Why lockout again, NHL?

Why lockout again, NHL?

I’m going to lay this out now: if the NHL locks out the entire season like they did in 2004-2005, I will David Carradine myself in a Bangkok hotel room.  All of last season, I had assumed that both the players and the owners realized that another lockout would ruin all the repairs they made and turn the casual fans of the game away once again.  All of my assumptions got me nothing in the long run, though, as it seems that neither side has learned anything in their wake of the last work stoppage.

The NFL and the NBA already went through this.  While the NFL lockout was more of a joke than anything else (it’s not a lockout when it takes place during the offseason and doesn’t hinder any games being played that count) the NBA lockout erased half a season.  But the NBA didn’t seem to be affected and that’s partly because the NBA is a more prominently featured league and it gets constant ESPN coverage, so finding followers is a lot easier.  Without this luxury, the NHL has struggled to get their fan base back.  The Comcast/NBC merger has significantly raised the NHL’s stock by moving NHL games to more NBC channels.  However, if the league shuts down for any amount of time, the new viewers will probably abandon the league without a second thought.

If the NHL locks out this year, it’ll be because they can’t agree on these hot button issues:

1.     Players’ share vs. Owners’ share

Much like football and basketball, the owners want more money.  And their argument is valid because they put the teams together.  Obviously, without the owners, there is no team.  And without a team, there are no fans.  The fans buy tickets, merchandise, and concessions, which, along with television and marketing deals, fund the wonderful game we all love.  While hockey is evolving to a much higher speed game, and becoming much more dangerous as a result, the players want to make sure their interests are protected.  The current split is hovering around 57/43 percent players to owners.  For the new collective bargaining agreement, the owners have suggested a fair, and evenly balanced, 50/50 split.  The gall of them for that!  This is the number one bargaining chip and, until this is solved, none of the other points are going to get hammered out either.

2.     The Salary Cap

The salary cap: an interesting idea that was poorly executed.  Since the new CBA was set in place during the last lockout, the salary cap has been steadily rising every year.   Currently, this year, it jumped to right around $70 million.  Surprisingly enough, the problem isn’t with the rising salary cap, it’s with the cap floor.  Currently, the league requires teams to spend “x” amount of money or else they are penalized.  If the cap is $70 million, teams are required to spend roughly $55 million.  For bigger market teams, this isn’t an issue.  But smaller markets are losing out on much needed revenue because they are being forced to pay players to meet a bottom line.  Certain teams, like Phoenix, could have their financial situation helped out if they aren’t forced to meet a minimum amount.  But is a cap floor necessary?  If teams don’t have to spend, will they choose not to?  And will that create the disparity gap that the NHL was trying to avoid by implementing a salary cap to begin with?  And, in that same vein, what’s the point of a salary cap if it just keeps rising every year?  The NHL needs to figure out something before fans are saying: “Yes, our team is $55 million under the cap.  Now we can sign this guy for $25 million a year”.   This isn’t basketball; let’s not let the NHL come to that.

3.     Contracts

This is the part I have the strongest opinion about.  Currently, all contracts are guaranteed money.  While this is great for the players, it’s crippling for the owners. The biggest problem I can see with the contracts since the CBA was implemented in 2004-2005 is the length and structure of them.

For example, let’s use the big free agent signings this year: Parise and Suter.  Both signed for 13 years and $98 million dollars.  What the Wild did for both deals were front-load the contracts.  In 2012-2013 and 2013-2014 they make $12 million a season.  In 2014-2015 they make $11 million a season.  The middle of the deal is $9 or $8 million.  The last three years are $2, $1, and $1, respectively.  In the last years of the contract in 2024-2025, but both will be hovering around 40 and most likely at the end of their careers.  This is what the NHL doesn’t like and is trying to avoid teams from doing.  While front loading is an underhanded tactic, it’s a smart loophole that the teams were able to exploit to their advantage.

Based on the discussions so far, the league is getting sick of this practice.  Their newest offer looks something like this: no salary arbitration, entry level contracts jump from three to five years (possibility on a change in the ability to claim UFA status), and that signing bonuses on contracts are done away with so there is an equal value for every year of the contract.  The players will probably balk at this but it’s necessary to protect the league.  The ten-year plus contracts are going to ruin teams (see: Rick DiPietro; Islanders).  They need to cap not only entry contracts, but also all contracts.  Put the limit at five years and be done with it.  An employee review every five years will keep players working to their maximum potential and won’t allow them to float through their deal because they are guaranteed the money they signed for seven years ago.

Capping contracts would also make trades relevant again.  Roberto Luongo would’ve probably been traded out of Vancouver long ago.  One of the things that made teams hesitant was his giant albatross of a contract.  It’s hard to swing a trade for a guy who only has eight years left on his contract and an average cap hit of six million dollars.  The league needs to push to cut out front loading and cap the maximum years.  Players may complain about it now but it’s the best course of action for the NHL in the future.

4.     Escrow money and Revenue sharing

To explain the escrow money: a percentage of all the player’s salaries are placed in an account during the season.  At the end of the season, this money is split up among the players to make sure the decided money split is met (see #1).  What the players are angry about now is that the smaller market teams are crippling league revenue and, therefore, sucking up all the money that is being put aside.  The players are losing money they’ve earned to pay for the markets that can’t support a hockey team (see: Phoenix, formerly Atlanta, the Florida teams).  While the players find this to be a nuisance, the owners have been using this to keep the league from going bankrupt.

As for revenue sharing: to make everything even, the big market teams share their money with the small market teams.   The idea, in theory, benefits all teams and makes the league better as a whole.  The current setup doesn’t have the revenue sharing set to a particularly high amount and if that changes, the owners of the richer teams probably won’t support it.  But the players might jump on board with that because it means they would make more back in their escrow payments.

If you made it through all of that, you can see that settling on a new CBA will be a daunting task.  Our only hope as hockey fans is that the league and players realize that another lockout will turn off fans and will kill all the momentum that has been amassed up to this point.  I’m looking forward to October as the start of the NHL.  I really hope the players and league are too.

Reference(s):

http://prohockeytalk.nbcsports.com/2012/07/04/heres-how-parisesuter-contracts-break-down/

http://proicehockey.about.com/od/nhlnewsscoresstats/a/Nhl-Lockout-In-2012-A-Look-At-The-Issues.htm

http://www.tsn.ca/nhl/story/?id=400940

http://www.tsn.ca/nhl/story/?id=400580

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