NHL lockout: Risks to hockey increase the longer the staredown lasts
By John Feinstein,
Maybe by then there will actually be hockey again.
It certainly doesn’t appear that the end of the current lockout — six weeks long on Saturday and counting — is anywhere in sight at the moment. Bettman can find time in his schedule for news conferences ballyhooing something that will happen in three years. Negotiating with Donald Fehr, the executive director of the player’s union, to save this season is apparently much more difficult.
Thursday was the drop-dead date set by Bettman and the owners to save a full 82-game season. If an agreement had been reached by then, the season could have started on Nov. 2. With some tinkering, the entire regular season — 1,230 games in all — would have been played.
That hope is apparently gone. The question now isn’t when the season will begin but if the season will begin. The owners were willing to blow up an entire season eight years ago because they insisted they could no longer survive under the league’s economic system. Ultimately, they got what they wanted: a salary cap and a 24 percent rollback in player salaries.
Now, they are insisting that wasn’t good enough, even though hockey-related revenues have gone through the roof since the players returned in the fall of 2005. Prior to the lockout, the NHL’s hockey revenues were $2.1 billion per season. Last season the number was closer to $3.3 billion.
The owners say they need more — or, more specifically, they need to pay the players less. Their first offer to the union was to slash the players’ percentage of hockey-related revenue from 57 to 43 percent. Last week, the owners came up to 50-50 — still a substantial cut, but seemingly at least in a ballpark where a deal could get done.
It didn’t. The players made three separate counteroffers a week ago and each was rejected within 10 minutes. Apparently the NHL’s negotiators are very fast readers. The players are now willing to drop their share of revenues from about 54 percent to about 52 percent over the life of the contract. One would think it would not be that difficult to find a middle ground between 50-50 and (roughly) 53-47.
Only it isn’t that simple. The owners’ offer includes a lot of deferred payments for current contracts — meaning many players who have signed long-term deals would be asked to wait, in some cases for years, after the contracts expired to be completely paid. Given the money involved, that would mean a huge savings for owners and a loss for the players.
The players have made the point that no one held a gun to any owner’s head as late as this summer, when several players signed long-term deals in the $100 million range. On one hand, the owners are pleading poverty. On the other, they were handing out huge contracts like Cracker Jacks, even while the commissioner was talking about how desperately everyone needed to tighten their belts.
Now it has become a staredown. As soon as it becomes impossible for the league to play an 82-game schedule, everyone starts losing money. The players, even those playing overseas, would rather be getting paid their NHL salaries and be playing back here. The owners do not want to lose the Winter Classic — a crowd of more than 100,000 is expected in Michigan Stadium to see the Detroit Red Wings and Toronto Maple Leafs play on New Year’s Day. And the loss of another season would, at this point, cost owners a lot more money than eight years ago because a lot more of them are making money under the salary cap system.
So, who blinks first?
Fehr says the players are ready to come back to the bargaining table right now. Bettman and the owners say they won’t return until the players agree to negotiate within the framework of their last offer. In other words: Accept the basic concepts in the offer and then tweak the numbers. The players won’t commit to that because it would mean, in essence, giving in on the issue of deferred pay.
It is all very complicated, especially to those who just want to see hockey. Clearly, the owners are counting on the fact that hockey fans are perhaps the most loyal in sports. In 2005-06, the season after the lockout, NHL attendance actually went up. Fans may have been disgusted with both sides while they were fighting, but they loved the sport too much to turn their backs on it once they stopped.
The owners expect that to happen again. As soon as the doors open to their arenas, fans will pour through them. That may be the case. But there’s always risk with a niche sport, because even a 10 percent drop-off in attendance league-wide would be financially difficult to swallow. NHL owners count on playing at close to capacity (witness the Washington Capitals) in order to break even. If they make the playoffs, that is when they usually start to make money.
It seems remarkable that every major labor dispute in sports in recent memory has been a lockout, not a strike. The NFL owners locked their players out in the spring of 2011 (and then their officials a year later); the NBA owners locked their players out last fall and now, the NHL has locked its players out for a third time since Bettman became commissioner.
It seemed impossible going into the summer that the two sides could be so far apart this time that there would be a lengthy work stoppage. Everyone was making money and the sport’s popularity has soared the last couple of years. The best TV contract in league history is in place.
And yet, six weeks in, no one is even talking about a settlement. At the moment, there are negotiations going on to figure out a way to begin negotiating again.
That’s not encouraging. But it does leave Bettman a lot of free time for news conferences, ribbon-cuttings and perhaps doing some judging at a county fair or two. Everyone in hockey is fiddling while the sport continues to burn.
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