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Is it too soon to worry about another NHL lockout?


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#1 Hockeytown0001

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Posted 26 July 2010 - 01:15 PM

Is it too soon to worry about another NHL lockout?
By Adrian Dater

Yes, it is. I’m going to start now though.

Talking with a couple of agents, a player here and there, an NHL management type here and there the last few days, and it’s clear to me that the impossibility that we all would assume for the NHL — that it is THE league we’d least have to worry about with regard to another long work stoppage, because of its recent past — is indeed possible.

I’m going to keep this kind of general for now, because it’s a blog and the expiration of the current NHL CBA is still another two seasons away, in September of 2012. I still have a hard time — a really hard time — believing that the NHL and its players would ever let another disastrous canceled season happen. The lost year of 2004-05 remains a dark, awful memory for everyone involved with this game. All that griping, all that posturing, all those “drop-dead deadlines”, all those false starts and crushed hopes. It was awful, and it really hurt the game a lot. Many fans still haven’t come back to the sport, though revenues have grown since ‘05, the cap has grown from $39 million to the current $59.4 million and TV ratings have improved greatly.

So why am I worried already? Because I’m a bit of a neurotic first off, a classic glass-is-half-empty kind of guy. In my kind of outlook on life, you go into everything expecting the worst and if it doesn’t happen, it’s a wonderful day, so you’re “happy.” If the worst does happen, you were ready for it. And I’m not changing my stripes at this point.

But secondly, this guy makes me a little nervous:
Charming looking fella isn’t he? That’s Donald Fehr (pronounced “FEAR”), in case you didn’t know, the man who led the baseball players union for 26 years and a couple of work stoppages, including the one that led to the cancellation of the 1994 World Series. Fehr left the MLBPA last year, but he could become the next director of the NHLPA as soon as Wednesday. The NHLPA is holding meetings Tuesday and Wed. in Toronto and could name the successor to Paul Kelly, who was ousted in a despicable, ugly palace coup by scheming, infighting players and other underlings. (This story by longtime hockey writer Jim Kelley summarizes the situation nicely).

Fehr has been working with the NHLPA as an unpaid adviser, but has dropped hints he might take over as director for a while and groom a potential successor. The players clearly want him to take over.

Again, it’s a little early to fret too much, but already there are whispers that, under Fehr, the players might try to abolish the current hard salary cap and get a soft-cap, luxury-tax, revenue-sharing style system that baseball has had for the last seven years. Basically, that would mean that teams could spend as much as they wanted on players again, provided they pay the tax over a certain threshold. The Yankees, of course, are the only team to have paid it every single year.

This would all be “over our dead bodies” of Gary Bettman and NHL owners, right? After all, they had no problem canceling a whole season to get that hard cap. I would say that a majority of owners and certainly Bettman would say “over our dead bodies” to a giveback of the hard cap, but under Donald Fehr the players almost certainly wouldn’t be the pushovers they were last time. This is a guy who ruled with an iron fist over already spoiled baseball players and never gave an inch. Bob Goodenow was seen as that kind of guy once too, but the players caved when Bettman and Co. finally called their bluff, and Goodenow was thrown under the bus, as were Ted Saskin and Kelly (which is something that would definitely give me pause if I were Fehr), but Fehr just isn’t a guy who would put up with any such nonsense if he takes the job. You can bet he’ll have it in writing a hundred different ways that no such Brutus-Caesar routine would again take place under his watch and disgrace his reputation like the others.

Why, you ask, would either side want things to change right now? After all, the cap has gone up by $20 million in five years, which should make the players pretty happy. All the salaries are tied to a percentage of league revenues, so the owners have “cost certainty” and can only spend to a certain amount anyway, which should make them happy too. What’s the problem?

For starters, all the players hate the fact that they have to put aside a certain amount every year in escrow to cover any projected revenue shortfalls. This past season, players lost 12 percent of their salaries to escrow, money that won’t come back. You won’t hear any player say this publicly, but I’ve heard more than once this kind of sentiment privately: “Hey, I’m basically only making about 45 cents on the dollar. I got 35-45 percent in taxes to the government, I gotta pay my agent (typically 1 percent of total salary) and now I get dinged another 12 percent.”

Granted, players actually made money in escrow under the current CBA a couple of times, when revenues exceeded expectations and they got a premium of a percent or two. But not the last couple of years, and agents are really starting to hear it from their players. And, are the owners totally happy with the current CBA? You’d think so, but that’s not what I’m hearing.

Here’s why:

*** Think about it: small-market teams before the lockout are still small-market teams now, making whatever dollars they make at the gate and whatever piddling money they’re getting in TV money now (more on that in a bit). Ticket sales in cities like Atlanta, Phoenix, Anaheim, Carolina, Columbus, Nashville, Tampa, the other team in Florida, etc., etc., weren’t all that great last year. Granted, none were Stanley Cup winners and no marketing plan succeeds quite like winning, but they aren’t making much more, if at all, in ticket sales than they were right before the lockout.

But every NHL team MUST spend a minimum of $43.4 million this coming season on player salaries alone. Think about it — that’s $4.4 million MORE than the cap ceiling of 2005. In some private conversations with some high-level NHL people, some owners — mostly in small to medium markets — are mad at having to spend so MUCH right now just to field a team for one year.

More private grumbling goes like this:

We could have had a fixed $47.5 million hard cap ceiling for SIX YEARS in ‘05 with no linkage to revenues — that’s what the players publicly, in fact, offered — and we didn’t take it. We could have even had them at $45 million and we didn’t take it. Now it’s a $43.4 million floor, which makes the small-market teams like us unhappy, and the big-market, hockey-mad teams who have money to burn — the Torontos, the Chicagos, the Bostons, the Philadelphias, the Montreals, the Rangers — are unhappy because not only can’t they spend to what they want to keep the fans there who spend big money on tickets happy, but they also have to share revenue with the smaller guys.

Now, Chicago has had to break up a potential dynasty because of the cap, getting rid of half their Cup winning team a month later. So do you think they’re happy now with a cap system? And do you think the league loves that a big-market team that gave them great revenues and TV ratings could be just a one-year wonder?

And the smaller guys aren’t getting enough revenue-sharing to stay healthy anyway (the current figure is around $90 million a year that is being split by the 30 teams, with lower half in revenues receiving the lion’s share obviously. In the NFL, revenue sharing currently is around $100 million PER TEAM). Look at Phoenix, look at Atlanta.”

One prominent person who sides with the NHLPA said this: “If you look at some of the stuff the PA proposed before the lockout — a revenue-sharing, luxury-tax proposal — and you get some forensic accountants and model it out based on NHL revenues since then with the same level of spending by each team currently, every single team would be doing better than they are right now. That’s the dirty little secret that Gary Bettman doesn’t want the media to ever pick up on.”

It was pointed out that a team such as Columbus or Nashville probably is bringing in only $60 million or so currently. If they’re spending a minimum of $43.4 million on players, plus salaries for staff, travel, all the other little expenses that come with running a team, and their total revenues are only $60 million or so, then, yeah, they’re losing $10-15 million a year probably.

Granted, people from the PA side tend to do more of the griping right now and that’s just one side of the story. I’m sure Bettman would counter that with a very verbose argument, but he’s not going on the record tonight here at All Things Avs.

*** There’s an awful lot of worry that the hard-cap, everybody’s equal system will produce another Edmonton-Carolina, Anaheim-Ottawa type of Stanley Cup Finals. Crass as it sounds, the reality is NHL execs, owners (except in those cities) and TV execs live in fear of such match-ups occurring again, because they got NO ratings and probably never would. No ratings means no TV money, and no TV money is a big reason why the last lockout happened and could happen again.

The last three years, the league has “lucked” out, with two straight Detroit-Pittsburgh and one Philly-Chicago Finals matchups. Pittsburgh may not be a huge market, but Sidney Crosby is the biggest household name in the game still, and Philly-Chicago was perfect — two big-market teams with great fans, players and atmospheres. But if this year’s Final is between, say, Columbus and Atlanta? It’ll be right back to those 0.9 types of national ratings.

This is why the next negotiation between the NHL and a U.S. broadcast partner is so HUUUUUGE. It really is. The league’s current U.S. TV deals with Versus and NBC (soon to be under the same corporate owner, Comcast, if their bid for NBC gets approved) expire after this season. Exact dollar figures on the current deals with both partners are hard to come by, because NBC paid no up-front rights fee the last time, basically splitting the ad revenue they got from the games with the league. Versus isn’t believed to have paid much further north than the $75 million range for its rights this past season. NBC probably wasn’t worth much more than $60 million this year I’ve been told by a couple people, though I do not have hard proof of either of those numbers and they are to be taken in more of a speculative form).

Bettman, it would seem, would be very smart to want to get the next TV deals wrapped up before this coming season is over, because who knows if he gets a Columbus-Atlanta final or not (no offense you two, but you know the national numbers wouldn’t be good) and has to go to the table with another 0.9 rating to sell? The ratings for the Philly-Chicago series were astronomical by previous NHL standards (into the 5’s and 6’s), and the numbers overall were good on Versus for the year and into the playoffs (full disclosure, I write a freelance NHL column for Versus.com). If he goes to the table with the most recent Finals to sell, as well as the overall numbers for the year, then he’s got much better leverage.

The scuttlebutt I’ve heard is this: Bettman wants $250 million a year, minimum, on the next TV deal, and let’s say for this example that would be from two partners as it currently stands (and remember, Versus and NBC could essentially be the same entity soon). $250 million a year would allow the league to sustain its weaker revenue, smaller-market teams for the foreseeable future. $250 million a year, guaranteed, would be a little less than double the current U.S. deals (don’t forget, the league gets a pretty good chunk of change (not sure how much though) from Canadian broadcasters, where the ratings are great and is the No. 1 sport of the country).

The NBA signed an eight-year, $7.4 billion deal with its broadcast partners in 2007. That’s about $930 million a year.

Based on last year’s ratings, $250 million a year could still be quite a bargain for an NHL broadcast partner in the U.S. Bettman probably could get more if he goes to the table with this spring’s ratings.
But the deal with Versus and NBC expires in June of next year, after the Finals. If it’s Columbus-Atlanta (no offense you two, I love ya), then all bets are off how much the league gets.

That’s why the NHL, of course, would always want big-market teams like Chicago, Philly, the Rangers, L.A., Boston or, maybe (even though the Canadian ratings don’t apply to the U.S. numbers) a Toronto in the Finals. But I am not a conspiracy nut who believes that the NHL fixes who makes it to the Finals, any more than I am that Boston or the Lakers seem to make it (a lot!) to the NBA Finals because of David Stern or referee puppetry.

A no-cap, baseball-style system would certainly make it easier for big-market teams to get to the Finals, ensuring the NHL would have boffo TV ratings and make more money for everyone. But do we really want another NHL where it’s just the Rangers, Detroit, Philly, etc., etc. (even the Avs when they want to) spending all the money and buying up all the “best” players? Do we really want a league where it’s the Yankees-Red Sox every year? I’m a die-hard Chowd fan from back in the day, of course, so you might think I love it, but really I’m almost as sick as everyone else seeing them and the Yankees every year, while all the small-market teams try to nibble on the crumbs.

The NHL’s current CBA ensures every team has the same shot, theoretically anyway, as everyone else to win a Cup. But that means you run the risk of nobody watching your biggest event of the year (and nobody watched those San Antonio NBA finals, or Houston or Orlando when they made it too. The ratings for those NBA finals were bad, under the 10 mark).

There is no perfect system. Everybody always has a gripe in this stuff (but of course, they shouldn’t, because they’re all doing what we’d kill to do and getting paid a good dollar regardless).
I just hope common sense prevails at the next CBA talks, and we don’t go through what we did five and six years ago.

But I worry.
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#2 F.Michael

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Posted 26 July 2010 - 01:21 PM

Yes I'm worried.

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#3 blgillett

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Posted 26 July 2010 - 01:32 PM

I'm very scared it will happen and from what I have read they want the cap back to about 40 mill. If that happens the Wing are screwed! Not good!!
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#4 F.Michael

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Posted 26 July 2010 - 01:54 PM

I'm very scared it will happen and from what I have read they want the cap back to about 40 mill. If that happens the Wing are screwed! Not good!!

I honestly get the impression (from what I've read) that it'll be the NHLPA whom have an axe to grind with the owners.

If the players ever got a clue - they'd re-sign their current deal rather than threaten to sit out another season.

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#5 Bring Back The Bruise Bros

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Posted 26 July 2010 - 01:57 PM

I'm worried.The business side of the game shows itself again.
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#6 Hockeytown0001

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Posted 26 July 2010 - 02:27 PM

I honestly get the impression (from what I've read) that it'll be the NHLPA whom have an axe to grind with the owners.

If the players ever got a clue - they'd re-sign their current deal rather than threaten to sit out another season.


This. I don't want to go through that sh*t again.

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#7 haroldsnepsts

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Posted 26 July 2010 - 02:44 PM

I honestly get the impression (from what I've read) that it'll be the NHLPA whom have an axe to grind with the owners.

If the players ever got a clue - they'd re-sign their current deal rather than threaten to sit out another season.

To be clear, in 2004 the players didn't sit out as a bargaining tactic. They were locked out by the owners and prevented from playing.

At the time the owners did a great job of painting the players as greedy and killing the NHL, but even under the cap it's become pretty clear that several owners are just unable to control themselves when it comes to contracts, and others just don't know how to ice a competitive team in spite of the cap and revenue sharing.

Here's an interesting point from the article:

One prominent person who sides with the NHLPA said this: “If you look at some of the stuff the PA proposed before the lockout — a revenue-sharing, luxury-tax proposal — and you get some forensic accountants and model it out based on NHL revenues since then with the same level of spending by each team currently, every single team would be doing better than they are right now. That’s the dirty little secret that Gary Bettman doesn’t want the media to ever pick up on.”


More than even the new NHLPA president, I think it's up to Bettman if we lose another season. Last time the tone he set was divisive right from the get go. They were intent on breaking the players union and nothing short of a lost season would've done that.

#8 cusimano_brothers

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Posted 26 July 2010 - 02:47 PM

I would think that the League's time could be better spent in figuring out ways to prop up the financially weaker teams instead of planning another lockout. The NHLPA has resurrect itself sooner rather than later.

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#9 DEVILSWATERBOY

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Posted 26 July 2010 - 03:02 PM

Bettman get these teams out of areas that don't know hockey , don't like hockey, don't care about hockey, don't have ice on the pond outside, also while you are doing this bring back old time hockey when fighting was part of the game (TO PROTECT YOUR STARS!!!!!!!!!!!!!), put yotes back in Winnepeg, Hurricans back in Hartford or simular venue, put a team in Quebec and get the damm teams out of Florida, Georgia, Arizona, and one of them out of California :ranting: :!:

#10 Grim

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Posted 26 July 2010 - 03:07 PM

I think the Cap will ironically be the final death knell for fighting in the NHL. Very difficult to fit one-dimensional role players into the roster.

#11 blgillett

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Posted 26 July 2010 - 03:31 PM

You got that right.

I honestly get the impression (from what I've read) that it'll be the NHLPA whom have an axe to grind with the owners.

If the players ever got a clue - they'd re-sign their current deal rather than threaten to sit out another season.


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#12 Hockey Convert

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Posted 26 July 2010 - 04:11 PM

This worries me, and honestly, reading that article I kind of feel for the players. If they really are giving up 12% of salary to offset revenue shortfalls, that is bulls***. The other side of the coin, though, is that I can see the problem with the salary floor for the smaller markets; they're almost guaranteed to lose money no matter what they do. I kind of like the soft cap and tax method idea. It might give that Columbus-Atlanta final less of a shot at happening, that's true; but it seems that's a TV revenue dog anyway. TV exposure is a big one, for me; the NHL has got to get more exposure. Partially that's selfish, though; I do not live in the Detroit area, so it's really hard to watch most Wings games unless I go to an online stream. So, perhaps trade a lowering of the salary floor for a loosening of the hard cap, with luxury tax system? I don't know the best answer, but I hope it doesn't come down to lockouts/strikes and no compromise. With Bettman in charge, though...


Bettman get these teams out of areas that don't know hockey , don't like hockey, don't care about hockey, don't have ice on the pond outside, also while you are doing this bring back old time hockey when fighting was part of the game (TO PROTECT YOUR STARS!!!!!!!!!!!!!), put yotes back in Winnepeg...


This is a hot-button issue, it seems like, but I agree; for one thing, it will boost ratings. I don't really care for the off-faceoff arranged bouts, but the heat-of-the-moment policing should be let alone, cheap shots punished, etc. Add to that a softer salary cap so that competitive teams can keep a goon around without compromising skill players... Well, I'd at least like to see where that could go.

#13 EZBAKETHAGANGSTA

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Posted 26 July 2010 - 04:23 PM

I'm very scared it will happen and from what I have read they want the cap back to about 40 mill. If that happens the Wing are screwed! Not good!!


There is absolutely no way that will happen. The player's association and the Owners of the teams that are doing well would both be against it, leaving only the smaller/struggling team's owners to go for that. Eliminating the Cap Floor would be for the best though...

Edited by EZBAKETHAGANGSTA, 26 July 2010 - 04:24 PM.

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#14 Barrie

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Posted 26 July 2010 - 04:41 PM

Call me crazy, but I'd be willing to have the NHL season sit out another season to "can" the hard cap and floor (especially the floor), and get a luxury tax system. Just like TV, I don't like the Carolina-Edmonton and Anaheim-Ottawa finals. Plus I think with 16 teams making the playoffs, there is more than enough opportunities for the big spenders to lose. Plus big spending doesn't always guarantee winning, they still need to spend it properly i.e new York Rangers and Toronto Maple Leafs.

Personally I think a MLB luxury tax system with 16 teams making the playoffs is the best way to go.
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#15 Buppy

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Posted 26 July 2010 - 04:55 PM

I'm not worried. Maybe a little just because it is a negotiation and anything can happen. But I don't think there's any issues for either side big enough to risk losing another season. Teams and players are both doing pretty well, a lockout or strike would hurt both sides in the short term, and I can't think of any long-term gain that either side would want badly enough to make the sacrifice.

#16 NomadFromKazoo

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Posted 26 July 2010 - 05:04 PM

To be clear, in 2004 the players didn't sit out as a bargaining tactic. They were locked out by the owners and prevented from playing.

At the time the owners did a great job of painting the players as greedy and killing the NHL, but even under the cap it's become pretty clear that several owners are just unable to control themselves when it comes to contracts, and others just don't know how to ice a competitive team in spite of the cap and revenue sharing.

Here's an interesting point from the article:



More than even the new NHLPA president, I think it's up to Bettman if we lose another season. Last time the tone he set was divisive right from the get go. They were intent on breaking the players union and nothing short of a lost season would've done that.

There is an inherent conflict between the interest of high and low revenue teams. High revenue want to spend for themselves. Low revenue want to share and cap. It's not an easy problem to solve. Just taking the players side and saying the problem is owners can't control themselves and not recognizing that dynamic's not really going to shed any light on the real issues. IJust supporting the players is easy, but it's not a solution. It's more complicated then that. And sure there are bad owners, there are also bad players. Again ignoring one and not the other's not going to solve anything.
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#17 blgillett

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Posted 26 July 2010 - 05:23 PM

Maybe you forgot about it but they already have let it happened once it can happen again that the scary part about it.

There is absolutely no way that will happen. The player's association and the Owners of the teams that are doing well would both be against it, leaving only the smaller/struggling team's owners to go for that. Eliminating the Cap Floor would be for the best though...


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#18 EZBAKETHAGANGSTA

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Posted 26 July 2010 - 08:33 PM

Maybe you forgot about it but they already have let it happened once it can happen again that the scary part about it.


It can happen again, but there is no way the cap would drop that low. The players (the ones who actually held the strike), wouldn't stand for it at all, nor would many of the bigger market teams.
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#19 blgillett

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Posted 26 July 2010 - 08:59 PM

That is the numbers that is being thrown around but I hope your right!
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#20 Hockeytown0001

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Posted 26 July 2010 - 09:03 PM

Reading the article again, it just makes me more worried.

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