Wednesday, October 31, 2012

NHL Armageddon 2012: tough times for everyone

The National Hockey League reportedly is set to cancel one of the league’s marquee events -- The Winter Classic currently scheduled for January 1, 2013. The NHL has booked Michigan’s 115,000+ football stadium, hoping the Toronto Maple Leafs will be meeting the Detroit Red Wings. If the league cancels the game on or before November 2 (Friday), the school will return the $100,000 deposit the NHL has made to the school.

Before the NHL can consider holding The Winter Classic, the league first has to reach a new labor accord. The NHL and the NHL Players Association are no closer today than they have been since talks broke down on October 18 in agreeing to a new collective bargaining agreement. There are many hockey insiders who suggest if the Winter Classic is canceled; the cancelation of one of the league’s showcase events would be seen as a harbinger of bad news.

If the NHL labor dispute is settled and the league begins its 2012-13 on or before January 1, the Winter Classic would serve as the perfect opportunity to reintroduce the NHL. The NBA used a five-game Christmas Day schedule last year to help bring the NBA back after their lockout delayed the start of the 2011-12 NBA season.

NBA Deputy Commissioner Bill Daly told The New York Times: “We aren’t commenting on the timing of the Winter Classic announcement. It will (or won’t) be made if and when necessary.”
But he added, “I can certainly confirm that if the game is canceled, there is no ‘resurrection’ scenario for this year.”

Daly’s thinking and the NHL’s doesn’t make a great deal of sense. The Winter Classic does take a great deal of planning and if the event moves forward the NHL likely needs at least four to six weeks to put all of the necessarily pieces in place to hold the event. But canceling the event two months before it is scheduled to take place might seem a little premature on the NHL’s part.

“There are so many arrangements associated with an event of this magnitude — about 109,000 tickets have already been sold,” Brian Cooper, the president of the Toronto sports management company S&E Sponsorship Group said in a New York Times report. “For companies attending the game or doing business there, you’ve got to book hotels, transportation. There are bands playing that have to book dates. All that has to be in place six to eight weeks in advance at the latest.”

It is in the NHL’s best interests to move forward with The Winter Classic if their labor dispute is settled on or before December 1. Brian Cooper’s sentiments aside, plans for the 2013 Winter Classic include a series of events at Comerica Park (the home of the American League champion Detroit Tigers) and other events in the Detroit area. The event is very important to Detroit who like to call their city “Hockey Town”.

Those events include games between Red Wings and Maple Leafs alumni, as well as A.H.L., N.C.A.A. and junior games. The first of those games at the Detroit baseball stadium is scheduled for Dec. 27, with a doubleheader involving Michigan, Michigan State, Western Michigan and Michigan Tech.

In terms of the NHL and the NHLPA moving forward and working towards a new CBA, the two sides haven’t met since their hour long meeting held at the NHLPA’s Toronto offices on October 18.
Don Fehr the NHLPA’s executive director was in Minneapolis Monday where he was meeting with 30 NHL’ers updating his membership on were the lockout currently is. NHL players have now missed two paychecks – they’ll lose their third paycheck next Monday, November 5.

Speaking with The Minneapolis Star Tribune’s Michael Russo, Fehr suggested some of his membership are experiencing some genuine fear the entire 2012-13 season could be lost to the lockout. Russo asked Fehr NHL’ers are worried about the money they’re losing and if some hockey players are ‘frightened’?

“Yeah. … But that doesn't mean you make a bad agreement because of it.”
Fehr is right in saying you don’t sign a bad labor agreement because you are losing money but sooner rather than later more and more NHL’ers are going to realize they stand to lose a great deal of money they’ll never see again.

The average NHL salary is $2.4 million. The average NHL career is between 4 and 5 NHL seasons. The minimum NHL salary is $500,000. The National Hockey League has canceled 25% of the current NHL season.

Simply mathematics explain why fear and loathing is about to become the new NHLPA mantra. Fear realizing that for the second time in eight years the National Hockey League may lose an entire season to a labor dispute, loathing directed at NHL owners determined as they did eight years ago to break the NHLPA and force players to accept a CBA the owners want the players too.

Most of the more than 800 current active NHL players either missed the 2004-05 season or understand the impact a lost NHL season had on NHL players through what they were told by current and former NHL teammates. The millions of dollars most NHL players stand to lose is money they will never be paid – never.

On October 16 NHL commissioner Gary Bettman put forward a proposal offering ownership and management share all Hockey Related Revenue (HRR) on a 50/50 basis. The initial offer the owners made to the NHLPA in early July called for the split to be 43% for the players and 57% for the owners. The players have been steadfast in their demand that all current contracts be honored at their full dollar value and a gradual decrease in their share over the lifetime of the agreement from the current 57% to 50%.

The owners have suggested they are ready to honor current NHL contracts. The NHL hasn’t been clear as to how that can take place and only offer the players 50% of the HRR. The NHL can keep a larger percentage of the annual escrow payments the players make into a fund that is held in trust. Based on HRR the escrow payments are paid to the players or the owners at the end of the season. As is so often the case players who either don’t have long-term contracts, are unsigned or are currently playing junior hockey that will be impacted once the NHL and the NHLPA agree to a new CBA.

The owners as expected withdrew their 50/50 HRR revenue split Thursday night after the NHLPA refused to accept the owners October 16 offer. Gary Bettman is preparing a new offer for the NHLPA one that is expected to include the owners offering the players 47%, while the ownership keeps 53%. The regressive move by the owners follows a similar tact David Stern sent to Billy Hunter and the NBA Players Association when labor talks in their dispute broke down last November.

The two sides in the NBA dispute settled on a 50/50 split over the 2011 American Thanksgiving holiday weekend. Watch for a similar timeframe and resolution in the current NHL labor battle, a settlement in time to save part of the 2012-13 NHL season.

For Sports Business News this is Howard Bloom

Labels: , , , , , , ,

Tuesday, October 30, 2012

The NBA – a league of haves and have-nots

National Basketball Association commissioner David Stern last week announced he would be was stepping down on February 1, 2014. Adam Silver will be the NBA’s next commissioner. One of the biggest challenges Silver will face the growing disparity between big market teams and smaller market franchises – a growing issue for the NBA.

When 2012-13 National Basketball Association tips off tonight, the Miami Heat and the Los Angeles Lakers are the prohibitive pre-season favourites, the Heat to win the NBA’s eastern conference and claim their second consecutive NBA title, the Lakers to meet the Heat in the NBA Finals after they win the league’s western conference championship. Both the Heat and Lakers dramatically added to their rosters in the off-season. The team the Heat met in the 2012 NBA Finals the Oklahoma City Thunder took their own dramatic step, trading James Hardon Sunday to the Houston Rockets.

The trade is what the business of basketball is about and offers a window into what NBA maybe evolving into -- larger market teams being able to attract talent and smaller market teams unable to hold on to the players they draft and develop.

The Thunder had offered Harden a multi-year agreement that would have paid the NBA’s sixth man of the year $55.5 million. Harden wanted a contract that would have guaranteed him $60 million, the maximum allowed according to the NBA’s collective bargaining agreement. The two sides faced a Wednesday midnight deadline to reach an agreement. If they failed to reach an extension to Harden’s current contact he would have played the 2012-13 season under his current agreement and become a free agent at the end of the season.

"We wanted to sign James to an extension, but at the end of the day, these situations have to work for all those involved. Our ownership group again showed their commitment to the organization with several significant offers," Thunder general manager Sam Presti said in a statement.

"We were unable to reach a mutual agreement, and therefore executed a trade that capitalized on the opportunity to bring in a player of Kevin's caliber, a young talent like Jeremy and draft picks, which will be important to our organizational goal of a sustainable team."

Harden joined Kevin Durant and Russell Westbrook on the 2012 United States Olympic basketball team. Both Durant and Westbrook along with Serge Ibaka have long-term contracts with the Thunder. The Thunder has committed more than $200 million to Durant, Westbrook and Ibaka through the 2016-17 NBA season, reluctantly they were ready to offer Harden a long-term contract worth $55.5 million.

The NBA has a salary cap, but unlike the National Football League and the current National Hockey League (which both have hard salary caps that cannot be exceeded) the NBA has a soft salary cap. Teams can exceed the NBA salary cap. If they decide exceed the salary cap they pay a tax of $1.50 for every dollar that exceeds the cap. The tax increases every year the team is over the cap. If the Harden had accepted the Thunder’s offer, the Thunder would have committed more than $62 million annually to Harden, Durant, Westbrook and Ibaka – putting the team near the NBA salary cap and unable to make any major personal decisions if one of the players became injured and was unable to play.

The Los Angeles Lakers will pay the NBA more than $30 million in luxury taxes after their payroll for the 2012-13 season is added up. The tax for exceeding the NBA’s payroll doesn’t include the $19 million in revenue sharing the Lakers are already being forced to pay the NBA.

The Lakers projected 2012-13 team payroll - $100 million. The Lakers will generate more than $90 million in ticket sales and are in the first year of a local television agreement with Time-Warner Cable that pays the Lakers $120 million annually. The $30 million luxury tax, nothing more than the cost of doing business for the Lakers. And if the Lakers 2013-14 payroll remains around $100 million their luxury tax next year will exceed $85 million.

"It damages the Lakers a lot because they're projected to pay $49 million, which sucks up a lot of the money they're getting from the Time Warner contract," said NBA salary-cap expert Larry Coon in a Los Angeles Times report. "Luckily, they got that contract in order to pay for the revenue sharing.

"They needed to bring player expenses down but also level the playing field. They figured revenue-sharing would do that," Coon said. "Combine that with progressive luxury taxes coming next year and it's getting to the point where few teams will be able to spend."

The Thunder offering Harden $55.5 million would have been a mistake. Durant, Westbrook and Ibaka give the Thunder the core of what will be a very good NBA team. Harden provided a ‘spark’ whenever he came off the bench for the Thunder, an important player but a player the Thunder didn’t need long-term.

The Thunder do not have a local television agreement that pays them the $120 million the Lakers will receive from Time Warner. As much money as the Lakers l generate from projected ticket sales and television revenues this year ($210 million), it remains to be seen if the Lakers will allow their payroll to be anywhere near $100 million next year given that they’ll be forced to pay a luxury tax that exceeds $85 million if they do.

Did the Oklahoma Thunder make the right decision in not agreeing to Harden’s demands trading one of their star players – yes they made the right business decision for their franchise. The Thunder picked up Kevin Martin, Jeremy Lamb and three draft picks. Martin is in the last year of his contract,

Lamb is a rookie and the three draft picks represent future talent. The financial commitment is minimal given Lamb is a rookie and Martin is set to become a free agent. If the Thunder had kept Harden their payroll would have been tied up for the next four seasons, now they have flexibility. The Thunder are a smaller market NBA team, a franchise that doesn’t generate the dollars bigger market teams like the Los Angeles Lakers do. The Thunder cannot position their franchise to be locked into four major long-term player contracts.

The Lakers have already committed almost $77 million to Dwight Howard, Kobe Bryant, Pau Gasol and Steve Nash next year (assuming they sign Howard). The Lakers enjoy the benefits of $210 million in ticket and local television and that doesn’t include the revenue the Lakers receive from the NBA’s national television agreement. Tens of millions of luxury tax dollars for the Lakers, the cost of doing business in a major NBA market.

The current six-year NBA CBA signed last December was going to create a level playing field, where the small market (Oklahoma City) and bigger market (Los Angeles) could compete on a level playing field.

On the surface that may not appear to be what is taking place – the haves (the Lakers) can spend like drunken sailors, while the have-nots (the Thunder) are always saving for a rainy day.

Both teams made the best business decisions, the best boardroom decisions for their respective franchises – however basketball games are played on a basketball court and not in a board room. The 2012-13 NBA season is set to tip-off, if the Thunder manage to do what they did last year, make it to the NBA Finals, denying the Lakers the chance to get there, the Thunder will be both prudent spenders and a very good basketball team.

For Sports Business News this is Howard Bloom

Labels: , , , , , , ,

Monday, October 29, 2012

Lance Armstrong – the ugliest American

Lance Armstrong’s lost legacy will forever remain the millions of dollars he helped raise for cancer research and the hope he offered cancer survivors and their families. Gone forever is anything good Lance Armstrong has accomplished. Lance Armstrong’s lasting legacy will be as the ugly American, a man who personified some of the worst characteristics a man can have, a man who cheated, a man who bullied others. Lance Armstrong is the poster boy for what is wrong with the sports industry and sadly the world we live in.

In the last few weeks as has been well documented, Armstrong remained defiant throughout the years he was accused of using performance enhancement drugs, bullied and threatening anyone who challenged his honor. Armstrong has done irreparable damage to his reputation, is facing the loss of millions of dollars he will be forced to pay the Tour de France prize money he never earned for cheating his way to seven Tour de France titles, and millions of dollars in related prize money. Sadly The New York Times reported Lance worth more than $125 million will manage to retain most of the millions he earned.

Armstrong earned most of his money (more than $100 million) from his sponsors: Nike, Anheuser-Busch, Oakley, Trek Bicycles and smaller brands like FRS, an energy supplement, and Honey Stinger, a maker of organic waffles. Armstrong’s sponsors ended their business relationships with the disgraced icon.

The sponsors can sue Armstrong if a “morality’s clause” was included in their agreements. Morality clauses have become standard in most endorsement agreements. The clause protects companies if during the lifetime of the agreement the endorsee does damage and harm to the image of the company. More often than not the clause allows companies to end their contractual obligations but rarely offer companies the right to ask for their sponsorship fees back. Armstrong’s sponsors exercised that option in their contracts.

David B. Newman, a partner in the law firm Day Pitney told The New York Times: “They’d have to spend a lot of money to prove these allegations,” Newman added. “From a return on investment, you’d spend a lot of money on lawyers and lawsuits, and more publicity can’t help your product.”

He added, “They don’t walk away happy, but they’ll say, better to cut our losses now.”

When asked what Mr. Armstrong would do if his sponsors sued him for damages, Tim Herman, one of Armstrong lawyers, told the Times, “We don’t have a plan for that, because I do not expect that to happen.”
SCA Promotions a Dallas based company is expected to go after Armstrong for $7.5 million
Armstrong won in a 2006 lawsuit against the company, and an additional $4.5 million they paid Armstrong.

Armstrong successfully sued the company after SCA refused to pay a $5 million bonus Armstrong was owed for winning the 2004 Tour France his six of seven fraudulent titles. Armstrong was awarded the $5 million insurance policy the United States Postal Cycling team purchased in advance of the 2004 Tour de France with SCA against Armstrong winning the Tour. The additional $2.5 million represented the court costs which Armstrong was awarded when he won the lawsuit.

“There is no revisiting that,” Herman said in the New York Times report. “If everyone who had settled a case finds out something later on and they want to renegotiate or relitigate, the system would break down. The point is, the agreement is unequivocal. There is no going back.”
Herman is simply saying what is in the best interest of his client – Lance Armstrong.

Jeffrey Dorough, SCA’s corporate counsel, told the New York Times the firm was preparing a letter to Armstrong demanding that he return $12 million — the $7.5 million and an additional $4.5 million it paid for a previous victory.

“It is inappropriate for him to keep any bonuses that were contingent on him being the champion of the Tour de France,” Dorough said. “We’re hoping he’ll respond to our letter.”

During the 2006 lawsuit Armstrong offered sworn testimony that he had never used performance enhancement drugs, allegations that have since been proven false after 11 of Armstrong’s teammates and 15 support personal associated with Armstrong’s seven Tour de France titles offered sworn testimony to the United States Anti-Doping Association that Armstrong had used performance enhancement drugs.

“In any deposition, if he would deny the usage of performance-enhancing drugs, he would open himself up to criminal prosecution for lying under oath,” said Andrew Stoltmann, a lawyer in Chicago who has represented professional basketball, football and baseball players in the New York Times report. This would be testimony in addition to the sworn testimony Armstrong made in 2006 were under oath he testified that he had never used performance enhancement drugs.

“Prosecutors love high-profile obstruction of justice cases to serve as a deterrent for lying under oath.” Stoltmann offered.

It remains to be seen if the United States Justice Department will pursue charges against Armstrong relating to the 2006 testimony he provided. The Justice Department indicted Marion Jones, Barry Bonds and Roger Clemens alleging they have provided false testimony in congressional hearings.

In January 2008 Jones who won five medals at the 2000 Sydney Olympic Games (she was later stripped of all the Olympic medals) was sentenced in a federal court to six months in prison, two years of probation and community service for lying to federal prosecutors investigating the use of performance-enhancing substances. Bonds was convicted of a minor offense and the charges against Clemens were dismissed.

It is in Lance Armstrong’s best interest that he writes SCA Promotions a check for $12.5 million and another $3.8 million check to Amaury Sport Organization organizers of the Tour de France are demanding Armstrong return. $16.3 million may seem like a great of money – however if Armstrong fights either case the public battle will likely strip Armstrong of any dignity he has left, along with a near certainty the Justice Department will file perjury charges against him.

Luxottica Group SpA (LUX), whose Oakley brand was the last major sponsor to drop Armstrong, won’t try to recoup money paid to the cyclist, company spokeswoman Cheri Quigley told The New York Times.

“We are deeply saddened by the situation, especially given our longstanding relationship, but we feel it is best for all involved to move on and collectively spend our energy rebuilding the sport of cycling,” Quigley, who declined to discuss financial details of Armstrong’s contract, said in an e-mail sent to Bloomberg Media.

It’s impossible to know what Lance Armstrong is thinking. He was fearless in defending a reputation he never earned – badgering and bullying anyone who suggested he used performance enhancement drugs. It wasn’t necessarily a sense of entitlement that convinced Armstrong that he was right and everyone else pointed fingers at Armstrong was wrong; it was more likely something as simple as “if everyone else was cheating why can’t I”.

Armstrong’s actions will forever be inexcusable. Lance Armstrong may not care, however if he ever really believed in the message he offered to millions, if he believes in doing what is right, Lance Armstrong needs to return the $16.3 million and fade into obscurity.

For Sports Business News this is Howard Bloom

Labels: , , , , , , , ,

Sunday, October 28, 2012

David Stern - leadership personified

David Stern one of the sports industries most influential leaders Thursday announced he would be retiring as National Basketball Association commissioner on February 1, 2014. Stern became the NBA commissioner on February 1, 1984. When he became commissioner the league’s championship series was televised on a tape-delay basis, the league had a terrible image. Thirty years later under Stern’s leadership the NBA has evolved into a global brand – one of the preeminent sports and business brands.

During his over 28-plus years as Commissioner, Stern has built the model for professional sports in league operations, public service, global marketing and digital technology. He has overseen the league’s growth with seven new franchises, a 30-fold increase in revenues, a dramatic expansion of national television exposure and the launch of two leagues, the Women’s National Basketball Association and the NBA Development League.

Interest generated by the leagues' growing international initiatives has led to the opening of offices in 15 global markets, the televising of games in 215 countries and territories in more than 40 languages, and the creation of 13 language-specific Web destinations. The leagues' digital assets, including NBA.com, WNBA.com, and NBADLeague.com; social media platforms; NBA LEAGUE PASS; NBA TV, which is available in nearly 60 million U.S. homes; and mobile applications reach hundreds of millions of fans every day.

Stern’s intense commitment to social responsibility both in the United States and around the world has been a signature of his tenure as commissioner. In 2005, the league launched NBA Cares, through which the NBA, its players and teams have raised more than $205 million for charity, provided more than 2.1 million hours of hands-on service to communities around the world, and created more than 750 places where children and families can live, learn, or play. NBA Cares supports a host of community outreach initiatives, including a myriad of internationally recognized youth-serving programs that focus on education, youth and family development, and health and wellness.

Stern faced many challenges during his tenure as NBA commissioner a 1987 drug scandal involving members of the Phoenix Suns one of the biggest. At the time Sports Illustrated called it at the time “the biggest single drug bust in the history of professional sports”. The case focused on the use of recreational drugs, not performance enchantment drugs. On Friday April 24 five members of the Suns were charged possessing or trafficking in cocaine or marijuana or conspiring to do so. Six other members of the team (there were 12 players on the team) were linked to the charges.

In 1983 while serving as the NBA’s vice president Stern created professional sports first drug testing program. Years before performance enhancement drugs became the issue they are today, the 1983 NBA drug testing policy put procedures and testing in place relating to the use of recreational drugs.

The Suns story, dubbed "Waltergate" (Walter Davis was one of the players linked to the case), received nationwide news coverage and damaged the team's reputation. Then Suns General manager Jerry Colangelo (later the team’s owner) stated, "We got crucified. We were tried, convicted and hung in 72 hours." The prosecution started falling apart in July. Davis' initial questioning did not include dates, locations and other details. When questioned in regards to the details, Davis could not provide them. No defendant in the case went to trial. Edwards and Humphries were required to join a drug counseling program.

Stern’s drug testing program which focused on the use of recreational drugs, offered players counseling initially. Only after testing positive three times was a player banned from playing in the NBA. Stern led with a firm but at the same time caring hand. The drug policy he created in 1983 remains the standard bearer for professional sports.

As impossible as it may seem today when David Stern became commissioner the NBA Finals were televised by CBS on a tape-delay basis. The current NBA television agreement which ESPN and TNT share the national broadcast rights is worth $930 million annually to the NBA. That agreement expires in 2016 and does not include the tens of millions of dollars most NBA teams receive from their local broadcast agreements.

Stern’s lasting legacy may be the globalization of the sport. In 1989 FIBA, basketball’s international governing body, and the NBA reached an agreement paving the way for NBA players to represent their respective countries in the Olympic Games. Stern leveraged that opportunity to manage and create NBA events globally, establishing the NBA as basketball premier brand.

As Stern eases himself out of the NBA – the globalization of basketball and the NBA brand will remain important.

“It's an area of extreme importance to us. We're going to be opening or have opened an office in Brazil, which has, as you may recall, the World Cup in 2014, the Olympics in 2016. And we'll be focusing on that greatly. We just opened an office recently in Mumbai to approach the Indian market. And we, having just gotten back from China, I'm not even sure that we can respond adequately but we'll try, to all of the requests for business partnerships and growth areas that were apparent there.”

Wikpedia offered an interesting selection of some of the other notable events that took place since David Stern decided to lead the NBA:

• Relocation of 6 NBA franchises (Clippers, Kings, Grizzlies, Nets, Hornets and Sonics)
• 7 new NBA teams (Hornets, Timberwolves, Heat, Magic, Grizzlies, Raptors, and Bobcats)
• Ratification of the NBA Dress Code
• Four NBA lockouts (1995, 1996, 1998–99, and 2011)

The 2012-13 NBA season marks the first full season under the new collective bargaining agreement the NBA and the NBA Players Association signed last December. The NBA played a truncated 66 game schedule that began on Christmas Day. The Miami Heat won the NBA title.

The Heat signed Ray Allen during the off-season. The Los Angeles Lakers added Steve Nash and picked up Dwight Howard in a trade from the Orlando Sentinel. The new CBA was reportedly going to create a level playing field in the NBA, both small market and bigger market franchises would be able to compete against each other. Instead the both the Lakers and Heat made significant off season moves – on the eve of the 2012-13 season there is a belief the NBA is a league of “haves” and “have-nots”

“Since we have been in the business of sports, and in my case it goes back lots of years, superstars starting with Wilt Chamberlain, and Kareem Abdul Jabbar have had more than the ability to have a say in where they went. In fact, in one of the early collective bargaining negotiations, I think I remember being in in a conversation where players said after some number of years that we should have a right to choose where we're going. And strangely enough, I agree with that.

“So I am not as affected by it as you are. I mean, even if you're talking about Dwight Howard. He was drafted by Orlando. He spent seven years there and in lieu of the 8, Orlando got five draft picks. That's a pretty good system in my view. If Dwight Howard decides after seven years, which is longer than the average career in the NBA, that he'd like to be in another city, I think that's a right for which he's bargained.

“We could I'm not sure the players would agree to it again but we could say you're not allowed to have any movement, no matter where the draft has sent you. But even representing ownership, that's not a view that I ever agreed. ”

The next 15 months will be filled with David Stern tributes. More than anything else David Stern represented sports royalty. David Stern embraced the tough decisions and was always ready with any of the many challenges he faced. The National Basketball Association and the sports industry owes a debt of gratitude to Stern for the role he has played in the evolution of sports as a multi-billion dollar industry.

For Sports Business News this is Howard Bloom

Labels: , , , ,

Saturday, October 27, 2012

NHL Armageddon 2012: a sport at its crossroads



The National Hockey League lockout passed its 40th day Thursday, a monumental day in a labor dispute that if not settled in the coming weeks or months will cripple the sport.  Eight short years ago a league imposed lockout resulted in the cancelation of the 2004-05 NHL season. Today, the league once again stands at the edge of the abyss with the sport hanging in the balance.

In an offer presented to the NHL Players Association on October 16 NHL commissioner Gary Bettman proposed the NHL and the league’s players share in hockey related revenues (HRR) on a 50-50 basis.

The previous collective bargaining agreement that expired on September 15 gave the players 57% HRR and the owners 43%.

The offer Bettman made to NHLPA executive director Don Fehr was rejected. Fehr and the NHLPA made three counter offers to the league’s owner’s on October 18 each suggesting the players would consider the 50/50 split but only if all current contracts were guaranteed at their full market value and only over the lifetime of the NHLPA’s proposal.

The NHL which initially offered the players 43% HHR in their first offer to the players in July, made their October 16 offer in hopes of preserving an 82 game NHL schedule, which would have seen the NHL season open on November 2.

One of the real concerns now is moderate NHL owners, a large group of owners who were ready and open to negotiating an agreement with the players based on a 50/50 share will join a smaller group of hardline NHL owners who believed the NHL’s offer to move from offering the players 43% to 50% was far too generous.  Those owners want to see the NHL lower their offer to the players from 50% or either 47% or 43% of HRR.

The other side of the coin how the NHLPA are going to react is even scarier. Don Fehr spent much of his professional career as the executive director for the Major League Baseball Players Association. MLB does not have a salary cap as does the NHL, the National Football League and the National Basketball Association. When asked if the NHLPA would attempt to have the salary cap removed for the CBA, Fehr suggested all options would be considered.

 Both scenarios offered result in the same end game – scorched earth, the end of the NHL as we now know it.

“Thursday was the latest we could stretch it for an agreement for a full season, because if we go past Nov. 2, we can’t play a full season,” Gary Bettman said following the Barclays Center press conference at which the Islanders’ 2015-16 move to Brooklyn was announced.

“We can play an abbreviated season, but we would rather play a full season.”
“The fact of the matter is that there are just sometimes you need to take a deep breath because it’s clear you can’t do anything to move the process forward,” Bettman said. “We’re at one of those points right now because we gave our very best offer.

“That offer, for better or worse, was contingent upon us playing an 82-game season. So I think things in some respects may actually get more difficult.”
The league is expected to offer the players 47% of HRR a move that will result in a great deal of anger from the NHLPA in the next few days.

All is not lost, the 2012-13 NHL season is far from over. The tough talk that both sides will be making in the next few days is nothing more than talk. Heading into the lockout the NHL knew there was little if any possibility an 82 game schedule would be preserved. At the same times the NHLPA is well aware both the NBA Players Association and the National Football League Players Association reduced their respective revenue share to 50% from 60% and 57% respectively.

There are several issues the NHLPA needs to consider. First the 50/50 split their “union brothers” playing in the NBA and in the NFL had to accept. The average NHL player salary in the 2010-2011 season was $2.4 million. The minimum NHL salary during the same season was $500,000. The average NHL career is between four and five seasons. The average NHL player cannot afford to lose the millions of dollars he’ll earn if the 2012-13 NHL season isn’t played. With the league now considering a much shorter season NHL players stand to lose millions of dollars in lost wages.

Fehr offered this late Wednesday:  “The players made multiple core-economic proposals on Thursday that were a significant move in the owners’ direction," he said.

"We are and continue to be ready to meet to discuss how to resolve our remaining differences, with no preconditions. For whatever reason, the owners are not. At the same time they are refusing to meet, they are winding the clock down to yet another artificial deadline they created."

While the next few days are going to be rough for the NHL and the fans of the frozen sport, far more critical are the next four weeks.

Gazing into a crystal ball the NHL and the NHLPA will make several more attempts at averting the complete cancelation of the 2012-13 season. Both sides know if the 2012-13 season is canceled and that will not happen until mid-January at the earliest, the National Hockey League will suffer irreparable damage, the long-term effects will be catastrophic. As the saying goes “it’s always darkest before the dawn” the clock has yet to strike midnight on the 2012-13 NHL season but for hockey fans it just appears that way.

For Sports Business News this is Howard Bloom

Labels: , , , , ,