NHL owners and players finally figured a way to mix pain with their pleasure, the two sides tentatively agreeing in the wee hours of Sunday morning to a new collective bargaining agreement in the 113th day of an arduous, oft-acrimonious lockout.
The season, which will have each team playing either 48 or 50 games, is expected to begin in 10 to 14 days. For the Bruins, that could mean they open their downsized 2012-’13 season Jan. 17 in Ottawa or Jan. 19 in Montreal, but that’s only if the league picks up the schedule that was released last summer. If so, Boston’s first home game would be Jan. 21 vs. Toronto, a 1 p.m. matinee on Martin Luther King Day. All regular-season play is expected to have clubs playing only within their respective conferences.
In the end, the league’s 30 owners got most of what they wanted most — a far more significant share of the revenue pie, which last season was a $3.3 billion business (total revenue) . For at least the next eight years, possibly 10, the two sides will split evenly every dollar that funnels to the cash drawer, a dramatic swing from the expired CBA that had the players collecting 57 percent of the take since the start of the 2005-’06 season.
While percentage points may seem a trifle, that drop of seven percentage points would deliver $231 million each season to the owners’ side of the ledger, based on the league’s most recent revenues. Even if that number were to remain static, it would mean the owners claw back an additional $2.3 billion over the length of the new 10-year deal. Each side has the right to terminate the new pact after eight years.
So, was it all worth it? Only these next months and years will tell, but the answer will be delivered, as always, by the consumer.
This was the third lockout in league history, and the fans always have returned, actually as record spenders following the lost season of 2004-’05. What remains to be seen now, though, is whether a third lockout will be the game’s proverbial third strike, with fans too angry, alienated and turned off this time to buy tickets and merchandise and snubbing such emerging marketing devices as the NHL Network and nhl.com.
Another huge income sector possibly damaged: corporate sponsorships. Fan interest could remain strong, but what of the likes of big car companies, beverage and tire makers, insurance providers and big pharmaceutical manufacturers? Many of those sectors grew significantly over the last two decades, especially in the new NHL that emerged following the ‘04-’05 lockout. League bosses and no doubt players themselves will have to work hard to re-engage the game’s biggest spenders.
Of equal importance now to the game, the industry and the fans, however, is for the two sides for the first time in their history to construct a true, meaningful partnership. A CBA is just a document, a business blueprint, but it in no ways defines a culture or spirit of mutual interest. For too long, even pre-dating the first lockout of 1994-’95, players and owners have co-existed in a rancid relationship.
Owners, under the direction of commissioner Gary Bettman, have been too quick to resort to locking the door amid what they’ve contended to be perpetual financial strife. The players, led by a gong show of executive directors, have been too slow in engaging in meaningful CBA dialogue with owners, driven first and foremost by raking every available dollar off the table (not unlike the owners), while refusing to recognize or even acknowledge the quirky financial dynamics inherent in co-crafting a successful business model for 30 teams, 23 of which do business in the US, some of them in very challenged hockey markets.
It’s imperative this time that the NHL and the NHLPA work on their marriage, and not plot, scheme and connive how they’ll sashay into or around another lockout in, say, Sept. 2020 (the eighth-year opt out). Of course, if the fans indeed don’t come back this time, the two sides will have little choice but to work on hockey harmony.
In that sense, fans have always acted as the enablers in the lockout dynamic, their unwavering loyalty ever-emboldening owners to lock the doors and players to resist financial reformation. Some 200 of the rank-and-file, who last season earned an average $2.4 million, bolted to play for very little money in European leagues during the lockout — a move that to some fans and media underscored their indifference toward working toward a resolution here.
Fans are fans, emotional and passionate. But eventually their sensibilites and loyalties can be offended, broken. They’ve been twice burned in these lockouts. If they come back now a third time, owners and players will be extremely fortunate, and they would be absolute fools to take for granted yet again that fans will always, always flock back to the rink.
It will take moderate, smart, even visionary leaders on both sides now to turn a document into a culture of compatability, harmony and growth. Owners and players gave all of that lip service after the last go-’round, but then entrenched themselves in their usual positions, heads buried in ice shavings, all but ignorning one another.
Key to previous dysfunction: the PA tearing through executive directors the way a rookie coach panics behind the bench, tearing up lines and defensive pairings. The PA dismissed Bob Goodenow amid accepting the last CBA. They then tore through the likes of Ted Saskin, Ian Penny, and Paul Kelly, going so far as to remove Kelly in mutinous style as a means eventually to hire Donald Fehr.
They believed Fehr, considered a genius for his leadership of Major League Baseball players, would bring them untold riches, far beyond a 57-percent revenue split, with their next deal. Now they stand at 50 percent, at the cost of losing somewhere between $600 and $800 million in this season’s salaries. Under Goodenow’s direction, they lost some $1.2 billion in 2004-’05 salaries, as well as many more millions in existing contracts beyond ‘04-’05. Fehr at least figured a way not to burn away a full year and he preserved most of what the players currently under contract signed for before the start of this lockout.
There will be extensive spin now from players, saying they stood strong and won this thing. Rubbish. The league was painfully slow in putting a real offer on the table, which was both damaging and lamebrained. But much of the deal agreed upon Sunday was put on the table by owners on Oct. 16, and it then took the PA some five weeks to engage in meaningful dialogue around that offer.
Two weeks of hard bargaining off the October offer could have had the game restored by early November. Heel dragging, forever the DNA of the players’ union, will have erased 10 weeks worth of games, further damaging the image of the game in the public and corporate eye.
But now the healing begins, with fans and sponsors to determine the pace of recovery.
Along with the 50/50 split in revenue and the 10-year term length, the significant parts of the new deal include:
■ No individual player contract shall exceed eight years. Only players who renew deals with their existing teams are eligible for the eight-year max. All others, typically signing as free agents, are capped at seven years. Previously, there was no limit on how long players could sign.
■ Revenue sharing among teams bumped from $150 million to $200 million.
■ Individual team salary cap for this season will be $70.2 million, with a reduction to $64.3 million in 2013-14. Over the length of the CBA, the cap cannot fall below $64.3 million. The new deal allows for a total of two compliance or ‘’amnesty’’ buyouts for ‘13-14 and ‘14-15 allowing clubs to ditch player salary if necessary not to exceed the cap. The buyout figures will not be counted toward the cap. However, they will factor into hockey related renveue (HRR) computations.
■ Each club shall pay a minimum of $44 million in salaries (salary floor), in ‘12-’13 and ‘13-’14.
■ Owners agree to fund up to $300 million toward a “make whole” provision, money that will allow players with deals signed prior to the lockout to earn most, if not all, of their money.
■ Minimum salary, to begin at $525,000, will increase to $750,000 over the length of the CBA.
■ Participation in the 2014 Sochi Olympic Games remains unresolved. To be agreed upon outside the agreement.
■ Player pensions, a late sticking point, will be defined benefit plans rather than defined contributions — putting greater liability on the owners.