As the calendar nears the Sept, 15 expiration of the NHL's Collective Bargaining Agreement, it's starting to look, sound and feel a lot like the dark fall of 2004. Despite record revenues ($3.3 billion, a 33 percent increase from 2005-06), a 10-year TV deal worth approximately $2 billion with the NBC Network for U.S. broadcasts, money-printing innovations such as the Winter Classic and its HBO 24/7 lead-in series, and all the "cost certainties" that team owners got after the last lockout, here we are again talking about another delayed or completely lost season.
The "partnership" with the players that Commissioner Gary Bettman once trumpeted as working "for everybody...most importantly for our fans" now needs change. Player costs are too high, he said on behalf of the owners whose initial CBA offer was tone-deaf at best and Draconian at worst: a cut in the players' share of Hockey Related Revenue from 57 percent to 46 (43 according to the NHLPA after new HRRs are re-tabulated), five-year contract limits, the elimination of arbitration, and expanded benchmarks for attaining unrestricted free agency. Oh, and $1 billion in unmarked bills and a plane to Mexico.
That last part is a joke, but nobody connected to the game is laughing much these days. New NHLPA boss Donald Fehr issued an "alternate proposal" that offered to accept a pay cut for three years, maintain the current salary cap, and expand revenue sharing among teams without any changes in contract term rules, but it was shot down a day later by Bettman. With time running out, both sides remain about $1.3 billion apart on the numbers and their philosophy about to how to divvy up the pie. So it's just like 2004 all over again, right?
Let's take a look at the timeline of the last lockout and compare.
GALLERY:Revisiting the 2004-05 NHL lockout
CBA negotiations had begun in October 2003, but by the following August, the two sides had met only four times. Among the issues were higher player fines, the schedule, playoff bonuses, free agency, salary arbitration, and revenue sharing. The owners were demanding a $35 million salary cap and "cost certainty" that gave players a 50 percent share of league revenue. In February, the NHL had unveiled a controversial report by former U.S. Securities and Exchange Commissioner Arthur Levitt, who'd been hired by the league. Called a "super-audit" it declared that players were receiving 76 percent of the league's $1.9 billion revenue while owners had lost $273 million during the 2002-03 season. (NHL revenue wasn't as well tabulated as it is today, but it was probably still over a $1 billion. Meanwhile, the average salary of $730,000 in 1994-95, the year of the previous lockout, had risen to $1.8 million by 2003-04.)
NHLPA boss Bob Goodenow disputed Levitt's findings, issuing a report of his own that claimed $100 million of unreported hockey revenue had been uncovered by the NHLPA's examination of the books kept by four teams. The players offered a five-percent rollback in salaries, a return to 1995 entry-level contracts, and a luxury tax on payrolls topping $50 million to be shared among all teams. Bettman vowed the owners would wait as long as necessary to get what they wanted. Goodenow, who had been warning players to prepare for a lockout that could last as long as two full seasons, said they would not agree to a hard or soft cap. "Bottom line, if they want a hard cap, we'll sit out the rest of our lives," Maple Leafs union rep Bryan McCabe told The Toronto Star.
THEN vs. NOW: Fehr has offered to keep playing beyond the CBA's expiration date, but Bettman insists a lockout will begin that day if no agreement is reached. Though friction, frustration and disappointment seem to be increasing as talks progress, the harsh rhetoric of eight years ago has largely been absent as both sides express a desire to reach a deal. Most meetings have been characterized as cordial and businesslike -- though that could change. Abruptly cancelled bargaining talks after a meeting between Fehr and Bettman on Aug. 22 followed by a mere 90-minute session on the 23rd was cause for concern, especially when Bettman kept citing the "wide gap" between the two sides.
On Sept. 15, one day after Canada won the World Cup of Hockey, Bettman formally announced a lockout -- the second of his tenure that began in 1993. The NHL's financial model was "broken," he said. The stalemate began in earnest as the calendar turned to October. Philadelphia Flyers owner Ed Snider summed up his colleagues' animosity toward Goodenow by saying, "I might jump over the table and choke him to death. That would not be good. That's why they keep me out of the negotiations."
THEN vs. NOW: While tensions may rise between Fehr and Bettman, it seems doubtful they'll ever come close to the mutual loathing between the league and Goodenow. Also, methods for the accounting of hockey-related revenue are, while not without some controversy, now more transparent and agreeable to both sides.
It seems hard to believe, but there were no formal negotiations through October and November. By December, players were starting to grumble to Goodenow that he should at least try to get things moving. So the NHLPA made its first formal offer to the league since the summer: a dramatic 24 percent rollback in existing salaries, a 20 percent tax on team payrolls that exceed $45 million, and some concessions on rookie contracts and arbitration. In a press conference, Goodenow called them "significant, significant changes" and optimism ran high among players that a deal would get done in time to salvage part of the season. But after five days of studying the proposal, which Bettman had called "a big time move", the verdict came back: no deal. Without a hard cap of some kind, he said, a CBA couldn't be consummated although he was willing to give players a 54 percent cut of revenue. Goodenow told his ranks that once a hard cap was in place, it would never come off and the dollars would always go down from there.
THEN vs. NOW: The hard cap is now in place, of course, but the team salary ceiling for 2012-13 is set at $70.2 million -- a stark difference from $39 million in 2005-06 -- so it seems that the biggest fight will be over revenue share percentage. Just as Goodenow predicted, the owners want to reduce that magic number.
With the situation growing truly toxic between the owners and Goodenow, who was dealing with his mother's serious illness that would claim her life that summer, the parties in question agreed to temporarily remove themselves from formal talks. NHL Vice President Bill Daly, house counsel Bob Bateman, and Board of Governors chairman Harley Hotchkiss matched up against NHLPA President Trevor Linden, Senior Director Ted Saskin, and house counsel Ian Pulver. Their talks yielded no fruit despite rumors of growing distance between Saskin and Goodenow over the concept of a cap, and of some players splitting from the ranks.
Meanwhile, Boston Bruins owner Jeremy Jacobs engendered zero goodwill from players with his comment to the Boston Globe: "They're comfortable, they're presumptuous, they know they're going to play and they don't have to fight for the position. There should be a way of perhaps sending them to a Providence (AHL team) for a couple of games or so until they build back the energy and the desire to play." More than 350 players were actually playing hockey at this time -- most of them in European leagues. "I played in Germany -- and it was great, but I was always on the phone with (Colorado Avalanche player rep) Adam Foote, trying to get updates," says Toronto Maple Leafs defenseman John-Michael Liles, whose sophomore NHL season (with Colorado) never happened as scheduled.
THEN vs. NOW: Many players are already planning to go to the AHL, Europe or Russia's KHL, and all will receive monthly checks from an NHLPA "war chest fund" that has accumulated over the years, mostly from shares of licensing fees. During the last lockout, several players from that time told SI.com, monthly checks were "between $10,000 and $15,000." Maybe not good for a life of champagne wishes and caviar dreams, but enough to eat out at Denny's once in a while. "It helped you just be able to pay the bills and things like that," says Liles.
On Feb. 4, Goodenow and Bettman met for over seven hours, the first formal talks in more than two months. "Unfortunately, both sides are stuck," Goodenow later told The New York Times. "There isn't a way. But we'll have to try to find it."
According to Bruce Dowbiggin's book "Money Players", Saskin and Daly held a secret meeting in Niagara Falls, N.Y. It was there that Saskin reportedly told Daly that the NHLPA would agree to a hard cap in exchange for salaries not being linked to revenues. Saskin gave Daly a cap figure: $52 million and no linkage. Daly reportedly countered with a $40 million cap and no linkage. From there, the story has remained cloudy as to whether Saskin betrayed the absent Goodenow by giving in on a cap. In hindsight, it appears to have been a blunder on Goodenow's part to give Saskin such free rein. Infighting among players and NHLPA chieftains soon became public. Said Buffalo Sabres player rep Jay McKee at the time: "It's not so much I'm angry that they offered a cap. I'm angry that 'why now'? Why not last June, last July?"
A series of "final, final, final" offers were swapped, with the NHL backing off its demand that salaries not top 55 percent of overall revenue and coming up to $42.5 million on the cap while the players came down to $49 million. Everyone assumed they'd meet in the middle at $45 million and the season would be saved. But the owners did not budge, nor did the players, even after a federal mediator was brought in to help. On Feb. 16, Bettman announced the cancellation of the rest of the schedule and the playoffs, the first time since 1917 -- during an epidemic of the Spanish flu -- that the Stanley Cup would not be awarded, though Bettman did say there was one last chance to reverse the cancellation if a deal could be struck within a few days. It didn't happen.
THEN vs. NOW: While the NHLPA may ultimately offer deeper concessions than are currently on the table, don't expect any Brutus-style betrayal of Caesar this time around by the players. Other than his former colleague and mentor, Marvin Miller, perhaps no union leader in sports history has commanded the respect of his players the way Fehr did in Major Leaguer Baseball. He is seen as a match for Bettman's considerable intellectual level, and and appears to have the unwavering support of his new clients in hockey who know they were beaten like a rented drum in 2005.
In a hastily arranged meeting in New York on Feb. 19, hockey legends Wayne Gretzky and Mario Lemieux joined the negotiations. Optimism ran high that they would be the Monty Halls who could make a deal. After all, who on either side would want to disappoint the Great One or Le Magnifique? Later that night, some media outlets reported that a deal had been struck, with a $45 million cap and 24-game regular season. The reports proved erroneous. The sides never moved off their final numbers. Bettman soon canceled the season for good. "It was unreal," Liles recalls. "You just couldn't believe it. It's still hard for me to believe we lost a whole season. We'll never know what would have happened on the ice that year."
THEN vs. NOW: While everyone around the game believes the major fight will now revolve around the 57-percent revenue share number, it is important to note one huge difference from 2004: TV money. In many ways, this next potential lockout has much more in common with the 103-day work stoppage of 1994-95 than the disaster of 2004-05. The league was on the upswing in 1994, so much so that SI ran a cover story entitled "Why the NHL's Hot and the NBA's Not." The league was set to start a new U.S. TV contract with FOX for the '94-'95 season, and that, many believe, is ultimately what made the owners want to settle in time for a 48-game regular season.
In 2004, the owners had a $300 million lockout war chest, but the NHL's five-year $600 million contract with ESPN ended with a paltry offer of $60 million a year to renew. The NHL declined, so owners had no meaningful U.S. TV money to worry about if a season was lost. Now, they do. Well, not for 2012-13, anyway. Under its terms with NBC, the NHL will receive its full TV monies should the season be cancelled. But sources say NBC would then get a one-year extension on its current deal with no rights fees paid at all. That could prove valuable to NBC if the NHL ends up really raking in more money for the network by then and the owners are stuck holding the bag for their short-sighted decision of 9-10 years earlier. Still, it's hard to find many who believe they will cancel another whole season, primarily because of the new revenues from TV and the Winter Classic, which is often cited as the tripwire date when the lockout will end with a settlement.
The NHLPA's infighting continued, and seeing the ranks divided, the NHL went for the kill. With one season already in vapors and another in jeopardy as talk of using replacement players swirled, the desperate union agreed on July 13 to a shocking final deal: a $39 million hard cap with linkage to 54 percent of revenues, an immediate 24 percent rollback in existing salaries, and a new escrow payment system that would further hedge the owners' costs if salaries exceeded the linkage number. Bettman then spoke the words that hockey fans thought they might never hear again:
"Well folks, it's over. Let's drop the puck on a fresh start and a wonderful future for the National Hockey League," he said, after the league's Board of Governors ratified the new CBA.
Perhaps most gratifying for the league, it had excised its boogeyman from the game. Goodenow, who resigned his NHLPA post while taking a reported $7 million buyout, has refused all media requests -- including one from SI.com for this timeline -- since leaving in 2005. After serving as a consultant to the KHL, he's been leading a quiet life in Michigan and Florida. He was succeeded by Saskin, who was later fired by the players over suspected breaches of confidentiality. The NHLPA would go through another director, Paul Kelly, before hiring Fehr full time in 2011.
THEN vs. NOW: On Oct. 15, all NHL players will receive escrow checks. They had 8.5 percent of their bi-monthly pay deducted, and while the final numbers are still being tallied, NHLPA sources predict the escrow dough to be returned will be at or right near eight percent of base salaries for 2011-12. That means Washington Capitals star Alex Ovechkin, for instance, will get about $720,000. According to the estimable Capgeek.com, the average salary for 2011-12 (minimum 10 games played) was $2.17 million -- up sharply from $1.46 million in 2005-06. Based on that figure, players will receive average escrow checks of $173,600. It may not be what many of them are accustomed to living on, but it's a nice chunk of change that, unfortunately for fans who fret that the season won't start on time, will ease their financial pain, at least for a while.
One of the ironies of a 2012 lockout: by insisting on an escrow system in the last CBA, the owners made it easier for players to not sweat as much. (This may explain, some conspiracy-minded players now believe, why the NHL mysteriously dropped its escrow demands so steeply after the 2010-11 season, when 12.4 percent was deducted.)
"One of the reasons we had to go through a difficult period through the work stoppage is because we didn't have a system that worked and it was affecting our franchises' health and what the game looked like on the ice," Bettman said in a 2008 interview on Bloomberg Television about the state of the game under the new CBA. "So, by creating a partnership with the players, by having a salary cap, we now have a system that works for everybody -- but most importantly for our fans."
Just not for long.
If there are common threads between 2004-05 and now they are the entrenched differences in "philosophy" -- the league wanting to pay players less; the players wanting teams to share their wealth more equally with each other -- and the owners again demanding that the players save them from themselves. After all, the owners only have themselves to blame for lavishing huge, onerous, long-term deals on stars.
GALLERY:NHL's biggest contracts
What's next? As the story of 2004-05 tells us, predicting the future of the NHL can be a fool's errand.