Thursday, September 23, 2004

NHL Lockout News

This NHL CBA news update ends my recent two-week sabbatical from posting. I have been busy at college, this being my sophomore year at the University of Michigan. I am a Mechanical Engineering major, and involved in the Solar Car Team as well as Undergraduate Research. I'll post as often as possible with my hectic schedule. Goodenow The trench warfare continues between the NHLPA and team owners, with Bob Goodenow, executive director of the NHL Players' Association, participating in a hot seat interview on CBC's The National Wednesday night. NHL Commissioner Gary Bettman had a similar interview the previous night. Goodenow didn't give hockey fans much hope for an expeditious end to the NHL lockout of 2004, which commenced after midnight on September 1:
"We've tried to find a common ground and tried to find a fair solution but the only response we've got from Gary Bettman and the owners so far is that it has to be a cap, it has to be a cap, and as long as that's the stance, unfortunately, this lockout is going to continue."
These strong words certainly don't give me much optimism that a new CBA will be inked to save part of the 2004-2005 NHL season. Both sides are sticking to their guns and harsh rhetoric, and we have yet to see an Olive Branch Petition extended from either side. The rhetoric and steadfastness makes sense, as both sides want to hold on to their bargaining chips and not lose negotiation space. But, eventually, if this lockout will ever end, either the NHL will have to scrap its salary cap hopes or the NHLPA will have to accept a cap in some form. NHL players make on average $1.8 million per season, and, under a salary cap system the league is pursuing, that average would likely be around $1.3 million. But Goodenow stands pat:
"Hockey players are highly paid and they deserve to be highly paid. It is a marketplace and it has worked for many, many decades and we believe that some type of marketplace going forward is the ultimate fair kind of system for fans, players and owners. Our proposals and all of our actions so far have gone towards finding a middle ground. To date, Gary Bettman and the owners have said there is only one solution and that is a salary cap....Sometimes people say, 'I'm mad at the players.' The reality is, what we're trying to do is to make sure the public knows: one, the players are locked out; two, that they want to play; three, that their salaries have been set by the owners, and salaries go up and down based on their performance. It's not the players triggering these problems. The problems are complex and dynamic. It's important for the public to understand...that the players are not asking for more. The players are asking for just a fair share and a marketplace system."
I agree with Goodenow that the owners are partially to blame for the economics for the league. Look, the main problem with how spending works in the NHL is the majority of these owners are doing business in the NHL as a hobby. They will still be able to put bread on the table even if their NHL franchises are losing millions of dollars each year. This is because one becomes an NHL owner after becoming infinitely rich, so the owners don't have enough pressure to run a healthy business in the NHL. And the few fiscally conservative owners out there are pressured to throw their money around when guys like Carolina Hurricanes owner Peter Karmanos and Red Wings owner Mike Illitch have pissing wars over who can sign Sergei Fedorov (1998 offer sheet). After Fedorov's holdout in 1998, he pocketed a grand total of $28 million for a half season of play ($12 million bonus for the Wings reaching the conference finals, $2 million salary, $14 million signing bonus). Such rogue deals have fueled the out-of-control spending we see in the NHL under its current CBA. argues that "Three key contracts helped kill the CBA," citing deals with Joe Sakic, Paul Kariya, and Eric Lindros. Karmanos has said that he has lost $12-16 million each year since 1994, when he bought the Hurricanes franchise. He also said that he would only lose $5 million if the Hurricanes do not play this season:
"We'll lose less money next year as well. It's like a panacea to me. I suddenly have an extra seven, eight million dollars."
Bettman The following are excerpts and key points from Gary Bettman's interview with the CBC Tuesday night. Gary emphasized that a lockout shouldn't result in the contraction of franchises:
"Personally, I don't believe in contraction. I think that's a terrible thing to do to your fans. I also believe that with $2.1 billion in revenues we can have 30 healthy franchises...with affordable ticket prices."
But Bettman conceded that the purpose of the lockout was to correct the current system before teams did drop. He continued:
"Let's not get caught up in the rhetoric here. The union has not offered us anything meaningful. Under the union's last offer, under the projections that they gave us, over half of our team's would continue to lose money. If that's how they figure we're going to solve the problems, it's clear why we haven't been able to make a deal."

And to the kids who are missing Hockey Night in Canada:

"We're sorry. We're sorry we have to go through this but we can't continue the way we're going and we promise, we promise, that we're going to fix it. We need to fix the system and I'm not planning on going anywhere until it's fixed."

And how the NHL will lure fans back:
"We are concerned about the damage a work stoppage will impose on the business but we are in constant communication with our fans. As I said before, we apologize for the fact we have to go through a work stoppage but at the end of the day it's not too far back in our history where we almost lost Ottawa and we don't want to lose Ottawa going forward. We don't want to lose any franchises so we're asking our fans to be patient with us with the assurance we'll make things right."
Bettman also divulged that team owners are under a gag rule prohibiting them from discussing CBA issues for fear of a $1 million fine. For an in-depth CBA guide, go here or here. Role Call Over 150 players have signed deals to play in European Leagues during the lockout. Most of the contracts contain escape clauses that will allow the players to return to the NHL once the lockout ends, although Peter Forsberg has already committed to playing the entire season with Modo (Sweden). Team Modo is building a powerhouse of talent, including Henrik Sedin, Daniel Sedin, Mattias Weinhandl, Pierre Hedin, Markus Naslund, Niklas Sundstrom, Peter Forsberg. For Wings fans, Henrik Zetterberg will be playing for Timra (Sweden), Tomas Holmstrom for Lulea (Sweden), Pavel Datsyuk for Dynamo Moscow (Russia), Anders Myrvold for Valerenga (Norway), and Jiri Fischer for Liberec (Czech Republic). Any other arrangements have yet to be formalized or released to the public.


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