Gary Machiavelli

With the failure of mediation, the NHL has seemingly gone for a ‘Hail Mary’ move: asking for a direct meeting between owners and players without the presence of the leadership of either side. What should we make of this request?

First, the offer clearly favours the league over the union. There’s a temptation here to dismiss the players as jocks who don’t understand the finances of the game, but that would be unfair. What seems undeniable, however, is that in a meeting without labour lawyers the owners – older and with a long track record in business – as a group likely have a sizable advantage over the players – younger, and without the same level of success or experience in business. This is a proposal that plays to the NHL’s strengths and the union’s weaknesses.

Second, the offer is likely made with the belief that the players should accept the NHL’s point of view, minus complicating factors. It’s been clear for some time now that the league’s ownership believes that Donald Fehr is misrepresenting it’s message to players. That seems unlikely, given that player representatives have been deeply involved in the meetings, but that’s the belief. Further, Gary Bettman inspires deep antipathy among players – the NHL likely further believes that the same message from a less distrusted spokesman will carry more weight.

This is not a negotiating strategy – really it’s an end-run around Fehr and a move that has the bonus of shifting the message from Bettman to more trusted spokespeople.

Third, if the NHLPA accepts there is at least some possibility that this helps move negotiations. A number of things might come out of such a meeting. The players, some of whom clearly believe there are internal divisions among ownership, may be influenced if a group of owners comes out and says the same things in a private meeting that Bettman’s been saying publicly. On the other hand, the owners may come to the realization that the chief negotiators among the players share Fehr’s point of view.

The bottom line is that this is a risky move for either side, but a move where the split of risk and reward clearly favours the NHL. It’s also a move that helps the NHL almost regardless of the outcome. That’s why they proposed it. If Fehr shot it down immediately, that would play to their message that he’s misleading the players. If the executive board and negotiating committee of the NHLPA opted to accept the meeting, the league could rightly place more confidence in its owners than the players could in their delegates. Finally, if the NHLPA does the most sensible thing and votes down the concept, the league simply gets to look like they’re trying to be creative while the players’ association is being intransigent. Representatives can also darkly hint that only Fehr’s influence swayed the vote, playing into the league’s whisper campaign against the NHLPA executive director.

Superficially, the NHL offer looks like an act of desperation, a creative attempt to solve the impasse in negotiations. In reality, it’s a carefully considered, almost Machiavellian move where the vast majority of outcomes favour the league, regardless of how the union handles it. It was a nice play by Gary Bettman.

Recently by Jonathan Willis

  • I dont care how much this favours the Owners. The players are fools and maybe they need some different voices telling them that.

    They didnt want to lose 12% of their salary so instead they remained locked out until now when they’ve lost 25% of it purely on games lost. Bravo. Add to it the hilarity that is the fact the owners offered to “Make Whole” their contracts to ease the transition down to a reasonable 50% and I dont see why the PA is dying on this hill.

    The 12% they didnt want to lose is out the window now. Gone, likely forever. And why? Some contracting issues?

    5 year limits: Who does this affect? 5% of the NHLPA membership? Less? Preventing backdiving protects more members than it hurts.

    2 year Entry Level deals: Tell me Nuge, Eberle, Hall, and Yak wouldnt get more money sooner if their entry deals ended a year earlier.

    Putting UFA back one year: The size of the player’s pie is fixed. They cant get more money than their share allows. And try to tell Danny f*%cking Heatley or Ryan Smyth they cant control which city they play in until they hit Free Agency.

    At the end of the day the Union is supposed to be looking out for their players. Making sure they arent taken advantage of by the owners, but what it has become is an extortion league. The Players are in no danger of being screwed by the Owners. Their average salary has doubled in the past 7 years and they have a lot of power over the NHL.

    This isnt the old days where players were being paid in the dark and owners kept them down. The owners are making them incredibly wealthy individuals. Individuals who have already acknowledged the need to get down to a 50/50 split and were offered guaranteed dollars during the transition.

    Bah Hum-Bug

    • Gitagrip

      The owner’s haven’t made the players wealthy. Hockey has made them wealthy. The problem with the owner’s proposal is that (just like the last one) it is a bad deal for precisely those teams it is supposed to help. As a result it condemns the league to an economic model that does not work. So long as the only response from the league is that the players should take a smaller share of the pie every five years the players have every reason to resist.

      By free market standards the players are significantly underpaid. The only justification for them agreeing to be underpaid is the economic stability of the league is a win-win proposition. However, these owner driven CBA deals are the main driver of the economic stability of the league.

      So while I grant that economic stability is important for everyone, the owners as a whole continue to be their own worst enemy.

      To take one small case in point, getting rid of long term contracts will drive up salaries on a yearly basis hurting the ability of small market teams to keep their stars, and yet we are supposed to believe that this deal is necessary for those teams to survive.

      Finally, Omark is destroying the Swiss league full of NHL stars.

      • book¡e

        Ok, please explain how the players are being underpaid by free market standards. As I see it, the market of high skill professional hockey has been neatly controlled by an oligarchy to keep a restricted number of teams which can then hold cities ‘ransom’ to get significant concessions to subsidize their industry.

        At the same time, by restricting the number of high skill professional hockey teams the NHL has greatly increased per team revenue. However, management led by billionaire ego in the 90s drove salaries through the roof. They are now facing the reality of that.

        NHL players are rare, but they also have a very narrow area of expertise. Most of them would continue to play the game for 25% of what they earn now (if there was no choice).

        I believe that a true free market based upon supply and demand would have resulted in a much greater number of teams with a much greater dispersement of talent. Essentially you would combine the AHL, NHL, and ECHL and that would be your league. Perhaps you would end up with a European system with tiers developing.

        NHL players are rich because over the last century some very smart businessmen set up a number of institutions in the market to support THEIR model. They established agreements with municipalities, other leagues, the players, state and provincial governments, etc. that gave them tremendous power to influence the market. They have used this to market and grow the game to a point were it earns BILLIONS. Corporations buy tickets from sports teams like they are supporting a charity – do you think that happened because they like hockey?

        Its the same for all professional sports, these are created systems, they are not necessarily natural phenomena of the market.

        The players benefit greatly from this. THis is why they will not start their own league. For one, they would be exposed to financial risk (gasp!) and two, it would likely never reach the levels of the NHL in terms of revenue.

        • StHenriOilBomb

          I agree with most of what you said. The elephant in the room is that the NHL is subsidized heavily by public construction of arenas. However, that is irrelevant to the discussion of how the players and owners should divide up that subsidy.

          I’m not suggesting the players start their own league. I’m suggesting that the principle of collective bargaining is precisely that it is collective. That means the owners have to offer things to the players that they want and when concessions are demanded they have to be combined with reasons. A collective agreement is not a hammer, and if it is used as a hammer it is rational for the players to decertify.

          • book¡e

            I have no problems with two parties negotiating an agreement. I don’t see it as a moral issue in any way. I don’t care who makes billions and who makes millions and who doesn’t. Both sides bring what they bring to the table and lay them out and then make a deal.

            I don’t have any problem with the players using their rights to decertify, nor would I have a problem with the league using replacement players. These are all legitimate actions.

            I have supported the league in this because I think its best for fans to have a healthy NHL and the players will play regardless of the % they get. Eberle is not going to go back to school because he is only making $3 million. However, I think they probably have enough to settle now (the owners) and if the players have a trump card (and decertification is it), then they should play it and force the league to accept.

            The risk is that the League is in as bad of shape as the NHL is saying (I don’t believe it) and 3-4 teams fold.

    • I’ve been debating how to respond to this comment because it makes a lot of good points, points that I agree with.

      In the short-term, I don’t think there’s ever been any doubt that the players are best served by making the best deal they can get as quickly as possible. I also agree that players’ lot in life is pretty good, and seeing as they have the money to get excellent advice I see no reason to feel bad for them in a labour dispute, even when the other side has an advantage.

      On the other hand: long-term I think the players’ collective financial interests are likely best served by decertification, and my read is that Fehr has been slowly, carefully, guiding them down that path. It’s uncertain, and there are dangers, but freeing up team spending powers and removing the threat of a lockout are big incentives.

      • Best benefits a select group of players you mean. If the lack of a Union causes there elimination of 5 or 6 teams, as has been projected, then a couple hundred players wouldn’t even be able to find work if they wanted to in the league. Sure it would help the players who are already making more than everyone else on long term contracts but not the other guys. It would allow the owners to no pay for anything other than the salaries of the players no hotels or charter flights and they may even need to pay for their own hotel room. Incentives for the few but would destroy the majority. Losing 5 or 6 teams would likely bring a bunch of revenues down, media contract would be smaller as well as merchandise sales. I don’t see the bonus really for anyone except the current and future superstars.

        • Rob...

          Decertification wouldn’t cause any teams to fold. If anything it would help their bottom line because it would allow struggling teams to lower their payroll costs because they would no longer be compelled to spend to the salary floor.

          I’m not saying the players should be paid more in the absolute. I’m saying the salary cap system as the owners conceive of it serves neither their interests nor the interests of small market teams. It forces them to act irrationally and take on bad contracts when these are precisely the teams that should be incentivized to find inefficiencies.

          If hockey adopted a soft cap/luxury tax system, with sensible arbitration rules, with increased revenue sharing, and contractual restrictions that restrained salaries for young player as it does in baseball % revenue would stabilize between 50 and 55%, and almost all teams would be profitable.

          The system in baseball works for everybody. Unless hockey finds a win-win system that works for everybody this is never going to end.

          • Sorry Capt. Obvious, but the minute you use MLB as the standard of what is best for the league and teams, you’ve officially lost me. I thought your arguments were pretty well stated until this point. MLB is a joke of a league where those teams with huge payrolls generally win year after year (or at least make the post season). Don’t you remember the flood of talent that left Edmonton year after year because we couldn’t afford to keep them? How frustrating was it to see non hockey markets like Dallas and others with deep pockets pillage the lesser lights like Edmonton year after year? How does this benefit the league? How does this benefit the sport? Baseball is a joke.

          • book¡e

            I know people believe that MLB has terrible competitive balance but I checked and its actually pretty good. The big difference is the number of teams that make the playoffs. If 16 players made the playoffs in baseball as they do in hockey then since 2005 every team would have made the playoffs multiple times except for the Pirates and Royals, teams famous for poor management and player development.

            Sure the Yankees have an advantage but every team (except for the Pirates and Royals) competes.

            As for the Oilers losing all their players, I presume you are thinking of guys like Doug Weight. He played for the Oilers from the age of 22 to 30 which were far and away the best seasons of his career. The Oilers didn’t lose Doug Weight the star because Doug Weight the star no longer existed by the time they lost him. Keeping a young player through the best years of his career at a discount is a good thing.

            Conversely there is little chance that Hall, Eberle, Hopkins, and Yakupov all play for the Oilers until they are 30. The CBA makes it impossible.

          • Interesting. Unfortunately for MLB, they don’t have 16 teams making the playoffs, so the comparison is still valid. The Yankees drive me crazy, along with the BoSox, the Braves, Phillies and every other team that spends vastly more than Oakland, Seattle and until recently the Blue Jays. Generally, those with the money, win. In the NHL, it will go back to what it was prior to 2005. Even messed up teams like the Rangers who spent $80 million/season and didn’t make the playoffs still stole (through free agency or lopsided trades) star players from other teams, putting those teams, like the Oilers at a severe competitive disadvantage. Let’s face it, as cool as it was to see the upstart Oilers beat Dallas and Colorado, their chances of winning the Cup was next to none. I don’t particularly like the idea of creating a “league” with two to three tiers in it. If that’s the case, I love the idea of combining all three leagues (NHL, AHL and ECHL) into one mega league with 3 tiers. I don’t like this idea that there are teams every year, year after year, that have NO chance of winning. That isn’t a league to me, that’s a feeder system for the heavy weights.

          • book¡e

            Ya its really hard to compare the 50/50 split in the MLB because their revenue is a lot more than the NHL. Not to mention just the LA Dodgers est. television revenue for 2015 is expected to exceed 1.5 billion. Ya I’m pretty sure its easy to pay a player 20 million a season with TV revenue like that.

        • I have yet to see a reasonable projection indicating that 5-to-6 teams would go under in a post-CBA world.

          Partially that’s because nobody knows what post-CBA world will look like. The loss of 5-6 teams seems exceedingly unlikely, however – there likely on’t be a salary floor or a league minimum wage.

          • Hair bag

            What do you think is going to happen when there is no salary floor or guaranteed contracts and teams like Florida can’t put a solid product on the ice because their salary payout is $25million while the top teams are spending $80-100million – do you think the lukewarm fans are going to come out to watch a losing product…give your head a shake! The same goes for Dallas, Carolina, Phoenix and a host of others where hockey is a second tier sport.

          • I’m more towards your side of the fence here, but the one concern I might have is that the NHL does not have the fan base in weaker markets that the bigger sports have.

            The Utah Jazz can put out a cheaper team year after year because they have enough basketball fans to support a team they know will only contend every so often.

            They have fans that love the sport and accept the fact that their team will never be one of the perennial contenders. They watch and hope that once a decade or so they pull of something special before their talent leaves for brighter lights.

            I have some concern that no such base exists for hockey in a number of markets. If a similar situation arises I’m not as convinced that certain franchises can bear the potential loss of fans in their markets, simply due to fielding a less expensive roster.

          • I definitely agree with you, and I do think the NHL would lose some teams – but I suspect relocation, not contraction, will be the answer there.

            I can think of at least three markets off the top of my head that would be decent locations for an NHL team that don’t have one right now.

  • wiseguy

    If decertification occurs, the NHL should investigate a restructuring where each team is sold to a corporate entity. Each owner would own a proportionate share of the corporation based on either previous revenues or appraised values of his team. The single entity that owns all teams can then legally dictate all rules, salary caps, individual contract maximums and length of term, etc. without a CBA. There is no collusion because it is all the internal workings of one company.
    The very profitable teams would have difficulty agreeing to this as it would be the ultimate revenue sharing, but if you can set a cap of $30 million per team with no guaranteed contracts, the profits that can be shared would be monstrous.

    • Yeah, I’ve thought about this idea as well. You’d essentially be franchising out the NHL teams, and then the NHL can make all the structural rules, but the teams are still independent as far as how they spend their money.

      The only problem would be convincing the richer teams to go for this. If the NHLPA decertifies though, I could see some teams breaking off from the NHL and trying to create their own league, and the remaining teams going to a model like this. For in reality, who freaking knows really. It’s a very, very, very dangerous gamble for the players to make.

  • John Chambers

    Good analysis, Willis.

    I think this is ultimately a move to discredit Fehr, and the only casualty on the NHL’s side is Bettman, who the players dislike intensely anyway.

    It could very well be a move that breaks through the impasse by offering some clarity to the communications between both sides.

  • vetinari

    This move would definitely favour the owners. Many of them are more respected than Bettman, and have established personal relationships with the players which they can lean on during negotiations whereas Bettman just has his sun-blocking machine and assortment of patented evil smirks.

    If the players accept the proposal, if I was on their side, I would parade out every former player that’s been critically hurt playing the game and ask the owners to understand that this is why cutting any existing salaries is a bad idea (“why did Eric Lindros introduce himself to me three times and then ask me to seat him and his wife [pointing to Claude Lemeuix] next to the kitchen?”).

    If I was on the owner’s side, I’d have a giant clear vase with billiard balls in it on the conference table when the players arrived– each black ball would represent one profitable team and each red ball would represent one non-profitable team. Each ball would also have a team name on it and represent at least 23 union jobs. I would ask the players to select the billiard ball that best represents the team that they play for (or most recently played for if they are UFAs). I would then challenge the players to a game of pool with the condition that if they sunk all the black balls first, we’d give in to their most recent offer. However, every red ball that I sunk before they eliminated all the black balls means that that team and those jobs disappear post lockout.

    • Bicepus Maximus - Huge fan boy!

      Interesting perspective. Of course you would just be accused of playing games and the meeting would end that instant. Opposing sides don’t seem to matter to either. Its a me me me me me game they are all playing.

  • Rob...

    I’m cancelling my sports packages in a month if this thing isn’t settled. TSN and Sportsnet have failed to pressure the NHL and NHLPA into settling this dispute, and they have failed to fill their airtime with a suitable alternative… AHL and/or CHL games.

  • Klima's Mullet

    I see zero chance that the NHLPA accepts. How many players can even dream of a 5 year+ contract? Or backloaded mega deals? Not very many. How many even care about make whole if they have no contract or are a 1 year deal.

    This would open the door for owners to directly appeal to the majority of the players who have zero to gain and are throwing away money and maybe even their careers being bullied into following Crosby and crew hang on to their $100 million.

    I disagree this has anything to do with the NHLPA being scared that the owners are more business savvy and Fehr not wanting to put inexperienced people in the room with these super smart shrewd owners. I think it IS about the message getting through and that Fehr is worried that him and his elite circle of superstars won’t be able to filter the message from the 200 guys whose entire careers on the chopping block the longer this goes on.

  • Oil Kings 'n' Pretty Things

    He who owns the business…….gets to set the rules. If the players want to dictate the rules, they should start their own damn league………if I don’t like what my employer is doing, I have two options, state my case and hope they listen, or go get another job.

    Until the NHL draws the proverbial line in the sand, and tables a final offer, the NHLPA will not negotiate a deal. They have to receive a final offer or the season will be cancelled type of offer, before they so anything!

    Who is dividing and conquering is a matter subject to debate.

    • The NHL has tabled a final offer three times now.

      Every time Gary Bettman makes an offer, he says things like ‘this is our last, best offer’ or ‘the offers will only get worse as we start losing pre-season revenue.’

      You can’t draw a line in the sand when you drew three already, knowing the first two times that you were going to draw a different one later.

  • Everything Arch said X2.

    I see this as more of an imformation session than actual bargaining. The players aren’t going to agree to anything without counsel if they have this meeting but they would certainly have a lot of questions for Fehr afterwards.