PowerPlay Magazín

So as you've probably heard the NHL lockout of the NHLPA by the team owners is over. While I'm very glad that we get back the best sport played at the highest level it should be asked whether or not this CBA will be at all effective in preventing another embarrassing and frustrating NHL lockout of the NHLPA. Public statements on the reasons for this lockout made by Bettman or Daly are suprisingly scant, but even so it appears that virtually everything they uttered during the negotiations must be taken with at least a grain of salt since often what was said one week would be proven false the next. For example, in what possible way are mere CBA “adjustments” reconciled with the initial NHL offer widely described as draconian and laughable? How many best or final offers were made? What about that hill the owners were to supposedly die on? Even the finances trotted out can't be wholly trusted. According to the oft-quoted Forbes the Panthers lost $7 million last year, but “according to the [Broward] county auditor, the organization made $117.4 million in profit between 1998 and 2012” Where in this flack of owner PR spin and negotiation rhetoric can we ground ourselves onto something approaching objective truth about the roots of this lockout and the seeds of any future ones?

It's too generic to say that hockey players are simply paid too much: It's assumed and expected that all businesses want to cut costs to maximize profits by reducing wages, if at all possible. Even if one or more of the previous recent lockouts were indeed primarily over player salaries the tactic of petulantly shutting down the league after each CBA to merely address the split in HRR between owners and players will undoubtedly have increasingly detrimental effects on league prestige, and by extension sponsor revenue, fanbase size and revenue, and broadcast deals. With such risks another lockout will need to be over something other than just hockey player salaries. Therefore the seed of a future lockout is more likely to be found in the structure of the NHL business model itself. It would be in the relationship between where and how the individual NHL team businesses operate according to the economic principles of competition in a free market, and where they attempt something more collectively and collaboratively; i.e. revenue sharing.

Revenue sharing has proven to be a necessity for each of the major professional sports leagues in North America. It's a tacit admission that not all markets are equal in their capacity to generate revenue, and that some form of parity is important for a compelling spectator sport. The NHLPA recognizes this by voluntarily entering into CBA's that strictly regulate player participation in a capped market. Instead of highest bidder wins every NHL player has their rights first drafted and then owned by franchises until they are 27 years old. In the last CBA team salary caps were reluctantly agreed to which acts to further restrict their earning potential even after that age. On the other hand NHL teams attempt to facilitate league parity primarily with revenue sharing. Bettman talked about “shared (presumably financial) sacrifice” but can the maintenance of league parity truly be considered a shared sacrifice between owners and players? The median NHL player plays 4 seasons in a career. This means the vast majority of hockey players playing at the highest level never get to participate freely even in a capped market, let alone a completely free and unfettered market. This sacrifice is compensated by the minimum league salary, restricted free agency and a host of other benefits most people would kill for but the point remains, in the interests of league parity NHL players enter a form of bondage at their entry draft and never actually leave in their typically very short careers.

Considering how completely players sacrifice their maximum career earning potential is this same level of commitment shared by the owners? The latest CBA includes $200-million of revenue sharing, or 6% of hockey related revenue in 2012 (assuming Forbes is accurate). Unlike the NFL there is no billion-dollar TV deal, so in reality most of that revenue being shared is from the high-priced concessions, merchandise, luxury boxes and ticket proceeds from markets like Chicago, New York, Montreal and Toronto. So what does that say about this supposed “sacrifice” by the owners? What does that then say about the way this CBA addresses market disparity? It says that appreciable market disparity in the NHL is a burden that has been and will continue to be carried almost completely by the NHLPA and the fans of so-called “have” markets. That is the seed of another lockout. As long as the root causes of market disparity remain, where those who are responsible for choosing and remaining in stubbornly unprofitable markets, where the sacrifices needed to maintain said choices are borne largely by those who are not responsible and are thus insulated from the risk and disincentive to address that disparity, then the NHL business model is hopelessly broken. Another lockout, strike or some form of NHL work stoppage is all but inevitable, and no agreeable split of the HRR pie will prevent it.