By Jordan Kobritz
NHL owners were willing to lock out the players for the entire 2004-05 season in order to obtain a salary cap and force a reduction of 24 percent in player salaries. In the six seasons since play resumed, league revenues have increased by 50 percent, from $2.2 billion to $3.3 billion. Unfortunately, that increase has not been uniform across the league. Teams north of the border and those in large markets in the U.S. have generally been profitable, but approximately two-thirds of the league’s 30 teams operated in the red last year.
In the first season after the lockout, the salary cap in the NHL was $39 million and the salary floor was $21 million. Most lower-revenue teams could survive in that financial environment. But if the 2012-13 season were to be played under the existing Collective Bargaining Agreement (CBA), the salary cap would be $70 million and the floor $52 million. While the salary cap has resulted in competitive balance, one of the league’s primary goals during the lockout, it hasn’t achieved the financial equilibrium forecast by Commissioner Gary Bettman and the suits at NHL headquarters.
With the CBA expiring in September, the league made its first offer to the union last week, which was nothing short of a trip down memory lane. The league’s proposal included an 11 percent rollback in the percentage of revenue designated for the players, from 57 percent to 46 percent, and perhaps more importantly, a redefinition of “Hockey Related Revenue,” the figure that is used to determine the salary cap. The two proposals combined constitute a 22 percent reduction in player salaries from last year’s figures, a proposed “giveback” similar to the concessions made by the players to settle the 2004-05 lockout.
Other hardline proposals included entry-level contracts of five years, up from three, and delaying free agency another three years, from seven to ten. The proposal makes it clear that the new NHL is the same as the old version, treating the players as adversaries, not the partners they should be. In years past, lacking strong and effective leadership, the players mostly acquiesced to the owners’ demands, accepting the role of serfs to the owners’ lords. But rest assured this time will be different.
The hockey players’ union is currently led by Donald Fehr. The hard-nosed – some would say recalcitrant – Fehr signed on as head of the NHL Players’ Association in 2010 after serving in a similar capacity with the MLBPA for 26 years. During his tenure as head of the baseball players’ union, the sport underwent a devastating work stoppage in 1994-95 that was incorrectly attributed to labor when management was almost totally to blame. Nevertheless, Fehr was unable to shake responsibility for a strike that led to the loss of the 1994 pennant race and the World Series for the first time since 1904.
Fortunately for baseball, management saw the error of its ways and embarked on a path that has led to a period of labor peace which will extend to 22 years by the end of the current CBA, the result of which is unprecedented financial success for the sport. That success was due in large measure to the working relationship forged between Fehr and Rob Manfred, MLB’s Executive Vice President for Labor Relations. Successful CBA negotiations – and implementations – are most likely when the parties are in relatively equal bargaining positions and an environment of trust and respect exists between the negotiators. The latter two items are woefully absent in the NHL.
When Fehr assumed his new position, a number of commentators suggested that he would lead hockey players down a path that would result in significant damage to the game, similar to what happened in baseball in ‘94. Realists knew better. First, the sport had already experienced a devastating blow, courtesy of the owners: The 2004-05 lockout. The players couldn’t damage the game any more than the owners had already done.
Second, the current Don Fehr is a wiser, mellower version of the one who presided over the ’94 strike in baseball. It is highly unlikely that Fehr will reciprocate with a counteroffer that mirrors the extreme version submitted by the Neanderthal owners. As Fehr has said on many occasions since he assumed his role with the hockey union, his goal is to forge an agreement that benefits his players and the game, one that recognizes the realities of today and the history of labor-management negotiations in hockey. One example of that history is the existence of a salary cap, something Fehr did not have to deal with in MLB.
Under Fehr’s leadership, hockey owners can count on the players being better informed, more united, and willing to exercise more patience than their predecessors. Those traits were the hallmarks of the MLBPA under Fehr and his mentor, the inestimable Marvin Miller. Fehr was on board with the union during most of MLB’s eight work stoppages. Based on those experiences, he will make every effort to forge an agreement without the loss of games. But owners should be forewarned. Fehr will be prepared, diligent, reasoned, focused, creative, and above all else, he won’t panic.
NHL owners are obviously envious of their NBA and NFL brethren. Owners in both of those leagues locked out their players last year, successfully reducing the players’ share of league revenues to roughly 50 percent in the NBA and 48 percent in the NFL. However, teams in those leagues share more revenue than their NHL counterparts. In order to forge an agreement absent a work stoppage, NHL owners must be willing to adopt greater revenue sharing than currently exists. Fehr is likely to present proposals that pit owner against owner, rather than owners against players.
The union is currently reviewing the owners’ proposal. The nature and tone of their response may determine the course of the negotiations. But if the league loses any portion of the 2012-13 season, you won’t be able to blame it on Don Fehr.
Jordan Kobritz is a former attorney, CPA, and Minor League Baseball team owner. He is a Professor and Chair of the Sport Management Department at SUNY Cortland. He recently co-authored three law review articles on labor relations in the NHL: Don Fehr Trades His Ball For a Puck: Will He Continue to Score? 19 Vill. Sports & Ent. L.J. 521 (2012); Trying His Luck at Puck: Examining MLBPA History to Determine Don Fehr’s Motivation for Agreeing to Lead the NHLPA and Predicting How He Will Fare. 12 U. Denv. Sports & Ent. L.J. 1 (Spring 2012); and Don Fehr Leads the NHLPA: Does the NHL Have Anything to Fear? 11 Va. Sports & Ent. L.J. 178 (2011). Jordan can be reached at jkobritz@mindspring.com.
