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NHL Owners Employ Boeing-Like Tactics, Demand Concessions in a Time of Profit

Hockey has had a hard time climbing out of the “niche sport” shadow in the U.S. Of the four major professional sports it ranks fourth in the heart of sports fans. In the South, where Nascar is king, hockey falls to 5th at best. This, combined with a natural lack of empathy for relatively large professional athlete salaries, has resulted in little attention being paid to the fact that NHL players are being locked out by management for refusing to accept major concessions.

Nor is the labor movement immune to this oversight. The idea of young men making a minimum of $525,000 (and an average of $2.45 million) fighting over their “fair share” of $3.3 billion in league revenues is unlikely to stir the same emotions from union brothers and sisters as underpaid hotel workers or teachers trying to put food on the table for their families. Perhaps that is entirely fair. What is not fair is the set of concessions being asked of these highly skilled, unionized workers who put their health and happiness on the line on a daily basis.

During what would have been the 2003-2004 season, management locked out the players and hockey was not played. And while the players were able to withstand a year without pay, the bartenders, waitresses, hotel workers, and various other local community members who make their living supporting the hockey experience were left out in the cold. As negotiations continue, many of those fans are having flashbacks to the real world consequences of an NHL lockout.

For the loyal hockey fan there is little hope on the horizon. This is going to be a long fight. Perhaps the best early indicator of this was the NHLPA’s hiring of Donald Fehr, former head of the baseball players union. The Newt Gingrich look-alike has a reputation for getting what is best for his players at any cost. With the NHL owners demanding a 50/50 split of revenues and strict limitations on contract growth as a non-negotiable starting point there doesn’t appear to be much in the way of bone-throwing coming Fehr’s way.

The NHLPA currently collects 57 percent of league revenues. According to a leaked memo:

Moreover, at the same time we were told that the owners want an “immediate reset” to 50/50 (which would significantly reduce the salary cap) and that their proposals to restrict crucial individual contracting rights must be agreed to. As you know, these include — among other things — losing a year of salary arbitration eligibility, allowing the team to file for salary arbitration in any year that the player can file, extending UFA eligibility to age 28 or 8 seasons, limiting contracts to 5 years, and permitting only 5% year to year variability in player contracts.

Following the new norm of labor relations, the owners are taking the “all or nothing” Boeing-style approach. It doesn’t take rigorous training as a contract negotiator to understand that that is not how progress is made.

Along the way, management has taken some severe steps. First, they cancelled the Winter Classic which was to take place on New Year’s Day in Ann Arbor’s Michigan Stadium. The outdoor, regular season hockey game has become a favorite of players and fans.

This means the biggest loser in the NHL lockout thus is likely the economy of Michigan and Ann Arbor in particular. The last time the Winter Classic was held in a football stadium was 2011 when Pittsburgh’s Heinz Field played host. The event brought $22 million (!!!) in additional revenue to the region. The “big house” in Michigan holds 109,000 people, nearly twice the 65,050 that can fit into Heinz Field. Added ticket sales and the growth in popularity of the event would have made the revenues much higher in 2013.

Initially, the cancellation brought a week of solid, somewhat unprecedented negotiations. Reports on Monday suggest progress has been made but that the two sides are still far off.

To make sense of the ongoing negotiations we turn to ESPN’s resident expert Pierre LeBrun,

Sources on both sides confirmed to that the league’s Make Whole offer — an attempt to honor players’ existing contracts — amounts to $211 million of guaranteed money ($149 million in Year 1 and $62 million in Year 2, both deferred in payment by one year and payable with interest). The league’s belief is that by Year 3 of the deal, revenues will have likely grown enough that at 50 percent of HRR the players shouldn’t face much if any salary erosion in escrow. At which one NHLPA source countered, what if the revenues don’t grow that much? Then what? The union says in that case players aren’t made whole on their contracts.

Listen, the league’ $211 million Make Whole offer is not anything to sniff at;

it’s a tangible move on the league’s part. But it’s still nowhere close to where the NHLPA would be willing to sign off on. Try about $600 million or so. That might do it.

At $211 million, the NHLPA doesn’t feel that comes close to making players “whole” on current contracts.

“It’s not make whole — it’s make partial,” said one player via text.

Hockey fan or not, this is an interesting scenario for the labor world as we will see if the negotiating practices of companies like Boeing, leaders of the “concessions in a time of profit” crusade, are what we should expect henceforth when collectively bargaining.


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