A Dangerous Journey…

When #2 son was in Middle School, the discussion at the dinner table once turned to the clubs available in the school for him to join. He had expressed interest in a few of them and I asked him if he might be interested in joining the Math Club because he had always been good at math. His response was a most definite, “No!” When I probed and asked why he was so adamant about that decision, he said that joining the math club was a “dangerous journey into the land of the plastic pocket protectors.” He was either twelve or thirteen years old at the time, but I could not- – in good conscience – – dissuade him from taking that “dangerous journey”.

Well, today I want to take a “dangerous journey” of my own, a journey into the realm of the NHL CBA negotiations. Let me acknowledge at the start that my depth of knowledge here is such that I would be in danger of drowning in a parking lot puddle. Frankly, the major reason I am paying attention to this matter even a little bit is because Donald Fehr is involved and Donald Fehr always provides me with the ability to comment on bizarre positions that he and his organizations take.

Meanwhile, on the other side of the table sits Gary Bettman who has already taken his league through a full season shutdown of the sport. Bettman is the same guy who engineered a way to deny the sale of the Phoenix Coyotes to someone who wanted to buy the team for “X million” dollars only to have the NHL assume control of the team so the NHL could sell it to someone else for” X – 50 million dollars”. Oh, and that reduced sale price came after the league had operated the Coyotes at a cash-flow loss for a year. Even if you do not give a rat’s patootie about the NHL, you have to want to follow what happens with those two guys eyeballing each other…

Sometime during the past season, Gary Bettman declared that the NHL would set a league attendance record and that the league would have the highest level of revenues in history. I may not be your “go-to-guy” for business acumen, but I do think that is good news regarding the health of the league. Their customers – – the ones who spend the money to keep the league afloat – – must like something that is going on.

Clearly, that is too simplistic… Bettman and the rest of the league’s labor negotiation team have subsequently announced that there is a fundamental and dire need for the league to restructure itself in order for the league to remain viable as a business entity. When I read that, I took a deep breath and thought:

    Wow! That CBA that the NHL signed after throwing away an entire season five or six years ago must have been a capitulation by the league to the players’ union despite what the press reported as major concessions by the players back then.

In fact, back then there were folks who trashed the head of the NHLPA at the time, Ted Saskin, for selling out the players in the agreement that got the NHL back into “playing status”. Saskin has lost his job; Saskin is not accorded any kind of “hero status”; the players have made plenty of money as the salary cap has increased dramatically every year; and now the owners think that the previous deal is something they cannot continue to live with and survive as a business entity. Pardon me while I catch my breath here…

Now the NHL has its first negotiating proposal on the table to resolve the issue of a new CBA since the current one vaporizes on 15 September – – just a tad shy of 60 days from now. Here are some salient points:

    The league wants the players to allow the league to recalculate revenues in a way that will reduce the number that players get to share by 11%.

    The league proposal would roll back the current $70M salary cap per team to $52.5M next year. [How teams with a lot of long-term top dollar contracts would actually make that figure remains TBD.]

    In addition to reducing the revenue that would count toward calculating the salary cap for a given year, the NHL proposal calls for the players to take a cut in their share of that smaller pie from a current 57% to 46%.

    The NHL wants to put a limit on contracts at 5 years and it wants to forbid all signing bonuses for every contract.

I read one report that said 19 of the 32 NHL teams would be over the new proposed cap should it be implemented as it is presented and that those 19 teams would have to find ways to offload $125-140M in guaranteed contracts that are currently in force. That ought to be fun…

I cannot wait to hear what Donald Fehr and his minions come back with – – knowing that this is a league that has shown the willingness to shut down for an entire year thereby providing the players with zero income. I would not be surprised if the players’ response was something along the lines of:

    Total elimination of the salary cap.

    A modest “luxury tax” on team salaries that exceed $90M per year.

    Free agency for all players after being on an NHL roster for a total of 200 games (two and a half seasons roughly).

If that is the players’ response, the world may have to do without NHL hockey for another year because there is no way on this planet in this solar system that either side is going to agree to what the other side would represent.

To give you an idea how the revenues of the NHL have fared since the “lockout year”, the salary cap of $35M that was imposed then carried with it a salary floor for every team. That is only fair; the original salary floor was $22.4M. Last year, the salary floor for every NHL team was $48.7M while the cap went to $70M. Nonetheless, somehow, the teams in the league are in some kind of collective financial trouble and the players’ union is complaining about how its members are getting screwed.

Meanwhile, as all of this posturing is going on, the NHL free agency season is in full bloom. The Minnesota Wild signed two of the “blue-chip free agents” to identical contracts extending over 13 years and totaling $98M – – but most of that money comes early in the deal because they would only make a modest $1M in the final two years of their deals. Is that a “signing bonus” they paid to these free agents or is that a shrewd contract provision?

Nothing here points to an agreement by 15 September 2012. In fact, nothing here points to an agreement. The NHL has survived a year’s worth of lockouts and come back to record revenues. The NHL players have tried to make back the salaries they lost in that lockout year – – and the star players have done that and more. The owners and the players look at that situation through different prisms but the real difference is that Gary Bettman and Donald Fehr are the main men in the arena here.

    Bettman won a long-term stare down last time and took league revenues to unheard of levels since then.

    Fehr is the “new guy” here who has to show that he is tougher than the guys he replaced – – and Fehr has shown no aversion to canceling things like the baseball
    World Series in 1994. [Make no mistake; the players walked out and canceled the World Series; the owners did not lock them out back then.]

This could turn into a “Loser Leaves Town” match if Bettman and Fehr choose to make it such. Even Vince McMahon could not script a story line better than this one… Maybe the special guest referee for this match should be Fay Vincent. At least it would give him something to do other than changing oxygen into carbon dioxide.

Finally, Greg Cote had this comment in the Miami Herald about the proposed/hopeful start of a rejuvenated USFL next year:

“A new USFL is targeting a March 2013 startup with eight teams. Future announcements are expected to include a postponement of the original startup date, followed by the disbanding of the league.”

But don’t get me wrong, I love sports………

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Comments

  • Matt  On July 19, 2012 at 7:48 am

    For the record, I referred to it as “dangerous journey into the land of the monogrammed pocket protectors.” :)

    And I say if the USFL is going to re-launch, even though they are planning on not being in markets where there is an NFL team so as to not be seen as competing – they should bring back the Washington Federals. This town has PLENTY of room for another terrible team! :)

  • The Sports Curmudgeon  On July 20, 2012 at 11:52 am

    Matt:

    Sorry to have forgotten your exact description of the Math Club; but now that you remind me, that is what you called it…

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