NHL, Union Reject Competing Plans
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The National Hockey League and its players association took another major step yesterday toward canceling the 2004-05 season.
During a 3 1 /2-hour negotiating session in Toronto, the league turned down the proposal presented by the union last week, which included a 24% reduction in player salaries. The NHL then made a counteroffer of its own, which the union rejected out of hand.
“We studied the (Union’s) proposal extensively and we discussed it with each of our 30 clubs,” NHL commissioner Gary Bettman said. “The unanimous conclusion was the Union’s proposal does not work. It is dramatic in its immediate, short-term impact, but is fatally flawed as a system going forward.”
Rather than negotiating against the points of the NHLPA proposal, which also included a proposed luxury tax, the league instead presented a counter-proposal that contained the “cost certainty” it says it needs in order to ensure future success and survival for all franchises. The union considers that tantamount to a salary cap and thus unacceptable.
“In short, the league took what they liked from our proposal, made major changes, and slapped a salary cap on top of it,” said union chief Bob Goodenow. “Put simply, our proposal provides the basis for a negotiated agreement. The NHL’s does not.”
Yesterday was the 90th day of the lockout, and there is probably less than a month left to salvage the season. The last lockout, during the 1994-95 season, ended on January 11, 1995, and a 48-game season ensued.
The NHL referenced the 12.1% annual salary growth in its response, stating that under the union’s proposal, league-wide losses would once again reach current levels by the second and third full years of a new collective bargaining agreement. In particular, Bettman questioned whether the union’s proposed luxury tax would be an effective drag on salaries.
“Look at the Union’s proposal on its face: No tax until $45 million,” Bettman said. If every team went to $45 million, there would be no taxes paid and our player costs would be what they are now. With a $50 million payroll, a team would pay a $1 million tax – we could pay out 80% of revenues, more than the 74% under the old CBA – without triggering more than a $1 million tax per team. That won’t do anything.”
Yesterday’s NHL proposal included what it called a “payroll range system.” Under this plan, teams would be able to spend between 51% and 57% of their 1/30th share of the league’s hockey-related revenues on player compensation. In dollars, based upon the league’s reported revenues of $2.032 billion, this would mean that team payrolls would range from a low of $34.6 million to a high of $38.6 million.
The union has repeatedly affirmed that it will not accept any solution that ties player salaries directly to league revenues.
“[Bettman] knows full well that a salary cap is a non-starter for this organization,” said Goodenow. “He remains fixated on the salary cap solution. And as long as that’s the case, there’s going to be problems.”
In response to the NHLPA’s proposal to provide immediate relief on existing contracts, the league counter-offered a tiered salary rollback. Under their plan, players making less than $800,000 would not see their salaries diminished, and those above $5 million would face a 35% pay cut.
No new negotiations are scheduled, but Bettman did challenge the NHLPA to come forward with another proposal.
“If the Union does not come forward now,” Bettman said, “it proves that the Union leadership knows full well that under the Union’s proposal, the fundamental failures of our current system will not change and we will be right back where we were in, at best, a couple of years.”
NHL executive vice president Bill Daly’s memo to team owners was leaked to the Canadian sports network TSN on Monday night, foreshadowing the league’s rejection of the players’ proposal. Daly remains cautiously optimistic.
“We’ll keep working at it,” he said. “It’s hard to draw any conclusions from this meeting other than we’re still not any closer to a resolution.”
Based upon the fact that arenas are being booked for non-hockey events 45 days in advance, and that the league would need to start up again by the end of January in order to have a season of meaningful length, it seems more likely than ever that the 2004-2005 season will go by the wayside.
Mr. Greenstein is the editor-in-chief of INSIDE HOCKEY (insidehockey.com).