Wednesday, August 29, 2012

TSN Radio Clip: The NHL's CBA Proposal

I join Scott Macarthur on the Mike Richards Show to talk NHL CBA. As per my posting below, you probably know where I went with it.

Click here to listen.

NHL's Latest Proposal & Why The Union Won't Be Too Happy

On Tuesday August 28, the NHL issued a revised CBA proposal to the NHLPA. This most recent proposal is somewhat of a departure from the NHL's initial proposal, which was dramatic and ambitious. However, ultimately, don't expect the NHLPA to being doing somersaults over this latest proposal.

Initially, the NHL wanted the players to agree to an 11 point reduction in its share of revenue, from 57% to 46%. This time around, the NHL appears to have toned things down a bit. They have proposed backing off 46%, and have also said they won't ask for rollbacks in salary. Seems nice enough - right?

This is what the NHL offered as far as the player share of revenue:

Player Share of Revenue

2012/13 - 51.6%
2013/14 - 50.5%
2014/15 - 49.6%
2015/16 - 50%
2016/17 - 50%
2017/18 - 50%

On its face, this initial part of the proposal is an improvement. It also appears that the NHL may have adopted an expanded definition of hockey related revenue (or HRR). This is the revenue that the league shares with the players. Things like expansion fees, for example, are not considered HRR and are therefore not shared with the players.

Defining HRR is important here. Really important. All along, Donald Fehr has been claiming that the NHL's definition of HRR is too narrow. As a result, the 57% of revenue the players got last year was, in Fehr's estimation, really 50%. As well, the initial 46% revenue proposal of the NHL was really 43% (that's why you may have been seeing some outlets reporting 43% instead of 46%).

So the big issue is not necessarily what share of revenue the players get, but HOW you define revenue to begin with.

Let's move on to the part that really won't make the NHLPA happy. The NHL is proposing the following salary caps:

Projected Salary Caps

2012/13 - $58M (fixed)
2013/14 - $60M (fixed)
2014/15 - $62M (fixed)
2015/16 - $64.2M (proj.)
2016/17 - $67.6M (proj.)
2017/18 - $71.1M (proj.)

In the first year, the NHL is proposing a fixed cap of $58 million. Here's the problem: there are 16 teams that are already over the $58 million cap. The Bruins and Wild, for example, are at $68 million. As well, there are another 7 or so teams that are really close to it. So a significant number of teams are either over the cap or within striking distance.

This means that for teams to come under the cap they will have to cut salaries or renegotiate deals. So while we would not see individual rollbacks in salaries, we would see team rollbacks in salaries - and by extension that would result in teams having to cut players or renegotiate deals (this presumes the NHL would put a system in place for that).

As the Union head, Fehr's mandate is to look out for the best interests of his members/players. This is a fundamental labor law principle and one that Fehr holds dear.

Part of that mandate is to ensure that his members remain employed. That's being threatened by the NHL's proposal. As well, as Union leader, Fehr is directed to ensure that his members do not take pay cuts unless it can be shown rather convincingly that reductions are warranted. To date, Fehr's position has been that no such basis has been provided.

The NHL's newest proposal is an attempt to broker a deal and the league has moved off its initial dramatic proposal. This is the good news, as we can now say that negotiations have begun in earnest. However, don't expect the NHLPA to be elated with this latest offer.

This will push back. They will resist. They will continue to fight.

Tuesday, August 28, 2012

Team 1200 Radio Clip: NHL CBA & Redskins Team Nickname

I join JR and Steve Warne to chat latest on NHL CBA, while also providing my thoughts on the team nickname 'Redskins'.

Friday, August 24, 2012

Team 1200 Radio Clip: Lance Armstrong, USADA and Sponsor Dollars

I joined Steve Lloyd and AJ Jakubec on the Team 1200 to chat Lance Armstrong and the USADA's ruling from earlier today. We break down why Lance did what he did and why he effectively had no choice.

TSN Radio Clip: USADA & Lance Armstrong

I join Mike Hogan on TSN Toronto Radio to talk about Lance Armstrong and the USADA ruling.

Click here to listen.

Thursday, August 23, 2012

Bettman's Talk of Lockout Not A Threat

Gary Bettman came out recently and said that if the sides can't agree on a new CBA, the players will be locked out. Here's what Bettman said on August 9:

"I re-confirmed something that the union has been told multiple times over the last nine to 12 months. Namely, that time is getting short and the owners are not prepared to operate under this collective bargaining agreement for another season, so we need to get to making a deal and doing it soon."

This was not a threat directed at the players. It was simply a statement of fact designed to remind the players and Donald Fehr that the NHL has no intention whatsoever of playing without a new CBA. 

Why the reminder? Fehr has been saying for some time that the sides could start the season without a CBA and work on an agreement while the season gets underway on time.

"The law is that if you don't have a new agreement, and as long as both sides are willing to keep negotiating, you can continue to play under the terms of the old one until you reach an agreement. All I know is that in baseball, there were any number of occasions in which we played while the parties were continuing to negotiate" Fehr said.

So Bettman's statement that the league would lockout the players if a new deal is not reached was designed to set the record straight on how this may proceed. Nothing more. The rhetoric will ramp up, though, the longer this drags. Expect real threats to materialize.

Tuesday, August 21, 2012

Twitter Reveals Shift in NHLPA Strategy

Twitter can be a useful tool for anyone in search of insight. This applies to a lot of things including the NHL CBA negotiations.

At the start of the bargaining process, the NHLPA was tweeting photographs of its players at NHLPA meetings. We saw the likes of Jason Spezza, Michael Cammalleri, Rick DiPietro and Steven Stamkos dressed in suits and gathered around conference room tables. The images were congenial and amiable; cooperative and hopeful. The players looked committed and unified in their quest for an equitable resolution.

This, of course, was all by design.

Twitter has now revealed a dramatic shift in the NHLPA's strategy. Rather than continue on with the positive imagery and the toned down rhetoric, the NHLPA has gone on the offensive by adopting a decidedly disagreeable tone to its public communications. Today, we saw tweets questioning Gary Bettman's honesty, accusations that the League has nefarious intentions and an allegation that the NHL is "losing its mind". Here are some of these tweets:

It remains to be seen whether this migration to a new and more contentious PR strategy will benefit the NHLPA. Prior to posting these tweets, its seemed that fans were sensitive to the players' complaint that the NHL was not proposing a fair and equitable deal. Despite owners getting their new cap system in 2005 together with a 24% rollback, which they alleged they needed to fix a broken business model, they have nevertheless once again called for a dramatic reduction in the players' share of revenue. 

While always difficult to gauge, it did seem that last week public opinion was perhaps slightly in favour of the players. Does that remain the case today in light of these tweets? Tough to say. However, it is possible that some fans may not react positively to these types of tweets. Let's not forget that both sides clearly stated at the outset that their intention was not to negotiate in public. Donald Fehr and Gary Bettman have, in fact, done an admirable job in keeping things civil.

Of late, though, we have seen the Union make statements that represent a departure from its generally unemotional and reserved approach to things.

In the grand scheme of things, these tweets may turn out to be insignificant. However, and more importantly,  it is what they represent - potentially a step in the wrong direction.

Monday, August 20, 2012

Interview: Dan Kaplan of SBJ on Top NFL Issues

I interviewed Dan Kaplan of the Sports Business Journal. He covers the NFL for the publication among other topics and his stuff is really good. We talked top NFL issues as we enter a new NFL season. 

We covered Peyton Manning, the NFL ref situation, the sale of the Cleveland Browns, expansion, relocation, a team in Europe, competing in the Olympics and whether we will ever see a team in Toronto.

Saturday, August 18, 2012

NHL Players: Employees Not Partners

We hear it a lot - the NHL owners and players are partners. We know the players get a share of revenue. The better the league does the more the players get paid. That linkage is the primary reason the relationship is often characterized as a partnership.

But is it a partnership? Short answer is of course no.

Teams are the employers, while players are the employees. The sides do get together every few years to hammer out a new CBA, which sets out the terms and conditions that govern employment. However, these are the terms and conditions that govern the employer/employee relationship and not some other type of legal relationship.

Indeed, the parties are not partners in the legal sense. If they were, the players would not only share in gains but also in losses. If a fan got hurt at a game, and a team had to pay out a legal settlement, the players don't feel that financial hit. Shane Doan isn't asked to help pay down the losses of the Coyotes or pay the NHL's legal bills.

The owners, teams and league bare much of the risk associated with owning and operating teams complete with the seemingly endless stream of potential liability.

It is, then, more accurate to describe the relationship as follows: the players partner in revenue but are not partners.

It is true that the big business of sports is unique in that the athletes are the assets that are in large part responsible for the revenue generated by a league. For that reason, it is completely reasonable for players to ask for more than the limited compensation provided in the traditional employer/employee relationship. However, this request remains framed within the employer/employee relationship. It is not a partnership.

NHL Players do get that extra-ordinary compensation, with the average NHL salary climbing from $1.4 million in 2005 to $2.4 in 2011.

Fully appreciating the nature of the legal relationship - and all that comes with it - is perhaps a step in the right direction in getting a deal done.

Friday, August 17, 2012

Radio Clip: TSN Radio - NHL CBA and Coffee On My Lap

I join Mike Richards of TSN Radio Toronto. He starts off by introducing a new song that plays around with my last name. The song is great and brings me happiness. Cheers to Mike Richards and producer Matt Cauz for the theme.

We also chat about how I don't know how to drink coffee. And yes - we hit NHL CBA.

Radio Clip: TSN Radio - NHL CBA & Are Players Partners?

I join Jim Tatti on TSN Toronto Radio and talk the latest on the NHL CBA. We engage in a discussion on the difference between players partnering in revenue and players being partners with the NHL. Two different things. Entirely different.

Wednesday, August 15, 2012

Radio Clip - Team 1260: NHL CBA

I join Dusty Nielson on the Team 1260 to chat the NHLPA's proposal.

We talk about why the NHLPA's presentation was "effective" but while there is no strong basis to be encouraged as of yet.

Radio Clip: Team 1200 - We Break Down the NHLPA's Initial Proposal

I join the boys at the Team 1200 to talk the NHLPA's CBA proposal.

Click here to listen.

Tuesday, August 14, 2012

The NHLPA's Proposal And What It Reveals

Today the NHLPA submitted its own proposal to the NHL.  The head of the Union, Donald Fehr, characterized the offer as an “alternative proposal” and for that reason it is not appropriate to describe it as a counter proposal.

What Was Said By Fehr

The NHLPA believes that the proposal “once implemented can produce a stable industry and one that going forward can give us a chance to move beyond the recurring labor strife that has plagued the NHL for the last 2 decades”.

Fehr said that the settlement must be “fair and equitable” for players - as well as owners.

Players have offered to take a reduced share of hockey revenue “going forward for next 3 seasons”. That would be under the existing league formula for calculating the player share of revenue – and not the new proposal that calls for players to get 46% of revenue.

If league revenue grows at the average rate it has under the old agreement, the NHLPA estimates the amount of reduced player compensation to be about $465 million over the next 3 years.

The Union also proposed significant “expanded” and “aggressive” revenue sharing among clubs. Revenue sharing could reach and "probably would reach" about “$250 million”.

At the end of 3 years the players would have an option for a 4th year.

The hard cap is here to stay with some modifications.

Fehr said no significant changes to player contracting rules were proposed and the “current system would not be modified”.

Player Share of Revenue

The NHL proposed dropping the player share of revenue from 57% of hockey related revenue to 46%. Fehr did not indicate what percentage he countered with today. We do know that he said that the players are open to taking a cut of $465 million over the next 3 years. As well, this is based on a current 57% share and a growth rate consistent with past 7 years.

We also know that the Union has said that the NHL’s proposed 11 point drop in revenue share would result in a loss of $450 million next season assuming revenues of $3.3 billion. This is about $40 million per percentage point in the first year.

So it is possible that the NHLPA has proposed a 3% to 5% rollback on revenue share compared to the 11% drop the NHL has tabled.

However, we don’t have the actual proposal so this number may be off by a couple points. However, based upon the NHLPA’s proposed reduction, it does seem that the Union’s proposed cut of revenue is north of 50.

CBA Length

Fehr suggested today that CBA could be 3 years in length with an option to renew for a fourth year – by the players.

CBA length will be really important to the NHL. Long term CBAs promote stability and help grow a league. It helps with television and sponsor deals. Owners and the league will want something closer to the NFL – which is a 10 year deal. Even the NBA is 6 years with an option to extend.

If the proposal is indeed 4 years, that won’t cut it. Look for a minimum of 6 years.

Contract Rules: Largely Unchanged

Fehr said today that the Union didn’t call for significant changes to contract rules, like length.

The NHL has proposed a 5 year max on contracts.

This is a meaningful divide. The NHL wants something like the NBA has, which in part is a 5 year limit on contract length. The league wants to try and reign in the long term and lucrative contracts that seemingly are handed out on a regular basis.

Presumably, the NHLPA did not agree to the proposed rollback on UFA eligibility either – although that is a guess. They may have given away year. See here why this is a big deal for the NHL.

Team Sharing Revenue

Fehr called for an aggressive and expanded form of revenue sharing among teams. This is not a surprise. This is a common and recurring theme among Unions. Billy Hunter proposed it for the NBPA and DeMaurice Smith did the same on behalf of the NFLPA. The idea is that if teams share revenue then weaker clubs get stronger and the league as a whole is stronger.

Next Steps

The NHL will look over the agreement today and expects to have a response by tomorrow. We may learn new things then that can help us better understand where all this is headed.

Thursday, August 2, 2012

Why Donald Fehr has Already Succeeded

On December 18, 2010, the National Hockey League Players’ Association (NHLPA) announced that "the full membership of the NHLPA has voted overwhelmingly to appoint Don Fehr as the new NHLPA Executive Director".

Given the pervasive and seemingly endless struggles of the NHLPA, this was a wise choice. To say that the NHLPA has historically had some issues would be an understatement. A gross understatement and one that would put every euphemism to shame.

Eagleson, Goodenow, Saskin & Kelly

The first NHLPA head was Alan Eagleson. After 25 years as head of the Union, Eagleson stepped down from the position in 1991. Eagleson went on to face criminal charges relating to his conduct during the time he worked at the NHLPA, and ultimately, on January 6, 1998, pled guilty in a Boston court to three counts of fraud, agreeing also to pay a fine of $1,000,000. The following day in Toronto, Eagleson pled guilty to another three counts of fraud and was sentenced to 18 months in jail.

By way of example, Eagleson was accused of taking large payments from insurance claims before the players filing them received their share, telling the players that he earned the "fee" while fighting against the insurance companies to get the claims paid. In fact, many players later learned that the insurance companies had already agreed to pay the claims and there had been no "fight".

The NHLPA also paid for some of his clothes, theatre tickets and an apartment in London, England.

After Eagleson, Bob Goodenow took over before he was fired by the players after 13 relatively strong years of leadership. Next up was Ted Saskin, whose appointment was so controversial that it led to the highly respected Steve Larmer resigning from the Union. Saskin was later fired for alleged misconduct, including reading player emails.

Paul Kelly was next to take over the Union. The selection was lauded as a good one since Kelly was highly respected and smart (I’ve interviewed him and completely agree). That being said, Kelly was fired in the middle of the night. He waited in a hallway while 30 players decided his fate. When he took over, Kelly ordered forensic audit of the Union's activities over the previous three years, which allegedly revealed some had been spending millions of the Union's money.

Clearly, since its inception, the NHLPA has struggled mightily. Through the years, the NHLPA has been fraught with corruption, scandal, controversy and mismanagement.

That is until now.

Donald Fehr Is Appointed

So that brings us to Donald Fehr. When he was asked to take over the NHLPA, and as reported here on Offside first, he issued a memo to players indicating that before he would step in as head of the NHLPA, the players would need to "overwhelmingly vote" to accept his appointment. Before a vote, Fehr said he would meet with the players of each team.

He wanted his appointment to be unanimous and have everyone on board. He knew that he could not operate effectively if the NHLPA did what it has done in the past - splintered off into rogue groups. Fehr appreciated the importance of solidarity from his days as the boss of the baseball union.

Fehr ran the MLB player union for 27 years before he stepped down in 2009. He was instrumental in making the union the most powerful in sports, and masterfully guided the players through the collusion grievances in the 80s (which resulted in an award of $280M to players) and the 1994-1995 strike. He also guided the players through CBA negotiations in 2002 and 2006, the first negotiations since 1970 that were achieved without a work stoppage.

As a young lawyer, Fehr assisted the MLBPA in the landmark Andy Messersmith and Dave McNally arbitration case. In 1977, Marvin Miller, head of the union, hired Fehr as general counsel to the MLBA.

In December 1985, Fehr was voted executive director of the MLBPA after having served as acting director since December 9, 1983. Fehr successfully challenged the owners' collusion, leading to the owners paying $280 million in damages to the players. He was instrumental in implementing the rejection of future admissions into the MLBPA by replacement players who planned to fill in during the strike of 1995. He is known for his fierce negotiating skills, and by many accounts, is smartest guy in the room.

On June 22, 2009, Fehr stepped down from the MLBPA executive director position. Shortly after leaving his position as Executive Director of the MLBPA, Fehr took up a position as an advisor to the NHLPA.

Fehr: Changed the NHLPA Culture

Fehr has dramatically changed the NHLPA culture. Gone are the days of midnight votes and misconduct. 

We now have a Union that is thoughtful, considered and patient in its approach.

When the NHL made its dramatic proposal, the reaction from Fehr was not emotional. He indicated that they would carefully review the proposal and empirically assess its fiscal impact on the players - today and years from now. His membership echoed his position. Manny Malhotra cautioned people not to react emotionally.

“It’s a long process,” said Vancouver Canucks center Malhotra. “So instead of getting wrapped up emotionally and going off the handle, it makes far more sense to be educated in what they’re trying to propose and understanding in great detail, to make sure we know what to counter with.”

This is a direct result of Fehr’s leadership and stewardship.

From the start, Fehr’s approach has been inclusive and transparent. There are a record number of players participating in NHLPA meetings. Everything is discussed; everything is considered; everyone has a voice. The players not only respect Fehr, but also trust him. And we all know a hockey player's trust can be tough to shake.

Fehr's legacy is unequalled in the field of sports labor law except for his first boss and the godfather of sports unions, Marvin Miller.

Fehr hasn’t rushed back to the NHL with a counter proposal. He won’t. He will take his time to ensure that the matter is properly and fully canvassed. This deliberate and meticulous approach is now an integral part of the NHLPA.

Indeed, to date, Fehr's greatest accomplishment as Union head is that he has changed the NHLPA's culture.

Wednesday, August 1, 2012

Interview: CFL Commissioner Mark Cohon

Last night on Offside, we interviewed CFL Commissioner Mark Cohon.

Mark addressed a bunch of issues, including the timeline for a team in Ottawa, expansion in Canada and the U.S., the signing of NFL players, the health of the league and how a commissioner leads leaders.

Interview: LA Kings COO Chris McGowan

Last night on Offside, we interviewed the Chief Operating Officer of the Stanley Cup champion LA Kings, Chris McGowan. 

We covered a lot of ground, including how to translate the big win into ticket sales, the club's unconventional use of Twitter, the Olympics, the lockout and Will Ferrell's involvement with the LA Kings.