Did NHL Owners Negotiate In Good Faith?

The NHL Owners came under attack when Minnesota Wild defenseman Ryan Suter let his displeasure over potential rollbacks be known.
(takenbygabi @ flickr)

Friday, in an interview with ESPN, Minnesota Wild defenseman Ryan Suter went public with his displeasure of what he feels were unfair business practices by Minnesota Wild owner Craig Leipold.

Suter is upset at the prospect of losing some of the $98 million in salary he is supposed to get over the 13-years of his contract due to potential salary rollbacks that may come with any new CBA.

“If you can’t afford to (sign contracts) then you shouldn’t do it,” Suter told ESPN on Friday. “(Leipold) signed us to contracts. At the time he said everything was fine. Yeah, it’s disappointing. A couple months before, everything is fine, and now they want to take money out of our contracts that we already signed.”

While it is hard to sympathize with anyone that just collected $10 million in bonuses from his employer, Suter’s point is valid.

That said, if Suter expects us to believe that a potential rollback on salaries was not part of the conversation when he and his agent Neil Sheehy sat down to discuss Suter’s deal with the Wild we’re not buying it, not for a second. And, if Suter and Sheehy didn’t discuss a possible rollback Suter should fire his agent in disgust for his act of stupidity!

Given Suter’s comments it appears as if he and his agent may not have considered rollbacks, but with the precedent being set in the last CBA negotiations, if that is the case, he and his agent were foolish.

In a perfect world Suter and Sheehy would have accounted for some type of rollback, holding out for a little bit more money in order to off-set any losses. Whether they did that or not is between Suter, Sheehy and God, but if I was a betting man I would think they would have thought about rollbacks as being a real possibility and acted accordingly.

Of course, there is the question of integrity. Owners and players seemingly sign deals in good faith (well, most of them do anyways) and to ask the players that recently (or otherwise) signed multi-year/high dollar deals to accept anything less than what they signed for seems like dirty pool.

Ryan Suter (Flickr/bridgetds)

“It’s disappointing that the owners, they sign all these guys and some guys were signed within the last week before the CBA was up.” Suter told ESPN. Now, they’re (owners) trying to go back on their word. It’s frustrating, disappointing. It doesn’t seem like that’s the way you operate a relationship or business.”

Morals aside, the owners are completely within their rights to fight for every penny, as are the players. To suggest that either side is not attempting to exploit the other for every penny possible would be foolish and ignorant.

The bottom line is both the owners and players are in a 15-round boxing match and as the match goes on there is bound to be bloodshed on both sides of the financial ledger. It’s inevitable.

While Suter’s comments will get some support, they are a tad premature. First, there is no guarantee that the owners will secure a rollback on current salaries. Second, coming out and stabbing your owner in the back is not the best way to start a relationship with a team you just signed with.

Besides, the owners are a group, and there is zero evidence that Leipold is for or against the idea of rollbacks. Ok, he probably is supporting a rollback! But if the shoe was on the other foot, would the players do the same? Darn right they would! They would, and are, fighting for every penny, and who can blame them?

You cannot hate on the owners when as many as 20 teams are losing money. Sure, as one reader recently pointed out, the owners can use those loses as tax benefits, but if this was such a profitable venture (losing money) why would the owners be looking to operate in the black? Why not keep things just the way they are if it is so appealing to operate in the red?

Obviously, those tax breaks ain’t what some people believe them to be. In the end the owners will fight for what is best for them, and they have spoken loud and clear that operating in the black is where they want to be.

For his part, Leipold did not respond to Suter’s comments. This hardly comes as a shock as the NHL has put a gag order on all owners and general managers regarding the CBA with fines of up to $1 million keeping the group’s lips duct taped. For better or worse, the owners do not have an individual voice, at least not in public.

Many believe that NHL commissioner Gary Bettman is in control of the owners, orchestrating the entire CBA process. Perhaps Suter’s venom should be aimed at Bettman, forgoing the personal attack on Leipold?

Not to overstate the obvious, but the NHL is in deep trouble. Without significant revenue sharing the NHL’s financial issues will continue to perpetuate themselves. The owners and players must work together to strengthen the league as a whole. If they fail to do this there is a real danger that the NHL will be in more trouble as time goes by.

The following is an excerpt from Kurt Badenhausen of Forbes Magazine. Forbes tracks the business of hockey, and more specifically, which teams are actually operating in the black and which ones are losing money. It’s a real eyeopener as to what is at stake here and why the owners are fighting as hard as they are for wholesale changes to the way players are compensated and to what level players are compensated.

“The NHL’s problem is the widespread disparity in profits for its 30 teams. We (Forbes) estimated that 18 teams lost money during the 2010-11 season in our annual look at the business of hockey. Several other teams barely eked out a profit, but the league’s most flush teams made a killing. The Toronto Maple Leafs, New York Rangers and Montreal Canadiens had an operating profit (in the sense of earnings before interest, taxes, depreciation and amortization) of $171 million combined. The other 27 NHL teams lost a collective $44 million. If you add the Vancouver Canucks and Edmonton Oilers to the fat cats ledger, profits hit $212 million with the remaining 25 teams posting a loss of $86 million.”

18 teams losing money? How is that possible with the NHL reporting record revenues? Clearly, those revenues only profited a few teams, while the rest are forced to incur huge losses. If you were an owner would you continue to support the current system? I think not. And, if you were a player, would you not be willing to take less in order to have a strong 30-team league? In the long run would that not benefit everyone?

(Toronto Maple Leafs Hockey Club)

“The NHL is not in dire financial straits as it was in 2004 when a lockout caused the cancellation of an entire season. It does need the top teams to share more of the wealth if it wants to be healthier financially. The league currently shares about $150 million of its revenue and the league has proposed bumping that up to $190 million. The players association is looking for revenue sharing closer to $250 million. We know why the Maple Leafs, Rangers and Canadiens do not want that much revenue sharing. What about the other 27 teams?”

While unlikely to ever happen, maybe it is time for the NHL to be operated as one entity with 30 subdivisions? Is the success of many not worth hurting the few that profits millions?

At the end of the day the owners and players are going to have to get along and both sides are going to have to find a way to make the league (on the whole) profitable. It is sad to see that the two sides are at odds instead of sitting down and trying to hammer out a fair and equitable deal that makes sense for both sides as a team.

Maybe the two sides get a deal done through mediation, maybe they get it done as a team. As long as they get a new CBA signed the fans really could care less and if a few toes have to get crushed along the way (Ryan Suter’s or otherwise) so be it.