The Malik Report
by George Malik on 08/20/12 at 05:15 AM ET
The more I think about the premise behind Gary Bettman and the Board of Governors’ desire to lock out their players for a third time in eighteen seasons and the second time in eight years, the more I think that the NHL gods must be crazy.
The NHL ceased operations for an entire season to bring labor costs down, ensuring that the players would make only a certain percentage of pennies on the hockey-related dollar, with that percentage linked by iron chains to league-wide revenues. The current CBA wasn’t so much collectively bargained as it was bullied, bulldozed and eventually written by Bill Daly and a group of turncoats who had so sold out their union that would-be NHL executive director Ted Saskin and his cronies did exactly the opposite of what super PAC’s insist “union bosses” desire to accomplish, instead nodding their heads to every suggestion that Daly and the NHL made while completely acquiescing to their opponents’ demands in secret.
Especially given that fans were lied to about an “inflationary spiral” surrounding salaries and ticket prices that doesn’t exist, and that the NHLPA expected to lose a season for some sort of meaningful reason, the current CBA was sprung upon fans and players chock full of lies, empty promises and unpleasant surprises.
Because the CBA’s revenue-sharing program seems to do little more than piss off big-market owners, and because the salary cap is based upon a percentage of league-wide as opposed to team-by-team revenues, under the current CBA, the rich have gotten richer, the teams in the middle have gone back to “have-nots” after spending a few seasons as “haves,” and teams in trouble (absent taxpayer-backed subsidy deals, anyway) have remained in trouble, all while ticket prices have continued to rise irrespective of player salaries or team performances as they are determined by supply and demand.
And yet the NHL came back to its players eight years after drafting this “dream CBA,” with salaries maxed out as high as they will go in terms of percentages of hockey-related revenues, demanding to not only receive a huge bailout in terms of a percentage of the HRR pie, but also to severely restrict player movement, player mobility and essentially workers’ rights to find employment elsewhere, with the league readily and publicly admitting that it had no intent to change the system by which it operated—and on top of that, to redefine hockey-related revenues to ensure that the players would give at the office twice.
In plain English, given that the NHL does not plan on contracting teams, a league whose business model isn’t working for each and every one of its 30 franchises decided that its only problem involved labor costs, labor costs determined by a fixed percentage of league-wide revenues, and that while current business model was unsustainable, it would continue operating under its current system, minus huge give-backs from its employees’ pockets.
Does that make sense from a business perspective? In a business with 30 franchises who can charge whatever admission supply and demand will allow them to charge to watch performers perform, where a third of the franchises are raking in dough, a third of the franchises are getting by and a third of the franchises are in economic distress, and where labor costs are fixed to a certain percentage of the revenues deemed to stem from their performers’ work, what would a second “bailout” from employees likely result in?
That’s an easy answer. More profits for the moneymakers, a few years of better times for the franchises in the middle, and maybe a year or two of less immediate distress for the troubled franchises, with guarantees that things would be much worse by the next time the labor deal was up for negotiation again.
Because in this kind of business, where labor costs are fixed to a certain percentage of league-wide revenues, and revenue-sharing isn’t particularly meaningful, five to eight years from now, the rich will be even richer and the poor will be even poorer because those moneymaking teams will continue to make more money, driving the salary cap higher and higher and higher. Decreasing the players’ share almost exacerbates the problem because, especially with HRR redefined, profits are all but guaranteed to increase and increase at steeper rates.
So what we’re really looking at, as the Montreal Gazette’s Jack Todd suggested, a third lockout for the sake of a fourth and then a fifth, a sixth, and so on.
Without addressing the inequities between the biggest and smallest-market teams, and without tweaking the system to ensure that teams like the New York Islanders or Anaheim Ducks qualify for whatever revenue-sharing program exists, the NHL is ensuring that the gap between rich and poor will get bigger at a faster rate, and that the same problems will manifest themselves the next time the league insists that it’s labor costs and only labor costs that are the problem for a business plan that clearly doesn’t work for everyone.
If anything, the biggest markets will be even more tired of continuing to bail out its weaker sisters under a system of revenue-sharing that’s partially constructed from teams’ biggest cash cows in playoff revenues, and there will be more teams like Phoenix and Long Island, not less.
It’s also worth noting that, according to the labor union’s representatives, even a cursory glance at independently-audited team books indicate that a significant amount of revenues that are supposed to be subject to divvying up between labor and owners are in fact not being divvied-up, to the point that the labor union believes that there’s a fuzzy math gap of 6% of league-wide revenues.
That’s staggering and stunning in itself, or it should be. 6% of $3.3 billion is a crapton of cookies behind hidden under pillows and chocolate bars stuffed in underwear drawers.
Yet we find ourselves at a point where it’s the labor being told its wages are the only problem plaguing a runky pickup truck whose driver’s solution to a leaky fuel line that’s gotten worse over the past eight years is to consistently tell his mechanic that he needs a bigger gas tank to continue getting from point A to point B. It’s the labor union that’s trying to meaningfully address the league’s revenue-sharing issues, trying to make it more palatable for big markets to keep their weaker sisters afloat. And it’s the labor union’s plan—which included massive give-backs in pay in addition to a revised revenue-sharing system to essentially float its employer’s most troubled franchises a loan that will never have to be repaid whose proposal was dismissed out of hand.
If we take the words NHL and NHLPA and put them in the place of “employer” and “labor union,” does any of this sound any less insane? Does it sound like anything less of a game of “kick the can?” Or does it sound anything less like a business that will continue to ask for salary give-backs to the point that the labor union will eventually say, “Screw it, cancel the season that would be played during Lockout 4, we’re going to play in leagues that treat us more like the talent that puts butts in the seats you sell people, and less like bloodsucking leeches?”
The NHL is currently operating under a CBA it sacrificed a year to achieve, a CBA that Gary Bettman promised fans and promised the 30 members of the Board of Governors would solve the systemic issues plaguing the business and destabilizing small and mid-market teams, and because it was based upon a salary cap that would be an average of league-wide revenues, and because it was based upon limited and ineffectual revenue-sharing, it didn’t achieve its goals.
So wouldn’t you think that any sane sports league would suggest that it has some systemic problems to tweak under a new CBA?
Instead, we’ve got a sports league threatening to lock out its players and fans because it wants to place the burden of stabilizing the business upon its labor force, and because it’s unafraid of the fact that continuing to operate under its business model will make the gap between moneymaking and money-losing franchises that much more stark over time.
All the NHL’s proposed CBA does is buy off the big markets by promising even more profit, and buys off the mid and small-market franchises by suggesting that they can cross their fingers and hope that whatever business problems plague their franchises will magically disappear over the short and long term simply by reducing labor costs.
For the smallest and most troubled franchises, the league essentially addressed their inability to keep up in the revenue-increasing rat race by not setting broken bones or fixing broken ligaments, but instead slapping their legs in casts, and as they continue to limp along, the NHL is now promising them new, lighter casts and better braces. They aren’t promising any real “fix,” and five or eight years down the line, when they’re being lapped for the eighteenth or nineteenth time, Gary Bettman’s plan appears to be, “Lather, rinse, repeat.”
That’s nuts. And stupid. And yet the league is unrepentant, not even trying to mount any sort of PR campaign or write another “Levitt Report.” This time, its’ just, “Well, we lied to you last time, and now we’re going to lock you out again, assume that you’re all going to come back—even with many more ways for you to spend your discretionary income more immediately available in this digital world—and then we’re still going to keep asking you to spend more and more money to watch hockey games. If you don’t like a lockout, tough shit. And if you don’t want to deal with a fourth or fifth one, tough shit.”
Arrogant, nonsensical, illogical, and plain old idiotic. In any sane business, Gary Bettman and the Board of Governors would be laughed at for having already achieved every goal in terms of restricting labor costs, and yet suggesting that the systemic problems with their business plans have nothing to do with the system and everything to do with having to spend exactly what they wanted to spend on labor costs. It’s ludicrous. It’s stupid. It’s childishly immature.
And at this point, it appears that, “We’ll just keep digging into our employees’ wallets to solve all our problems, even after we locked them out for a year to achieve all our collective bargaining goals, just to kick the, ‘What do we do to fundamentally address the problems that are plaguing our 30-team business model?’ can down the line until the next time we lock ‘em out to dig into their pockets” is both a sound strategy in the Board of Governors’ eyes and is a strategy that’s going to cost games, fans and, in the case of game-night employees, real jobs to real human beings who can’t afford to not pay their bills while the billionaires try to get away with holding the millionaires over a barrel all over again.
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The Malik Report is a destination for all things Red Wings-related. I offer biased, perhaps unprofessional-at-times and verbose coverage of my favorite team, their prospects and developmental affiliates. I've joined the Kukla's Korner family with five years of blogging under my belt, and I hope you'll find almost everything you need to follow your Red Wings at a place where all opinions are created equal and we're all friends, talking about hockey and the team we love to follow.