For once in his life, NHLPA executive director Donald Fehr is not being looked at as the bad guy. The NHL threw the first stone in what now looks to be a long CBA negotiation. Renaud Lavoie of RDS first broke the news of the NHL’s less than encouraging offer on unlucky Friday the 13th (of July). Many experts such as TSN’s Bob McKenzie and Darren Dreger have been pessimistic about the upcoming labor negotiations and were predicting there might be a lockout. After seeing the first offer, it’s not hard to imagine.
Yes, this is July. Yes, this is the first offer. However, even as a first offer, it has to be one of the worst first offers in league history. Even back in 2004 when the league came off of a season where they lost close to $300 million, their first offer was an offer that gave the players north of 50% of the league related revenues. The scary thing now is that according to McKenzie, the league related revenue may be a smaller pie, and the NHL has initially offered the players just 46% of that smaller pie.
This slap in the face offer no doubt was inspired by the NFL’s hard nose negotiations with their players union. The NFL’s union has always been weak, but it was the first time that a union had to take less than 50% of revenues. David Stern and the NBA were able to crack the NBA union as well after a lockout of a couple of months. However, if Gary Bettman is licking his chops at how these CBA negotiations have changed in the owners favor, he may be barking up the wrong tree. Hockey players are different and come from much different backgrounds than players in the other three leagues.
Former executive director Bob Goodenow resigned on July 29, 2005 shortly after having to swallow his pride and accept a salary cap into the NHL world for the first time ever. The problem for the NHL was that the players were so united they allowed the cancellation of a full season before unwillingly accepting a cap.
If you look at it now, Goodenow won the deal without even knowing it. Goodenow was an extremely bright guy and excellent negotiator and even though the players had to accept the salary cap, they won in almost every other aspect of the negotiation. Big markets still have the advantage because they have been circumventing the salary cap by offering 10-plus year deals and frontloading the deals and buying players out later. Smaller market teams cannot afford to do that. That’s one of the things Bettman is trying to stop.
Another thing that can’t sit well with Fehr and the players is the fact that the owners are proposing a huge cutback even as revenues have grown north of 3 billion dollars since 2004 when they were just over 2 billion. It makes no sense on paper. In the league’s current state, about half of the teams make money and about half lose money. The big market teams are usually making money, and the smaller markets a lot of times lose money because of the temptation not to stick to their budget. While the current 57% the players get is probably too much and has to go down, 46% is not where it has to go down to. The small market argues they need it lower to contend. However, smaller markets can still contend with a 50-50 split or just north along with responsible spending.
If you look at teams that are losing money, they are making choices to spend above the league salary cap floor. Just like Goodenow stated in 2004, “There is a salary cap. It’s called a budget, and you stick to it.” Owners and general managers just can never understand this. Here’s an example: Lou Lamoriello. Lou’s a great hockey guy. In 2010-11, the salary cap floor was set to $43 million. The cap was around $59 million. The Devils payroll was right up against that cap. According to Forbes, the Devils lost $7.5 million that year. Now, if Lou Lamoriello wanted to, he could have cut payroll enough to break even and still been within the NHL’s rules. The problem is his competitiveness and ego have him wanting to win so bad, he overspent his budget. This was Goodenow’s point, which was very big market friendly.
These are the same GM’s and owners who point fingers at the players yet if they really wanted to, the issue was within their control. Although they probably wouldn’t have had a shot at the Stanley Cup if they spent less. Nonetheless, the choice was theirs.
The problem that is causing a lot of negative reaction toward the owner is they are billionaires who feel like they hold all the leverage on players. The NHL owners know they can always afford to wait longer than the players can. That is why the players will always cave. But the question is how long are the owners willing to wait to get the deal they want? Judging by the first offer, they may be willing to miss some time at the start of the 2012-13 season. It is HIGHLY unlikely the owners will be willing to miss the whole season like they did in 2004. I’d rate that at virtually no chance. The league knows they were lucky to recover last time, and they are in nowhere near as bad of shape as they were in 2004.
Here’s the thing about the NHLPA, though. Hockey players along with baseball players over the years have been arguably the strongest and most tight knit unions. And now this tight knit group has Don Fehr, the former leader of baseball’s union that still to this day has never accepted a salary cap. While the NHL players had to accept a cap (after losing a full season nonetheless), one can bank on Fehr not getting ripped off in this deal. Even if the season has to start late, “cave” isn’t in Fehr’s dictionary.
However, just as many have been saying for months, it’s not Fehr you should be afraid of. It’s the league. It’s the billionaires that think they can take more money back in each CBA negotiation until they are making a profit and spending to the cap because they cannot control themselves. It’s the sense of entitlement that the owners feel that is the players owe it to them to give them a CBA which protects themselves from themselves. The recent trend of CBA negotiations in professional sports period is scary.
While many believe the players threw the first stone by bringing in Fehr, fans and writers alike seem to be in the players’ corner this time. That was something that was not really the case in 2004. They do not fear Fehr. They fear the league being unwilling to make a fair deal. Only time will tell. If they want to keep the players percentage below 50 like the NFL did, it could be a long winter.
Justin Johnson is a Senior Correspondent and has been covering the Philadelphia Flyers for The Hockey Writers since the 2008-09 season. Justin has covered all levels of hockey across the United States and Canada. Justin is a graduate of Rider University in Lawrenceville, NJ and currently resides in Southern New Jersey.