“They just want the money”

Rich Hammond asks:

Can players, owners make progress this week? « LA Kings Insider

We’re at the beginning of what figures to be a critical period for the NHL and its players, in terms of determining whether training camps will open on time.

[…]

The issues are relatively clear. At the end of the 2004-05 lockout, the league put in place a salary cap, and tied the rise and fall of that cap (and floor) to revenues. If the league, in general, did well, the players would do well, by virtue of the cap ceiling rising (and their salaries correspondingly rising). Now, the league is asking that the players’ share of that revenue split be reduced, from 57 percent to something in the range of 43-46 percent […]. It’s a pretty staggering change. Seven years ago, the owners railroaded the players, absolutely crushed them, and got everything they wanted. Now, seven years later, they’re coming back to the table and saying, “It’s not enough.”

[The owners] got the exact system they wanted, with the economic certainty they demanded, and now they’re essentially coming back to the players and saying, “Yes, we got cost certainty, but we didn’t go far enough.” Whose fault is that? Seven years ago, the owners did make compelling arguments. They opened their books, showed how much money they were losing, and made convincing arguments that the current system was not sustainable. […] This time around, I haven’t heard anything compelling. It’s not terribly far from me complaining to Amazon.com that they’re charging too much money to my credit card, even though I’m the one who made the purchases. Whose fault is it that the New Jersey Devils gave stupid money to Ilya Kovalchuk?

Tom Benjamin has made, I think, the most coherent assessment of the situation.

Tom Benjamin: Framing the Issue and Reasons for Optimism

A friend […] recently asked whether I thought the media was doing a better job covering the CBA negotiations than they did in 2004. “The players seem to be winning the PR war,” he said, “And the hockey reporters seem to be a lot more sympathetic to the plight of the players.”

“They are winning the the PR war because Gary isn’t bothering to fight,” I replied. “And the sympathy for the players stops short of opposing Bettman on the only issue that matters.”

During the 2004 dispute I wrote things that I thought were blindingly obvious but found myself completely out of step with the hockey media. Once again I find myself reading the same facts and hearing the same quotes as all the other hockey writers and drawing conclusions that are completely different than the ones suggested by the narrative playing in the MSM.

[…] Here’s a typical framing of the dispute from Rick Gano at the Globe and Mail:

The league wants the players to give up a significant amount of salary to stabilize the industry while the union maintains that goal would be best accomplished with the wealthy teams doing more to help their struggling counterparts.

I frame the dispute: “The league wants the players to give up a significant amount of salary. It is money. They don’t need a reason.” […] This negotiation is not about a need to stabilize the industry and it isn’t about the plight of struggling counterparts. The lion’s share of the money Bettman drags out of the players will end up in the pockets of the rich teams just like it did the last time. Even if the league had zero struggling teams they would be demanding the money and threatening a lockout.

I think everybody in the process understands this. It is the same plan that was sucessfully executed in both football and basketball. The league expects to get this concession because it will bring the NHL into line with the NFL and the NBA. Plus, it is a lot of money and the players are there for the plucking. End of story. As Chris Campoli said, “They just want the money.”

[…]

Donald Fehr understands what is going on:

“One of the things which appears to happen in the capped sports, is no matter what the economic circumstances are claimed to be, whether they are claimed to be losses as we had in basketball this last time, or whether there’s an acknowledgment there are no financial problems, as we had in the NFL this last time, it doesn’t matter. The position is, we have a cap and the cap has to be lowered.”

Sooner or late the owners are going to say, “This is our final offer. Take (about) 50% of the revenues or you are sitting until you do decide you want to play for (about) 50% of the revenues.” For a host of reasons, the best the players seem able to do is surrender quickly. Caving in is the smart choice – and that’s exactly why Bettman is squeezing very hard.

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When the problem is framed “Who bails out the sad sacks?” there is a mess. The owners say the players. The players say the rich teams. Some fans say dump the sad sacks. There is no good answer. There is no deal. There is nothing.

When the problem is framed “The owners want more and the players will have to give it to them” there is a more interesting story […].

[Fehr’s] opening proposal surprised me and after chewing it over, I think we can guess at the outline of his strategy. I can even imagine how he can push the league into a settlement.

On the other hand, the hockey media is filled with doom and gloom after Gary Bettman airily dismissed the player’s proposal. Harrison Mooney puts it as well as anyone when he wrote:

[…] with less than a month to go until the owners’ September 15th deadline, the NHL and the NHLPA have still yet to agree on which proposal is the basis for their negotiations. Anyone hoping the two sides are on their way towards bridging the gap had best be concerned, because it should be clear by now that, as it stands, they’re building two separate bridges.

They are indeed building separate bridges, but that’s okay in this case. It appears to me that Fehr and the players have decided they will give up the money. They are going to settle for (about) 50% of the revenues hopefully before they miss any games. The objectives are to push the (about) part as high as possible, b) change the system enough to give the players a chance to hold on to their (about) 50% over the long term and c) end the regular threat of work stoppages in this industry. (Good for them, I say, on all the objectives, but most particularly the one that spares the fans from this soap opera every few years.)

I think I missed the part where Fehr is attempting to gain protections against future work-stoppages, but Benjamin is much more informed than I am, so I will stipulate.

Another reason for optimism is that while Gary Bettman grumbled about the significant gap, he did not specifically rule anything out. I think he is going to come back to the players ignoring the player request to negotiate the cap in dollars, but offering them a fatter percentage as he heads the negotiations toward (about) 50%. He would be building his own bridge, but it is still being built with money. He started by demanding $430 MM a year. The players offered $150 MM, albeit in different form. If he responds with a percentage that represents a clawback of $320 MM… Then Fehr tweaks his bridge again… Sooner or later they will have a deal that (whichever bridge is crossed) represents (about) a 50-50 split going forward.

At this point the players will have given Bettman his money. Bettman will have realized his objective. The only difference would be that the owners would have to pay a significant penalty to repeat the squeeze several years from now if they accept the player bridge. They would have to give the players a fat raise – back to 57% of revenues – for a year to set up a lockout. It provides the opportunity for the league and the NHLPA to quietly negotiate a split that is (about) 50% of revenues indefinitely.

If the NHL is playing a larger game in lockstep with the NFL and NBA they will not be knocked off their path. But if they really want a deal – a good deal – and long term labour peace, they’d have to look very closely at the last offer they see. Will they really want to shut down the sport today to preserve their negotiating power several years down the road? Pay a real cost today for gains that won’t materialize for several years? Is that worth a half season?

Perhaps not. Perhaps the owners will cut the deal. It might work out just as well for them as the current system and if it doesn’t work for them, they can always pay to get their hammer back.

Is that what Donald Fehr is doing? If so, I’m impressed. Is labour peace in our time really possible? I’ve got hope.

Benjamin’s view seems to be that (1) Fehr knows they are going to fold, (2) Fehr must know that folding quickly is “the smart move,” and (3) Fehr will cough up the money, in effect, in exchange for contractually making future lock-outs much less likely.

#3 would of course be welcome news to all fans. The rest depends on who is deciding what “the smart move” is. Is Fehr telling the players that they will resolve this quickly? I doubt it. Who will say first that it’s time to make a deal, Fehr or the players he represents? Have the players done their own math? Are they really willing to give up 50% of this year’s salary (losing half a season, for instance) in order to save 7% of that same salary over the next several (7? 8?) years. That’s obviously a wash.

I guess I would be optimistic if I thought they had run the numbers and could see that they will make the most money by taking the deal now and not getting locked out.

 

  1 comment for ““They just want the money”

  1. August 28, 2012 at 2:22 PM

    Interesting. I will read Benjamin’s entire discussion as soon as I get the chance.

    It seems to me that the players (i.e, the membership, as opposed to Fehr and the NHLPA civil service) would naturally be inclined to avoid trading short-term loss for long-term gain and would compromise to avoid a lockout. I’m sure most of them are savvy enough to know that they each have a short window in which to make good money as a professional hockey player, and something gained several years from now may mean nothing to them (unless it takes the form of more generous pensions).

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