Understanding the NHL Lockout
By Wesley Rickards, 10.07.04
It's a nightmare for Canadian residents and anyone living between Buffalo and Minneapolis: They’re not playing hockey, eh?
The National Hockey League, the distant fourth among the “Big Four” in sports, is in trouble because of a disagreement between the owners and players. The players are locked out, and the season is in jeopardy. If the season gets cancelled, the NHL will not award the Stanley Cup for the first time since 1919, when a worldwide influenza epidemic cancelled the series.
Comprehending the Collective Bargaining Agreement
The disagreement between the players association and the owners came at the end of a collective bargaining agreement. This agreement, which after being in effect for 10 years, expired on Sept. 15. During this time, revenues were up 173 percent, while player’s salaries grew at a rate of 261 percent, according to statistics on the league’s web site. To combat rising salaries, arenas raised ticket prices. Now, many fans are priced out and league is taking heavy financial losses.
Because salaries escalated at a higher rate than revenues, a greater proportion of revenues went to the players. Currently, 75 percent of revenues go to players, the largest amount in any sport.
Also, the average salary of an NHL player shot up to $1.8 million. Those costs for players priced many teams out of competition. One-third of the professional teams lost money. As a whole, the league lost $1.8 billion in the last 10 years. Some teams have even declared bankruptcy, while others opted to sell their best players because of financial reasons.
The Sides
The players association created a four-point, plan which proposes a revenue-sharing between high-revenue and low-revenue clubs. They also recommend that teams take a five-percent reduction off every contract.
But the NHL drafted a plan of action. The NHL, backed by Commissioner Gary Bettman, said that the proposal from the players union does not to solve larger problems.
“There is no short-cut or quick fix,” Bettman said at a recent news conference. “We need an enforceable, defined relationship between revenues and expenses.”
The NHL wants player salaries tied to revenue. This would lower the average salary from $1.8 million to $1.3 million. But the players association said it would never agree to a salary cap. While the owners said that it’s not a “cap,” but a “cost certainty.”
“Unfortunately, the league has rejected all opportunities for compromise, while stubbornly insisting that Gary Bettman has the single solution to every problem – a salary cap,” said Bob Goodenow, the executive director of the player’s association in a press release. “Gary and the owners have chosen, through a lockout, to try to force Players to accept a system they know Players would never agree to.”
The Waiting Game
Labor disputes are nothing new to the world of hockey. This is the third work stoppage in the history of the NHL. In April 1992, players went on strike, but made a deal 10 days later and the league rescheduled the games that were missed.
In October 1994, the owners locked out the players until January, when both sides agreed on a new deal. NHL teams played a shortened 48 game schedule that season.
But things are not as optimistic this time around. Recently, the owners set aside $300 million in case of a lockout. Players are finding alternate leagues this season. More than 150 NHL players are playing overseas in Europe and several others are playing in both minor leagues and independent leagues in the United States.
The last scheduled negotiations between the two sides occurred on Sept. 9. And without hockey, one thing is for sure – it’s going to be a cold winter in Canada.
