Thursday, May 31, 2012

NHL Armageddon ?

Game one of the Stanley Cup final was played last night, I worked and didn't see it but I understand it was a reasonable tilt with the Cinderella Los Angeles Kings winning their ninth straight playoff road game to take a 1-0 lead in the final. More importantly is that after this series ends it might be quite awhile before we see another NHL contest as the very real possibility of another prolonged strike/walkout looms large with the expiry of the current Collective Bargaining Agreement on September 15th.

Make no mistake, despite the healthy upturn in NHL revenues since the disastrous cancellation of the 2004-05 season the owners will be looking for concessions from the players. The simple matter of the fact is that currently the NHL players receive up to 57% of league revenues, creating the situation that has seen the salary cap rise from $39 million in 2005 to a projected $73.8 million this summer, the result is that the current cap floor, the minimum teams may expend in salaries, is now $48 million, or $9 million more than the ceiling was seven years ago.

Since returning the NHL has improved the product on the ice, added numerous major corporate sponsors, signed a much more lucrative American television contract and increased attendance but that's not going to stop the owners from crying poor. In reality despite the increased revenues as many as 18 of the NHL teams lost money in 2010-11 and although revenues are up operating income is down, 21% in 2010-11 according to Forbes Magazine and the reason for that is quite simply that the players make too much. The recent negotiations in the other two major sports with salary caps, the NFL and the NBA, resulted in the players accepting agreements whereby the players get 48-50% of revenues and you can bet that's what the NHL owners will be gunning for.

The two sides have not even begun to discuss the new CBA, despite the fact that it expires in less than four months, and the fact that the players union is now headed by Donald Fehr, who is philosophically opposed to any sort of salary cap having successfully kept one out of baseball during his tenure as the head of the MLBPA, I don't feel too warm and fuzzy about this one. Fehr, and the NHL owners, have to understand that hockey will be unlikely to survive a second work stoppage in less than a decade, the fan base is simply not large enough and the corporations who have signed on will simply walk away and spend their sponsorship dollars elsewhere.

Hopefully the players will realize that a game which has an average player salary of $2.3 million isn't really the same as working in a 7-11 and being squeezed by the man, and the owners will reflect upon the fact that the value of their franchises are at an all time high, and gaining value every year, which isn't the same for all business models in North America currently. Hopefully both sides will sit down and try and figure how to keep the game growing and moving forward.

Personally, I'm not too hopeful. I mean do these two look like they're ready to get along ?

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