NHL Owners Set To Reject Players’ Labor Proposal

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The New York Sun

Things have never looked bleaker for the National Hockey League than they do today.


The league reportedly will turn down the offer submitted by the players union last week that proposed a 24% rollback in salaries in a last-ditch effort to save the season. According to the Canadian television network TSN, NHL Executive Vice-President Bill Daly sent a confidential memorandum to the 30 team owners in which he confirmed the league’s opposition to the players’ stance.


“In sum,we believe the Union’s December 9 [collective bargaining agreement] proposal, while offering necessary and significant short-term financial relief, falls well short of providing the fundamental systemic changes that are required to ensure that overall League economics remain in synch on a going-forward basis,” Daly wrote in a memo dated December 12, according to TSN.


The two sides are scheduled to meet today in Toronto. NHL Commissioner Gary Bettman is expected to present the union with another proposal promising owners “cost certainty,” which the players say is tantamount to a salary cap and thus unacceptable. That will likely mean the end of negotiations and subsequent cancellation of the 2004-05 season.


And maybe that is exactly what the owners want. In his memo, Daly wrote that “the Union’s offer was more about trying to unify the players and ensure player solidarity […] than it was about making a good faith effort to reach agreement with us.”


This is sheer nonsense. By offering to cut salaries so dramatically, the players union risked blowing itself to pieces. Many players were surprised and upset with the offer, and felt that the union was giving up too much. If anything, it is the league’s response that will provide the players with a rallying point.


It has been widely speculated that the NHL intends to declare an impasse next summer, imposing its terms unilaterally and forcing the players to choose whether they want to operate on the owners’ terms. Given the events of the past week, it looks unlikely that players will cross picket lines.


While the players did not capitulate to the owners’ demands for “cost certainty,” last week’s proposal did offer the owners certain cost savings in the short term of well over $500 million. This wasn’t enough, according to Daly.


“While the immediate ‘rollback’ of 24% offered by the union would materially improve league economics for the 2004-05 season,” Daly wrote, “there is virtually nothing in the union’s proposal that would prevent the dollars ‘saved’ from being redirected right back into the player compensation system, such that the league’s overall financial losses would approach current levels in only a matter of a couple of years.”


Perhaps the problem, then, is not the players’ proposal, but rather the owners’ inability to run their hockey clubs like businesses. The 24% proposal in effect promised to bring the average player salary back to 2000 levels, giving the owners a fresh chance to learn some restraint within a more management-friendly environment. Yet Bettman and Daly refuse to place any responsibility whatsoever on the teams, instead hoping that cost certainty will ensure fiscal discipline on the part of the owners and general managers. It seems they are forgetting that just a few months ago, the Calgary Flames and Tampa Bay Lightning provided an eloquent demonstration of how to win in the NHL while operating within a budget.


Last year, player salaries totaled approximately $1.3 billion, or 62% of the league’s $2.1 billion in revenue. Under last week’s NHLPA proposal, 2004-05 salaries would have fallen to $988 million, or 47% of league revenues. In Daly’s response, he said that “the ‘rollback’ should be structured among the players in a more equitable manner than the Union’s current proposal envisions.”


This is an interesting tact, one presumably intended to drive a chasm between the players. But it’s unlikely to work. In the players’ proposal, the league’s biggest stars would have given up millions of dollars in contracted salary. The Islanders’ Alexei Yashin, for example, has six seasons left on a nine-year, $90 million deal, and so the union proposal would have cost the enigmatic Russian center $14.4 million. A rollback would also mean that the market value for every future free agent would decrease substantially; with Martin Brodeur’s salary reduced to $5.2 million, it is hard to imagine any other goaltender getting more.


The players’ proposal also included a payroll tax with a starting threshold of $45 million and tax rates ranging from 20% to 60%, with additional penalties for perennial offenders. Unimpressed, Daly reaffirmed the league’s firm opposition to “any new economic system that is premised on salary restraints encouraged by a luxury tax,” calling it “a system based on projections and guesswork.”


While the luxury tax as proposed was probably not punitive enough – the Red Wings and Rangers wouldn’t have qualified, for example – it should have provided a starting point for negotiation. Had the threshold been set at $40 million with tax rates beginning at 40% and rising more quickly, the luxury tax would have surely placed a meaningful restraint on teams’ abilities to spend excessively on players.


If the owners truly believe that the players’ proposal did not represent a “good faith effort,” it is clear that the league’s Armageddon will now begin. When it is over, the sport will be a fragmented mess. NHL teams will field lineups of AHL level quality. European players will continue to migrate to the Swedish Elite League and the Russian Super League. Many North American stars – and perhaps the former NHLPA itself – will throw their support behind the World Hockey Association. Interest in hockey in the United States will dwindle even further.


It’s a good thing for NBC that they’ve committed no money upfront for the rights to broadcast NHL games. If the world’s greatest players couldn’t draw more fans to the tube than an average night of celebrity poker, what will happen when the talent level drops dramatically and the players’ names are suddenly unrecognizable to even the most informed observers?


The NHL’s future looks very bleak indeed.



Mr. Greenstein is the editor in chief of insidehockey.com.


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