxes in workplaces. Sometimes, if you’re on the floor of the company, you know more than the person in the corner office. It’s not just the premise of Undercover Boss. It’s a sound way to doing business. If the right suggestion comes along and makes the business more efficient, does it matter where it came from?
Which is why the NHL’s stubborn unwillingness to at least consider some version of the NHLPA model is puzzling. Remember what happened in February of 2005, right at the 11th hour, when the NHL and the players’ association needed to make a deal or else lose the season. The two sides came pretty close. The NHL offered a $42.5-million (all currency U.S.) hard salary cap not linked to league revenues, a significant departure from previous offers. The NHLPA countered with a $49-million hard cap that would permit teams twice in the six-year span of the collective bargaining agreement (CBA) to exceed the cap by 10 per cent and pay a tax rate of 150 per cent as the price for doing so.
On Feb. 16, 2005, Bettman cancelled the season. Three days later, both sides met in New York, with Mario Lemieux and Wayne Gretzky attending, to attempt to uncancel the season. At that point, the NHLPA reportedly dropped its demands to a $45-million hard cap. Think about how good a hard cap set at $45-million would look today.
The majority of NHL teams would be positively giddy had they agreed to that deal, given that a salary cap tied to revenues – which was back on the table for the NHL once the season was cancelled – eventually rose to over $70-million this past summer.
It’s what permitted teams to commit almost $1-billion to new salaries over the summer – highlighted by Sidney Crosby’s 12-year extension, plus expensive free-agent deals for Shea Weber, Zach Parise and Ryan Suter – and a mad scramble in the 48 hours before the lockout to get another couple of dozen players signed to deals worth about $200-million.
So what does this tell us?
First, that owners, in the mad pursuit of winning the negotiation, ultimately shot themselves in the foot with a deal that cost them billions in the end. Moreover, they’ve also proven that they cannot and probably never will be able to control their spending habits. Whatever restrictions are placed in the next agreement – and the NHL is calling for massive salary concessions, in the wake of rising costs – the teams will find a way of circumventing them.
Agents will pour over the fine print, discover the loopholes, and then find GMs willing to be complicit in circumventing the stop signs that Bettman and deputy commissioner Bill Daly will insert into the language of the new agreement. It was that way in the two CBAs signed coming out of lockouts and it will be that way again.
History shows that if the league had incorporated some of the NHLPA’s ideas into the last agreement, they may have been better off in the end.
Conclusion: Maybe they need to take a fresh look what the NHLPA has on the table – drags on salary increases in the future, plus enhanced revenue sharing – and see if they can plug in numbers that would make it work for them.
The alternative is to follow a script that hasn’t worked at all – win the negotiating battle and lose the CBA war. The owners got what they wanted in the last two negotiations, but miscalculated their effects, with a poor display of crystal-ball gazing. End result: They are back to the drawing board for a third time, stalled again, and this time, they better get the fix right.