Friday, July 6, 2012

Labor Negotiations 2012

The NHL and NHLPA met on Thursday, marking the second formal bargaining session between the sides as we approach the expiration of the current collective bargaining agreement ("CBA"). Katie Strang of ESPNNew York waited patiently outside of NHL HQ in New York during the two hour, forty minute session. 

Donald Fehr represented the NHLPA along with John Tavares, Matt Moulson, Rick DiPietro, Manny Malhotra, Ruslan Fedotenko, Kevin Westgarth, Ron Hainsey and B.J. Crombeen.[1] I'm sure there were also several lawyers present, but I can't say how many. There was no word who was there on behalf of the NHL, but we can presume Gary Bettman was among them.

The two sides met formally for the first time last Friday. Reports from that meeting suggest that the NHL made its initial presentation about what has happened during the current CBA. It is being presumed that today, the NHLPA made its initial presentation.

The big quotes from the day came from Donald Fehr, as reported by Katie Strang,

"We had a constructive meeting…"
"When you're beginning negotiations, you need to have dialogue. You need to see what you have a common understanding about, what you need to flesh out, what you need to discuss further. We did some of that today. We still have groups meeting now, and we're going to reconvene tomorrow morning. That's about all I can say about it…"
"It is a business-like start. There's no other way to put it. The problem is, you hope for the best and you do what you've got to do to try and make an agreement if you can, but I've been out of the predictions business for a very long time.”
Fehr wisely declined to say more, as it would be very counterproductive to the negotiation process.

The two sides are scheduled to meet again on Friday.

There are many issues that will be at the heart of this negotiation, including, but not limited to, player/owner percentage, revenue sharing, cap floor/ceiling, rollbacks, Olympic participation, realignment, contract term, front loading contract, burying contracts, and actual revenue/losses, which to me, could be the key issue in the negotiations. I plan on giving several of these their own posts to discuss at length, as the issues are so deep that to give them a brief snippet here would not do them justice.

Instead, I want to briefly discuss the upcoming process as well as share a personal anecdote.

The current CBA expires on September 15, 2012. At that point there are three options:
1) Agree to a new CBA;
2) Work stoppage; or
3) NHL and NHLPA agree to play current season under expired CBA while continuing to negotiate a new CBA.

Everybody is hoping for #1, but the likelihood of this happening prior to the season is looking slim, given the large number of issues to discuss and how complex some of those issues are.

There have been three past work stoppages in the NHL. There was one strike, and two lock outs.

The only time the NHLPA has instituted a strike was in 1992. It lasted for ten days. It ended with a pretty huge win for the players.

The NHL has locked out the players twice. The first lockout cost the league half a season in 1994-1995 and ended with a pretty significant victory for the players, leading directly to the second lockout in 2004-2005, which cost the league the entire season. However, that lockout ended with a pretty huge victory for the owners.

It could be that we are facing a third lockout. The last lockout was caused because many owners were losing money hand over fist. However, this time, it appears that a lockout may be caused by the greed of the owners, which is why I think it will end more quickly than the previous two.

I think our best hope as hockey fans will be that the two sides continue to negotiate past the expiration of the CBA, and either the season begins with both sides operating under the current CBA, or, in the alternative, the season starts some time around Thanksgiving with a new CBA in place. Call it a hunch, but I don’t foresee a prolonged lockout or the two sides reaching an agreement by September 15. Fortunately, Donald Fehr is quick to point out that the season could continue without a new CBA in place. As hockey fans, we can all only hope that the season starts on time.

On a personal note, in the first season after the lockout, I met Gary Bettman. It is frequently said that he is the smartest guy in the room. Well, I can personally confirm that. In a conference full of lawyers and law students, his wit was the sharpest and his words were the fastest. I left very impressed by the way he side-stepped my question about fighting and any other question he didn’t deem palatable, and fully understanding how he managed to thoroughly defeat the somewhat overwhelmed Bob Goodenow.

This time around, he faces a much more worthy adversary in Donald Fehr. While I don’t view Gary Bettman as a guy who likes to lose, I also think he understands that he has the weaker bargaining position this time around and that he is facing a much better organized and led union than he did seven years ago. I think this gets resolved relatively quickly, with both sides claiming victory in the issues that are most important to their respective constituencies.

[1] I have to say that I like how involved John Tavares is in the player's association at such a young age.


  1. I, too, happen to think this one will resolve relatively quick. One of the reasons- NHL's revenue is up significantly. On the other hand, a few team on the verge of bankruptcy can ill-afford losing another season.

    1. I think the large uptick in NHL revenue is really what will be the source of contention in negotiating the new CBA. The players just see that the league is making so much money, so it will be hard for the owners to justify asking for a larger piece of the pie, which they will inevitably do through comparison to the recent NBA and NFL CBAs which contain sharing percentages of 51.2 percent and up to 48% (increasing to 48.5% in 2015), respectively. I'll discuss these issues in a future post, but I just wanted to dip my toe in the water of the Labor Negotiations with the news from Thursday.

  2. Can you explain what exactly revenue sharing means? Obviously I understand some what, but what I don't necessarily understand is, if the percentage of revenue sharing is higher for the players will the Salary Cap be higher allowing for players to get more money through contracts or what?

    1. I'll explain this in further detail in a future post, but simply put, revenue sharing for the NHL means that a pool of money is created by some larger earning teams, and that money is then distributed to the lower earning teams.

      This is actually an incredible over-simplification of the system currently in place in the current CBA, but it should help illuminate the two major areas where the disputes could arise.

      1) Between the owners themselves: there could be a dispute about how much the larger earning teams have to subsidize the lower earning teams. In essence, why should they be penalized for the failings of other franchises?

      2) Between the owners and the players: When the owners say that some teams are losing money, players could argue that increased revenue sharing would help curb those losses.

  3. Teams that put more into that pool should then have there salary cap raised accordingly.They should be rewarded somehow.

    1. But then you head back to the salary disparities that existed prior to the creation of the salary cap. The league likes parity and allowing some teams to spend more would inhibit that parity.

  4. But why should teams who are successful financially, whether because of strong fan base, or good sound business decisions always be carrying these lesser franchises.Would a luxury tax similar to MLB be the way to go.

    1. Though I see where you are coming from, I couldn't disagree more. The key to a good league is parity and without a cap and revenue sharing certain teams would have an inherent advantage (which wouldn't have been earned by anything the team itself did or didn't do). The reason that teams who are fortunate to have strong fan bases should be carrying "lesser franchises" (a designation I find unfair) is that in a business sense, the teams aren't competing against other teams but against other sports (and entertainment option in general).

      Is it fair to reward a team like Toronto because it happens to be in huge market that also happens to be hockey mad while punishing Nashville because it’s an expansion team in a “non-traditional” market? Isn’t Nashville’s role of spreading the popularity of hockey to new markets admirable and good for the sport?

      If there was no cap or revenue sharing the NHL would most likely end up with far fewer teams and be dominated a select few (similar to the way it was dominated by the Canadiens in the 50s).

    2. I agree with LDvS in that giving any advantage to large market teams based purely on their market size would essentially eliminate the parity that has been created by the salary cap.

  5. Sadly, my gut feeling is the same as yours. There appear to be too many issue to resolve (and Fehr doesn't seem like the type to back down easily) for the NHL season to start at the regular date with a new CBA in place. I really hope I'm wrong though.

    Also, as a fellow attorney and a huge hockey fan, I wanted to commend you on this blog. I've been interested in the legal/business side of the sport for a while and have always had a hard time finding good reading in that regard. Needless to say I'm glad I found your site and will be spending quite a bit of time on it. Cheers!

    1. Thanks for the kind words. I am glad that you will be around. Tell your friends as well; the more the merrier. Make sure to follow me on Twitter for updates @puckandgavel.