1986...
TGS SPECIAL REPORT...HERE WE GO AGAIN WITH ANOTHER LOCKOUT
by Bruce Marshall, Goldsheet.com Editor


We were originally planning to run our 2012-13 NHL preview this week, as we looked forward to another season of our daily hockey Top Choice selections, which proved popular a year ago. Leave it up to the NHL owners and players, however, to scuttle not only our plans but also those of many others who were looking forward to the first puck of the season being dropped later this week.

Yep, they’re involved in another lockout. And just when we were hoping to have heard the last of the “L” word after the NFL recently made a deal with its regular referees as its replacement refs were about to require Secret Service protection.

But no one does lockouts better than the NHL, which has lost more games (1698 of them since 1992!) to work stoppages than MLB (938), the NBA (504), and the NFL (zero) combined over the past 20 years. If you recall, the last time the NHL became bogged down in this sort of dilemma, it cancelled the entire 2004-05 season. And, to listen to some hockey insiders, there’s a decent chance (estimated by many at better than 50-50) that the 2012-13 campaign, which has already seen its first two weeks cancelled and soon likely to lose a lot more, could be bound for the same fate.

The same NHL sources are telling us that while the specter of a lockout has loomed over the past year, few believed, even as recently as last spring’s Stanley Cup playoffs, that it could actually escalate into another work stoppage. After all, the league had made a remarkable recovery from its hari-kari act of 2004-05, with the revenue pie having astoundingly grown by over $1 billion since the last collective bargaining agreement was ratified in 2005. With a collection of exciting young stars and colorful teams, enhanced TV contracts, and having finally gained a foothold in former hockey hinterlands like Nashville, Raleigh, Tampa, and the Pacific Coast, including the riches of Southern California after both the Anaheim Ducks and, just last June, the L.A. Kings, won Stanley Cups, this hardly seemed the time for a lockout. Why risk so much that has been gained over the past seven years?

But the owners and, to some extent, the players are convinced that the fans will return, as they always have. Thus, in a perverse way, the burgeoning popularity of the NHL might effectively be working against a quick resolution to the lockout. And if that’s really the motivation behind the owners and players, they’re probably right. After all, long ago even we stopped talking about sports work stoppages in apocalyptic terms...because the fans have always returned.

Although we suggest the NHL is taking a very short-sighted, if not arrogant, view of its current position within the marketplace; while the hardcore fans are almost sure to come back into the fold, why risk alienating a newer and highly-charged customer base that could easily become more disillusioned with the labor proceedings than those diehard Flyers, Bruins, Blackhawks, Red Wings, etc. fans who can never be offended enough by the owners and/or players to stage their own boycotts?

Besides, this time around, the framework for the entire labor agreement within the NHL is not under review as it was eight years ago, when, among other things, the owners were trying to establish a salary cap. The current debate is less about the structure of the NHL’s financial apparatus than it is about simple dickering over percentages due each side, the sort of pro sports labor disagreement that can usually be resolved in an amicable fashion.

But circumstances always seem to dictate otherwise in the NHL. Unlike last year’s NBA lockout, when most pro hoopsters had no other employment avenues to explore, remember that many hockey players (especially the European nationals) can gain temporary employment elsewhere in the world, as in 2004-05 when 388 of them found jobs, mostly with teams in Russia, Sweden, the Czech Republic, Finland, and Germany.

Moreover, the owners also recall 2004-05 and their ability to sit tight and eventually force the deal they wanted down the throat of the NHLPA, which ratified a contract less favorable than one it was offered many months earlier in the negotiating process, when the 2004-05 season still could have been saved. The players were hardly satisfied with the leadership and direction provided by then-NHLPA executive director Bob Goodenow, who resigned under fire just five days after the new deal was signed.

Now, the NHLPA’s new executive director is none other than Donald Fehr, the same Donald Fehr who led the MLB players union when baseball shut itself down in 1994, scuttling the World Series that fall. If Don Fehr could cancel a World Series, then he would figure to have no trouble doing the same with 2012-13 NHL campaign...if that’s what his constituents really want.

At some point, however, the players are going to realize, as they did seven years ago, that all is not fair in war, love, and labor negotiations. And while, morally and ethically, the players are standing on firm ground in this latest dispute, Fehr, as did Goodenow several years ago, risks grossly overestimating the union’s leverage. That’s because, as it was in 2004-05, the owners are holding the majority, if not all, of the cards.

Simply, the owners can afford to hold out a lot longer than the players. Many of the owners, especially those who haven’t been making much, if any, money from the game, probably don’t mind shutting down for a while. Even for a full season, although this factor is not nearly as pronounced as it was in 2004-05. The league is also still the caretaker of the Phoenix Coyotes franchise and would rather not have to sink any more money into that operation, if possible. And a work stoppage is one way to avoid doing so.

We doubt the players are close to the point of surrender just yet, as they’re still upset that the owners have nixed an extension of the same deal they coerced onto the union seven years ago. The players accepted a 24% salary rollback in 2005, only to eventually see their compensation pie substantially increase because the HRR (Hockey Related Revenue) escalators, which keyed the salary cap levels, happened to rise dramatically; players say they don’t want to give in again, or the owners will keep asking for more. Thus far, the union is still directing Fehr to insist upon guaranteed money, with 2%, 4%, and 6% raises from current levels, over the next three years, compounded, instead of negotiating on a percentage basis. All of which has been a non-starter for the owners.

Both sides, however, seem to be thinking about the long haul, and how to best position themselves for an escalation to the HRR. The union figures its guaranteed increases should be accommodated by a projected HRR growth at 7.1% per year, the average for the past seven years. Owners say that amount, going forward, is too high; commissioner Gary Bettman in particular believes those projections are too ambitious, citing the rise of the Canadian dollar and “one-time” events such as a new U.S. TV contract with NBC, and the Atlanta Thrashers’ move to Winnipeg, as windfalls not likely to recur in future years.

Our contention, however, is that the players might be underestimating the potential growth possibilities, with a new owner waiting in the wings in Phoenix, and new arenas in Quebec City, metro Toronto, and Seattle ready to welcome relocated teams. The Canadian TV contract is also up for renewal in two years, and those rights fees could figuratively explode. No one is asking us to get involved, but if we were, we’d tell the players to consider foregoing the guaranteed increases and tie as much of their future increases as possible to HRR, which we suspect could really pop in the next couple of years. Risky, maybe, but consider the reward.

In the meantime, neither Fehr nor Bettman (nor the most influential owners who are pulling the strings behind Bettman, reportedly including the Flyers’ Ed Snider and the Bruins’ Jeremy Jacobs) seem inclined to give an inch, instead involved in a silly stare down with one another. And lest these guys believe they operate in a vacuum, they’re now getting some politicians (among many others) angry, too. New Jersey US Senators Bob Menendez and Frank Lautenberg, enraged by needless negative economic repercussions caused by the lockout in their state, recently sent a letter to Bettman reminding him that Congress has jurisdiction over interstate commerce, which includes professional sports, and will be keeping a “close eye” on negotiations. We would expect Newark Mayor Cory Booker and reps of other municipalities that footed much of the bill for funding new NHL arenas to perhaps send Bettman similar correspondence.

Unfortunately, from our vantage point, this lockout only ends whenever the players cry “uncle.” We’re just worried that, as in 2004-05, that might not come until it’s too late to save the 2012-13 NHL season.


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