By Stu Hackel
Monday's surprising proposal by the NHLPA -- which, among other things, agreed to temporary salary reductions and generally maintaining the hard salary cap -- presents a formidable challenge to the owners, who have pledged to have at least some sort of preliminary response on Wednesday.
This "alternative view," as Don Fehr called it, of how the players would solve the NHL's revenue imbalance between the successful and struggling clubs also includes more comprehensive revenue sharing than the league currently employs, something the wealthiest NHL clubs have largely resisted. Ken Warren of The Ottawa Citizen framed ownership's dilemma in these terms on Wednesday morning when he tweeted, "Do richest NHL teams care more about their own teams or the NHL as a whole? That's the answer we're all waiting for."
The first hints of an answer came from NHL Commissioner Gary Bettman after Wednesday's bargaining session. "There's still a wide gap between us with not much time to go," TSN quoted Bettman telling reporters. "This is a process that we're going to continue to work hard on. I think there's still a number of issues where we're looking at the world differently."
TSN added, 'Bettman says he understands what the NHLPA has put forth, but adds that it isn't a full proposal and he is 'disappointed' that he's still waiting for one at this late stage."
Those words may disappoint lots of fans and perhaps the players as well, although just what the NHL's specific responses were to the details the players' side presented Tuesday are not known.
Here's the video of Bettman's remarks after the meeting and he does credit the NHLPA with recognizing the league has problems. He bases the differences between the NHL and the NHLPA on the fact that the players don't recognize that the NBA and NFL models are where the NHL wants to go. In his remarks below, Fehr takes issue with those sports' labor agreements being the standard by which the NHL should be measured and refers to the MLB model as superior.
Fehr said in his remarks Wednesday that he believes the owners take the players' significant concessions seriously, but don't like them because it's "just not what they asked for....They asked for $450 million a year. It's not $450 million a year." He acknowledged the monetary gap between the sides was wide, adding the owners liked some parts of the NHLPA plan, and disliked others. But like Bettman, he pledged to continue negotiating, trotting out the "it's a marathon, not a sprint" analogy to describe the collective bargaining process.
Here are Fehr's remarks...
...and he disagreed with Bettman's inference that's he won't start negotiating because he's disappointed the NHLPA has not yet made a full proposal. Fehr said, "They have almost everything." One of Fehr's main points -- he makes a few -- restates that the players are willing to make concessions and partner with the league's wealthy clubs in assisting those clubs not doing well.
Many observers have noted that the core issues to be settled by the next CBA have more to do with the NHL's rich franchise-poor franchise dichotomy than any perception that the NHL is not a thriving business in need of some sort of massive overhaul. The owners' surprising proposal in July on slashing salaries and restricting the conditions of individual player contracts seeks a solution overwhelmingly by taking away from the players and looked more like a solution befitting a troubled business. The players' surprising response, on the surface at least, looks more like a response to a healthy business that nevertheless has some trouble spots.
In his remarks to the media on Tuesday, ...
...Fehr said the players' proposal was designed for "fixing problems that exist, not fixing problems that don't" and he portrayed it as one that spoke to the needs of the game and the business as a whole and not merely the desires of his constituency. "We do believe that the proposal the players made today, once implemented, can produce a stable industry, one that going forward can give us a chance to move beyond the recurring labor strife that has plagued the NHL for the last two decades."
It's unknown, of course, whether these admirable goals can be realized, and they certainly won't as long as the owners see things differently. But it must be acknowledged that the NHLPA proposal calls for both sides to sacrifice something whereas the owners' initial position, at least what is known of it, called mostly for player concessions.
Many details of the NHLPA proposal remain unknown as both sides continue their practice of much restricting the public flow information in these negotiations, which is fine if it helps lead to a settlement. We'll review what is known below but first, it's intriguing to examine how the players arrived at their unexpected and disarming scheme, one which (as noted in Monday's post) had them optimistic about the chances of a new CBA arising from it.
The Lightning's B.J. Crombeen, who is on the players negotiating committee outlined the thought behind the NHLPA's stance when he told Damian Christodero of The Tampa Bay Times last week, "Going into it I didn’t know what to expect. It’s very different circumstances than the last time around. I felt that there are times where there are disagreements and we might not see some things the same way, but for the most part it’s been very cordial. I think both sides are really trying to understand where the other side is coming from. It’s something where we’re really taking our time and making sure that instead of saying 'We don’t like your proposal' or 'We don’t like your ideas and these are our ideas and we have to make it work,' we’re trying to understand where they’re coming from and put together an alternative proposal that would try to understand where they’re coming from but also understanding where we’re coming from."
This is the language of compromise rather than confrontation. Will the details of the NHLPA's plan will match the rhetoric? We can't know that yet either. But regardless, the fact the players would accept less money and not try to overhaul the salary cap system signals that it might be time for the hockey world to re-assess Fehr, who seems to be guiding the players in a more conciliatory direction.
Changing opinions on Don Fehr would be an heretical step for some. Even though Jesse Spector in The Sporting News is hailing Fehr's proposal "genius," that hasn't been a word most in the hockey community have associated with him unless "evil" is right before it.
In fact, these negotiations have often been portrayed as being led by two demonic hardliners whose track record in labor relations boils down to three lockouts (Bettman) vs. four strikes (Fehr). Fehr has always defended himself in part by reminding interviewers (like this one) that in the 16 years following the 1994 baseball strike, MLB has gone through an unprecedented period of labor peace and business growth. They've even been using a plan the MLBPA proposed.
However, it was the stoppages that everyone around hockey remembered -- especially in Montreal and Toronto, two of the NHL's top towns. The Blue Jays were two-time defending World Series champs, but denied a chance for the hat trick and the first Series three-peat since the early 1970s Oakland A's. The Expos had baseball's best record when the '94 season was halted and Fehr remains unforgiven in Montreal for his role in costing them a shot at the World Series, which some believe would have changed Expos' history and kept them in town.
Now, fast forwarding to 2012 and we see Fehr trying to play a much different role. As Fehr said in the video above, responding to the question why the players would give up some Hockey Related Revenue (HRR) with the owners making so much money, "Regardless of how you view the industry as a whole, it may be that there are some individual franchises in cities that need some attention. The owners have indicated to us that they believe that as true and so what we wanted to do was try -- as you should in bargaining -- address the concerns that are given to you, if you believe that you can do so, consistent with your obligations to your own constituents and negotiating a fair deal." Again, that's not the language of confrontation, but of someone who is seeking to make a deal which, as he's said, is what the players want. They want to play.
Fehr also discussed how he spent the last two years in dialogue with the players, learning their concerns, giving the perspective of the PA's staff and, just in the past few days, speaking to about one-third of the NHLPA membership in crafting the proposal, one which is a consensus of their opinion. It's clear from the star-power he assembled to stand with him on Monday that he's got the visible support of membership on this, members who obviously have bought into the notion that they'd make concessions to get a new CBA and, perhaps, a CBA that could pave the way for a more stable, less strife-torn environment.
Yes, it's only words right now. We'll learn over time more about the NHLPA plan and find out how the owners respond eventually and that will determine whether Fehr's and the players' optimism is justified, whether indeed the NHLPA alternate view is the basis on which the sides can start hammering out a new agreement.
Reduced Salary -- Over the next three years, the players would no longer tie their salaries rise to the rise in HRR but would take a reduced share. While revenue has grown 7 percent annually over the course of the CBA and 10 percent last season, David Shoalts in The Globe and Mail reports, "In the first year of the agreement, the players’ salaries will rise 2 per cent, in the second year the increase is 4 per cent and it goes to 6 per cent in the third year...If the revenue rises more than 10 per cent in a year, the amount above would be subject to the revenue split in the current agreement, which gives the players 57 per cent of HRR." Jeff Z. Klein in The New York Times notes that the reduction is less than the 24 percent pay cut proposed by the owners. "Under the owners’ proposal," he writes, "which reduces the players’ percentage of hockey-related revenue to 43 percent from 57 percent, the players would give up $450 million in the first year alone." But Fehr said this plan would save the owners from between $465 million to as much as $800 million, depending on the rate of growth of league revenues." In the fourth year, by the players' option, the current CBA linkage would return and the players would get 57 percent of the revenues. The notion that salaries would even temporarily be unhinged from revenue, which has been a mainstay of the NHL's cap system, is something some believe the league may oppose, if only on philosophical grounds. We'll see.
On Sportsnet, Michael Grange remarked that the gap between what the owners' proposal called for in reduced salary and the players' plan is sizable, $1.3 billion, enough for the owners not to agree.
Grange also said the savings to the owners under their plan are immediate while under the players' plan are delayed. He believes they owners want their savings now and that would be another stumbling block.
Salary Cap -- Except for a few minor instances that Fehr did not detail in his remarks, the current hard cap structure would remain in effect. There were reports that a luxury tax would be enacted for those clubs who exceeded the cap, but the union took great pains to deny that was true afterward. There are currently penalties for teams that go over the cap and there might be something like that under the NHLPA plan, but the specifics are not known.
Individual Contracts -- Free agency, salary arbitration, entry-level contracts, contract lengths, bonuses and front loaded deals – things the owners want to change by either restricting or eliminating them -- remain as they are in the current CBA under the players' plan. Interestingly, after the owners' made their initial proposal in mid-July, former NHLer Vincent Damphousse, who had once been an NHLPA official, told RDS that he believed the call for salary reduction constituted "the sinews of war" between the sides while the individual contract conditions "will not be difficult to resolve because they do not affect the overall amount of money accruing to the players." Turns out it's just the opposite, and the players are more concerned about their contractual conditions. We'll see if these become points of negotiation going forward.
Revenue Sharing -- The NHLPA plan could see as much as $250 million shared with clubs in distress, and that group of franchises be expanded to include some that cannot now share the wealth (like the Islanders, prohibited from getting revenue sharing money due to the provision that denies this help to clubs located in TV markets with over 2.5 million homes). That would be good news for struggling franchises (and one reason for Ken Warren's tweet referenced at the top of the story). The actual sum of revenue currently shared is not clear. Shoalts reported last month that in 2007-08 it was $146 million. Klein notes that some estimates have now put it at $170 million; Michael Grange of Sportsnet.ca says the figure is $200 million.
As Shoalts writes, the NHL's wealthy clubs have "adamantly opposed" revenue sharing; he says the most any club contributed to the pool last season was $14 million. Bettman downplayed the importance of revenue sharing in the NHL's view of the next CBA last week, saying controlling player salaries concerned ownership more.
But once again, Fehr's words on this and the whole package reflect a mind-set of cooperation: “In essence, when you boil it all down, what we are suggesting is that the players partner with the financially stronger owners to stabilize the industry and assist the less financially strong ownership groups.” He said earlier the PA's plan would be an alternative to the harsher view proposed by the owners. With proposals to share the sacrifice as well as the wealth, it appears at first glance, at least, that he was right.