The Answerman returns after a lengthy hiatus, to ponder the latest developments in the all-too-predictable labour dispute between NHL owners and players …
Q: What is it about work stoppages in professional sport that so ramps up your crankiness quotient? Usually you are the soul of even-handedness and understanding.
A: One simple reason: The coming NHL lockout is so unnecessary and so easily avoided, if only reasonable people would sit down, skip past the obligatory rhetoric, posturing and other stall tactics currently preventing meaningful negotiations – and get down to the business of give and take. Sadly, that’s not likely to happen until December at the earliest.
Until then, both sides will try to impress you with how firm their resolve is. They’re digging in for a long siege, and since they’re not actually moving very fast off their respective starting points, it’ll leave them lots of time to convince you – the fan – that they hold the moral high ground in this dispute.
Q: But who has it really?
A: That’s an easy one. Neither group is on the side of the angels. There is merit to some of their respective arguments, plus a lot of disingenuous spin at work.
Q: And you can separate the two for us?
A: We can try. Let’s start with the fact that in seven years since the last lockout, the NHL has grown from a $2.1-billion to a $3.3-billion business. In theory, the players and owners were supposed to be partners during this time of unprecedented growth. The reality is, the notion of a partnership has been a charade. The owners pretty much drove the bus on the business side of the operation.
What is harder to fathom is why the players are complaining. They were the primary beneficiaries. The NHL’s business operations did a fabulous job of signing on new corporate partners, developing new media ventures, improving national television contracts – to the point where the pie has grown enormously against the backdrop of a global recession. Hey, if it’s me, that’s a company I want to be “partners” with. I’d cede input into my company’s financial plan for a 13-per-cent annual growth any day of the week.
Q: So the overall business of hockey is thriving?
A: Booming, yes. Thriving? That’s less clear. If you listened to commissioner Gary Bettman carefully these last few months, you noticed he was always talking about gross revenues. He wouldn’t talk about profit and loss. These are two distinctly different things, as anybody whoever bought a share of Nortel can tell you.
The problem with the NHL is its structure. It is really one giant holding company, with 30 separate divisions. Those divisions share a little bit of revenue – mostly from TV – but largely operate as separate entities.
So you have at the top end, teams such as the Toronto Maple Leafs, Montreal Canadiens and Philadelphia Flyers, wildly profitable entities, making tons of money, by capitalizing on their brands and on the loyalty of the customers in their particular markets. Then you have at the bottom end, teams such as the Phoenix Coyotes, New York Islanders, Florida Panthers and even San Jose Sharks, drowning in red ink.
That’s an issue that doesn’t get talked about enough – the division between owners at the top end and owners at the bottom end, each seeking different objectives in the next CBA, and usually not all that prepared to help each other out.
Q: Presumably, then, you’re suggesting that the NHL Players’ Association’s proposal – of increased revenue sharing – needs to be a fundamental platform in the new agreement.
A: Unquestionably. Essentially, you have two choices here. Either you let market forces prevail which means, in short order, six teams would likely fail and just go away. Or you prop up the bottom end, and that means the Torontos and Philadelphias would have to forgo some additional profits to help out their weak sisters.
A 24-team NHL actually might look good in the grand scheme of things, except to the hard-core fans in the six cities that lost their teams, and to the 135 NHL players who lost their jobs because of contraction. But you’d be hard-pressed to convince a union to go down a path in which their membership would shrink by 20 per cent, so that’s not likely a viable option.
Q: So what is?
A: Currently, the players receive 57 per cent of the gross revenues in the business, the owners 43. The owners want to reset those percentages and it’s reasonable to think, based on the increased costs of running a team plus settlements reached in the NFL and NBA, that in a new NHL collective bargaining agreement, a 50-50 split probably awaits at the finish line.
Q: Theoretically, could the business of hockey benefit from a correction, in the same way that a super-heated stock market occasionally undergoes a correction? The NHL was, these past seven years, an unexpectedly super-heated business.
A: So you’re imaging a world where there might be a 20 per cent across-the-board reduction in everything – salaries, merchandise sales, dare we even suggest, ticket prices?
Q: Yes. Could it happen?
A: As intriguing as that may sound, it is hard to realistically imagine it happening. Remember, this vehicle is called The Answerman. For that to occur, you’d need to consult our alter ego, The Dreaming Man.