Life

Blame the Owners

Sure players are rich. But their greedier bosses never learned to share, and shun laws of economics.

By Marc Edge, 16 Nov 2004, TheTyee.ca

hockeypuck

As hope fades for a National Hockey League season, it’s hard to feel any sympathy for team owners. They are obviously pulling yet another off-ice power play against the players in their long-running quest for dominance over not just them, but also over basic economic laws.

Some uninformed fans mistakenly call the hockey shutdown a “strike” and begrudge players their inflated salaries, which at last count averaged about US$1.8 million a season. But placing the blame on players ignores the essential fact of who closed the ice rinks. It wasn’t the players, and it isn’t a strike. It’s a lockout, because that’s exactly what the owners have done to the players. They’ve closed the doors to NHL arenas and promised not to open them again until the players agree to a salary system that guarantees the owners can’t lose the kind of money they’ve been frittering away on high-priced free agents for the past decade or so – or lose any money at all.

The owners have proven incapable of running their businesses in a responsible manner since their lockout of 1994-95, which lasted a half-season, but they have instead blamed the players for causing the problem. They have further demanded that the players provide the solution by accepting a salary cap set low enough to ensure profitability no matter how badly managed teams are.

This economic tug-of-war between millionaire players and billionaire owners has of course left hockey fans caught in the middle, deprived of their usual fall fare.

Brad Pitt can’t skate

But somehow fans seem more inclined to blame the players who are being prevented from suiting up for games than the team owners who have decided to apply economic pressure by withholding their pay cheques.

For some reason hockey fans seem to think players are less entitled to have their salaries determined by market forces than, say, movie stars or basketball players. No one seems to begrudge Brad Pitt or Tom Cruise $8 million or even more for making just one movie, and the average NBA salary is about US$5 million. But for some reason hockey players are seen more as overpaid, unskilled laborers than as talented performers.

The reasons we are unlikely to see NHL hockey at all this season are numerous. Both sides are dug in to their positions – the owners are bound and determined to wrest a salary cap from the players and the players are dead set against one. Both have enormous war chests saved up to see them through the dispute – the players from their rich salaries, and the owners despite their supposed losses. But the growing realization is dawning that team owners have a hidden agenda that has nothing to do with negotiating a resolution to the labor dispute. Instead it is increasingly obvious that the NHL plans on canceling the season and starting again next year with non-union replacement players. Taking such a precipitous step could change the face of hockey as we know it and even result in the death of the NHL.

Players offer good ideas

The players realize the business model of hockey is broken, and they are willing to do their part to help fix it. They have offered to take an across-the-board salary cut if the league will institute some basic economic reforms designed to address the cause of its financial problems and not just treat the symptoms. Rather than a salary cap like in the NBA or NFL, the players have suggested a luxury tax system such as is used to restrain salaries in Major League Baseball. This would have the added benefit of redistributing revenues from large-market teams that sign high-priced free agents to small-market teams, such as in Calgary and Edmonton, that are less able to afford them.

The root of the NHL’s economic problems lies in its lack of revenue sharing. NFL teams share about two-thirds of their revenues, which creates a level playing field on which teams in small markets like Green Bay, Wisconsin, can compete against large-market teams in New York and Chicago. Gate receipts, for example, are split 60-40 between home team and visitors in the NFL, and regular-season and playoff television revenues are split equally between all teams, whether they make the playoffs or not.

NBA and MLB teams share more than a third of their revenues league-wide, but NHL teams share only about nine percent. Home teams keep all gate revenues, and every team is left to negotiate its own local broadcasting contracts. Teams in large markets end up with loads of dough to blow on free agents, thus driving salaries up, while other teams run red ink in an attempt to keep up with inflation

Burned before

Another reason not to expect NHL players to give in easily to the league’s demand for a salary cap is the fact that before their recent prosperity players were exploited mercilessly for decades by team owners. Before Bob Goodenow came along as head of the NHL Players’ Association and instituted reforms to the system of salary negotiation, players were basically at the mercy of owners under the regime of Alan Eagleson. “The Eagle” lived in the pocket of owners for decades while he was head of the NHLPA, profiting personally from deal-making in international hockey while he was supposedly representing players at the bargaining table.

As former NHL president Gil Stein revealed in his memoirs, labor negotiations with Eagleson were a sham, with the settlement decided in a back room over drinks with owners. The pension benefits that players for years accepted under Eagleson’s reign rather than pursue free agency, as David Cruise and Allison Griffiths of Victoria detailed in their 1991 book Net Worth, were instead funded by monies that rightfully belonged to the players anyway.

Eagleson went to prison for the fraud he perpetrated upon NHL players, but he and the league avoided a multi-million-dollar lawsuit brought by retired players in the late 1990s only on the legal technicality that they had waited too long to file their claim. Ever since Eagleson departed the scene, NHL players have seen their fortunes multiply as Goodenow has ensured that market forces work in their favor.

Expanding avarice

NHL owners, driven by greed, expanded from 21 to 30 teams during the 1990s, pocketing $50 million and then $80 million per franchise, or as much as the market would bear. But in the end the joke was on them, as increasing the number of teams drove up the price for scarce free agents, who were only allowed their economic freedom at age 31 or 32 under the 1995 collective bargaining agreement. Twice the six-year deal was extended at the league’s request so it could expand in labor peace, but ultimately their greed came back to bite team owners in the wallet.

Free agency does not drive salaries up. It only allows the most basic of economic laws – supply and demand – to come into play. Now NHL owners want to repeal even that law and force a no-lose economic model on players. Hockey fans should at least realize whose ox is being gored. Of course, it’s theirs. And if the owners have their way, it will also be the players’.

Marc Edge is the author of  Red Line, Blue Line, Bottom Line: How Push Came to Shove Between the National Hockey League and its Players (Vancouver: New Star Books), 2004. Contact him at mail@marcedge.com.  [Tyee]

14  Comments:

Login or register to post comments

  • Earnest Canuck (not verified)

    7 years ago

    The death of the "National" Hockey League doesn't strike this fan as such a bad idea, frankly. Out of the ashes of this busted-ass, Yankeefied, lawyerized excuse for a league we might see a real rebirth for the Canadian game. Say, twenty teams? -- most in deserving cities north of the 49th that got ignored and abused as the NHL scoured deserts and swamps for non-existent American puck freaks -- good towns like Halifax, Winnipeg, Hamilton. Large but realistic salaries for talented players -- their talent not crushed and diluted by the 300 or so NHL clutch-and-grab players who have no place in pro hockey. Reliable revenues at the gate, from the most reliable fan base. This is doable! As to the current owners and players and their many parasites, well, pucks on both their houses, I'd say.

  • Frank (not verified)

    7 years ago

    Perhaps a Canadian division within a new world league. I'd like to see a Winnipeg-MoDo final :)

  • Kent (not verified)

    7 years ago

    Scrapping the NHL doesn't seem like such a bad idea. The whole idea of becoming an instant millionaire because of being born with athleticism, and conversely, owners charging exhorbitant prices to watch these guys, grates on a person who works 50plus hours a week just to feed a family and maybe get a couple weeks off during the year to go on a budgeted vacation. The same opinion could be given about the NBA, NFL, movie actors.........

  • Frustrated (not verified)

    7 years ago

    Lower paying teams like Calgary, and Tampa Bay along with moderate payers like Vancouver and Minnesota were finally starting to dominate over the super wealthy teams like New York and Washington. In essence the game was sorting itself out at the end of last season. Even New York finally figured out that overpaid talent could not buy you victory, and dumped a ton of payroll at the season end. Just when things were starting to finally work the NHL shuts it all down. Very curious indeed.

  • Frank (not verified)

    7 years ago

    Not to mention the rise of the Canadian dollar has given all Canadian teams a huge boost. After all, it was the woes of the dollar that teams were using as an excuse for government help.

  • relayer (not verified)

    7 years ago

    The NHL and all the other sports leagues are simply providing bread and circuses. Anything to distract the masses from how badly they're being screwed by their corp/gov'ts. Which is more important: that you're being deprived of watching overpaid athletes, or that your gov't is using YOUR pension plan to invest in companies that make land mines? CPP vs NHL? Your choice defines your intelligence.

  • Angelo (not verified)

    7 years ago

    Hopefully they players and owners will keep this up for a few more years and we can kiss that stupid game goodbye.

  • Frank (not verified)

    7 years ago

    Hopefully then we'll get rid of movies, plays, festivals, works of fiction etc that also have no value beyond entertainment and simply distract us.

  • RG (not verified)

    7 years ago

    They haven't been playing hockey this year????....

  • Mr. Lahey (not verified)

    7 years ago

    Typical left wing woe is me argument. These guys are playing thousand of miles from home for hundreds of thousand instead of millions just to say that they are hard done by. And Union zealots wonder why hundreds of people line up for their jobs. Sad

  • Frank (not verified)

    7 years ago

    You found a "left-wing argument" in hockey?

  • Marc D. (not verified)

    7 years ago

    The people who benefit are the fans and the real hockey players - your local hockey teams. Support your local hockey team, not some overpaid stuffed shirts playing hockey in places that have never even heard of ice. Frankly, I hope the NHL *stays* dead. It had long-since exceeded it's sell date.

  • J.D.Carlson (not verified)

    7 years ago

    Tell me, what industry, business, corporation ...has guaranteed "cost certainty"? The owners can@t skate, shoot, hit or score. their teams are all toys which they pay for from in most cases wealth that was passed down to them. They are like a bunch of spoiled kid`s who only now realized that with 30 teams many may never get a chance to own a winner. If any of their other(main) business ventures were/have lost as much as they claim hockey has cost them they would have simply sold. If you can`t stand the heat...You would think it would be easier for 30 owners to agree that they will not pay any new players more than "x" and any existing player more than "y" when negotiating contracts, that it will ever be to get 700 players to voluntarily accept less than they can get! The owners are acting just like the kid with the only puck at the community rink...who couldn`t skate, shot, hit or score. Too bad for the rest of us!

  • Angela (not verified)

    7 years ago

    I think players need to start their own league. They should not accept a salary cap. Canadians should fight for their nationl sport. We take it lying down instead.

    Bring Back Our Hockey Heroes
    By: Angela St. Micheal

    Canadians are terminally polite. So polite are Canadians that they are content to watch their
    national past-time go bye-bye across the seas to Europe in a major “brawn drain”. I was born in
    Scotland, just outside of Glasgow. As professional hockey players continue to be locked-out of the arenas in which they would normally play, comparatively in my mind I cannot help but
    wonder what rioting would ensue in the streets of Glasgow, and the rest of Europe, if greedy
    owners dared lockout professional soccer players. Those owners would be met in the streets of
    Glasgow by the devoted folk of the Celtic and Ranger clubs, with a Glasgow kiss - a deadening
    head butt.

    Of course, there are those who will blame the players by accusing pro-athletes of being spoiled
    or greedy, but these remarks, whether made by members of the media or by members of the
    public at large, are born of jealousy for the talent players possess. The life of a NHL athlete is a great life, but not everyone has the talent, skill or heart to play at that level. Why is it so incredulous in a capitalist market economy to pay players in accordance to what they earn for their respective franchises?

    Before the players can be blamed for the current lockout, it must be noted that bargaining was
    opened up by the NHLPA in the 2003-2004 season by offering to take a 5 percent salary
    rollback. The players’ union also agreed to a luxury tax on payrolls if owners agreed to
    redistribute tax proceeds to small market teams as a form of revenue sharing, a practice greedy
    NHL owners shun. NHL negotiator and the godfather of salary caps, Gary Betteman, is
    mandated by the NHL to not accept anything less than a hard salary cap for players. A salary cap
    is unconstitutional and should not be accepted by the players under any circumstances. A salary
    cap would be a step backward for NHL players who have suffered a long history of manipulation
    at the hands of greedy owners. Owners treat players like property, and a player deserves to chart the course of his own destiny.

    In other professions, a candidate is free to negotiate the highest salary available based on talent. Why should professional hockey players be exempt from such a privilege in a free market
    economy when they bring in millions of dollars in revenue annually for their franchises?
    Hockey legend, Gordie Howe, was cheated by the lucrative Red Wings organization for the bulk
    of his career. Though he was the top scorer in the NHL for six years in the 1950s in
    Hockeytown, USA, by the time he had been playing in the league for nineteen years, Mr. Hockey
    was still only earning $45,000 a year. The Red Wings organization was one of the most
    profitable franchises in the league largely due to Howe’s popularity with the fans, but Howe
    didn’t share in the owners’ huge profits. LA Kings’ owner, Bruce McNall paid Gretzky in
    excess of $20 million during his years with LA, but he sold the Kings’ franchise for $311
    million. Was Gretzky not in fact, responsible for the lucrative turn McNall’s franchise took?
    McNall reported a $4 million deficit the year before Gretzky arrived to play for the Kings’
    organization, and a $13 million profit at the close of the first year Gretzky played in LA.

    Sadly, it is not the owners who do right by the players, but the players themselves who garner the
    integrity of the sport. In the 2001-2002 season, Brendan Shanahan, Steve Yzerman and Chris
    Chelios, each deferred $500,000 of their own salaries to the tune of $1.5 million, to sign free
    agent Brett Hull at $9.3 million for two years. Remarkably, Hull is one player who has cried that
    “some” players are overpaid for what they contribute. Presumably he doesn’t feel he is one of them, though it was his fellow players who topped up his salary as a free-agent.

    Professional athletes should not be exempt from the economic rule of supply and demand merely
    because they have a talent few mortals possess. Players earn what they do because they possess
    a unique talent that entitles them to participate in a billion dollar industry. Their careers might
    be limited by time in a sport where one check could end a career, bringing years of discipline,
    dedication and dreaming to a gut-wrenching halt. NHL players are entitled to earn a substantial
    salary, and NHL owners who plead poverty while hiding revenues, are not to be believed nor
    trusted.

    The Stanley Cup cost Governor General Lord Stanley $48.67 in 1893, and he donated it for
    amateur contenders in Canada. In 1915, US competitors were permitted to also compete for the
    Stanley Cup. The NHL does not own the Stanley Cup; it belongs to Canadians. It might be time
    for the players to form their own league as they were poised to do after the 1994-95 lockout, and
    compete for the Stanley Cup in the spirit that was initially intended by Lord Stanley who loved
    the purity of the sport. I would rather see that than have our hockey heroes leave for Europe.

    Will Canadians continue to stand idly by as their national sport and athletic heroes are taken
    from them by the greed of owners? Or will we fight for what belongs to us as Canadians? If an
    agreement has not been negotiated before February 24, 2005, I propose that on that day - the
    anniversary of the day Team Canada won the gold medal against Team USA in 2002 - Canadians peacefully take to the streets across the nation, to demand that NHL owners negotiate to bring our hometown hockey heroes back to work. The Canadian winter is long and cold, and without hockey, the Canadian winter is unbearable.

    Mr. Bettman, purveyor of the robber barons’ salary caps, and Mr. Goodenow, protector of our
    players’ rights, please bring back our hockey; please bring back our heroes.

    • No best comments selected by an editor for this story yet. To see all comments, click the All Comments tab, above.
    • The discussion for this story is closed. No more comments can be added.