Saturday, October 6, 2012

NHL Lockout & CBA negotiations

Despite NHL owners essentially dictating the terms of the last CBA which included a hard cap & a 24% salary rollback after locking out the players for an entire season, they have again locked out the players, this time for refusing to accept further salary rollbacks as a starting point to negotiations.

It is no surprise that the players have rejected the owners' "starting point" for negotiations - especially given that the NHL's revenues have increased at a rate of about 7% per year (and about 50% in total) since the last CBA during a time when the US economy has suffered a serious downturn and after owners spent this past summer signing numerous players to mega deals for mega term.  If signing players to contracts they never had intention of honoring isn't bad faith negotiations, I'm not sure what is.

Nevertheless, the players did make a counter-proposal, which called for the honoring of existing contracts, but gradually reduced their share of the revenue pie to close to 50% over the term of the CBA, as well as increasing revenue sharing among owners to support struggling franchises in small, non-traditional markets.

The owners rejected the players' proposal, insisting instead that immediate rollbacks were necessary to "fix" the business side of the game and subsequently locked out the players (& fans) to demonstrate the seriousness of the situation.

On reflection, it appears that Bettman & the owners may have miscalculated on a number of fronts this time around.

Perhaps figuring that the players would be very reluctant to lose salary from lost games, especially since they ended up better off under the last "dictated" CBA despite losing an entire season's worth of pay fighting against it, the owners appear to have employed the same "hard line" strategy as last time - the message to the players has been - accept immediate rollbacks to salary or face a lockout if they don't & no negotiations until they do...

The owners also appear to be taking the fans' loyalty for granted at least a bit, exemplified when Bettman commented that the NHL has the best fans anywhere in response to whether they may be alienated by yet another work stoppage.   Fans understood the reasons for the last lockout & were generally sympathetic to money-losing owners, but there is less support now for owners who essentially dictated terms of the last CBA, spent huge sums over the summer & now want the players to give back.

Its been suggested that owners in smaller, non-traditional hockey markets are more prepared for a long lockout than those owners who were doing well, since the smaller markets were perennial money losers under the just expired CBA.   The problem with that one-dimensional thinking however is that if fans tire of this lockout, especially the longer it goes, they may lose interest altogether & find other places to spend their money...and may not be as receptive to coming back when things get settled - that would result in lower revenues & hurt small markets comparatively more than markets where there are current waiting lists for seasons tickets...and put the NHL right back into the same money-losing markets situation they are in now...presumably requiring further salary rollbacks & lockouts...

Although most current players weren't around for the last lockout, they certainly appear to be prepared to hold out rather than accept any rollback to current contracts, and actually seem to have been galvanized by Bettman & the owners rejection to negotiate off their proposal to gradually reduce their share of HRR. 

Bettman needs to be mindful that just as the owners were united in their mission to oust their nemesis Goodenow last time round, he may become, if he isn't already, the players' target this time round & make things much more difficult for himself & the owners if he overplays his hand, like he appears to be doing.   He may ultimately win the war, but whatever is left afterwards may be unrecognizable & worth a whole lot less than if he had worked with the NHLPA towards a common ground as actual "partners".  If this lockout drags on much longer, I suspect internal dissension among owners will grow and put more conflicting pressure on Bettman to "fix" things asap - in such a scenario, where emotions start to run high, it is very likely that a sub-optimal deal will result and ultimately the seeds for Bettman's removal will have been sown.