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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
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