Thursday, May 24, 2012

While Fehr Says No More "Massive Concessions" Lockout Talk Remains Premature

This past weekend, Stephen Fehr, brother to NHLPA executive director Donald and special counsel to the Union, gave a talk in San Diego at the Sports Law Conference. This is according to Liz Mullen of the Sports Business Journal.

He declared that the players made “massive concessions” in 2005 and that they were not inclined to give up their current share of revenue.

The massive concessions he speaks of are the 24% rollback in salaries and the hard salary cap.

The NHL will likely take aim at reducing the players’ share of revenue from the current 57% to something in keeping with the other leagues – about 50% or so. The NBA is at about 50% (give or take a point depending on league revenue), the NFL works out to about 48.5% and MLB is at about 47% (there is no cap in baseball so this is where the approximate number falls).

A drop in revenue share from 57% to 50% is significant and represents a serious point of contention. This will lead to some tense moments complete with the ebbs and flows of negotiations.

So where does that leave us? Is a lockout in the cards?

At this point, it remains premature to conclude that the league is headed for a lockout. The NHL is enjoying an unprecedented level of success, and more importantly serious momentum in the U.S. The league is in the first year of its $2 billion TV deal with Comcast, where for the first time, all playoffs games are available nationally. As well, the league has seen a $1 billion increase in revenue since 2005 (under the capable watch of NHL COO John Collins).

So the NHL likes where it’s at right now and doesn’t want to see a labor disruption. The system isn't broken; it just needs to be refined.

As for the players, they are weary – very weary I suspect – of losing part of, or an entire, season. For many, the lost 2004-05 season remains fresh in their minds. This will be a real incentive for the players to work out a compromise.

One more point for the players – decertification may not be a viable option (blowing up the Union like the NFL players did with a view to bringing an antitrust or anti-competition lawsuit). The Court of Appeal decision during the NFL lockout significantly reduced the strength of a union’s antitrust claim and sent the message that the sides are best served working things out at the bargaining table and not a federal courtroom.

While the other leagues share about 50% of revenue with players, remember that the NHL generates significantly less revenue then these leagues. So while 57% is a high number, it must be considered in the context of the amount of revenue generated by the league.

Ultimately, the sides will find an area of compromise. It may be somewhere around 52.5% of revenue or so together with some creative math to amplify that number under certain circumstances.

Until there is evidence to the contrary, lockout talk is premature.

1 comment:

GHT120 said...

A possible solution might be to drop the percentage to 50% (hard to argue they deserve both a higher percentage than NFL players AND guaranteed contracts) but keep the cap ceiling/floor at whatever the calculations based on current CBA and revenues yields until such time as the new formula catches up.