NHL Hopes "History Won't Repeat Itself"
Matthew Adamski for SBS
It appears the NHL is headed for a long work stoppage. When the current Collective Bargaining Agreement expires next September, players and owners will begin negotiations on a new labor agreement. How long it will take for both sides to come to an agreement is anyone's guess.
Many people around the league are guessing it will take at least a year and maybe more. And that would be disastrous for a league that already must deal with a growing list of economic problems including inadequate revenue funding, uneven payrolls, escalating salaries, and increasing ticket prices. The list will continue to grow if the NHLPA and NHL can't agree on how to fix those problems.
The league and owners have made it clear already that they will be pleading for a salary cap or a luxury tax. If history is any indication, it will be difficult for Bettman and the owners to persuade the NHLPA to accept any major changes to the current system, including a "salary cap".
Prior to negotiations in 1995, owners insisted on a salary cap to reduce the growth in player salaries because they were concerned about escalating payrolls. The players rejected it. In 1990-91 the NHL average player salary was $271,000. In 1993-94, the last season before the agreement was reached, the average player salary had risen to $572,000.
The owners then offered a luxury tax that would penalize teams for going beyond an arranged salary ceiling. Players didn't want to hear it. The owners continued to change the ceiling, but the players resisted every time.
When the owners offered a salary ceiling of $18 million for each team at the end of the negotiations, the players refused. They argued that the Buffalo Sabres had four players with a combined salary of $11 million and if they paid the other 20 players more than $7 million the team would be taxed and they would lose some of their profit.
Eventually, the owners gave in to the players because they did not want the entire 1994-95 season to be canceled. The two sides reached an agreement right before the noon deadline on January 13, 1995 and a week later the shortened season began.
Te NHL can't afford another work stoppage like last time. All parties involved must do whatever it takes to avoid one because it would only lead to more problems for the league. After all, the NHL and its teams can't gain revenue from ticket sales if no games are being played.
There is still a possibility the two sides will be able to avoid a work stoppage, but both sides seem far apart on the key issues facing the league.
Goodenow argues that a mismanagement of revenue distribution is the reason for the financial disparities between teams. He feels that revenue sharing would solve the problem.
I disagree. I don't think revenue sharing would be good for the league because it would mean that all teams including small market ones would be forced to pay a tax. It would put more of a burden on teams that don't get enough revenue to pay off expenses.
Bettman argues that under the current CBA, the league and teams can't generate enough revenue to pay off rising player salaries. As a result, several teams are losing money and financial disparities exist among the teams.
The St. Louis Blues lost $43.1 million in 2001-02. The New York Islanders lost $22.5 million. Tampa Bay has lost $50 million over the past three years. Phoenix expects its losses to be at least $25 million for 2002-03. The Los Angeles Kings estimate a loss between $12 million and $13 million for 2002-03. The Stars estimate their loses at $3 million for last season.
The financial disparities are obvious when you look at the big and small market teams.
The big market teams like Detroit, Colorado, and Dallas have a competitive advantage over the small market ones. The big market teams can afford to spend money on free agents while the small market teams have trouble keeping their best players and rely heavily on the NHL Entry Draft.
The New York Rangers spend $79 million on player salaries while the Minnesota Wild spend over $20 million.
The higher payroll teams seem to win the Stanley Cup ever year. The Rangers are the only exception. Seven of the past 12 Cup winners have been in the top five in salary. The New Jersey Devils, last year's Cup winner, had a payroll in the top ten.
I take the side of the owners and Bettman in this debate. I think a salary cap is the best way to eliminate the financial gap between teams in the NHL because it would ensure payrolls are equal, prevent salaries from further escalating, and allow lower ticket prices. As a result, teams would be more competitive, owners would be better able to manage their expenses, and fans would be able to attend more games.
The owners only want to do what is best for the league and I think its' about time the players do the same by cooperating with the owners.
The current system is clearly not working and the players should allow some changes to be made, even if it means a salary cap or a similar limit on payroll.
The players seem to be afraid that a salary cap or luxury tax would result in a significant drop in their salaries. However, the cap or luxury tax would only affect team payrolls, rather than salaries.
Owners gave in to the players last time. Now it's time players gave in to the owners, as it doesn't look like the owners are going to do the same again.
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