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The latest NHL proposal: Fair deal or PR move?

NHL trade rumors

The latest round of CBA proposals was met by hockey fans with undisputed enthusiasm. Things are finally looking up in terms of the possibility of a full 82-game NHL season and for the first time during this lockout, the NHL owners appear to be the good guys. The NHL chose to go public with their latest proposal, telling the media they had offered a fair “50/50″ split in Hockey Related Revenue under a 6 year term (with the possibility of a 7th year). As this morning came around, TSN.ca published Donald Fehr’s response to the players following the latest NHL proposal. Unfortunately, this letter seems to suggest much less enthusiasm from the players point of view in comparison to the fans. Why?

In the TSN article, Fehr explains the reasoning behind this lack of enthusiasm. Among the most notable reasons, he had this to say to the NHLPA:

Simply put, the owners’ new proposal, while not quite as Draconian as their previous proposals, still represents enormous reductions in player salaries and individual contracting rights. As you will see, at the 5 per cent industry growth rate the owners predict, the salary reduction over six years exceeds $1.6 billion.

The proposal includes a “Make Whole” provision, to compensate players for the anticipated reduction in absolute dollars from last year (2011-12), to this year and next year. However, it would work like this. The Players Share in subsequent years would be reduced so that this “Make Whole” payment would be made. It is players paying players, not owners paying players. That is, players are “made whole” for reduced salaries in one year by reducing their salaries in later years.

On the face of it, a 50/50 split seems fair; its an equal share of revenue between the players and owners. How much more fair than equal can you get? Well, under the previous CBA, which the owners were so eager to get (and resulted in the previous lockout), the owners fought for a 43/57 split in favour of the players. 7 short years ago–this was “fair”, and today, a collective $1.3-billion salary cut for players is fair.

So, what has changed? Besides the massive increase in concussions, front loaded contracts and waivers intended to circumvent the previous CBA, the NHL has grown its brand significantly. It is by no means any result of the players themselves (Crosby and Ovechkin are incredible players, but Gretzky and Orr were much more dominant in their days)–but rather the NHL’s responsibility to grow hockey in North America.

As much as fans love to hate on the league for putting teams in places like Arizona and the deep south, the league has managed to grow up to recording a record revenue of $3.3 billion last season.

But does that warrant an extra $231-million in revenue shares on top of the extra growth in total revenue that the owners are already receive? If the league can continue to grow the brand, then my opinion is possibly.

This does beg the question: If the players aren’t so enthusiastic about the latest deal, why are the fans? Is it a coincidence that news surfaced the NHL hired a PR spin doctor only the day before the latest round of CBA negotiations? I doubt it. The latest proposal was in stark contrast to any deal they have proposed up until now, and for some reason, the league chose to publish their decision.  This suggests a strong PR move in order to generate the needed support for the owners.

Here’s my issue. We are one week into what could’ve been the 2012-2013 NHL season, and only now the NHL proposes something relatively reasonable by which the NHLPA can negotiate from. Where was this offer in August when training camps could have started on schedule? If the owners were willing to put forth a 50/50 split eventually, why have they been holding out for the past month waiting for the NHLPA to make a counter-proposal?

The truth is, this proposal has consequently put the pressure on the NHLPA to give us hockey this year. If the season doesn’t start on the proposed November 2nd date, the players suddenly become the bad guys.

They’re now stuck between a rock and a hard place: Either they accept the fundamentals of the current deal and negotiate some beneficial terms within the next week or become the bad guys in the public eye and risk losing out in the long term as a result.

To me, fair isn’t an equal split in revenue. It may be fair for a league the size of the NFL or NBA where players can flee to Europe, but not in hockey.

Here’s why: The NHL needs its’ players; without these players, the NHL no longer becomes the premiere league for hockey. But, without the owners, where does that leave the NHL? It results in the need to simply find new owners. There are hundreds of multi millionaires who would kill to own an NHL franchise (see: Jim Balsillie). But, without the players there’s no product, or at least the product isn’t worth what it is today.

For this reason the NHL needs its players, but does it need this crop of owners? Besides issues of serious and fatal long term injuries, that’s why a 50/50 split is ultimately unfair–at least for now.

The current public uproar in favour of the NHL is why Gary Bettman has a reputation for being a brilliant businessman in the eyes of NHL owners. Business can be a slimy game, an the team owners may be some of the best businessmen in the world.

The NHL’s proposal and choice to publicize it definitely represents an attempt to generate support in their favor, but does it represent a fair deal?  In a bilateral agreement–that’s for the players to decide.