NEW YORK - SEPTEMBER 14: NHL Commissioner Gary Bettman (L) and Alex Ovechkin of the Washington Capitals chat during the cocktail reception hosted by Vanity Fair editor Graydon Carter at The Monkey Bar on September 14 2010 in New York City. (Photo by Andy Marlin/Getty Images for the NHL)
The owners want to turn the current CBA battle into a repeat of the 2005 fight, in which their players gave back a huge share of the pie. But that's not the fight we should be talking about.
The current NHL collective bargaining agreement battle has been framed as these battles are always framed: It's a bunch of wealthy owners and a bunch of rich players battling over how to split up billions of dollars. And in a way, that's sort of true, but that's only because that's the fight the owners want to force on their employees.
In their initial CBA proposal outlined in July, the owners asked the players to give back hundreds of millions of dollars. Under the current CBA, players earn a fixed 57 percent of all hockey-related revenue, but under the league's proposal, the players would earn just 46 percent of HRR. The proposal also changes the definition of what constitutes HRR so that players would earn even less. The Players' Association estimates that overall, the share would be something more like 43 percent and that by the end, salaries would be rolled back about 24 percent.
On top of those cuts to the players' share of the pie, the owners proposed a five-year limit on contract length, an extension of team-friendly, entry-level contracts from three years to five, an end to salary arbitration and a 10-year period before players are eligible to hit unrestricted free agency, up from seven years today.
In short, the league asked the players for just about everything, and they did it two months after they distributed this nice bit of bragging to the media:
The NHL is on pace for its seventh consecutive year of record total revenue. The League is projected to bring in more than $3.2 billion by the end of the 2012 Stanley Cup Playoffs. NHL Enterprises’ (League/national business minus broadcasting) revenue is forecasted to increase by 18 percent. This represents a growth of 195 percent over the 2003-04 season.
Seven straight seasons of record growth, and yet the owners are still asking the players to give back not just hundreds of millions of dollars, but a ton of other luxuries as well. How does that make any sense?
Well, from the NHL's perspective, it's not as simple as "We're making a ton of money, look how great things are!" The truth is that while the league as a whole is making money, those revenues are really only coming from a handful of teams. The Montreal Canadiens make money. The Toronto Maple Leafs and Detroit Red Wings, New York Rangers and Boston Bruins, Philadelphia Flyers and Chicago Blackhawks make money.
The Phoenix Coyotes? New Jersey Devils? Columbus Blue Jackets or New York Islanders? They don't make money. In total, 18 teams posted operating losses in 2011 according to Forbes. The league is threatened by this level of income disparity, and it's the chief issue Gary Bettman and Co. need to solve in this CBA negotiation.
There are a few varied solutions to this problem:
1) Ask the players to fill the gap. Seven years ago when we lost an entire season of hockey, it was relatively easy to get behind the owners and their need to institute a salary cap. Player costs were out of control. They needed to come back to earth if the league was going to survive. The salary cap solved a lot of those issues and the players certainly sacrificed in the process. They gave back 24 percent of their salaries in the 2005 CBA.
The owners are essentially asking the players to do the same thing yet again. There are teams in the league that can't afford to spend 57 percent of revenue on players, and that number needs to be trimmed to make these clubs economically viable, the league argues.
2) Contraction. Eliminate the teams that can't survive in the ecosystem. Simple enough.
3) More revenue sharing. The league as a whole is making a ton of money, but the income disparity is still there. 18 teams lost money last season, but because the NHL's form of revenue sharing is so benign, only 10 teams were eligible to receive that aid. The Islanders, for example, are in awful financial shape but ineligible for revenue sharing because they play in a "big" market. That's just the beginning of the issues abound in the current revenue sharing model.
Under a more robust model, the teams at the top which are bathing in money would share more of that money with the struggling teams at the bottom. Those teams can then worry about trying to compete, not trying to meet a bottom line, and the whole league benefits as a result.
Solution No. 2 will surely never happen. Not as long as Gary Bettman is commissioner or there's a union representing the players who would lose jobs under contraction. Let's just forget we even mentioned it.
Solution No. 1 and Solution No. 3 are directly at odds with one another. The owners have proposed No. 1 -- let's solve the problems faced by more than half our teams by cutting into the players' share yet again.
But that's simply unfair. Overall, the league has had more success than it could have ever imagined under the current CBA. It may have taken a lost season for that CBA to come to fruition, but it's caused nothing by overall prosperity. The players have already sacrificed considerably to get to this point. Why should they have to do it again?
More revenue sharing does seem to be the clear solution. There's this big ole' pie, and the players get a huge chunk of it, yes. But there's still plenty of money to go around afterwards, and the problem right now is that big-market owners don't want to give up any more of that cash than they have to. Small-market teams suffer because of this greed, but there's not much they can do about it. They don't make the money. They don't pay Bettman's salary.
This CBA debate isn't your typical owners vs. players battle. The owners will likely continue to frame it that way, but when you pull back the curtain, the only way the NHL is going to continue to grow is if the owners finally drop the gloves and settle their own infighting.
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