Lockout Negotiations Take Bizarre Turn
If one was looking to identify a rock bottom moment in the NHL labor negotiations, yesterday might be the moment to pinpoint.
In a bizarre turn of events, the owners and players lost any semblance of momentum they’d garnered from the early week player/owner meetings that generated a positive spin on the negotiation process and gave many fans a glimmer of hope in what has otherwise been a winter of discontent.
That all ended last night with two press conferences from two separate sides that have shown, if nothing else, that they are nowhere near the same page right now.
Union head Donald Fehr spun a tale about the two sides being closer than they’d ever been with the potential for a deal to be struck with relative ease.
That all changed with one missed call from Bill Daly to Steve Fehr in which the NHL declined the union’s most recent proposal and went on to say that “everything was off the table.”
From what NHL commissioner Gary Bettman said in his emotionally-driven tirade after the NHLPA press conference is that the owners fielded a “take it or leave it” type offer that the players then attempted to negotiate off of.
The press conferences were full of the typical posturing and rhetoric we’ve gotten used to over the course of the last two lockouts.
The difference here is that Gary Bettman appeared visibly rattled for the first time. Now, if we believe what the league is telling us, we essentially go back to square one.
So, to decipher a bit of the mess that we’re in, we’ve decided to bring in our colleague and good friend Mike Colligan to help us wade through the muck of yesterday’s bizarre exchange between the league and the union.
Marshall: Mike, we heard Bill Daly tonight explicitly say that a max 5 year contract length was “the hill the NHL would die on” in terms of the role it plays in the owners side of the negotiations. Does the league lose credibility on that statement based on situations that the owners have created with long term contracts (Weber, Kovalchuk, etc)?
Mike Colligan I did chuckle a bit at that comment. What I saw from Daly and Gary Bettman on Thursday night was a tandem that’s under enormous pressure from a number of different directions. Not only are the owners coming at them with various demands behind closed doors, but Bettman has also met his match from a negotiation perspective in Donald Fehr. Out of all the elements that the owners have insisted on, contract term is the one that they have complete control over. It was a fitting comment to end a curious evening.
Now, do they lose credibility? Perhaps, but I also know a number of teams have been concerned about front-loaded contracts for years. We finally saw the league step in on behalf of owner complaints in the Ilya Kovalchuk contract situation and it really comes back to saving General Manager’s from themselves. I don’t think the league wants to be in a position where they’re penalizing individual teams like they had to do with New Jersey.
Marshall: We’ve seen a lot of posturing on the part of both sides, to the extreme that Gary Bettman has apparently pulled the NHL’s “Make Whole” provision off of the table after this weeks events. How much of this is rhetoric and posturing versus actual hardline stances by the league?
Mike Colligan: I think both sides exposed themselves a bit this week and we’ll probably see them retreat back to their corners for a few days/weeks. There was a real opportunity to get a deal done but it may have been too much too fast.
As far as the “Make Whole” provision is concerned, if both sides do end up coming to an agreement in the coming weeks I think we’ll see it back on the table but in a different form. You can slice it up a number of different ways, but in the end Fehr feels that players should receive the money that teams agreed to pay them in their contracts. They won’t budge on that demand.
Marshall: In the current economic structure, has the salary cap, regardless of the fact that it’s tied to league-wide revenue, facilitated an atmosphere that demands teams sign long-term, frontloaded contracts to stay competitive?
Mike Colligan: In an ultra-competitive environment where GM’s have a shelf life, there’s always going to be an incentive to squeeze every advantage you can out of the system in place — and the heck with future ramifications. I’ve worked quite a bit with the recently-expired CBA and I’m always amazed at how many loopholes they anticipated in the new system. Unfortunately, a big one with long-term contracts was exposed and the league feels it needs to be fixed.
Like tax experts, GM’s will always be a step ahead though. The risk you take by making countless amendments is you eventually legislate any management creativity out of the game. We’ve already seen the trade deadline become a dud because teams don’t have the flexibility to make moves. Parity is great, but do you really want 30 carbon-copy teams?
Marshall: On the subject of decertification, would this be a maneuver the players’ association would use as a scare tactic? If the actual process of an anti-trust lawsuit was undertaken, what kind of negative impact could that have on the players’ future in the league?
Mike Colligan First of all, my education and background is in business so I can only speak generally to the potential fall-out from decertification and an antitrust lawsuit. What I do know is that the move isn’t as much of a slam-dunk for the players as it’s been made it out to be. If the players consider decertifying, they’d have to be willing to lose at least this season and maybe more while it plays out in the courts. I don’t think we’re at that point. Maybe in January we will be, but even then it’s quite a gamble.
The biggest risk of decertification and the antitrust lawsuit is no one knows how it’ll play out. There’s no real precedent we can look to (the NFL and NBA were different situations and both leagues settled quickly) and it would immediately become front-page news if the process was allowed to play out in the courts. Not only would the salary cap and other CBA mechanisms disappear, but there wouldn’t be a draft and the NHL, in the form we’ve come to know, would cease to exist. Individual players would be negotiating with teams to end the lockout and it’d be chaotic.
Marshall: Today, we saw Donald Fehr state that the two sides were closer than they’d been previously, but the players’ association still felt the need to request a federal mediator to close out the negotiations. We’ve also seen reports from players on Twitter that have stated that Donald Fehr advised them not to take the NHL’s most recent proposal, which Ron Burkle stated they would not negotiate off of. In you summation of these events, did Donald Fehr drop the ball on these player/owner negotiating sessions?
Mike Colligan: I hesitate to speculate too heavily on exchanges like this, however I think the NHL finally saw a little desperation from the players that they hadn’t seen before. Part of the reason for getting the owners and players into a room this week was probably to get a real sense for how badly the players wanted to get a deal done. As we’ve heard, there’s certainly more than a handful that just want to get back to playing games and I think the owners saw an opportunity to grab their final demands.
I would imagine Fehr recognized this situation unfolding (hence the supposed change in tone after the first day when he wasn’t involved), but knew the sides were close enough to get a deal done and felt a mediator might be able to step in and force the NHL to split the difference. The NHL isn’t going to do this deal on someone else’s terms so I think that’s the last we’ll hear of any serious mediation suggestion.
Again, I don’t know anywhere close to all the details from what happened this week but Fehr is involved because the players were sick of getting pushed around. In that sense, I think he was smart to take a chance on the owner-player meeting and despite a negative outcome, he handled it as well as he could have.
Marshall: From an economic standpoint, how much damage would you surmise the league would endure from a season that’s lost in it’s entirety?
Mike Colligan: The NHL made $3.3 billion last season and it’s safe to say that they would have exceeded $3.5 billion this season without the lockout. Right now the league is losing $18-20 million a day in gross revenues. Unfortunately, the last lockout showed that the league can withstand a stoppage and not only survive, but thrive. The NHL is on much more solid footing this time around and I think the damage would be limited to one season before the league would pick up with growth again.
Despite the negativity everywhere after this week’s letdown, I still would be shocked if the season is cancelled. At no point have I felt there was more than a 20-percent chance of losing an entire year and I saw a lot this week that shows these sides are very close to a deal. The situation in 2004 was drastically different. It’ll take a few weeks for everyone to settle down and there’s certainly no guarantee, but I think we’ll see hockey in 2013.
Thanks again as always to Mike for joining us. Stay tuned as we continue to wade through yesterdays mess.