NHL labour talks: The issues

Nearly seven years of labour peace in the National Hockey League is about to face some significant challenges.

The league and the players have indicated that the preliminary steps in negotiating a new collective agreement will take place following the NHL all-star weekend in Ottawa. How much tumult we will see between the two sides will be an indicator of how contentious these talks will become as the NHL and NHLPA get closer to a mid-September deadline to get a new deal.

Most sports fans roll their eyes when they read or hear the words collective bargaining agreement. For the most part, they don’t care about the percentage of league revenues tied to salaries or other issues that need to be settled. What concerns most fans is whether or not there will be a lockout in 8½ months.

If we can learn anything from the recent labour talks and subsequent labour deals in Major League Baseball, the NFL and NBA it’s that we will know in the next few months how strong the possibility of a lockout looms.

If it’s all quiet on the Western front, it will be a good sign. That certainly was the case in baseball. MLB’s talks with the players were under the radar and then, all of a sudden, a new deal was announced two weeks before the CBA was set to expire. Conversely, the NBA talks were omnipresent in mainstream and social media. Some players spoke out via their Twitter accounts. The NBA argued its points through the media.

So, if the NHL starts leaking its line of reasoning to reporters, or players start taking shots at the league in the media or on their Twitter accounts, the possibility of a lockout increases.

Marc Ganis, president of Sportscorp, a leading United States-based sports consulting firm, predicts that fans should brace themselves for a lockout. He told CBC Radio reporter Teddy Katz that he expects some games to be lost, but not a total season like we saw in 2004-05.

Of course, whether training camps open on time in September or the 2012-13 schedule becomes affected depends on how willing the two sides are to negotiate. Last time the NHL applied economic pressure by locking out the players. The league was not willing to negotiate anything other than their preferred cap system.

Although NHLPA executive director Donald Fehr has kept his cards close to his vest, the focal issue in this round of negotiations will likely be the percentage of revenues tied to player salaries. The owners will want to snatch back a higher percentage than the current amount, 57 per cent.

While MLB’s new five-year deal continues to be a free-market system, the NFL and NBA collective agreements are closer to the NHL model.

In the NFL’s 10-year agreeement, players receive 55 per cent of national media revenue, 45 per cent of all NFL Ventures revenue, and 40 per cent of local club revenue.

The 10-year NBA deal (either side can opt out in 2017) ties players salaries to 51.2 per cent of basketball related income this season and a 49-to-51 per cent band in subsequent years.

Seven years ago, the NHL successfully shut down the game to obtain the financial system they wanted. All the NHLPA heard from NHL commissioner Gary Bettman was how 75 per cent of league revenues went to player salaries.

After a year of unrest the players not only conceded to the owners a hard salary cap that was tied to 54 per cent of the league’s hockey-related revenues, but the players also rolled back their salaries by 24 per cent.

That 54 per cent has become 57 per cent because with each incremental revenue increase the NHLPA sees its share increase on a percentage basis, too. But seven years later, all the players have heard is how the league has reached record revenues (more than $3-billion US mostly because of the strength of the Canadian dollar, inflation and growth in new media). The owners' argument will be they want to reduce that percentage tied to player salaries because there is too much of a disparity between the strong hockey markets compared to the teams in the small or weaker markets. The owners will argue that too many teams still are struggling to break even.

But does paying less change the revenue disparities between NHL clubs? The NHL wants to pay players less because every dollar they can save in this manner is a dollar that goes back into the owners’ pockets. Will fans pay less for tickets, beer, merchandise etc? No, those prices are set by supply and demand.

But is the disparity between small and strong markets a players’ issue? The players don’t think so. The union believes the NHL revenue sharing system is not good enough and needs to be fixed.

For example, the NHL has the NFL cap without the NFL sharing of revenues amongst owners.

This is an issue familiar to Fehr. One of his legacies was his ability to get baseball to improve the revenue sharing among its clubs. He may propose to the NHL owners a system that doesn’t include a salary cap to address revenue disparities between clubs.

In the end, there is no quick fix here. The negotiations likely will go down to the wire even though there are 8 ½ months to go. The first few times Fehr and Bettman get together likely will be informal or preliminary sessions, so don’t expect serious negotiations until the summer.

That’s when we’ll listen for signs of how well the two sides are getting along.