Sunday, December 21st, 2014

A Pessimistic View

18

Tyler Dellow sees some reason to be optimistic about the current state of negotiation, but I don’t think the third proposal from the NHLPA is going anywhere and I can’t share the optimism. I do agree with Tyler’s assessment of the work James Mirtle has done with the numbers (and his coverage of the work stoppage generally).

I also agree with the opinion – held by both James and Tyler – that it would be crazy to blow off the season over $600 MM. Here’s Mirtle:

That’s roughly 3 per cent of hockey-related revenues. And losing a season over that would be absurd…

What should really frustrate fans more than the actual offers in place there is the lack of negotiations taking place between the two sides. If they can turn that $500-million or so difference over five years into $150– or $200-million, they’re basically there.

And it’ll be a 54-53-52-50-50-50 type slide that guarantees players their current contracts and gets it done.

That all seems reasonable, but the owners don’t agree. Three per cent does not sound like much, but it is a little less than half of what the NHL is demanding. The player offer might eventually get the league to 50/50, over the five years of the proposed CBA, the split is still a very unsatisfactory 53-47. How can Bettman show his face around David Stern if he takes that?

Furthermore, there is still HRR defining to do. The NHL wants to introduce some new costs to set against HRR, and the NHLPA wants subsidies from communities like Phoenix and Nashville included.

The owners can’t see how they can lose the dispute. If Gary’s anger is real it is because he cannot understand how the players can ignore the arithmetic. The owners cannot fathom that the players will be willing to lose half a season – and $900 MM in salary – in a fight over a little more than $100 MM a year and a few clarifications to HRR. The owners feel entitled to the money because it doesn’t pay the players to stop playing. Cancel the season? Gary Bettman believes that the players will fold long before that becomes an issue.

It seems clear to me that the players have decided they are going to fight, they are going to ignore the arithmetic, and they are prepared to sacrifice money and games. (Which would mean that Bettman has made a huge miscalculation. Bettman is betting that I’m wrong.)

Strategically, I think this means two things:

1) Donald Fehr and the players do not believe the owners will sink a season over a little more than $100 MM a year and a few clarifications to HRR.

2) If the players win the dispute, they won’t win it until January. Fehr wants to be dickering HRR with Gary Bettman on about January 15th, when the season hangs in the balance. I’m guessing that the players understand that this is the strategy and – barring a change in heart from the owners – have written off the first half of the season.

I think we have another three months to go before the negotiations get interesting again. I guess that makes me pessimistic.

Postscript: I think it is interesting that we haven’t heard anything about decertification so far in the negotiations. Both the NFLPA and the NBAPA had trotted out the threat by now. I don’t think we will hear anything about it until January. As soon as the season is lost, decertification becomes a pretty attractive option.

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Comments

18 Responses to “A Pessimistic View”
  1. Roberto says:

    In listening to the Bieksa interviews on Team 1040 over his charity game among other things, I think this was pretty clear. When pressed with questions on the negotiations, he let slip several times that he expects to play about half a season.

  2. Roberto says:

    I’m somewhat surprised that Devellano’s comments in late September, which essentially admitted to collusion on the part of the NHL GMs in competing for UFAs, have blown over so easily. I would have expected Fehr to jump on it. I guess the lockout has given the NHL a pass on this one.

  3. Roberto says:

    Er, that should have read RFAs…

  4. Richard says:

    Hey Tom, any comments on the ongoing Reddit AMA (“Ask Me Anything”) with an NHL executive? He seems to have some pretty frank answers on the NHL’s position and some of the deal mechanics…

    • Tom says:

      I hadn’t seen the Reddit thread until you mentioned it. I read it, but I didn’t see much. What struck you as interesting?

      • Richard says:

        Nothing specifically groundbreaking (and it takes awhile to wade through the post) but I just thought it was remarkable because of the tidbits sort of all held together:

        1. Frank answers from somebody on the owner’s side that at least doesn’t seem to be an obvious Bettman PR move. (instead clearly reading more like a “wtf are the players doing?” response)
        2. Some at least reasoned out commentary on why the owners think the players are full of crap during the latest offer round.
        3. Outright dismisses the idea of contraction under any circumstance
        4. His gut opinion on when the season would start
        5. Comments on contract amnesty (ie: never)

        Beyond that the one point he hammered home a few times was how the owners view revenue connected to their team’s share of a building vs. how fans and players might just view each team as its own enterprise. He particularly brought up the Kings (effectively) basement position at the Staples Centre for arena revenue, which I thought was interesting in theory.

  5. Rajeev says:

    Can one of the smarter journalists covering the negotiations, perhaps Mirtle, ask Fehr about the possibility of decertification? It would be curious if the PA wasn’t considering it, and it’s absolutely mind boggling that no one is asking them about it.

    • Gerald says:

      Wouldn’t the answer be that the NFLPA’s definitive loss in the appellate courts has once and for all discredited that approach?

      • Rajeev says:

        Well, I meant the question should be asked regarding decertification not as a mere tactic in the current collective bargaining negotiation but as a general modus operandi of the players going forward. If the journalists seem to understand that the players have very little leverage, that they are going to currently have to make significant concessions after previously making significant concessions in the last round of negotiations, and that the owners are likely to demand more concessions in the future, which at least most of the MSM seems to understand or at least allude to, then a logical question becomes, “well, why are the players engaging in collective bargaining?” Now, we all know how you, Gerald, answer that question. With the caveat that there is no single answer applicable to all the players, and any calculus of the advantages and disadvantages of collective bargaining depends on the specific skills and leverage of individual players, I would argue that most players, and certainly the ones I’m more interested in, would be better if not far better served without collective bargaining. The rationale of this conclusion is not really the point here so I won’t get in to it, but I think reasonable people would agree that it’s at the very least a plausible, debatable position. And given the flurry of press conferences throughout the negotiation process, and the unending stream of terrible questions like “when are you planning on meeting again?” or “what do you mean by ‘contract rights’?,” doesn’t it seem unreasonable for a person paid to not only report on these negotiations, but to presumably think about them, to never once ask the union head, “hey, why do the players even want to collectively bargain anymore?” Tony Gallagher wrote a piece suggesting it months ago, but I haven’t see anyone else in the MSM talk about it. Surely, Fehr’s thoughts on it are more interesting or newsworthy than asking him to explain why he doesn’t like the so-called “Make Hole” provision for the 8th time?

        And as for decertification as a specific, mere tactic in light of the 8th Cir.’s decision, I’d say, no, it has not conclusively discredited that approach. In small part because I’d guess the 2nd Cir. would be more sympathetic, rather, less pedantic, on the issue. But in large part because it could signal to the owners that the players really are ready, no matter how unimaginably/bravely/stupidly/whateverly so, to sacrifice the whole season. And in larger part because it could signal to the owners that the players really are considering ditching the union not as a mere tactic now, but as an end to collective bargaining going forward. Whereas I think their respective leagues rightly saw the NFLPA’s and NBAPA’s decertification flirtations as desperate ploys by weak unions, mere tactics lacking the necessary teeth-gnashing and hand-wringing that would accompany such a monumental and landscape-altering decisions, decertification by the NHLPA, unquestionably a stronger union with greater solidarity than the other two, could be of a different character. When a group of fairly unified and loyal members, notwithstanding the Shanahan/Linden faction that torpedo’ed the PA’s last “strategy,” loses or is on the verge of losing on all major bargaining points in play twice in 7 years, I think there has to be some serious questions asked regarding not the efficacy of this specific union, but of the utility and viability of a union in general. And that 8th Cir. ruling or not, if I’m Jacobs, Snider, Leipold, or Bettman, the last thing I’d want is a league without collective bargaining.

        • Tom says:

          But in large part because it could signal to the owners that the players really are ready, no matter how unimaginably/bravely/stupidly/whateverly so, to sacrifice the whole season. And in larger part because it could signal to the owners that the players really are considering ditching the union not as a mere tactic now, but as an end to collective bargaining going forward.

          I agree with you, Raj, but if we assume for a second that the players are really willing to decertify, Fehr shouldn’t talk about it publicly anyway. I think the appropriate strategy is to:

          1) Warn the owners now that the players will be taking a decertification vote on the day the season is cancelled.

          2) Tell them the NHLPA will not be coming back as a bargaining agent even if the courts end up declaring that the decertification is a negotiating ploy. Their inaction and unwillingness to answer the phone will speak louder than any court decision.

          3) The league will have nine months to decide what they are going to do before the start of the 2013-14 season. Individual players will probably launch anti-trust lawsuits, but the NHLPA won’t be involved.

          4) Unplug the phone.

          I wish.

          “Why do the players want to collectively bargain?” is a very good question.

        • Gerald says:

          This is little more than a revenge fantasy for player supporters. How curious that people would invest their own emotional capital to such an extent in arguments over money between two groups, particularly when they are not part of either group.

          This is right up there with the fantasy that some people have/had where Bettman is in an arena and the entire crowd turns their back on him. LOL.

          • beingbobbyorr says:

            Well, since you bring up ‘fantasy’, although we may not be a part of either group, sports customers tend to fantasize about being professional players, not BoG members sitting in their luxury boxes talking (with the clipped, measured delivery & Newspeak-like vernacular that Gary is famous for) about synergy, corporate partners, debt-equity ratios, etc.,

            Leave it to a lawyer to refer to emotions as ‘capital’.

            Gerald, maybe you can explain this in a Law-for-Laymen kind of way: just how do the courts “make unreal” a union’s decision to decertify? If . . . .

            a) the players stop paying their dues
            b) a now-unemployed Don Fehr dismisses staff & shutters the NHLPA office
            c) the NHLPA phone number returns nothing but an out-of-service message (and website returns a ’404′ error)

            . . . . just what is a court going to do and to whom do they do it? What choice will the owners have but to negotiate with 693 (or whatever 30 x N is, where N is the number of roster spots the BoG now feels like carrying) individual contractors? I grant you that that would be a brave new world with all kinds of uncertainty, and I’m not here to argue in its’ favor necessarily. I’m just perplexed as to how the NHL and the legal system can stop a voluntary organization from disbanding if its’ members don’t feel that the organization serves their interests anymore.

            The point of a decertified/free-market NHL world isn’t so that the NHL owners would get “. . . . taken to the cleaners”. It’s more to prevent the players from enduring a perpetual, systemic CBA-by-CBA attenuation of their power.

          • Tom says:

            This is little more than a revenge fantasy for player supporters. How curious that people would invest their own emotional capital to such an extent in arguments over money between two groups, particularly when they are not part of either group.

            I cxould care less how much the players make. If I had my druthers the players would have caved before the season started. That’s what would have best served my interests. I certainly understand why the players decided not to cave though and if I am emotionally invested in the dispute, it is because I generally like the players and I think the owners are a bunch of greedy assholes. A pox on all of them.

            I think the players would be better off if they decertified, but be that as it may, I am sure that I will be better off. I don’t want the owners to crawl back to the players and beg them to do anything if the players decertified. I want to see a premier hockey league operate with no collective agreement.

        • Gerald says:

          Raj, regarding the substance, I will follow your lead by not getting into the relative merits of collective bargaining vs. a “free market” (not that such a thing ever exists outside of Econ 1000 textbooks and the fevered minds of Chicago-school economists). Suffice to say that I could not disagree more regarding the eventual merits of a CBA-free environment as it pertains to players.

          More to the point, any agent who would advise their client to vote for decertification (and I think we both know THEY would be the ones making the decisions for their clients) would be engaging in malpractice.

          With players having such a narrow window in which to ply their trade, ahuge number of them would be effectively throwing their NHL careers away. The ones who wouldn’twould be curtailing them significantly. Such an approach, as bold as it might be in a theoretical world, could create chaos. Endless litigation. Hockey? Maybe not so much. Fewer jobs. Fewer star spots. Fewer endorsements. Etc. Etc. It sure would satisfy a few folks who think it might make Gary Bettman upset. For some, that seems to be the point.

          I know that there are ideas out there where some hockey fans think that the NHL could turn into the hockey version of the Premier League. Suffice to say that I do not share the views of soccer arrivistes who think that the BPL is the real stuff of dreams or that it could translate into the North American pro hockey milieu.

          If your point is simply that the media are mostly out of their depth covering this, you will get no argument from me. Expecting them to ask real business questions or asking the parties to delve into real issues is asking far, far too much. It is actually asking a lot of BUSINESS reporters to ask such good questions, much less folks who are well outside their comfort zone. Would they be good questions to ask, just to hear the answers? Sure, why not, just for funsies? I would rather know about their long temr views on the collective bargaining process, but hey, it might break the monotony.

          Regarding your view that the NBAPA is “unquestionably” a less strong union than the NHLPA, I think your faith is misplaced. I would submit that the NBAPA has had a much more successful past than the NHLPA and greater unity by a country mile. I am somewhat baffled by how anyone could think the NHLPA is stronger than anyone at this point. I would be willing to bet that the NBAPA membership is brighter and more business-savvy than the NHLPA membership as well, and that probably counts for something.

          On the question of “losing all major bargaining points”, the NHLPA won their share the last time around, and they have won their share this time around as well. As has been reported, the NHL conceded 14 out of 17 bargaining points the NHLPA put forward. We all focus on the stuff in the published NHL proposals, but those are not all the live points that have been bargained.

          Anyway, carry on. I don’t want to put the proverbial turd in anyone’s party punchbowl.

          • Gerald says:

            As a final point, one should consider that the NHL,with its unparalled array of top-tier sports law and anti-trust attornies at their disposal, may have a strategy to address such an off-the-wall approach, unlikely as it may be. Most of these discussions always seem to revovle around the assumption that, faced with such a challenge, the NHL owners would get the vapours and faint on the spot, followed by crawling back to the players chastened and ready to be taken to the cleaners.

            The reality is that no one ever does it for realsies (since we all seem to agree that the other efforts were mere bargaining tactics). Do you not see that the decertification approach doesn’t get tried, even though it would be such a plausible path forward in your view? In the free market of ideas, it seems the market has spoken in this regard.

            I guess we’ll see if that ever changes.

          • Gerald says:

            Heh,funny,but after I posted this, I noticed that a noted hockey/soccer fan on the web posted something about soccer’s sports structure. I have only just now read the headline, but I am sure I will enjoy the heck out of it this evening.

  6. snafu says:

    I was under the impression that the court ruled that the NFL could lock out the players, but that didn’t mean that a decertified union member couldn’t pursue anti-trust laws against the league if a lockout continued:

    ‘The 8th Circuit Court said the NFL lockout is legal but stopped short of ruling on NFL players’ rights to pursue antitrust lawsuits against the league.

    “We express no view on whether the League’s nonstatutory labor exemption from the antitrust laws continues after the union’s disclaimer. The parties agree that the (Norris-LaGuardia) Act’s restrictions on equitable relief are not necessarily coextensive with the substantive rules of antitrust law, and we reach our decision on that understanding,” Judge Steven M. Colloton wrote in the ruling.’

    http://usatoday30.usatoday.com/sports/basketball/nba/2011-07-10-nba-lockout-nfl_n.htm

    Raj’s point that a different court might feel differently may be valid if you read the dissenting opinion:
    http://eye-on-football.blogs.cbssports.com/mcc/blogs/entry/22475988/29346764

    Of course, this only seems relevant during a lockout, no? Can you really force players to have a union?

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