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Good Things Come to Those who Hurry Up

When the players voted to elect Don Fehr as the head of the NHLPA a couple weeks ago, they made official a relationship that had been growing for some time and was likely cemented in earnestness by the Ilya Kovalchuk negotiations that took place during the summer.  Fehr brings with him a wealth of experience in collective bargaining agreement negotiations from his time as the head of the MLB Player's Association, which saw three agreements during his tenure, the most memorable coming after a Fehr-led players' strike cancelled the 1994 World Series.  The current NHL CBA doesn't expire until the summer of 2012, but this move already has everybody speculating on what's to come in the months between now and (hopefully) the beginning of the 2012-2013 hockey season.

The biggest concern among fans is that Fehr is a tyrant, a personality as big and as uncompromising as Gary Bettman and the two of them are destined to lock horns in a personality battle that will ruin an NHL season and many fans' interest in coming back to the league which laid to waste two seasons quibbling over their millions.  That concern is absolutely valid.  The Fehr-led strike damaged baseball for several years like the lockout damaged hockey and the man who has admitted to be relatively new to the culture of hockey may be unaware of the total gravity of the situation that would arise from another work stoppage, whether it be a player' strike or an owners' lockout.  Regardless of which side would be at fault, fans largely wouldn't care (nor should they necessarily be expected to) and many would be so disenfranchised by the second ordeal as to refuse to come back after a new agreement is met.

However, I believe all of the factors at play here do work out to a favorable situation and that it would be in both the league's and the players' best interests to work out a new collective bargaining agreement, and to do it quickly.  There's no specific need to wait until the spring of 2012 to begin the negotiations that will affect the future of hockey going forward.

First up, as far as Fehr is concerned, I think a little perspective about the monster that ruined the Series when I was 13 years old is in order.  The old system was in ruins and had to be overhauled.  The agreement laid out after that strike has since brought about 16 years without a work stoppage, a massive improvement over the previous era that saw 8 of them in a 23-year span.  While many people have a problem with the way revenue sharing is currently set up and the effect that has on the competitiveness of most of the teams in the league, as well as problems with the steroid issue in baseball, hardly anybody can argue that the agreement Fehr forced upon MLB's owners set the groundwork for what is now the strongest players' union among the major sports and the most stable chance of making it through the 2011-2012 years without an interruption to their season.  I personally think that Fehr understands the difference in atmosphere in the NHL and understands that the players can afford a work stoppage no better than the owners.

Really, despite the problems that have surfaced with the current agreement, there are parts in it that are likely to be big issues in the upcoming NFL and NBA labor negotiations which hockey has right.  The NBA would love for the players to accept a hard cap like the NHL has.  Meanwhile, the NFLPA would kill for the strength to bargain for guaranteed contracts.  The NHL has each of these as an ultimate bargaining chip that both sides know they'll have to continue to accept if there's going to be a 2012-13 season.  That's the ultimate benefit, both sides have won serious concessions from the other and have 75% of the solution in place.  The 2004-05 lockout fundamentally changed the way hockey's finances worked; this round of negotiations won't need to do anything so drastic, but rather simply needs to tweak a few areas on either side.

On the owners' side, the issue of revenue sharing is the big sticking point.  Looking at that, it's more of a problem within the Board of Governors than it is among the players.  The big teams don't want to subsidize the smaller teams.  On a truly united front, the League would likely ask for another round of salary rollbacks from the players, but I'm not convinced they're ready to lockout another season over this issue.  The previous lockout was the biggest bullet they had to get to a solution where they got significant compromises from the players, but I don't think that, as a whole, they're so out of touch as to believe that they still have this weapon in their arsenal.  While all of the clubs would love if the players decided to take less, I don't think the players are so naive as to believe they will have to give up ground here. 

On the players' side, the biggest issue is escrow.  Players pay about 18% of their salary into an escrow pot throughout the year to make up for shortfalls in revenue and overpayments caused by the total players' share of hockey-related revenues exceeding the agreed-upon percentage.  Now, players have always gotten back some of their escrow payments (and in two cases have gotten back more than 100% of the money they paid into that account), but recently, we've been talking in numbers in the 12-13% range.  Naturally, the players are not thrilled by this, but they must ultimately realize that they're not likely to be able to successfully negotiate a larger percentage of revenues.  If anything, the players will likely ask for tweaks in what's considered "Hockey-related revenue", to better define the relationship between parent and shell companies which will pay money between themselves in order to mask dollars coming in.  However, much of the wiggle room that used to be employed by clubs was removed with the previous CBA and is not likely to be given back.  Aside from that, the only other major way to solve the issue of paying escrow is the adjust how their escrow dollars factor team-by-team and with revenue sharing.  Again, revenue sharing is more a contentious issue between the haves and have-nots among clubs than it is between the players and the owners.

Hang on, because this is where things move fast.  You've no doubt noticed that the biggest issue that both the league and the Players' Association face is that of revenue sharing.  The bottom line is that if there were more revenue to share, there would be fewer problems.  Of course, both Dan Ellis and the Notorious B.I.G. disagree with this sentiment, but I'm not here to argue the merits of relativistic socio-economic models on man's self-determinatory perspective on stress triggers.  I'm here to argue that getting together and solving the minor CBA quibbles which trouble each side sooner could make for a very large payday and the expulsion of several monetary concerns at once for the league and its players.

RIght now, there are a lot of factors either current at play or rapidly coming into play which, if capitalized upon correctly, could make for a lot more money in everybody's pockets.  First, the collective bargaining agreements of both the NBA and the NFL are coming due for renegotiation in 2011.  Reports from just about every major source discuss the potential for highly-contentious proceedings coming out of both sports' meetings which could cause major instability and concern among network sports providers in reference to what they'll have to cover.  In that same summer, both of the NHL's major contracts with Versus and NBC are set to expire.  The recently-improving ratings of hockey over the last several years coupled with broadcasters' desire to have something to fill their timeslots could work in unison to bring a much better television deal.  How much better, you ask?  Well, according to a blurb taken from a Globe & Mail article and discussed over at Puck Daddy, the current deal brings in about $75 million combined from the two networks, while a new deal could potentially bring in more than double that figure. 

For a comparison, the NBA's various television contracts, which run through 2016 bring in ten times that amount.  The NFL's deal nets each team more money in television revenue per year than the entire NHL's national broadcast deal earns.

Based on current revenue sharing rules in the CBA (which could very likely be changed), amounts over $300 million that the league brings in from national television contracts are put into the revenue sharing pot.  These are among the first dollars to be paid out ot the teams in need of revenue sharing and directly impact how many sharing dollars are required from both the players' share and from the league's highest-grossing teams.  In short, a $400 million television contract would cut down on the amount required from the richer teams and the players by $100 million.  Combine that with the fact that revenue would be up, causing a rise in players' salaries, which would make them less worried about escrow in the first place, and you've got a recipe for a very good outcome.  Maybe (and I'm just being optimistic here), but just maybe, all of the extra money in the pockets of everybody involved could mean lower ticket prices for the fans for a change.

One very big negotiating hurdle the league would have with television partners is that they'd be less likely to sign a long-term lucrative contract with a league they weren't sure would be playing in the next year.  While I'm sure that the NHLPA could use this as more of a bargaining chip against the league than vice versa, there's no good reason for one side to use this against the other in the first place; both sides benefit from landing the big television contract that Bettman promised would solve the problems that have surfaced since the last deal was made.  It would very much behoove both sides to come to an agreement at least in principle before summer 2011 so that, for a change, they can appear to be a united front in a round of contract negotiations.  Elliotte Friedman reported last Tuesday that Fehr stated negotiations likely won't start until 2012.  I agree with Friedman when he hopes that Fehr is lying.  Knowing how much he knows about public negotiations like this, that wouldn't surprise me.  There's too much to be gained by getting the minor issues solved now before allowing them to negatively impact what could be a supremely positive financial event for hockey executives, players, and fans alike.  If both sides want to build on the idea that the NHL is a partnership between the owners and the players, they can start to show that by partnering up to maximize their chances at landing a television contract which will bring the sport the kind of dollars and the kind of exposure which will cement the league's standing for the years to come.