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How to accurately place the blame

Examining the collective bargaining process in the NHL

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For the second time in eight years, the most important NHL battle is taking place not on the ice, but in boardrooms. Although public opinion is largely on the players’ side at the moment, it is inevitable that if — or more accurately, when — games are lost, impatient fans will begin to shift their blame. The same rhetoric will emerge: how the players get paid millions to play a game and the never ending chicken and egg arguments about whether the players or owners make the game possible. All of this is irrelevant to the reality of the question at hand: whether the negotiations are actually proceeding in a reasonable way.

So far, the owners have done nothing to indicate their conduct is anything more than an unnecessary power grab from the union. It does not matter how overpaid the players are in relation to their place in society or how much one dislikes NHLPA director Donald Fehr, or the NHL’s scapegoat Gary Bettman. This is the simple reality and by resorting to knee jerk, populist attacks on the players and their union, sometimes an extension of a general anti-unionism, fans are simply walking right into the owners’s trap.

Unlike in 2004, the reasoning for their demands is considerably vaguer. In 2004, the NHL used solid numbers to justify its refusal to accept anything other than a hard salary cap. The main point of contention this time around is the players’ 57 per cent share of Hockey Related Revenue. Despite getting nearly everything they wanted in the previous collective bargaining agreement, the owners are now claiming that the deal is unacceptable. The NHLPA has indicated they are willing to cut their share, but disagree on the percentages.

Before the last lockout, the NHL commissioned a report by Arthur Levitt that studied the financials of the 2002–03 season. The report found that the league collectively had $273 million in “operational losses” and was largely used as justification by the owners for the locking out of the players. There is no legitimate equivalent to the Levitt Report this time, however.

In his most recent press conference, Fehr said that he has looked at the team numbers and is unconvinced of their suffering. Fans are simply being asked to take the NHL’s word that the system is unsustainable and can’t be solved by the union’s emphasis on better revenue sharing and parity models.

One can argue that despite all of these intricacies, the CBA fight is simply a case of millionaires versus billionaires, and should be considered shades of gray at best. But what is fair here is not the same as what would be fair in a perfect world.

Bob Altree, director of employee relations for Enmax, has more than 30 years of collective bargaining experience and provided a view of how collective bargaining generally works.

“To have a successful bargaining agreement, both sides need to feel that the outcome is win-win,” said Altree. “Most successful agreements are built on trust,” he said. “If the parties don’t live up to the terms of the agreement, they don’t mean anything. The parties have to honour the agreement.”

This could be one explanation for the standstill in negotiations so far. Owners like Minnesota’s Craig Leipold certainly can’t help. Leipold was quoted in April that the Wild needed to “fix their system” because player salaries were out of control. Three months later, he signed Zach Parise and Ryan Suter to matching contracts worth almost $200 million combined that the Wild had been planning since well before Leipold’s previous statement.

Ironically, Leipold was also present when the NHL presented their first offer this summer. This proposal was largely interpreted as an insult to the players because of the unreasonable demands for immediate salary reductions and contract limitations. The owners have spent hundreds of millions on contracts this summer that they are now intent to revise just two months later. Is it any wonder that the players are having difficulty stomaching the owners’ proposals?

The owners’ hypocrisy is evident in another important way. The second issue under dispute along with HRR is revenue sharing and how to revise the system so that it is both fair and efficient. Understandably, owners resent having to pay millions each year to keep failing franchises afloat. Revenue sharing as a concept is not bad — it works fine in the NFL and, as Fehr is fond of pointing out, Major League Baseball.

The owners have argued that the problem of revenue sharing should be fixed by the players. This is inconsistent when one considers why the revenue sharing system is broken in the first place.

In large part, financial disparity in the NHL is a result of the heavily criticized expansions and relocations of the 1990s and 2000s, often combined with mismanagement of those teams. Essentially, given the financial risks to both sides, how is it reasonable to expect players to bail the NHL out for owners’ mistakes?

If the lockout drags through October and November as expect, there will be many who turn against the players by arguing that their inherent lack of leverage should have compelled them to reach a deal sooner. While it’s easy to predict that players will have to cave eventually, because they always have more to lose than the owners do, that does not mean it’s reasonable to expect them to give in now.

Although Gary Bettman is threatening to make the deal worse after the September 15 deadline, it appears Fehr is taking a calculated risk. The union can probably afford it more than people think: the players are guaranteed escrow cheques worth 8 per cent of their normal salaries in October. For their part, the owners are guaranteed $200 million in rights fees from NBC. It could be that negotiations won’t begin in earnest until the deadline is closer. The union is simply trying to make the best of the hand they’ve been dealt. Those who fail to see this fail to see the essence of the business of sports.

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