The Current Collective Bargaining System is Rigged………Players Cannot Possibly Win, They Can Only Lose

Introduction

There is no doubt that Players arguing they should be paid more irritates the fans. However, closer analysis shows that NHL Players grew up dedicated to one goal, worked toward it and sacrificed for many years. They outperformed their peers to get an opportunity as adults for a potentially lucrative, but very short, career.  They are the best hockey players in the world.  This does not mean they are entitled to a certain salary, but they should be entitled to a fair system for determining that salary.  The current system is not fair at all….it is rigged against the Players. 

Under Gary’s triple hard cap collective bargaining agreement (the "CBA"), the Players have no practical response to the Owners demanding a bigger and bigger share of the revenue pie. This will only get worse for the Players unless they abandon the counterproductive construct of unions and the collective bargaining process.  As we have seen, HRR is only a tiny portion of the financial benefits of NHL franchise ownership that the Owners enjoy.  

In fact, available data (see chart below) demonstrates that, from 2006 to 2021, even those Owners that have lost hundreds of millions in operating income (determined by HRR) have overall made money simply from franchise value appreciation…..and that does not even include the tax breaks the Owners enjoy or profits from ancillary businesses.  

The Owners Actually Make Money Even When They Lose Money!! 

The NHL’s pleas of poverty that led to Players agreeing to a 12% reduction in Players Compensation for the CBA signed in 2012 now ring hollow!!

Since 2006, the NHLPA Has Not Been Able to Exert Any Economic Leverage at all Against the Owners

Whether they want to admit it or not, and despite numerous opportunities to do so, the NHLPA Executive Directors who have followed Bob Goodenow have been unable to create any leverage at all in CBA negotiations.  They’ve made some impressive nonfinancial gains that improve Players’ health, happiness and overall quality of life……..concussion protocol, ability to obtain second medical opinions (but not be in control of their own medical treatment……see Jack Eichel), bye weeks, nicer arena training facilities, etc.. Those things are important, but they don’t help Players ‘pay the mortgage’.

The erosion of Players compensation from 75% to 57% in 2005, and then again in 2012 to 50%, of HRR,  is the result of the systemic inequality of bargaining power that is the result of participating in a process that is rigged in favour of the Owners and against the Players. So Players need to change the process to a fair one if they want to have any hope of being paid their Fair Market Value, or even maintaining their 50% allocation of HRR.

The Players Are Unable to Strike or Withstand an Owners' Lockout  

The most unfair aspect of the system is that Players cannot exert any economic leverage through a work stoppage, and striking is their only weapon.  Any work stoppage, whether a Players strike or an owners’ lockout, is a war of attrition. In labour disputes involving non-sports unions, a strike is a very powerful weapon. Employees of non-sports businesses typically have long careers spanning decades. The loss of pay for days, weeks, or even months can be recouped over their careers, making a strike worthwhile.

However, most Players’ careers are very short; on average roughly four years. It’s never worth it to strike, not even if all the Players’ demands are eventually agreed to by the Owners.  

Take the following example.  Let’s assume league HRR is $5 billion, and therefore the Players’ Share would be $2.5 billion.   A gain of 5 points demanded by the Players (say from 50 to 55% of HRR) would be worth $250 million a year in extra compensation. Assume that is a tough fight to win, and requires a Players’ strike lasting half a season (3 months) to achieve.  In a strike lasting half a season, the Players’ would be giving up $1.25 billion in salary that year in order to gain $250 million.  

The math is identical if the League wants to reduce the Players' Share of HRR from 50% to 45%. A decrease of 5 points demanded by the Owners (say from 50 to 45% of HRR) would reduce Players' Compensation by $250 million a year.  Assume the NHL backs it up with an Owners lockout.  Then assume that the NHLPA talks tough, and persuades the Players’ to hold out. In a lockout lasting half a season, the Players’ would be giving up $1.25 billion in salary that year in order to hold onto 5% of HRR ($250 million). For example, in 2012, the lockout lasted only three months before the Players folded and took a 12% pay cut; and by holding out they gained an agreement by the NHL to allow the Players to have a Defined Benefit Pension Plan as long as the Players agreed to pay for it themselves, including substantial administrative costs.

A different way to analyze the same principle is as follows.  Normally a non-sports employee will have a 40 year career….say from 25 to 65 years old.  If a Player has a 4 year career, then striking for ½ season is like striking for 1/8 of a non-sports employee’s career........5 years out of a 40 year career.

Furthermore, NHL TV contracts require networks to continue paying rights fees of hundreds of millions of dollars annually during a Players’ strike, and even during an Owners’ lockout.  During the work stoppage, whether by strike or lockout, the Owners are not paying any Players’ salaries.  They can cut all other expenses ‘to the bone’.  And the Owners are still able to collect TV revenue, and operate their arenas and ancillary businesses profitably, without any interference whatsoever from the Players or the Courts.

Summary

It’s hard to imagine any scenario where it would be rational for Players to endure a lockout or strike over a five percentage point decrease or increase in HRR.  For a Player, missing a significant portion of his few prime earning years is huge and the return is relatively insignificant.   But for the Owners, enduring a work stoppage has almost no impact.  Players have no chance!

So….what can Players do to help themselves??  Find out next week…….