The National Hockey League Players Association’s strategy at this point in the collective bargaining process is akin to spending $500 to fix a bike so you can sell it for $300. Idiotic!
Everyone in the hockey world knew many months ago that the NHL and the NHLPA would eventually agree on approximately a 50/50 share of Hockey Related Revenue (HRR). It seemed a foregone conclusion based on the deals previously signed by the NBA and NFL. Not surprisingly, the NHL and NHLPA have subsequently come to agree that revenue should be shared equally. Therefore, this labor dispute comes down to two issues:
(1) A Make Whole Provision or how much extra should be paid to players in years one and two (or more) of the agreement in order to partially avoid a rollback of existing salaries via significant escrow.
(2) Player contracting rights such as free agency, term and mechanisms to avoid salary cap circumvention in contracts such as Suter, Parise, Weber, and Luongo.
Unfortunately for the players, with every passing day the NHLPA keeps throwing good money after bad. Here is the simple math. The owner’s first reasonable offer (forget about the 43% robbery attempt) was a 50/50 share of revenue with a player funded make whole provision. That offer would have allowed for a full 82 game schedule with little or no damage to league wide revenue or the growth of the game. In other words, the players would have received 50% of $3.4 to $3.6B in revenue or more than $1.7B. This would have resulted in an effective rollback of $200M from the previous $1.9B in total player salaries. The owners have subsequently offered a league funded make whole provision that would see an additional $149M in year one. It is safe to assume that the players could have quickly extracted that from the league and still played a full 82 game schedule if they were willing to negotiate off the league’s offer rather than sticking to their guarantee of $1.9B regardless of revenue. Therefore, a 50/50 split plus $149M and a full schedule would have resulted in total player salaries of $1.85B and minimized year over year losses to $50M.
Now fast forward to the present offer from the NHLPA. The players are asking for (but not receiving) a 50/50 split plus $182M in Year 1. However, the game’s growth has been damaged and an 82 game schedule long ago become impossible. Best case scenario is a 60 game schedule. A reduced schedule with reduced growth means HRR would likely be in the $2.4B range for 2012-13 if it started in the next couple of weeks. Player share would be 50% plus a pro-rated amount of $182M or approximately $1.3B, a $400M drop from the owner’s first reasonable offer and $550M less than they could have negotiated at the time. As each additional 10 game segment is cancelled, the players lose an additional $200M that they will never get back.
So are the players willing to “invest” in this first year loss in order to fight a bigger long term battle that will protect future generations of hockey players? One often hears talk about the sacrifices that were made by past players in order for current players to enjoy the careers that they do and get paid as they do. Likewise, there is talk about sacrificing now for future players, fighting the good fight. However, that is all a bunch of rubbish when you factor in that the players have already agreed to a 50/50 split of revenue and that all the arguing is solely about preserving current contracts. If you have already given up on the long term fight and are losing the short term fight with each passing day then what exactly are you fighting for? The players are only fighting for the present, not the future, but are figuratively spending $500 bucks to fix that $300 bike.
Based solely on dollars, the players should settle as soon as is humanly possible. Economically, the deal only gets worse.
So this comes down to player contacting issues. My guess is that the league would cave on many of these issues if the players crawled back to them on the economic issues. The league’s biggest issue should be the length of contracts and salary cap circumvention via back diving deals. If the players were willing to limit term and limit year to year fluctuations within a contract then the league would probably cave on arbitration and free agency.
Both sides are equally to blame for this mess. However, there is only one side that is in a no win situation. This isn’t complicated unless you are as arithmetically challenged as the players seem to be. Put your egos aside and let common sense (and math) prevail.
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