2012 CBA Negotiations Thread

[bustaheims]

But isn't that exactly what the NHL has done as well? It seems to me that you think it's OK for the NHL to do that but not the PA.

To a point, sure, but, the NHL is working within a framework that PA has previously accepted, whereas the PA is proposing a framework that the league has continuously rejected.

 

[Kin]

I never said the league's position was necessarily reasonable, just that coming in with proposal that you know beforehand are not going to be accepted, don't really show signs of having listened to the other side in previous negotiations and only deal with one of the issues on the table isn't exactly using the league's previous offer as a starting point, nor is saying that it could be or framing your offers that don't necessarily ever reach 50/50 before they expires

Well, then at that point I genuinely have to question what you think a "starting point" is. The starting point of a marathon is miles away from the finish line but it's still where everyone meets up. You're right, the NHL's position and their intransigence makes the PA's offers meaningless in exactly the same way the PA's position and intransigence made the NHL's proposal meaningless.

Both offers were largely for public consumption but it's plain as the nose on one's face that the PA's offer used that 50/50 split as the "starting point" for their offers that, yes, did end up being far away from that starting point.

 

[bustaheims]

Well, then at that point I genuinely have to question what you think a "starting point" is. The starting point of a marathon is miles away from the finish line but it's still where everyone meets up. You're right, the NHL's position and their intransigence makes the PA's offers meaningless in exactly the same way the PA's position and intransigence made the NHL's proposal meaningless.

Both offers were largely for public consumption but it's plain as the nose on one's face that the PA's offer used that 50/50 split as the "starting point" for their offers that, yes, did end up being far away from that starting point.

Until they start speaking the same language about things, they're running in different races. That's why I don't consider it a starting point. And, for the record, I consider the PA's percentages to be pretty much meaningless, because, they're estimations and are only valid if growth is is 5% or greater, but less than 7.1%. Their proposals included caveats that would see the players get 61% of growth if growth exceeds 7.1%. Anything less than 5%, and the player's share exceeds 50%. Anything greater than 7.1%, and the player's share exceeds 50%. They like to talk about a 50/50 split, but I don't see any real commitment to achieving one.

 

[Kin]

To a point, sure, but, the NHL is working within a framework that PA has previously accepted, whereas the PA is proposing a framework that the league has continuously rejected.

But you have to acknowledge that this is a very different PA than the broken one that negotiated the last CBA. It would be just as legitimate for the PA to try to go after the cap by saying it fits within a framework that the league accepted in 94/95.

 

[Kin]

Until they start speaking the same language about things, they're running in different races. That's why I don't consider it a starting point.

Well, with all due respect, that's again saying that the NHL's position should dictate the course of the negotiations simply by virtue of it being the thing they're stubborn about. If the NHL isn't even willing to entertain a give and take that approaches the issue creatively then they're not really bargaining in good faith.

 

[bustaheims]

Well, with all due respect, that's again saying that the NHL's position should dictate the course of the negotiations simply by virtue of it being the thing they're stubborn about. If the NHL isn't even willing to entertain a give and take that approaches the issue creatively then they're not really bargaining in good faith.

That's valid, but, at the same time, the PA showed absolutely no willingness to discuss any of the non-economic issues. I honestly believe that the league might be willing to consider conceding linkage if the players were willing to concede on the major contractual issues (because, really, a fixed cap would probably be in the league's interests if they received some other contractual certainties). I'm not sure I could say the same about the players.

 

[Kin]

That's valid, but, at the same time, the PA showed absolutely no willingness to discuss any of the non-economic issues.

I don't think we necessarily know that to be the case and, either way, I think that's something that largely has to do with context. Yes, the PA seems reluctant to discuss about the non-economic issues when that discussion is, again, the NHL grabbing with both hands and not making any concessions but we don't know what the PA would be willing to discuss if it was an issue of creative give and take. Maybe they'd be willing to compromise on contract length in return for a lower UFA threshold.

But no, the NHLPA does not seem willing to talk about those things when the basis for the discussion is the NHL saying "We want this and this and this and this and this and this and a train set."

 

[crazyperfectdevil]

i'm not quite sure why we can't just agree that both sides are A-holes and be done with it

 

[Kessel Run]

i'm not quite sure why we can't just agree that both sides are A-holes and be done with it

Agreed. Who cares, get this over with. The couple hundred million they are arguing over will be moot in a couple of years at 5-7% growth.

 

[OldTimeHockey]

How so?

What starting point should he of started with? Come in with 3 offers that start at 50/50? That's not negotiating, that's caving.

The PA, found a way to bring it down to the magic 50/50 the owners wanted. Perhaps not the immediate demand of 50/50 the NHL wanted, but a path to it atleast. The owners spat on it and walked away.
The NHL basically got up and said, "our offer isn't a starting point, our offer is the be all and the end all."

A starting point would have been coming in with an offer that doesn't rehash the same system the league has emphatically told him is a deal-breaker, and, at the same time, perhaps he shouldn't have refused to discuss the non-economic issues. The reason the league walked away so quickly was that they had already said no to the basics of the framework Fehr was proposing. At that point, unless the numbers he was offering were radically in the league's favour, there was no reason to negotiate.

I don't get it. The PA had also already said no to a straight off 50/50 deal..but the league felt they had saved the world when they came out with the offer. At least the PA pretended to be interested in the League's deal.

They're both playing ping pong, but unfortunately for the fans, instead of hitting the ball, they keep smacking each other in the groin.

 

[bustaheims]

I don't get it. The PA had also already said no to a straight off 50/50 deal..but the league felt they had saved the world when they came out with the offer. At least the PA pretended to be interested in the League's deal.

And how exactly does that make Fehr more upfront and honest than Bettman? If anything, Bettman was much more honest about how he felt about the PA's proposals than Fehr was about the league's.

 

[OldTimeHockey]

I don't get it. The PA had also already said no to a straight off 50/50 deal..but the league felt they had saved the world when they came out with the offer. At least the PA pretended to be interested in the League's deal.

And how exactly does that make Fehr more upfront and honest than Bettman? If anything, Bettman was much more honest about how he felt about the PA's proposals than Fehr was about the league's.

Not really, Fehr said right from the start that they would look the offer over and have a conference call to discuss it. He then came forward, after looking the offer over, and said, it's an offer, but there's lots of work to do(completely paraphrasing.)

 

[Kin]

It might could be more posturing but the NHL is saying they'll withdraw their offer tonight:

http://espn.go.com/nhl/story/_/id/8551281/nhl-withdraw-proposal-once-deadline-passes

 

[Chev-boyar-sky]

It might could be more posturing but the NHL is saying they'll withdraw their offer passes]http://espn.go.com/nhl/story/_/id/8551281/nhl-withdraw-proposal-once-deadline-passes[/url]

I hate it when people take away things I never wanted in first place.

 

[crazyperfectdevil]

that offer was no good once the possibility of a whole season being played passed...assuming the NHL was truthful about when the deadline for that was.

 

[cw]

Anything beyond that is probably doubling down on 2005 stupid - particularly when unlike 2005, there is little philosophical at stake - just greed and ego.

It's interesting. I've heard people say something similar when they were talking about these negotiations and, specifically, they've said it in the context of how they thought a deal would be done with relatively little acrimony because this is just a dispute over numbers as opposed to philosophy.

But I think that kind of masks where the PA is on these deals. I don't think it takes much scratching past the surface to realize that the PA very much dislikes and resents the cap and that, while they probably realize they can't get rid of it in these negotiations, I still think it's very much informing the way that they look at what the owners are offering.

I think that's why some people don't understand why there doesn't seem to much of a middle ground being sought with regards to things like the individual negotiating rights. I think the players see any changes there as being symbolically important and representative what they "won" in the 04-05 lockout and likewise, I think it's why there seems to be more intractability than one would assume when most people seem to think that the nuts and bolts finances of the deal will, at some point, look like a 50/50 split.

Maybe I've misunderstood but when I looked over their three options most recently presented:
http://www.cbc.ca/sports/hockey/opinion/2012/10/crosby-and-fellow-players-miffed-at-nhls-quick-rejection.html
NHLPA Option 1 - Fixed Shares
... In years four and five, NHLPA would accept 50 per cent of HRR as long as players' share wouldn't fall below the third year's level.
..
NHLPA Option 2 - Milestones
... The faster revenues grow, the faster players' share goes to 50 per cent
..
NHLPA Option 3 - - Make Whole
...Takes the players' share to 50/50 immediately.

All three of those NHLPA options, like the NHL offer they responded to, made reference to getting to the 50/50 split in some fashion. Although you don't feel they have much to do with it, I think the recent NFL and NBA CBA deals coming in around 50/50 have plenty to do with it as well. Both those leagues are stronger financially so there's close to zero chance the NHL players will do measurably better no matter what they or anyone in the media might think right now.

From that, I can certainly understand why most folks might think they'll wind up with something close to a 50/50 split - because it's in the language of all the offers.

As for what they "won" in the last deal, as I recall, it was a contract derived from collective bargaining where the two sides start out with close to nothing and evolve to an agreement. In that evolution towards a deal in 2006, most would say that the players "lost" because they took a financially justified cut in pay. But the players "won" in that they still have a NHL to play in because the system they had was not financially sustainable. And all of the players who appeared in the NHL between 2006 and 2012 made more money under that deal than half the NHL teams they played for. And their salaries have risen decently from a $39 mil cap to maybe a $60-70 mil cap.

There isn't a single clause in an old CBA guaranteed to survive the next collective bargaining session. It's all a process of give and take. When a business performs poorly financially, the workers have to give some stuff up. I don't see a union of players any differently in that respect. The NFL and NBA players just went through that. Where the NHL and it's players have been is a reference point but not a rigid contractual foundation that must be carried forward into the future.

This argument seems to come down to how quickly they'll get to a true 50/50 split - an argument about the cost of transition = money. The other issues like individual contract rights are still there and have to be settled but the vast majority of those are also just about money.

It's the NHL's turn to respond to the NHLPA's offer. I suspect the next offer from the NHL will be less than what they had on the table this week because games are now being lost and the money pie gets a little smaller every day.

Maybe they'll talk about amnesty like the NBA did to facilitate a transition. That could save the NHL a few hundred mil though players like Dipietro or Redden or even Luongo could lose some big, guaranteed dough.

 

[cw]

I ran consolidated numbers for the last CBA through to 2011. Forbes has tended to guess a little high and their numbers claim to take revenue sharing into account.

Under the last CBA, after revenue sharing, without Toronto, Montreal & the Rangers, the NHL is basically a break even league. Forbes estimated revenues for 2012 at $3.3 billion so $114 mil operating profit is a puny 3.45% and after interest, taxes, depreciation, and amortization are tacked on, probably close to nothing or a net loss. If the Canadian buck shifts a bunch, it can get uglier quickly. Half the NHL teams lost money over the life of the deal.

The financial facts are beyond any reasonable debate: as player salaries are by far the largest league expense, the players have to give up some salary to help correct this. To the players credit, floating something around 50/50 in their proposals acknowledges this.

According to Forbes, who have kept repeating it so many times, I'm beginning to accept it, the league revenue sharing was $150 mil last year. Like the NBA as one example, the NHL is top heavy in profitable teams but the spread to the bottom is about 10% worse. Lopping off a couple of teams doesn't really solve the problem - they're still worse off than the NBA and it could cost the NHL low hundreds of millions to shed those teams. Although I agree that the NHL needs to do more revenue sharing, the NHL are approaching some real limits to that when league profits get as tiny as 3.45% unless one advocates that the big market teams don't deserve to make money and the league should be dedicated solely to line the pockets of the players. Once you go there, you might as well fold the league because owners won't invest in that situation indefinitely. There are financial limits to their egos. With the player salary reduction to a respectable 50/50, that will result in more revenue sharing to help. Rogers/Bell paid a bundle for the Leafs. If the reward for that massive investment is to take a big hunk of those profits and give them to the small market teams, that would be a disaster for seeking future investment in the league - and in the end, ultimately hurt the players and the league.

What bothers me about the proposals to date is the cap floor. Combined with player salary reductions and revenue sharing, it seemed to be an obvious third leg of what could be done to help correct this league financial problem. The NHL seems to be clinging to arriving at the cap floor as $16 mil below the cap in an effort to achieve competitive balance and press teams receiving revenue sharing into better financial performance.

Between 2006 and 2011, NHL revenues increased 36%. The top 10 profitable teams saw a 48% average increase after revenue sharing. The bottom 10 losing teams saw a 21% average increase after revenue sharing. So the big market, profitable teams are continuing to out perform the small market teams even with revenue sharing - the divide continues to get wider. To some extent, I think that is to be expected under the circumstances - particularly with the US economy.

What that $16 mil to cap floor formula has done is raised the minimum cap floor payroll 88.7% on the small market teams who only saw an increase in revenues of 21%. The difference between a cap floor that is 59% of the cap in 2006 and a cap floor that is a fixed $16 mil below the cap (77%) is $7.6 mil in 2011. That $7.6 mil difference or a portion of it could flip a lot of the losing teams in 2011 into being much closer to break even or maybe even making a few bucks.

Not all teams would reduce spending to the cap floor and therefore, not all teams would see all of that $7.6 mil savings every year. But it could save the small market teams some significant bucks over the life of the deal. And during the next negotiation, the players won't face a league saying "18 teams lost money last year".

Any business seeing a 21% increase in revenues cannot perpetually sustain an 88% minimum increase in payroll. Something else beyond player salary reduction and revenue sharing has to give.

The cap and cap floor have almost no impact on what the players get. The players get a % of NHL revenues no matter what. If the NHL under spends on salaries, the players get prorated bonuses. So a lower cap floor has little or no impact on the players pay.

If the league is having the financial problems the numbers seem to show, I don't understand why the cap floor can't rise with revenues like the cap ceiling. Sacrificing a little competitive balance doesn't strike me as a horror for a league where nearly all teams made the playoffs during the last CBA - except the top revenue team in the league.

I haven't determined exactly what the cap floor number would ideally be but I think the $16 mil formula is bad for all parties concerned. I don't understand why Fehr hasn't gone after it.

 

[bustaheims]

I haven't determined exactly what the cap floor number would ideally be but I think the $16 mil formula is bad for all parties concerned. I don't understand why Fehr hasn't gone after it.

I also don't understand why the owners haven't, either. Before this all started, I just assumed that expanding the gap between the floor and the ceiling was going to be part of their plan, as it gives the smaller market teams some salary relief while also potentially allowing the larger market teams to flex a little more of their financial clout. I mean, if the mid-point is supposed to be the player's share/30, lowering the minimum allowed payment would logically result in raising the maximum allowed payment in an effort to maintain/achieve a league average as near to that mid-point as possible, would it not? I know the league is big on parity, but, as you've said, something has got to give here.

 

[Kin]

All three of those NHLPA options, like the NHL offer they responded to, made reference to getting to the 50/50 split in some fashion. Although you don't feel they have much to do with it, I think the recent NFL and NBA CBA deals coming in around 50/50 have plenty to do with it as well. Both those leagues are stronger financially so there's close to zero chance the NHL players will do measurably better no matter what they or anyone in the media might think right now.

I think that's a slight misrepresentation of what I've said. I absolutely agree that what we saw in the recent NBA and NFL negotiations are telling in terms of what I think we'll eventually see the deal between the NHL and the PA be. What we disagree on is the why of the matter. You seem to be arguing that there's a direct relationship between the financial health of the league and the deal that their players have. I don't think the evidence supports that. The NFL, which is by far the most profitable league in North America, also has the labour deal that on the surface is the worst for it's players with the lowest share of revenue, a hard cap and non-guaranteed contracts.

Also, I'd dispute your contention that the NBA is stronger financially than the NHL. More in revenues, yes. But when the NBA negotiated their last deal they did so while claiming, as a league, hundreds of millions of dollars in losses. The NHL, at least according to Forbes, as a league is turning a very modest profit.

There isn't a single clause in an old CBA guaranteed to survive the next collective bargaining session. It's all a process of give and take. When a business performs poorly financially, the workers have to give some stuff up. I don't see a union of players any differently in that respect. The NFL and NBA players just went through that. Where the NHL and it's players have been is a reference point but not a rigid contractual foundation that must be carried forward into the future.

I'm glad you said this because I think it touches on why there's a lot of disagreement on this issue. I think there's a tendency to see this dispute very much along the sort of modern left-right economic theory spectrum with people seeing this as a traditional disagreement between labour and management. So depending on how they see labour in general they're trying, in my opinion, to kind of awkwardly see this in that same light. Owners deserve a certain amount of profit, or not, based on their capital investment and players deserve a certain percentage that is then inextricably linked to that profit or lack thereof.

I genuinely don't see it that way. I think that's a little simplistic. We're not talking about members of the UAW down at the Ford plant and it's a little silly to pretend we are. Players aren't really labour in that sense. They're product as much as anything. My interest in hockey, as a consumer, is related chiefly to the individual talents of the players. When I buy a ticket to see an NHL game it's because of their ability. They aren't replaceable without a seriously detrimental impact to the quality of the product being offered.

I mean, from my perspective, my point of view on the economics of sports is me at my right wingiest. I turn from a Keynesian believer in social justice into a full-on believer in the corrective power of the free market and dogs eating dogs. Player costs too high? Choose to cut them, a choice that the previous CBA essentially took away from a lot of the money losing clubs. A team in Columbus can't compete with a team in New York? Welcome to the real world. Competitors fail. I pay the league's highest ticket prices? I should get to see one of the league's best teams, or at least one with a heck of an advantage to getting that way.

But the NHL is afraid of the market, sports leagues are in general. Why is that? I mean, the owners are all smart men who made fortunes in our relatively free markets. Why so terrified to let it into sports? Well, there are two major reasons and they both kind of drill holes in what you're floating. The first is that the NHL is not "a business". It's a league of businesses that compete with each other and have very different financial realities, both factors which dictates the cost of players that wouldn't really be true in any other circumstance. This creates a problem, especially for a league hell bent on "parity". Players are worth, in real dollars, different amounts from market to market. Juggling those realities is very difficult and the decision the NHL has made is to try and create a wholly artificial market where we have to pretend that a hockey player in Phoenix is worth as much as a player in New York. The cuts you're talking about make sense in Phoenix, they don't in Toronto. A real business would address the issue with a scalpel, removing and reducing their unproductive areas. The NHL is trying to fix their problems with a sledgehammer, arguing that every team need an across the board cut in expenses, no matter how profitable the team is. That just doesn't pass the smell test.

The other problem, probably the more significant one, is the one you and I have discussed at length before. That X factor in the market place that leads to a lot of bad business decisions being made. I think there's no better proof of it then the entire framework of the previous CBA. You say the NHL is a struggling business. You say that struggling businesses often cut expenses. Alright, but answer this then, how many struggling businesses do you know that would find it necessary to demand an agreement, regarding labour or anything, in which a major portion of it revolves around contractually limiting the amount of money they are allowed to choose to spend. That's different. That speaks to the fact that A) we're dealing with 30 businesses here and B) owners do not always let prudent financial instincts dictate their decisions. Here's Dan Gilbert, owner of the Cleveland Cavaliers on this very subject matter:

To me, NBA franchises are like pieces of art... If you just looked at the Cavaliers in terms of revenues, profits and balance sheets? and you paid this amount for it ? people would say 'You're insane! You're nuts.'

It's an old argument between us but I just don't think you can look at these balance sheets and ignore that very real factor. . I'd be fine with the NHL cutting their player costs in half, heck far more than that provided it was something individual owners decided regarding the economic reality they faced. Owners clearly run their sports teams differently than they do their other businesses. They have a very different relationship with players than they do their other employees(unless, of course, you think Craig Leopold often appears at press conferences when he hires new telemarketers).

So, no, I just can't buy the argument that players are labour like any other Union members and that the NHL is a "business" like any other. That just is not a reflection of the reality I see.

Maybe they'll talk about amnesty like the NBA did to facilitate a transition. That could save the NHL a few hundred mil though players like Dipietro or Redden or even Luongo could lose some big, guaranteed dough.

A minor point but I don't think you entirely have the NBA's amnesty clause down. None of the players amnestied in the NBA lost dollar one by being waived. They still get paid, and by the team that signed them unless they're claimed, they just come off the cap. What you're talking about here seems like just allowing a franchise to dissolve any contract they wanted.

 

[hockeyfan1]

"Get it done"...in the words of U.S. President Obama, on the NHL lockout.  See story

http://www.cbc.ca/sports/hockey/nhl/story/2012/10/25/sp-nhl-lockout-obama-leno-world-series.html