Tense times at bargaining table
There’s little common ground when you examine the proposals put forward to this point
TORONTO — The first tense moments of the National Hockey League’s collective bargaining negotiations have arrived.
With Gary Bettman and Donald Fehr not scheduled to sit across from one another until the middle of next week and the sides unable to even agree on the core issues that need to be addressed, a sense of uneasiness has enveloped the talks.
After Wednesday’s session, in which the NHL dismissed the union’s initial proposal, Fehr set off for pre-scheduled player meetings in Chicago. The union boss will also oversee a session with players in Kelowna, B.C., before returning to Toronto and resuming CBA discussions on Aug. 22.
At that point, the league and the NHL Players’ Association will have only 24 days left to reach a new agreement and avoid a lockout.
But where do they start? There is very little common ground between the proposals each side has put forth and neither seems particularly willing to move off its current position.
“What the issues are and how they get solved and how deep the issues go are something that we’re not yet on the same page,” Bettman said Wednesday.
Meanwhile, the hockey world remains on hold — and many are starting to brace for the worst. The Detroit Red Wings announced Thursday that they’re cancelling their annual September prospects tournament in Traverse City, Mich., due to the “uncertainty” surrounding the CBA.
Eight teams had been scheduled to participate.
“We have determined that it is in everyone’s best interest to cancel this year’s tournament,” Red Wings GM Ken Holland said in a statement.
Subcommittees from the league and union gathered Thursday to discuss non-core economic issues such as travel, ice conditions and training camp. Both sides seemed encouraged about the status of those talks, but as deputy commissioner Bill Daly pointed out: “I don’t think that’s where this CBA is going to get cut or not.”
In simple ter ms, the owners want to pay players less — much less. Despite the fact the NHL’s revenues grew from $2.2 billion before the 2004-05 lockout to $3.3 billion last season, a number of teams are still struggling.
The financial success of the wealthiest franchises over the last seven years ended up hurting the poorer ones.
That’s because the salary cap was tied to overall hockey-related revenues and rose dramatically from $39 million in 2005-06 to $64.3 million last season, bringing the salary floor (the minimum teams must spend) up along with it. If next season was played under the current system, the cap would have been set at $70.2 million and the floor would have been $54.2 million.
However, a new deal needs to be put in place before the NHL resumes operations.
Under the proposal put forward by the owners in July, the players’ share in revenue would be cut from 57 per cent to 43 per cent and would include a change to the way the salary cap is calculated. Instead of being set at $8 million above the midpoint (total league revenues divided by 30 teams), the upper limit would be reduced to $4 mil- lion above.
As a result, the salary cap would drop to $50.8 million next season, which is below where the floor currently rests.
The league also called for the elimination of salary arbitration, contract limits of five years (with equal money paid each year, es- sentially eliminating signing bonuses) and 10 years of service before unrestricted free agency kicks in. All of those proposed changes are designed to slow the increase in salaries.
The NHLPA estimated the league’s proposal would cost players approximately $450 million per season.
Rather than making a direct counter-offer, Fehr elected to design his own system. He attempted to appease owners by keeping the hard salary cap in place and putting a drag on salaries by delinking them from overall revenues, but called for an expanded revenue-sharing plan that would see the wealthy teams distribute more than $250 million per season to the poor.
Under the union’s plan, the salary cap would fall at roughly $69 million next season. It would increase to $71 million in 2013-14 and $75 million in 2014-15.
In other words, the owners would only realize significantly more profit in the deal if the league continued to grow at a level beyond the seven per cent it averaged since the lockout. There’s no guarantee of that, especially since the strength of the Canadian dollar has helped fuel the growth.
The offer is based on the premise that the players would give up revenue for three years — the system would revert to the current rules in the fourth — so that the NHL could work on getting its struggling teams on stable footing.
“If there are issues remaining, they are club-specific issues,” Fehr said. “And that if the clubs that don’t need assistance are willing to partner with the players to help get at the issues of the clubs that may need it, we’re prepared to do that. But it’s not a circumstance in which the players are just going to say: ‘Okay, take everything from us.’ ” History is also at play here. The players are still smarting after being locked out for an entire season in 2004-05 before eventually accepting a 24 per cent rollback on salaries and a salary cap. At the time, Bettman repeatedly talked about the need for “cost certainty” to keep the league healthy — something the union eventually capitulated to.
Now in the next round of negotiations, the sides appear to be back where they started and the threat of yet another lockout seems very real.