It still sounds like the 3 proposals are based off of the players original proposal which moves away from the current methodology to more of a defined $ or % increase from last year or % share of growth from current revenue, which the owners seem to see as a non-starter, so they are still on different playing fields (which matters if % HRR growth differs from the assumptions being made).
If you work under the current structure and have the impression that 50/50 feels fair and that not “reneging” on current contracts feels fare, then you could do the following “soft landing”:
yr 1=54%
yr2=51%
yr3=49%
yr4=48%
yr5=48%
yr6 and beyond=50%
Assuming a 5% growth in revenue that results in the following increase /(decrease) for player salaries as compared to the previous year:
yr 1=(0.5%)
yr2=(0.8%)
yr3=0.9%
yr4=2.9%
yr5=5%
yr6=9.4% (the year player share its bumped from 48% up to 50%)
yr7 and beyond=5%
On an NPV basis (assuming 5% discount rate) that is exactly equivalent dollar-wise to 50/50 over the course of the life of the contract. Additionally, that results in basically keeping player $ flat for the first 3 years, which would allow the owners to not have to “renege” on current contracts and any small deviation could be taken care of through escrow (like it is today).
Separately, I’m shocked that no one is talking about this, but the owners proposal as it pertains to “lifetime” loophole contracts is huge. From a marcro standpoint it has an impact on the definition of what is included in the numerator for the % of HRR (lots of words have been spilled on the potential/unkown change to the denominator). The impact on the players/owners overall should be fairly negligible, considering only a handful of these contracts (roughly a dozen) have been given out and their % of revenue in 10 years or so (when these guys start retiring) will be roughly 1%. But the micro impact on individual teams (such as the hawks and flyers) will be pretty huge considering in a decade they will likely have to devote >10% of their cap space to players who are no longer suiting up for them. That would really suck for us.
To me this makes no sense, its benefits are spread so wide that they are negligible to owners and its harm is so accute (and impacting powerful owners). I get why they want to limit the owners ability work the loophole to blow this “off the books” money for future contracts, but why the adhoc punishment? It makes no sense, even as a bargaining chip to give up later in negotiations because if the benefits to the owners are negligible in aggregate then the hurt to the players escrow is spread so thin that its also negligible.
The owners are fixed on winning, period. And if that means sacrificing the entire 2012-13 season, then they are fully prepared to do that. That means the players either cave now and accept the best available deal, or come crawling back on their bloody knees next summer.
This entire mess can be attributed to two things. One, a ruinous strategy of over-expansion. Two, the fact that a number of clubs are supposedly in dire financial straits. Gary Bettman and the owners are united in “fixing” the mess they created by over-expansion. United in making sure that every single club is financially sound. United in taking the next step to getting rid of a few teams.
Donald Fehr was hired to be the pitbull of the players. The problem is he is doing battle with an ownership group that is prepared to break the union under their warped view of getting to financial sanity for the league.
The 2012-13 season is history. Unless the players come to the realization that they are totally and completely powerless. They need to fire Donald Fehr and come groveling back while accepting the terms of the owners. It’s as simple as that. Right or wrong. It is what it is. Like I said the owners aren’t going to budge and are seemingly fully prepared to sacrifice an entire season of hockey. This is a very one-sided fight that, in hindsight, the players horribly miscalculated on.
Rufus, you have drunk the league’s PR koolaid hook line and sinker. This isn’t about strengthening the struggling clubs. If that was the case, the union would be taking the $ given up by the players/revenue from well off teams and directing it to the struggling teams via increased revenue sharing. But beyond aesthetics, they aren’t. Actually, the player’s first proposal called their bluff on this. This is a pure money grab because the owners have leverage with the timing of recent labor disputes in other sports, the increased negative PR for unions as a whole, and the downturn in the economy. This is about taking some of the player’s pie, not about redistributing the pie to teams that are malnourished.
Over expansion really isn’t the problem, its where they expanded to how those teams entered the market. There definitely are success stories for non-traditional markets such as Dallas, San Jose, and Nashville.
I’ll have to strongly disagree. I’m not on the side of the owners (or the players) in this negotiation. But I’m telling you the owners are 100% committed to winning this negotiation and are going to budge very, very little on their position. Right or wrong, that is what it is. The players either concede now, or they crawl back on their knees next summer.
While I respect your sophisticated financial modeling and the like, the brutal truth is that this isn’t an argument about “math” so far as the owners go. They aren’t negotiating in good faith because they are bent on winning the argument completely. Which I fervently believe they will wind up doing in the end. And like I said, I’m not on the side of the owners in this mess. Rather I’m a longtime partial season ticket holder who is resigned to the reality of these negotiations. The players don’t have a pot to piss in, and it was horrible miscalulation on their part to go out and hire Donald Fehr. He’s not going to get them a damned thing. He’s just not.
I did not mean to imply that I believe you are on the side of the owners. I simply meant to say that the attribution of this lockout to underwater teams is merely a ruse perpetrated by the league’s PR machine. The fact that we have very quickly moved on from revenue sharing to how to we slice up the pie between the owners as a block and the players is evidence. The owners see themselves as having good leverage (although not as good as they did in 2004) and are aiming to take advantage of that.
I’m not as pessimistic as you, given that the owners are actually doing quite well as a whole and do have a vested interest in a full upcoming season (certainly much more so than they did in 2004). Frankly, I’m quite optimistic that something will be done. Perhaps not in the next 6 days and perhaps not in time for there to be a full 82 game season, but I think it will come very shortly thereafter and resemble something very close to what I outlined in a post above. I see the “soft landing” as a win for both sides as the owners will get down to the 50/50 that they think/know they can get down to and the players won’t have to have a rollback. The league isn’t in the dire straits that it was in 2004 that an immediate rollback is necessary to save the game
This is a 3.3B game right now with the owners piece of the revenue is over 1.4B. The owners’ revenue was around 800M last lockout(assuming players were making 63% of HRR, but this is a debatable number). According to Forbes, NHL teams lost a total of $96 million during the 2003-04 season in net operating income. For the 2008-2009 season and it was net operating income profit of $128 million.
Don’t let the chicken little’s fool you, the owners will hurt if the season is cancelled. They have much much more at stake to get games going than they did during the last lockout. Additionally, the growth in revenue since last lockout was (at least partially) a result of significant rule changes that improved the entertainment of the on ice product. The game coming out of the lockout was much different than the game going in. That won’t happen this time. There will be no bandaid for the damage of a lost season, just a lot of pissed off ticket holders with less disposable income than they did in the mid-2000s.
I’m not sure why you are placing blame on Fehr. He is obviously a significant (thats not a strong enough word) upgrade from Goodenow and from all accounts (from leaks from both sides) doing just fine in representing the players and dealing with the league. Don’t get wrapped up in the PR machine, this is a negotiation. I don’t for a minute buy that the players thought they were going to win a damn thing in this negotiation, they just want to lose the least amount possible. And if that in the end is something like, players (as a whole) don’t get raises for the next 3 years and then get half of ongoing revenue increases, well then thats not a terrible thing for them.
I wish I shared your optimism. But I don’t. Not unless the players put pressure on Donald Fehr to acquiesce, which they won’t do because they hired Fehr to be the pain in the ass human hemorrhoid that he was during his MLB player union days. The players don’t have any leverage. The owners are prepared to lose the season. Convinced of that 100% in fact.
Rufus you couldn’t be more wrong about Donald Fehr. The players have the best man possible representing them.
Don’t buy into the Owners PR stance that they really wanted to get the season going and this is their best offer. It is a LIE and is simply posturing. Ask yourself this. Why would they claim a 50/ 50 deal that has a provision such as the “Make Whole” provision? They can’t believe that anyone with a brain actually views the owners last proposal as a 50/ 50 deal. On top of that HRR doesn’t include ALL hockey related revenue, it only includes the things that define HRR which Fehr briefly alluded to in the above vid.
Fehr is also 100% correct when he says if this was the Owners best offer why did it take 1 month of a lockout to present. Well he didn’t give the answer, but the answer is because the NHL Owners are using the same lawyers that Bettman’s friend David Stern used to represent the NBA Owners. Just like the NBA work stoppage, the NHL Owners came with their first reasonable offer after the first game checks were missed. They also claimed they could get a full season in if the NBAPA accepted there offer immediately. However, the NBA Players didn’t and it took one more month and a shortened season.
There is no way Fehr and the Players will accept an offer with a “Make Whole” provision that essentially has players paying players, nor should they. I would also like to see the books on those teams that said to be “losing” money. Bud Selig in baseball was a master of cooking the books in Milwaukee to make it appear as though the Brewers were losing money to push his revenue sharing agenda. In reality Selig had a seperate company that ran parking. That money was counted as Brewers money, but the organization certainly saw revenue from it. Anyway, point is when the League is generating record revenues, the top League officials have goten raises because of the revenues and Owners spent wildly this summer; it is hard for me to accept these cries of poor when they won’t open the books. Donald Fehr is spot on when he challenges these Owners that spent wildly to be held accountable for honoring those contracts and not asking the Players to pay for them.
Edit I didn’t add NOT when talking about Brewers parking money. should have read That money was not counted as Brewers money, but the organization certainly saw revenue from it. Forgive my typo
Rufus, I agree…
Ozzie, in the end it really doesn’t matter what the “real” motivation is behind the owner’s demands… saving the Team’s that are losing money ( and I can believe there are several losers)… or Just flat out greed! The owners have the power… it is their League, yes the Players have the talent… but it doesn’t matter.
And just because the League turned $128 mill. profit… I bet most or all of the “profit” came from top 10 Teams ( in profit)… if that is the case… the owners will stick together because the Top 10 profiting teams aren’t going to just hand out checks to the bottom 20– that would be like welfare.
Lastly, these Players can only make this kind of coin for so many years… some day the Gravy Train will end… and every month that goes by is one Less $100,000 of income for some of these guys. One year lost- is Millions of Dollars that they will NEVER SEE!!! And can never make coaching Pee-Wee Hockey in Alberta!
The owners want to break the players and want salary and contract structure blown up and rebuilt to their liking. What is most revealing to me is that nary one owner has come out with public opinion on this strike. They are hunkered down oink their foxhole collectively. They want the entire business model changed, and if it means losing an entire season to accomplish that goal then so be it. The players are going to give up a lot under a new labor agreement. And they are also losing a season worth of paychecks for a career that is limited.
Listen for silence from the owners…it is deafening and nothing like 2004.
I’m not as concerned with the substance of each offer as I am with how the parties are handling the negotiation. At the start, I was happy that they were dealing with small issues, and getting small stuff like team travel out of the way. But, ever since the owners cut off those talks, it has been nothing but all encompassing take it or leave it offers. Until they get back to sitting in a room and working through issues, no matter how small, there will be no season.
It’s hard to determine what is really going on behind the scenes from the press conferences. Both the NHL & the NHLPA are ‘spinning’ things to make themselves look ‘better.’ But, behind the scenes I hope: (1) Rocky Wertz isn’t in the room making these demands. I hope he realizes that he has to work with players after a deal is done. If I’m a player, I’d remember who the owners in the room were, and it would affect how I deal with that owner in the future – when negotiating a free agent deals. I remember when Jeff Saturday praised Robert Kraft for being instrumental in the NFL CBA, but the flip side of that coin is that it’s human nature to not trust an owner after a contentious negotiation if they were delivering ‘ridiculous’ offers; & (2) One of the owners realizes there wont be an agreement until they can answer the players’ seemingly main question: “If you want us to give you concession X, what do I get in return?” If the owners don’t make the NHLPA feel like they’re getting something in this negotiation, there won’t be a season.
It still sounds like the 3 proposals are based off of the players original proposal which moves away from the current methodology to more of a defined $ or % increase from last year or % share of growth from current revenue, which the owners seem to see as a non-starter, so they are still on different playing fields (which matters if % HRR growth differs from the assumptions being made).
If you work under the current structure and have the impression that 50/50 feels fair and that not “reneging” on current contracts feels fare, then you could do the following “soft landing”:
yr 1=54%
yr2=51%
yr3=49%
yr4=48%
yr5=48%
yr6 and beyond=50%
Assuming a 5% growth in revenue that results in the following increase /(decrease) for player salaries as compared to the previous year:
yr 1=(0.5%)
yr2=(0.8%)
yr3=0.9%
yr4=2.9%
yr5=5%
yr6=9.4% (the year player share its bumped from 48% up to 50%)
yr7 and beyond=5%
On an NPV basis (assuming 5% discount rate) that is exactly equivalent dollar-wise to 50/50 over the course of the life of the contract. Additionally, that results in basically keeping player $ flat for the first 3 years, which would allow the owners to not have to “renege” on current contracts and any small deviation could be taken care of through escrow (like it is today).
Separately, I’m shocked that no one is talking about this, but the owners proposal as it pertains to “lifetime” loophole contracts is huge. From a marcro standpoint it has an impact on the definition of what is included in the numerator for the % of HRR (lots of words have been spilled on the potential/unkown change to the denominator). The impact on the players/owners overall should be fairly negligible, considering only a handful of these contracts (roughly a dozen) have been given out and their % of revenue in 10 years or so (when these guys start retiring) will be roughly 1%. But the micro impact on individual teams (such as the hawks and flyers) will be pretty huge considering in a decade they will likely have to devote >10% of their cap space to players who are no longer suiting up for them. That would really suck for us.
To me this makes no sense, its benefits are spread so wide that they are negligible to owners and its harm is so accute (and impacting powerful owners). I get why they want to limit the owners ability work the loophole to blow this “off the books” money for future contracts, but why the adhoc punishment? It makes no sense, even as a bargaining chip to give up later in negotiations because if the benefits to the owners are negligible in aggregate then the hurt to the players escrow is spread so thin that its also negligible.
The owners are fixed on winning, period. And if that means sacrificing the entire 2012-13 season, then they are fully prepared to do that. That means the players either cave now and accept the best available deal, or come crawling back on their bloody knees next summer.
This entire mess can be attributed to two things. One, a ruinous strategy of over-expansion. Two, the fact that a number of clubs are supposedly in dire financial straits. Gary Bettman and the owners are united in “fixing” the mess they created by over-expansion. United in making sure that every single club is financially sound. United in taking the next step to getting rid of a few teams.
Donald Fehr was hired to be the pitbull of the players. The problem is he is doing battle with an ownership group that is prepared to break the union under their warped view of getting to financial sanity for the league.
The 2012-13 season is history. Unless the players come to the realization that they are totally and completely powerless. They need to fire Donald Fehr and come groveling back while accepting the terms of the owners. It’s as simple as that. Right or wrong. It is what it is. Like I said the owners aren’t going to budge and are seemingly fully prepared to sacrifice an entire season of hockey. This is a very one-sided fight that, in hindsight, the players horribly miscalculated on.
Rufus, you have drunk the league’s PR koolaid hook line and sinker. This isn’t about strengthening the struggling clubs. If that was the case, the union would be taking the $ given up by the players/revenue from well off teams and directing it to the struggling teams via increased revenue sharing. But beyond aesthetics, they aren’t. Actually, the player’s first proposal called their bluff on this. This is a pure money grab because the owners have leverage with the timing of recent labor disputes in other sports, the increased negative PR for unions as a whole, and the downturn in the economy. This is about taking some of the player’s pie, not about redistributing the pie to teams that are malnourished.
Over expansion really isn’t the problem, its where they expanded to how those teams entered the market. There definitely are success stories for non-traditional markets such as Dallas, San Jose, and Nashville.
I’ll have to strongly disagree. I’m not on the side of the owners (or the players) in this negotiation. But I’m telling you the owners are 100% committed to winning this negotiation and are going to budge very, very little on their position. Right or wrong, that is what it is. The players either concede now, or they crawl back on their knees next summer.
While I respect your sophisticated financial modeling and the like, the brutal truth is that this isn’t an argument about “math” so far as the owners go. They aren’t negotiating in good faith because they are bent on winning the argument completely. Which I fervently believe they will wind up doing in the end. And like I said, I’m not on the side of the owners in this mess. Rather I’m a longtime partial season ticket holder who is resigned to the reality of these negotiations. The players don’t have a pot to piss in, and it was horrible miscalulation on their part to go out and hire Donald Fehr. He’s not going to get them a damned thing. He’s just not.
see you at the icehogs game tonight.
I did not mean to imply that I believe you are on the side of the owners. I simply meant to say that the attribution of this lockout to underwater teams is merely a ruse perpetrated by the league’s PR machine. The fact that we have very quickly moved on from revenue sharing to how to we slice up the pie between the owners as a block and the players is evidence. The owners see themselves as having good leverage (although not as good as they did in 2004) and are aiming to take advantage of that.
I’m not as pessimistic as you, given that the owners are actually doing quite well as a whole and do have a vested interest in a full upcoming season (certainly much more so than they did in 2004). Frankly, I’m quite optimistic that something will be done. Perhaps not in the next 6 days and perhaps not in time for there to be a full 82 game season, but I think it will come very shortly thereafter and resemble something very close to what I outlined in a post above. I see the “soft landing” as a win for both sides as the owners will get down to the 50/50 that they think/know they can get down to and the players won’t have to have a rollback. The league isn’t in the dire straits that it was in 2004 that an immediate rollback is necessary to save the game
This is a 3.3B game right now with the owners piece of the revenue is over 1.4B. The owners’ revenue was around 800M last lockout(assuming players were making 63% of HRR, but this is a debatable number). According to Forbes, NHL teams lost a total of $96 million during the 2003-04 season in net operating income. For the 2008-2009 season and it was net operating income profit of $128 million.
Don’t let the chicken little’s fool you, the owners will hurt if the season is cancelled. They have much much more at stake to get games going than they did during the last lockout. Additionally, the growth in revenue since last lockout was (at least partially) a result of significant rule changes that improved the entertainment of the on ice product. The game coming out of the lockout was much different than the game going in. That won’t happen this time. There will be no bandaid for the damage of a lost season, just a lot of pissed off ticket holders with less disposable income than they did in the mid-2000s.
I’m not sure why you are placing blame on Fehr. He is obviously a significant (thats not a strong enough word) upgrade from Goodenow and from all accounts (from leaks from both sides) doing just fine in representing the players and dealing with the league. Don’t get wrapped up in the PR machine, this is a negotiation. I don’t for a minute buy that the players thought they were going to win a damn thing in this negotiation, they just want to lose the least amount possible. And if that in the end is something like, players (as a whole) don’t get raises for the next 3 years and then get half of ongoing revenue increases, well then thats not a terrible thing for them.
I wish I shared your optimism. But I don’t. Not unless the players put pressure on Donald Fehr to acquiesce, which they won’t do because they hired Fehr to be the pain in the ass human hemorrhoid that he was during his MLB player union days. The players don’t have any leverage. The owners are prepared to lose the season. Convinced of that 100% in fact.
Rufus you couldn’t be more wrong about Donald Fehr. The players have the best man possible representing them.
Don’t buy into the Owners PR stance that they really wanted to get the season going and this is their best offer. It is a LIE and is simply posturing. Ask yourself this. Why would they claim a 50/ 50 deal that has a provision such as the “Make Whole” provision? They can’t believe that anyone with a brain actually views the owners last proposal as a 50/ 50 deal. On top of that HRR doesn’t include ALL hockey related revenue, it only includes the things that define HRR which Fehr briefly alluded to in the above vid.
Fehr is also 100% correct when he says if this was the Owners best offer why did it take 1 month of a lockout to present. Well he didn’t give the answer, but the answer is because the NHL Owners are using the same lawyers that Bettman’s friend David Stern used to represent the NBA Owners. Just like the NBA work stoppage, the NHL Owners came with their first reasonable offer after the first game checks were missed. They also claimed they could get a full season in if the NBAPA accepted there offer immediately. However, the NBA Players didn’t and it took one more month and a shortened season.
There is no way Fehr and the Players will accept an offer with a “Make Whole” provision that essentially has players paying players, nor should they. I would also like to see the books on those teams that said to be “losing” money. Bud Selig in baseball was a master of cooking the books in Milwaukee to make it appear as though the Brewers were losing money to push his revenue sharing agenda. In reality Selig had a seperate company that ran parking. That money was counted as Brewers money, but the organization certainly saw revenue from it. Anyway, point is when the League is generating record revenues, the top League officials have goten raises because of the revenues and Owners spent wildly this summer; it is hard for me to accept these cries of poor when they won’t open the books. Donald Fehr is spot on when he challenges these Owners that spent wildly to be held accountable for honoring those contracts and not asking the Players to pay for them.
Edit I didn’t add NOT when talking about Brewers parking money. should have read That money was not counted as Brewers money, but the organization certainly saw revenue from it. Forgive my typo
Rufus, I agree…
Ozzie, in the end it really doesn’t matter what the “real” motivation is behind the owner’s demands… saving the Team’s that are losing money ( and I can believe there are several losers)… or Just flat out greed! The owners have the power… it is their League, yes the Players have the talent… but it doesn’t matter.
And just because the League turned $128 mill. profit… I bet most or all of the “profit” came from top 10 Teams ( in profit)… if that is the case… the owners will stick together because the Top 10 profiting teams aren’t going to just hand out checks to the bottom 20– that would be like welfare.
Lastly, these Players can only make this kind of coin for so many years… some day the Gravy Train will end… and every month that goes by is one Less $100,000 of income for some of these guys. One year lost- is Millions of Dollars that they will NEVER SEE!!! And can never make coaching Pee-Wee Hockey in Alberta!
The owners want to break the players and want salary and contract structure blown up and rebuilt to their liking. What is most revealing to me is that nary one owner has come out with public opinion on this strike. They are hunkered down oink their foxhole collectively. They want the entire business model changed, and if it means losing an entire season to accomplish that goal then so be it. The players are going to give up a lot under a new labor agreement. And they are also losing a season worth of paychecks for a career that is limited.
Listen for silence from the owners…it is deafening and nothing like 2004.
I’m not as concerned with the substance of each offer as I am with how the parties are handling the negotiation. At the start, I was happy that they were dealing with small issues, and getting small stuff like team travel out of the way. But, ever since the owners cut off those talks, it has been nothing but all encompassing take it or leave it offers. Until they get back to sitting in a room and working through issues, no matter how small, there will be no season.
It’s hard to determine what is really going on behind the scenes from the press conferences. Both the NHL & the NHLPA are ‘spinning’ things to make themselves look ‘better.’ But, behind the scenes I hope: (1) Rocky Wertz isn’t in the room making these demands. I hope he realizes that he has to work with players after a deal is done. If I’m a player, I’d remember who the owners in the room were, and it would affect how I deal with that owner in the future – when negotiating a free agent deals. I remember when Jeff Saturday praised Robert Kraft for being instrumental in the NFL CBA, but the flip side of that coin is that it’s human nature to not trust an owner after a contentious negotiation if they were delivering ‘ridiculous’ offers; & (2) One of the owners realizes there wont be an agreement until they can answer the players’ seemingly main question: “If you want us to give you concession X, what do I get in return?” If the owners don’t make the NHLPA feel like they’re getting something in this negotiation, there won’t be a season.