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Labor Lock Out Leads to Season Cancellation
by Gabriel Desjardins on Feb 18, 2005
At 1 PM Eastern Time, February 16, 2005, NHL Commissioner Gary Bettman announced the cancellation of the 2004-05 NHL season, marking the first time a North American professional sports league has ever cancelled an entire season. After the NHL Player's Association had finally relented days earlier, accepting the owners' demand for a salary cap, it looked like a done deal, with players returning for an abbreviated 28-game season. But apparently the players' offer of a $49 million salary cap was just too far above the owners' demand for $42.5 million. Said Bettman: "If every team spent. . .$49 million. . .total player compensation would exceed what we spent last season and . . . would exceed 75-per cent of revenues. We cannot afford [the NHLPA] proposal."
Now let's get a few things straight:
1. According to Bettman, 75 percent of NHL revenue ($2.1 billion according to the owners -- the players insist it's higher) goes to paying player salaries. In fact, according to the USA Today, 2003-04 salaries -- for more than 650 players -- totaled $1.33 billion, or 63% of revenues.
2. Not every team will spend $49 million in the foreseeable future. The more likely situation is that the 20 teams that were under the cap in 2003-04 will remain under the cap, while the 10 teams that over-spent will be forced to reduce their payrolls. The total salary expenditure in this scenario would be $1.185 billion, or 56% of revenue, and the players would take, on average, an 11% pay cut.
3. Bettman insisted that despite the players' capitulation, the two sides were very far apart, stressing that $6.5 million times 30 teams is almost $200 million. But assuming that low-budget teams don't immediately increase spending up to the cap, the owners' $42.5 million demand would have meant total player salaries of $1.11 billion, 53% of revenue. The difference between the players' and the owners' demands is not $200 million, but in fact $75 million.
4. Everyone who was following the situation expected owners and players to settle at the halfway point between the two offers, which would have cost the owners an additional $37 million. In a multi-billion dollar sport, $37 million was the breaking point? $1.25 million per team is nothing in the realm of professional sports, especially given that a former Toronto Blue Jays executive noted he could "turn a $4 million profit into a $2 million loss and…get every national accounting firm to agree with [him]."
During the 1990s, NHL owners made a series of bad business decisions by eliminating teams in Winnipeg, Quebec City, Minneapolis and Hartford, replacing them with teams in the hockey hotbeds of Phoenix, Dallas, Tampa Bay, Miami, Atlanta, Charlotte, Columbus and Nashville. Then they signed all kinds of mediocre players to huge long-term contracts. Just about everyone involved with the sport knew the result would be disaster, but the owners assumed big companies in the expansion cities would buy up all the luxury boxes and guarantee them revenue even if local sports fans didn't know a puck from a deke.
You can't blame the players for taking the money. They're not businessmen. As Chris Rock said: "Shaq ain't rich. The man who signs Shaq's check is rich!" And the same is true for NHL owners and players. But, faced with bloated salaries, the players offered to take an 11% pay cut to clean up the bad business decisions their employers made over the last decade. No, the owners weren't satisfied -- they wanted the players to take a 17% pay cut, and wouldn't settle for anything less.
Hockey is a business (as evidenced by its lack of an anti-trust exemption) and when business goes badly, it's pretty hard to blame the employees. The owners make the business decisions for the league and set the rules, and it is they who have created the boring game we see today, with all of its clutching and grabbing and reams of no-name players who would have played in the AHL in another era, all in the pursuit of the same TV dollars that the NBA, NFL and MLB have captured.
In the end, the labor impasse is probably going to be good for the game. Some effects are obvious: superfluous and unprofitable teams will fall by the wayside, and the Rangers will finish last with a lower payroll. But more importantly, maybe, just maybe, hockey will be restored to the places where it matters, like Canada and the Midwest and the Northeast, and this whole crazy experiment with hockey in places that don't have ice will be just another distant memory, like the American Division of the Canadian Football League. That would be worth missing a couple of years with of boring Nashville-Pittsburgh series.
by Gabriel Desjardins on Feb 18, 2005
NHL commissioner Gary Bettman announcing the cancellation of the current hockey season during a news conference in New York, Wednesday, Feb.16, 2005. (AP Photo/Paul Chiasson)
An empty Joe Louis Arena in Detroit (AP Photo/Carlos Osorio)
NHL Players Association executive director Bob Goodenow (AP Photo/Frank Gunn)