The National Hockey League (“NHL”) owners officially locked out the National Hockey League’s Players’ Association (NHLPA) about a month ago, on Sept. 15, 2012 when the parties’ collective bargaining agreement (“CBA”) expired. This lockout has delayed the start of the season thus far, and may go on to prevent the entire season. Thus far, over 130 games have been canceled, and hundreds of millions of dollars in revenue lost.

While the owners and players are at odds over several contractual provisions, the main battlefield is over the salaries guaranteed to the players. Under the old CBA, the players were guaranteed 57% of league revenues. In their initial offer, league owners wanted to reduce that number to 46%, and due to some changes in how they counted revenue, effectively 43% of what was revenue under the old CBA. For reference, NBA players’ percent of revenue recently dropped to around 50%, MLB players are at about 45%, and NFL players recently dropped to about 47%.

In the owners’ view, League revenues have increased quickly in recent years, disproportionately benefiting the players. The last time we had an NHL lockout, we lost an entire season of hockey. At issue then was the fact that teams were losing money. Owners were not willing to lose money any longer, so losing the season was better than playing it, at least in their eyes. They negotiated for a salary cap and a restructuring of the league’s economic system, and eventually got it.

Since then, League revenues have grown about 70%. Thus, on the surface, this feud doesn’t seem to be about restructuring the league, but instead about how to split up the money. The NHL, however,  as a whole may be profitable and healthy, but many of the smaller-market teams are losing money. In fact, 18 teams lost money in the 2010-2011 season. Owners of those teams want players to get a smaller share of the revenue.

From the players’ perspective, NHL as a whole is very profitable and if individual teams aren’t, then the owners could consider adopting a more aggressive revenue sharing model, such as those use by the NFL or MLB.

There’s money to be made for both sides, so it seems unlikely that we’ll see another full-season lockout. It is worth noting that the NHLPA had tried to use Canadian labor law to argue that the players on the three Canadian NHL teams could not be locked out and must be paid their salaries. So far, that strategy has proved unsuccessful, and the parties’ offers and counter-offers remain very far apart.

Joel Slater

Image source.

Tagged with:

4 Responses to The NHL Lockout

  1. Caitlin Buckstaff says:

    The lockout is in its 96th day and it looks like the entire 2012-13 NHL season may be cancelled. NHL deputy commissioner Bill Daly has announced that there is a “drop-dead” date to cancel the remaining 2012-13 season in mid-January as Commissioner Gary Bettman will not have a season of less than 48 games. I’m curious if there is a number out there about how much revenue has been lost as a result of this lockout. Not only do you have loss of profits from ticket sales, but also loss of profits from merchandise, sponsors, and the highly advertised Winter Classic in Ann Arbor. I went to Michigan, and even though I graduated 2 years ago, the Winter Classic in 2012 was all the hype.

    The problem is that most states do not have professional hockey teams, so hockey isn’t an important revenue stream. However, for those cities that are home to professional hockey teams (i.e. Detroit, Minnesota, Boston, New York), this lockout has a substantial impact affecting the local economy, particularly the employment of many citizens who work the games. The externalities of the lockout seem pretty substantial. Hopefully, the NHL and NHLPA come to agreement soon so the lockout does not continue into the 2013-2014 season.

  2. Nick B. says:

    I just wish they would figure it out. I was looking forward to some Predator games! I do find myself wondering who to blame: The owners or the players? Who is more justified in their position? The media seems to constantly portray the poor players as getting a raw deal, but I’m not so sure. The owners put up all the capital and if teams lose money, players still get paid but owners don’t.

    Maybe a more aggressive profit sharing is a good answer, equalizing some of the risk across markets and allowing the owners to feel more comfortable with a lower percentage of net revenue. I don’t know, I just know I want to go watch some hockey!

  3. Interesting read! I heard on 102.5 The Game this morning that at least some of the 82-game regular season is bound to be affected as today is the last day to avoid this. Though the players rejected the NHL’s proposal, no counter-proposal was made. Both sides have valid concerns but I tend to think the fans are missing out if counters are not even being made. I don’t see an end in the near future. Even though today is the day, there are no talks planned between the NHL and the NHLPA. Moreover, league commissioner Gary Bettman isn’t sounding hopeful.

  4. Francie Kammeraad says:

    Two days ago, in an attempt to garner trust, the NHL allowed the players to ask questions of the owners for 48 hours. However, they didn’t tell the union. The NHLPA was predictably unenthused, as this 2-day window looked like an end-run around negotiations. But the owners maintain it was just an opportunity to speak frankly with players and provide information, not an attempt to undermine the NHLPA. As neither side can agree to meet, it doesn’t look like this tactic helped the NHL.