The gang is back and in a combative mood, despite the summer vacations. They kick off another season by taking on the CBA negotiations. Here we go again.
SCOTT BURNSIDE: Greetings and welcome back. It's always a pleasure to catch up with you, Pierre, and we’re especially honored to be joined by our New York-based colleague Katie Strang, who has been covering the negotiations this summer. Let’s start with you, Pierre. You are fresh from a well-deserved summer vacation; could you find your office without a GPS? I know that you are not surprised that with a lockout looming in just over a week, the two sides have achieved little traction and appear headed for another work stoppage. I recall a conversation you and I had just before you went off the grid for the summer, when I suggested the two sides would get a deal done and we wouldn’t miss anything, including training camp. You scoffed at me (not the first time, nor will it be the last) and here you are, vindicated. Why didn’t you expect things to get rolling before the Sept. 15 deadline that marks the end of the current CBA?
PIERRE LEBRUN: Call me cynical after surviving the daily yearlong coverage of the lockout that wiped out the entire 2004-05 season. Nothing gets done without real pressure-packed deadlines. The fact is, neither side was ever going to show its best hand this summer, weeks ahead of the Sept. 15 expiry of the CBA. That’s the poker game. And so, all along I think it was clear next week was going to be paramount in really getting things going on the CBA negotiating front. Once Gary Bettman gets approval from owners next Thursday to proceed with a lockout of players, it will instill the needed urgency on both sides to get back to business. Mind you, it’s certainly possible both sides get back to the table before that, or at least we can only hope. The difference from eight years ago is that I don’t feel the summer negotiating sessions have been a total waste. The sense I get from talking to both sides is that they’ve at least tackled secondary issues in some of those summer sessions that should help expedite the process once the big economic issues are settled. That’s a far different feeling from the summer of 2004, when, frankly, those meetings were a total charade as owners were ready to scrap an entire season to get their salary cap. This time around, I feel both sides want to get a deal done and save the season -- some facet of a season anyway. Katie, you’ve been around these guys all summer. What say you?
KATIE STRANG: While I can’t speak from previous experience -- after all, you are the grizzled (and I do mean, grizzled) old vet -- I do get the sense there is a stark difference in these negotiations from those eight years prior. Both sides insist that the dialogue has been constructive and civil and that common ground on the secondary issues has been forged. It also seems as if the level of engagement from the players’ end is much stronger. NHLPA boss Donald Fehr has invited and encouraged players to participate and share, and in doing so has tapped into a constituency that is invested and committed to the process. So those are positive signs. However, I think it’s worth discussing the pressure points from both sides now that we have broached deadlines. A lockout beginning Sept. 15 (at midnight) has seemed like a foregone conclusion for quite some time, so what is the league’s true pressure point? What timeline has the board of governors imposed on Bettman? The NHL insists the Winter Classic is a red herring, but I find that hard to believe. Should that marquee money-making event be in peril, the whole season will be in jeopardy. From the union’s side, what happens once the first regular-season games are lost? Bettman surmised that Oct. 11 -- slated to be the NHL’s opening weekend -- is the NHLPA’s true deadline. A union’s solidarity is always tested when a pay period is missed, and while it would be presumptuous to estimate this could fracture the group’s resolve -- by all accounts, the PA is far stronger than it was in 2004 -- he is right about one thing: Once regular-season games are lost and revenue starts slipping, the business and dynamics change. The players have a strong leader and what seems like a firm commitment to their cause, but their leverage will likely dwindle as the league is prepared to offer less and less.
BURNSIDE: I must admit I still find it a bit galling that a business that had a record $3.3 billion in revenues last season and in many ways has never been in a better position, given the popularity of things like the HBO "24/7" reality series, the Winter Classic, strong European revenues, a new television deal, blah, blah, blah, can’t get its act together in time to start training camp -- and presumably the regular season -- on time. And as usual the little guys, the fans, the arena workers, the people who derive some or all of their salaries from the business of actual hockey games being played, are virtually forgotten. That said, I agree with both of you that the dynamics are completely different this time around. Colleague Craig Custance, for instance, is working on a story examining how the whole social media and public sentiment regarding the negotiations might have an impact on how this plays out. Last time around, the general feeling was the NHL needed to do something to level the playing field and that was especially true in Canada, where there were concerns about the futures of teams in Edmonton, Calgary and Ottawa. This time around, with Twitter, Facebook, etc., there is no doubt the owners have very little in the way of public support. Does that matter at all, Pierre, or is it always about the long view for the owners: How much more revenue can they squeeze out of the players and how does it impact their franchise values?
LEBRUN: The league/owners have one thing going for them: Players had their shares scaled back in the NFL and NBA, so there’s an industry standard that’s been set. On the other hand, the NHLPA gave up a lot eight years ago and it’s fair as a player right now to ask, How many times do we have to fix your system?
It’s clear the fundamental impasse here is that the league/owners want the players to pay back off the top, while the players at this point are only ready to slow down their salary growth moving forward. The league’s last proposal, which would drop players' share from 57 percent of the pie to 46 percent, at least according to the current parameters, would mean big-time escrow payments for the players. The players’ proposal keeps all the present money/salary in the coffers for their side, but promises future stagnation. It’s certainly not enough from the league’s point of view. But there’s a deal to be done here. The fact that NHLPA head Donald Fehr chose to stay within the current system in his first offer was a positive sign in terms of finding common ground. He’s far away from what the league wants, but at least the salary-cap system wasn’t blown up in the NHLPA proposal. To me, the sweet spot is obvious: The league has to come down softer on the entry point of the new CBA, allow the players more breathing room in the transition phase and don’t bend them backward in the first year with massive escrow payments. In other words, I would offer to start this season with a salary cap in the mid-60s, keep the current way of calculating hockey-related revenue, but then phase in lower shares for the players (thus lower cap numbers) in future years. Somewhere, there’s middle ground between where the NHL and NHLPA currently stand. There’s no reason for this thing to go past October, as long as both sides are committed to making a deal.
STRANG: I wish I could be as optimistic, Pierre, but I see a start date in November or December as much more realistic. Let’s remember that last time around, it took approximately five weeks from the initial handshake to the deal becoming official. There will be a lot to iron out, even if there is an agreement reached on the core economic issues and, with five weeks until opening weekend, there remains a
significant gulf to traverse.
The league has been quick to point out the reduced shares taken in the NFL and NBA in recent labor standoffs as an industry standard in cap sports, but I’m not sure those are necessarily fair parallels. Major League Baseball, which has experienced significant labor peace since the implementation of a sophisticated revenue-sharing system (masterminded, by the way, by the Fehr brothers), has some very different constraints and components by way of comparison.
And since I brought up revenue sharing, I think this is a bigger point than people realize. Bettman has been quick to downplay its importance -- he doesn’t feel it to be a deal-breaker or game-changer -- but it
has been an integral part of the union’s plan. The NHLPA wants to partner with stronger franchises to help some of the struggling clubs, thereby minimizing the burden shouldered by player salary reductions; the league believes that money is fungible and the system the union proposed is based without regard to its practical application.
In essence, I think the plan you proposed, Pierre, makes a lot of sense. It features compromise and concessions from both sides. Unfortunately, those might not be two things we see a lot of in the near
There has been disagreement on financial issues, the definition and derivation of at least one crucial pool of money and, heck, the two sides can’t even agree on who elected to recess talks!
Friday was a good indication that both sides are digging in, and as such, I think all of us need to prepare for what might be a pretty lengthy standoff.