NHL Lockout 2012: Real Negotiations Begin

When a move toward a 50/50 split is greeted with confetti and wild cheers, you know you’re framing the discussion in the right way.

That’s what the owners did today. After spending the last month telling everyone that they weren’t going to make the next proposal, the NHL bowed to pressure and offered something that was likely closer to their true goal. Now, it seems like something that’s finally reasonable. That’s not bad for a deal that means hundreds of millions in savings to owners.

Let’s be clear: the owners are going to get a good deal out of this no matter what. That was never in question. Moving from 57% to 53% to 50% looks a lot more like progress than if they had started off asking for 50%. But thankfully, it is also a sign that true negotiations have finally begun.

Here’s what the owners would get under their proposal:

• Shifting from 43% of hockey related revenue to 50% means $216 million more per season to the owners if revenue remains as is, even greater savings if there is growth.
• Unrestricted free agency is delayed one more year (to 28 years of age or 8 years of service)
• All contracts limited to 5 years
• Revenue sharing capped at $200 million/

It’s been widely rumored that something around a 50/50 split would be acceptable to both the owners and the players, so this could be the basis of a true deal. However, that’s still asking for a huge concession from the players, and there are several other issues at stake.

What the players want

Now let’s consider what the players have said they want in exchange for shifting those millions the owners’ way. While they naturally want to keep the rights they currently have, these are the two most important points that have come up in talks:
1. Protecting their existing contracts
The players do not want a salary rollback or a large chunk of change taken out of their checks by escrow (which a steep 57% to 50% drop would do). Many proposed easing into the 50/50 split over time, and that seemed like an obvious solution. Instead, the NHL came up with the idea to take the 50% immediately and work out a gradual repayment plan for current deals. They would defer paying some of the money on those contracts to later down the line.
Having some of their money withheld and paid out in the future is clearly less advantageous for the players, but it is at least a nod toward a key sticking point.
2. Greater revenue sharing among the owners

The owners’ latest proposal had only a little movement on this score, and that could be a problem.
The players wanted $250 million in revenue sharing, and the owners budged $10M more in their direction. That’s still a $50M divide.
As much as Bettman likes to claim that the NHL is the most competitive league, the NFL has a clear lead in this department. Right now, hockey has an NFL-style cap without NFL-style revenue sharing. Small market NHL teams would benefit from both. If the owners could do more to help their own struggling teams, the NHLPA hopes, the cycle of constant lockouts could be broken.
The problem is that the wealthiest owners at the top loathe the idea, and it only takes eight of them to out-vote the rest due to the NHL’s bylaws. However, more revenue sharing would result in a healthier league. More than one economist has made this point:

The NHL (along with the NBA) has the weakest revenue-sharing provisions in North American sports. In contrast, the NFL not only shares broadcast revenue equally between all the teams in the league but also money from ticket sales. Forty per cent of gate revenue goes into a league pool that is shared evenly.

If the NHL were really worried about the survival of small markets, this type of redistribution would solve the problem. In the NFL, the small-market Green Bay Packers can compete financially with the big-market New York Jets.

Owners are asking players to sacrifice for the stability of small market teams, but redistributing money between the owners would achieve the same goal.

Bettman never wants to discuss this topic, whether he’s claiming it’s a “distraction” or denying the two sides differ much at all. But revenue sharing did merit a full sheet of questions in Frank Luntz’s survey on their behalf. That tells us the NHL is wary of how the public will view this fight. The owners don’t have a strong case there at all.
The question is how far the players will be willing to go. Most fans don’t care about what kind of deal is made, they just want hockey. A minority group of owners have an easy way to block change. On the other hand, the players do not relish facing yet another lockout six years down the road. Neither do I.

Right now, it looks like we could see a season. The next ten days will tell us everything.

What do you think the players should do?