Kukla's Korner Hockey
by George Malik on 06/18/12 at 11:58 PM ET
The NHL’s GM’s met during the Stanley Cup Finals, and usually the Board of Governors meets sometime before the Draft to start officially hashing out the “payroll range” and start looking forward to next year. Given the CBA uncertainties the NHL and NHLPA face, my Spock eyebrow rose halfway to the top of my forehead (which is located between my ears, behind my bald head when I read this from the Newark Star-Ledger’s Rich Chere:
Although Devils managing partner Jeff Vanderbeek is in the process of bringing in a new partner, approving that partner will not be on the Board of Governors’ meeting agenda Tuesday. Approving changes in an ownership group can be done at any time by the Board of Governors via fax and a vote does not have to take place at a formal meeting.
As far as I know, the NHL and NHLPA aren’t negotiating yet, but if we start hearing some serious-ass gloom and doom about the probability of NHL games being played in the fall tomorrow, it’s going to officially be time to worry about Chairman Mao shoving the same kind of, “You’re going to agree to a lockout whether you like it or not” proposal through the Board as he was able to convince the Board to approve that hastily-put-together realignment scheme last November.
Quickie update: Via Paul, here’s what ESPN’s Scott Burnside had to say about the Board and the CBA
Among other issues that will come before the board of governors Tuesday will be an update on collective bargaining. It’s expected commissioner Gary Bettman and/or deputy commissioner Daly will outline the schedule for bargaining with the NHL Players’ Association.
It’s believed the two sides will begin meeting before the end of June. The owners will also get an overview of the business operations, including the fact the NHL has seen national revenues—those generated through Canadian and American broadcast rights and the NHL’s other enterprises—rise by 173 percent since 2006, rising from $2.1 billion to $3.3 billion.
NHL Enterprises, which includes NHL Network, NHL.com, the NHL Center Ice cable packages, international interests and other events, has seen a 270 percent jump in revenues over that same period.
European revenues have started to take off in the wake of the NHL’s initiatives at selling the game across the Atlantic, with revenues jumping 328 percent since 2011. There are plans to build a permanent European NHL office.
Although overall ratings for the recently completed Stanley Cup finals dropped compared with recent final series, the first two rounds of the playoffs, rounds in which every game was available on one of NBC’s platforms, enjoyed a 17 percent increase in viewership over a year ago.
Owners will also hear about potential streams of revenue that league officials believe could generate $300 million in revenue in the next few years once a new collective bargaining agreement is hammered out. The owners will also be given an update on hockey operations and potential rule changes recently discussed by the competition committee. The competition committee recently agreed to ask the American Hockey League to adopt hybrid icing and the implementation of the so-called ringette line in the defensive zone, beyond which players must skate in order to complete a pass beyond center ice next season. The owners will also be updated on the sale of the Toronto Maple Leafs to a partnership of telecommunications giants Rogers Communications and Bell Canada.
Update: And if you need to endure, I mean enjoy a little bit of CBA philosophy, the Edmonton Journal’s Jonathan Willis offered some theorizing as to whether the NHL might finally lower the cap floor:
On the whole, the NHL has actually fared quite well under the new system. Colleague David Staples attended the Sloan Sports Analytics Conference in March, and Reported that commissioner Gary Bettman raved about the money the league was earning, highlighting “seven years of record revenues.” Overall, the league’s teams have seen their earnings rise from $2.1 billion after the lockout to $3.3 billion today – an increase of more than 50% over those seven years.
It’s true that the salary cap has continued to go up over that time period, but with the players’ share fixed at 57%, the owners have seen the actual number of dollars earned rise with it. Using the league’s figures and ownership’s share of 43%, we can see that after paying players, the average NHL team had $30.1 million left over in 2005-06. In 2011-12, that number was $47.3 million. Other costs need to come out of that total, and there’s no question that some teams earn more (*cough*Toronto*cough*) while others earn much less, but poverty is not something ownership as a group can plead today.
There would seem to be four possible solutions to the problem of the poorer teams.
The first, likely most obvious one, is for the NHL to kill weaker markets. Predators in the wild typically claim the sick and the weak animals in any herd, leaving the group as a whole strong and healthy. There are problem markets in the NHL – some of them created by inept ownership and management, but some of them just poor. The upside is that if those teams were relocated to other, more profitable cities, everyone would benefit. The owners of those teams would make more money, as would players as revenue went up, if the teams were Canadian they would help drive up television revenue, and the most frequent suckers of the league’s revenue-sharing teat would no longer be swallowing up other teams’ money. Of course, the league has remained stubbornly devoted to some markets, while commitments in other cities make extraction difficult. For example, it’s completely understandable that the City of Glendale wants the Coyotes to survive, given the amount of money they forked out to build a shiny new arena. It’s also not nice for the devoted fans of those teams, though odds are that is not a major consideration for the NHL or NHLPA.
Another possibility is expanded revenue sharing. Given the amount of money the league’s 30 teams are making, there really should be enough to go around. Of course, as a rich NHL owner I wouldn’t want to subsidize the dummy that conned into buying a team in a terrible market (or worse, the dummy that has allowed his management group to run the club into the ground) if there were any other solutions – and there are.
What the league is likely to pursue is a reduced players’ share of the pie. The recent negotiations in the NFL and NBA have seen the players’ share drop to the neighborhood of 50% of revenue – on $3.3 billion, a drop from 57% down to 50% would net owners as a group an extra $231 million, or $7.7 million per team. Again, that money isn’t distributed evenly, so poorer clubs will get a smaller benefit while rich clubs get richer. For ownership this is a slam dunk; for players, precisely the opposite. It’s likely to be the most contentious issue in these negotiations.
The final possibility is a larger salary range – more gap between the ceiling and floor. In a system where the owners and players each get a fixed percentage of revenue, the floor serves as a way of ensuring the players get their money; if the floor drops the money poor teams aren’t spending needs to come from somewhere else. The obvious answer is from rich teams, via an increased salary cap. This is one of the areas where [former Montreal Canadiens GM Serge] Savard’s quote above comes into play – the rich teams are already making money, and they like having a salary advantage over other teams. Budget teams then have the option of spending less.
The sacrifice would be parity, at least to some degree. But the fourth solution is the only one on this list that works for all parties, and it’s one I’d be shocked not to see in the next CBA, probably in concert with a reduction in the players’ share, and perhaps with a slight increase in revenue sharing.
Update #2: And here’s the other side of the coin, from the CBC’s Elliotte Friedman:
One CBA note: The NHLPA’s Executive Board (30 player reps and alternates) meets next Monday, Tuesday and Wednesday in Chicago. At that meeting (or shortly thereafter) the Negotiating Committee will be revealed. And that’s when negotiations will start—finally.
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Paul Kukla founded Kukla’s Korner in 2005 and the site has since become the must-read site on the ‘net for all the latest happenings around the NHL.
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