Fehr Blindsided Us All

Nobody saw this coming.

Certainly not the gloom and doom crowd, and not the nay-sayers, predicting a lockout when the NHLPA hired it’s current boss.

The moment Donald Fehr was brought into the Player’s Association, a lockout looked all but certain to most fans. But even the optimists like myself had no idea what was coming: a sweeping proposal that could change hockey’s financial system, and save many of the smaller market and struggling teams, while still giving back some concessions to the owners.

This is something that is going to take some time to digest, both for the fans and for the owners. Or at least, the owners should take some serious time to crunch these numbers. If they don’t, they will lose standing in the court of public opinion. Or to put it another way, if a player has a really bad playoff run, you might want to announce having an injury, even if you didn’t really have one. It just looks better. After the players looked and looked and questioned the ridiculous (albeit necessary) attempt to roll the clock back to the last lockout, if the owners take anything short of a half week to debate and look at this, or if they decide to dismiss it without exploring and question, they will look like knee-jerk fools who can’t see past their own egos.

We can now erase Bob Goodenow from the history books. The tactics displayed by the Executive Directors are worlds apart, and Donald Fehr seems to come out on top in the brains department. Goodenow dug his heals in to a loosing battle, thinking he could out-wait the owners, while Fehr hit them where it hurts: in reality.

Do I think the owners will accept being told by a bunch of players how to run their businesses? No, like the owner of a pizza chain doesn’t care what the dishwasher has to say about the company and how it should be run. But there are other examples of this in the world, most notably in Japan, where corporate success is a point of pride. The owners would do well to pay attention to the players here. It’s easy to forget that they see the inner-workings of the hockey business world in ways we only wish we could. They shouldn’t be discounted.

Finally, while this proposal may look attractive to the smaller market teams, how about to the potential owners of teams that could be or are being sold? Would you be less or more inclined to buy the Phoenix Coyotes if this deal (or some other modification of it) were put in place? Would you look at the financial stability of a team that was on shaky footing and see this deal as something that could help you in the long term?

We don’t have enough details about the proposal the NHLPA put forth, but we can say this for certain: there was more care put into the deal than anyone expected. Now we wait.

No Trade Idea

Here is a quick idea on the no-trade clause.  Rather than eliminating the no-trade completely, limit the term of any no-trade to five years, or 2/3 of the contract length.  This could also help to reduce the length of contracts organically, without putting in specific language about this.  It could actually wind up being beneficial to both sides.

Just a thought.

Still Think There Won’t Be a Lockout?

Last week, I wrote a post saying that I didn’t believe the NHL would see another lockout this year (with the caveat that they might lose the preseason, which wouldn’t be a loss in my books).  That was before the media reported on what the owners initial proposal was.  From Puck Daddy:

Renaud P. Lavoie of RDS in Montreal has reported five major points from the NHL’s first CBA proposal, and you may want to sit down, because I’m gonna give it to you straight. If the owners aren’t going to budge from these five points, we are most definitely headed for a lockout:

1. Reduce players’ hockey-related revenues to 46% from 57 %.

2. 10 seasons in the NHL before being eligible for unrestricted free agency.

3. Contracts limited to 5 years.

4. No more salary arbitration.

5. Entry-level contract are 5 years long instead of 3.

Add to that some other revelations by Larry Brooks:

[blackbirdpie url="https://twitter.com/NYP_Brooksie/statuses/223977981146693632"]

[blackbirdpie url="https://twitter.com/NYP_Brooksie/statuses/223978134452715520"]

[blackbirdpie url="https://twitter.com/NYP_Brooksie/statuses/223978473151143937"]

So, how do I feel about a potential lockout, now that a preposterous offer like this is what the owners are leading off with?

Still not seeing a lockout.  Because the owners are going to budge a lot.

Let’s take these points one by one:

1) Of course the NHL is going to ask for this kind of percentage reduction. Both the NBA and NFL got significantly modified caps, and the NHL owners would be irresponsible not to ask for even more.  If you don’t test the waters, you aren’t going to find out what the market (in this case, the cap) can handle.  Look at the roughly halfway point.  They will get their 50-52%, and be happy with it.  This is just a test.

2) The players got a reduction in free agency age in the last CBA.  The owners want it back.  I see this being a split.

3) Five years is pretty low.  Seven or eight year contract limits?  I can see that.  But I expect the players will fight this one.  Instead, I would be looking for a percentage based rise and fall in salaries over the term of the contract.  That sounds like a more reasonable way to limit contract lengths organically, take out the funny business in CBA circumventing like the Kovalchuk contract, and still allow for a market driven by value.  This seems pretty win – win overall.  See below in the Larry Brooks evaluation for a little more on this.

4)  This won’t happen.  Take it or leave it is not good faith bargaining.  This will go.

5) 5 year rookie contracts?  So half of your restricted career is on a rookie contract?  Look for this to be negotiated to a halfway mark of four years.

And as far as the Larry Brooks tweets:

– Redefining hockey related revenues is a fairly crafty move, but I don’t think Donald Fehr is going to fall for this one.

– If the percentages of the cap change, expect the floor and ceiling percentages to change as well.  This is an issue for the smaller market and smaller budget teams, and they actually need a change in the way the floor works.  But the numbers here will be tied to the cap percentage.  It’s very negotiable.

– As for the signing bonuses, I think bonuses are a scourge of the league, and should be significantly reduced, and rookie contract bonuses should be reduced a little bit.  But I don’t see them going away.  Nor the same salary in each season for the life of the contract.  The owners are shooting themselves in the foot with this aspect, and since they won’t get five-year term limits, they will likely ditch this proposal for something a little more reasonable (see point three above).  Keeping the salary the same over the length of the contract makes it less trade-able.  If you have a sliding salary, you can ditch that onto a budget market if needed.  Handcuffing yourself doesn’t make sense, even if the old system in this regard is broken.  This is why the salary cap hit was averaged over the length of the player’s contract in the first place.

OK, so what next?

Next, the players counter-offer.  And it’s going to be slightly less ridiculous than the one the owners put forth.  But only slightly.  The players would term this CBA into next season if they could.  We will hear that the players aren’t going to fix the system for the owners.  We will hear the words “non-starter’ many times.

This is just how it works.  This proposal was a show of strength, and the owners are going to see what happens next.  There is plenty of time until October.

The L Word: Why I don’t think we will see another lockout

Cold Hard Cash, bitches

Cold hard cash, bitches

The big fear for hockey fans is another lockout on the scale of the one we saw in 2004. The secret hope is a lockout on the scale of the NBA this year, or the NHL in 1995, or even better yet, the NFL before this previous season. The fans are practically salivating for the loss of a few games.

Sounds insane, right? Who would want something like that? Oh, you know, the cynics, and they are everywhere. They think the system is doomed, that the two sides will never come together. They keep a number in their heads, and if that number isn’t brought up in every report, they scream to the heavens that we won’t see hockey in October.

Color me an optimist, but I don’t think there will be a lockout. I will concede that there may be a loss of preseason, but I would hardly consider that a loss. Losing the preseason is like losing a limp. Sure, you technically lose something, but really, you get something in return.  We don’t need the preseason as it stands, but that’s for another post some day.

The two sides are meeting, and they are saying the right things, such as (via NHL.com):

“They’ve been positive,” NHL Commissioner Gary Bettman said of the meetings. “They’ve been constructive. They’ve been cordial.”

and (via NHLPA.com):

“We had a meeting for the better part of three hours. A lot of different issues were discussed,” said NHLPA Executive Director, Don Fehr. “The meeting was business-like and appropriate and we’ve got another one scheduled for Friday.”

Which is pretty much what you would expect. Neither side will be saying much, and leaks will be few and far between. With every word being scrutinized, don’t expect a lot of news while things are still friendly. This isn’t the Bob Goodenow-led NHLPA either. I don’t see this being played out in the court of the press and public the way the last CBA was. I’m not sure either side would come away unscathed in that situation.

What other people see as the end times for the 2012-13 season, I see as simple negotiating. There are things that needed to happen to legally start the negotiation, and when those actions were taken, the emo hockey fans among us danced the lockout dance, which looks nothing like the safety dance, but is very similar to posting “First!” in a comment thread while swaying back and forth in the middle of the club, wondering why no one understands you..

Myself? If I’m going to dance, I’ll be doing the fishstick. I don’t see anything that is going to completely derail the talks, regardless of the teeth gnashing. Simply put, there isn’t enough there to make the prospect of losing another season worth it to either side.

Philosophical Differences Aside

The 2004-05 lockout happened for one simple reason: the player market, and where either side thought it should go. The players didn’t want a salary cap, the owners did. In fact, without a cap, the owners claimed they would be out of business and quickly. They needed cost certainty. We can debate the need for cost certainty when nearly every business in the world operates without one, but I agree that without a salary cap, the NHL would look different than it does today (and I believe for the worse).  It was a fundamental difference that wasn’t going to go away.

Of course, the cap is now in place, and still the owners spend and spend, but they do have their cost certainty, and that’s the point really. We, the fans, see the owners and GMs doing things like paying $196 over 13 years for two free agents and say the owners need saving from themselves, but that isn’t the right way to look at it. The owners didn’t ask for the guarantee of profit (even if they kind of were). They wanted cost certainty, which is different. Now, years later, they need to adjust the numbers.

The players have made out well. They have plenty of advantages that you never hear about when it’s time to talk about contracts. The players have the advantage of using agents, who can play one side against the other until the ink on a contract is dry. If the owners talk about players with each other, it’s collusion. Fair? Sure, that is just the way it works.

While we keep thinking the owners need saving, they know what they are getting into. They understand that sports is a business where you can lose money, and probably will. They know how much they have to play with, and are smart enough (most of the time) to stick to a budget of some sort. It may not look like it from the outside, but that’s what you get when you are on the outside – a murky picture at best.

The Value of a Lockout

The 2004-05 lockout was worth it in the end to the owners. It’s easy to see why, when you look at the numbers. According to The Player, the anonymous NHL player who writes occasionally for Puck Daddy:

In 2003-2004, the final season before the lockout, players’ salaries ate up about 74 percent of all the revenue generated by the NHL. In that year, the business was worth about $2 billion.

Now, I’m no fancy math doctor, but that works out to around $1,480,000,000, which in technical terms is a f!$@#load of money. A league of thirty teams isn’t going to last long on $520 million dollars (and no, I can’t believe I just typed that either). Now the salary floor in the NHL is higher than the first salary cap, and not by a small amount. Simply put, what was good for the goose turned out good for the gander.

This current CBA negotiation isn’t about rolling salaries back 24%. This isn’t about not closing the doors on a few franchises without massive changes. This isn’t a grand new experiment at the possible expense of the players. This is only about a few percentage points.

What I would ask for

So while everything is on the table, what should be included in the new CBA. What should the players and owners be looking for?

For the owners:

Roll back salaries 10%.
Get the cap to a 50/50 split.
Take a few more dollars away from rookie contracts (because rookies, who can’t defend themselves in negotiations, are easy targets, and will always lose to the rest of the players).
Term limits on contracts (8 years max).
Maximum and minimum of how much a contract can go up or down from year to year (no more massively front loaded contracts).
A lower cap floor.

For the players:

Lose as few percentage points as possible (they will lose a few percent, but in the grand scheme of things, this isn’t going to be such a terrible thing).
More participation in league decisions, like realignment, playoff format, and rules (remember the “partnership of the last CBA?).
A more workable revenue sharing model.
Reduced escrow.
Better post-retirement benefits (because why not).

OK, two things there. First, it wouldn’t seem within in the realm of the players to deal with revenue sharing. But a more even or larger amount of revenue sharing would allow other poorer teams to spend a little more on salaries, which is in the interest of the players. And it helps the teams stay in business, which means more jobs for more players.  Losing two to four teams may make sense in some circles, but that’s a lot of players out of work (especially when you start looking at minor league systems), and that is of concern to the NHLPA.

Second, the owners need the maximum and minimum contract fluctuations more than they need contract term limits. Keeping players and agents from exploiting the CBA to get a team to pony up more Kovalbucks will keep teams from signing super long-term deals anyways. This contract style may or may not have started in a GMs office, but once it got out, it was a tool for agents. Keep this at bay, and you have a more viable solution for reasonable contracts than even getting a few percentage points back. I would be gunning for this more than anything, were I an owner.

Keep in Mind:

This is a negotiation. No one is going to get everything they want out of it. Even though the owners got a lot in the last CBA, they didn’t get everything. That’s just how it goes.

And I will bank on my optimism any day of the week before blindly expecting the next lockout. It’s more fun to look forward to more hockey than to sing another goth song about it.