NHL Lockout Info

[jk]

I ran into this on the Detroit News. It just provides a little basic information about the lockout. Not knowing these details myself, I thought others might find it interesting.

I consider this to be a very relevant Sioux hockey topic, since it could have a big say in the makeup of next year's team.

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Revenue sharing is dividing issue between players, owners

By John Niyo / The Detroit News

Burning questions about the NHL with training camps underway around the league:

Question: A new season is about to begin, but all the talk seems to be about next year. What gives?

Answer: The official countdown to Armageddon officially began Monday, that's what. The league's collective bargaining agreement is set to expire on Sept. 15, 2004. And, as all of us doomsday types have been saying for some time now, it appears as if there might not be a next season.

Q: And why not?

A: Because neither side -- the players' union nor the league and its owners -- are ready to budge on the central issue.

Q: Which is what?

A: Revenue sharing. Or, more specifically, the allocation of revenues between management and the NHL workforce.

According to the league's numbers, more than three-fourths of NHL revenues -- 76 percent, to be exact -- went to players last season. In the NFL, that share is 64 percent; it's 63 percent in Major League Baseball and 58 percent in the NBA.

As a result, the league's owners, with Commissioner Gary Bettman doing most of the talking, are demanding some sort of "cost certainty" in any new deal to reign in player salaries. The players, not surprisingly, are against a salary cap, and their argument is that it's the owners themselves -- not the current CBA -- that's to blame.

Who is right and who is wrong? Doesn't matter. This is where the battle line is drawn, with nary a white flag to be found. Union leaders have warned the players to prepare for a lockout that could last an entire season, or even longer.

Q: When will the two sides sit down at the negotiating table?

A: Perhaps sooner rather than later, though technically the NHL needs only to give 120 days notice -- that's May 15, 2004 -- of plans to terminate the current labor agreement.

The NHL Players' Association certainly won't make the first move -- the players are happy with the status quo. It's the owners who are demanding a new CBA, after all.

But both Bettman and union boss Bob Goodenow have met informally to talk about the issues. And Bill Daly, the NHL's chief legal counsel, said recently the league might be ready to submit a formal proposal to the union later this fall. Expect something along those lines in late November or early December.

Just don't expect any quick resolution on the issues, not while the players are still getting paid and the grumbling owners are still signing the paychecks.

[mksioux]

A similar article:

CBA: Understanding the Issues

[ScottM]

I blame Gary Bettman for a good part of the NHL's current situation. He took a solid, albeit niche, sport and tried to turn it into a version of the NBA with overexpansion into non-traditional markets, marketing that would put Coke to shame, a non-realistic grasp of the NHL's real appeal and encouraging/demanding NHL cities to build oversized palaces that could not be supported by the teams' core fanbase in downtimes. We have teams in Florida, but fewer teams in Canada than when Bettman took over. We have a few financially sound franchises, and a number that are already in trouble, and a few probably on their way to the judge. We have overpriced/underproducing players making mid-seven figure salaries, and we have owners who don't understand that hockey has a very narrow base of support across the general population.

/end rant

[dagies]

The thing that is so telling about pro sports these days is the comment ScottM makes about franchises in Canada.

The exodus of Canadian franchises to the states, considering the rabid hockey population in Canada is a downer, IMO. I think the NHL needs to figure out a way to keep the Canadian teams viable, and add more in Canada than in Mexico.

[redwing77]

Do you think Bettman is taking notes from Selig?

I'm sure, not to put words into Selig's mouth, that Selig would enjoy telling Bettman who to piecemeal up the league without jeopardizing his own investments. I'm not sure if Bettman has any interests in any specific team, like Selig does (Milwaukee Brewers' owner is a relative of Selig)., but it will be a wait and see I'm sure.

I wonder who the NHL's Steinbrenner is? And don't say the Red Wings otherwise I'm sure that Federov as well as the two Colorado picked up would be on the Red Wings.

[siouxfan1]

There is going to be a new Hockey League (WHA) starting around that time

I believe 2004-2005 season and that will make things even more interesting.

As in all things, only time will tell!!

Go Sioux!!!

[ScottM]

Here's an article on the potential for a lockout/strike and the purported financial position of the NHL and its teams. (Since this is a subscription, I figured I'd post the entire article.)

The Wall Street Journal September 19, 2003

NHL Says Players' Salaries

Put League in Financial Peril

Facing $300 Million in Losses,

Team Owners Call for Pay Caps;

Union Disputes Dire Portrayal

By STEFAN FATSIS

Staff Reporter of THE WALL STREET JOURNAL

When the National Hockey League opened training camps last week for the 2003-04 season, it was already standing on wobbly skates. TV ratings are minuscule, franchise values are plunging and two teams recently spent time in bankruptcy court.

Now add record financial losses to the lineup. According to a report prepared by the league for its club owners, the NHL's 30 teams posted combined operating losses of nearly $300 million last season. That was an increase of more than 35% from $218 million a year earlier, according to the report, and a more than sevenfold increase from losses of $40 million in 1993-94, when the league had 26 franchises.

The report, distributed to owners this summer and recently reviewed by The Wall Street Journal, depicts enormous revenue growth over the past decade that has been wiped out by even bigger jumps in player costs. Last season, the report says, the NHL spent 76% of $1.93 billion in revenue on player salaries and benefits -- a higher percentage than in the National Football League, National Basketball Association and Major League Baseball. "This is a level at which no business can survive," says Bill Daly, the NHL's chief legal officer. "The league will lose teams and players will lose jobs if we can't fix this."

The NHL's ice-is-melting portrayal comes as the league gears up for battle with its players union over a new collective-bargaining agreement. The current contract doesn't expire until September 2004, and talks on a new one haven't yet begun. But the league has amassed a $300 million war chest over the past four years to prepare for a possible work stoppage, and union officials have told players to expect a shutdown of 18 to 24 months.

The NHL wants an economic system ensuring "cost certainty," such as the salary caps in the NFL and NBA that allocate a certain portion of league revenue for players. NHL executives privately suggest a desire to reduce salary costs by as much as 40%. The union wants to retain a predominantly free-market system in which the average player's salary has soared to $1.79 million last season from $558,000 in 1993-94.

The NBA won the first salary cap in 1984 when it was in financial crisis. The NFL negotiated its cap when a flood of television revenue made labor peace desirable for both sides. By contrast, the NHL is trying to extract concessions from players who have grown rich thanks to team owners who willingly escalated their pay. "What you seem to have in hockey is some teams that are spending stupidly or spending unnecessarily," says Stephen Ross, a sports law professor at the University of Illinois, Champaign.

The National Hockey League Players' Association says it won't accept a salary cap. "We believe in letting the market system operate and letting [owners] pay players what they're worth, not a penny more or a penny less,'' says Ted Saskin, senior director for business affairs for the union.

Union officials say franchises that own arenas, concessions or local cable-TV networks siphon some hockey-related revenue from their teams. That would inflate both losses and the percentage of revenue being spent on salaries. "It's very hard to take those bar charts seriously without the whole picture," Mr. Saskin says. The NHL's Mr. Daly says the league's accounting is thorough.

Distrust between the NHL and its players dates to the early 1990s, when the union staged a 10-day strike, the first since it was formed in 1967. A 103-day lockout by management cost the NHL much of the 1994-95 season. The two sides now argue over everything including the minimum distance between a player's chin and his chin strap.

To be sure, the growth in NHL player salaries owes partly to the current labor contract. Player agents used loopholes to skirt pay limits for incoming players. Rules governing free-agency allowed high-revenue teams, such as the New York Rangers, to bid up the price of better players, raising the bar for everyone else.

The temptation to spend was made possible by leaguewide revenue growth of 163% over the past decade under NHL Commissioner Gary Bettman. The league added four teams, boosted sponsorship, licensing and TV revenue, and increased average ticket prices 81%, to more than $48, according to the league financial report.

Now, there is little room to grow. With regular-season TV audiences in the U.S. smaller than those for bowling, the NHL is unlikely to match the $140 million a year it gets from Walt Disney Co.'s ABC and ESPN. That contract, already far smaller than those of other major sports, expires after the coming season. Teams also have maxed out on ticket increases: More than half of NHL teams are lowering prices or leaving them unchanged this season.

The league has other problems. Ownership difficulties forced the Buffalo Sabres and Ottawa Senators into bankruptcy court last season. Both teams found buyers, but at the sport's lowest prices in a decade: around $45 million for the Sabres and $60 million for the Senators, not including arenas or debt, sports finance executives say.

Even more alarming: The four-year-old Atlanta Thrashers appear to be worth little or nothing. Industry executives say the sale of sports assets that AOL Time Warner Inc. announced Tuesday values the Thrashers and the NBA's Atlanta Hawks together at around $110 million. Given basketball's lucrative national-TV deal, "an NBA team on a stand-alone basis is worth at least $110 million," says franchise consultant Marc Ganis. He says the price indicates the Thrashers have "little value and perhaps even a negative value." Turner Broadcasting, now a unit of AOL, paid an $80 million expansion fee for the Thrashers in 1999.

Declining franchise values hurt because they typically are the basis on which sports teams borrow to finance operating losses or acquisition debt. In the past two years, several NHL teams have been rejected for loans, executives say.

More than two-thirds of NHL teams reported losses last season, people familiar with the league say. And the biggest losers were the winners: The New Jersey Devils claimed some $30 million in losses despite taking home the Stanley Cup.

League executives hope the players are persuaded by the gloomy overall picture. "I'm not looking for a fight," Mr. Bettman, the NHL commissioner, told a sports conference in Canada last week. "I'm looking for a solution to the economic issues confronting our game."

[CoteauRinkRat]

I really hope some concessions can be made on both sides to avoid this from happening. It will really destroy the progress that has been made over the past decade.

What are some people's predictions of what will happen?

[redwing77]

When the owners try to take more than they deserve, it never gets positive.

I think it is going to be bad. Very bad. We don't have the fan base Baseball or football has. We'll be making the niche smaller and it very well could hurt future broadcasts of regular season NHL games if you aren't a NHL Center ICE subscriber like me.

[DamStrait]

This one's gonna be long. I love the owner's argument: "Keep me from spending too much of my money!" "Well gee Mr. Owner, I'd love to take your offer, but it's really just too much. Why don't we settle on half that amount and sit down together for a nice lemonade." When have any of the owners turned down what somebody's offered them? "I appreciate the public's willingness to supply me a new arena, but this old one's really just fine with a few renovations that'd cost only a quarter of what a new one will." Spend within your means, do the hard work of developing home-grown talent (through drafts and trades for diamonds-in-the-rough), hire smart hockey people, and you'll be fine. In my opinion, there isn't any 'New York Yankees' of the NHL with revenue sources that dwarf those of any other team in the league, so if everyone spends within their means, there will be de facto revenue sharing without any need to renegotiate the labor agreement (or thus have a lockout/strike).

If the NHL does go on strike, does that mean ESPN?/ABC will partially fill the vacancies in the broadcast shedule with NCAA hockey? Nevermind.. I already know the answer to that...

[redwing77]

Damstrait-

It is a possibility... provided there is no basketball, football, water polo, billiards, bowling, golf, etc. etc.

Remember, ESPN got it's start broadcasting basketball. This means that they'll probably fill the space by giving cable viewers extra college basketball or college football coverage.