First of all I would like to clarify that I was pro-ownership last lockout. Owners had bumped up salaries to the point the league’s finances were in rough shape. However, it was basically a few ownership groups who were driving the pay-escalation, and it was difficult to indict the group as a whole.
Some owners had been victims themselves and had come out and criticized some of the more obvious offenders. Two examples of teams guilty of putting upward pressure on salaries are the NYR who inked Joe Sakic to an offer sheet which paid him $17 mil in 1997-98 and Carolina who signed Sergei Federov to an offer sheet that paid Feds $14 mil in 1998-1999. As we all know both Colorado and Detroit matched the offer sheets and retained their stars, but they were none too happy about it. Nearly a decade and a half later these numbers are still way out of line according to owners.
The players agreed to a sizable pay cut because of these indiscretions in the 2005 CBA, which featured the additional accoutrement of an owner-insisted-upon salary cap. But it took a year of stubborn bickering and acrimony along with dark rinks to get back to playing hockey, which caused the rabid fans arguably more grief than the players or owners.
So here we go again.
This time however, instead of a few renegade teams imprudently pumping up player-costs, it is literally a league-wide indulgence from which no team can claim exemption.
What is the proposed solution to the problems this indiscriminant spending has caused for some teams? Player pay-cuts and the owners once again reneging on contracts supposedly negotiated in good faith.
I can’t support this again, and can’t understand how the manipulative owners manage to garner support from their minions in the form of the mythical rhetoric we see on Internet bulletin boards. I would like to take the time to address a few of these myths.
Myth #1: No other business pays 57% of their revenue to their employees, and it is ridiculous for the owners to be expected to keep up that rate.
Well for starters that percentage was negotiated by the owners with the players. But beyond that there are many businesses who pay as much or more than 57% of their revenue to their employees.
In a business where the employees supply the competitive advantage for their employers, as in the case of NHL players, businesses can pay up to 90% of their revenue to employees. One example is a consulting firm whose profit is a direct consequence of the success of their consultants. Another example is American investment banks who pay up to 67% of their revenue to their employees. There are many examples, but generally speaking businesses who provide a service rather than a product routinely pay upward of 50% of their revenue to their employees.
Myth #2: The owners invest millions of dollars in their teams and have the right to make a profit.
No they don’t. No one has the right to make money. I got spanked back in 2008 when I made bad investments in TSE listed companies. I would have loved to have been able to approach the companies and say “hey, I invested in your company and I have the right to make money”. But in that context the claim showcases the derisory nature of this myth. The simple fact is, if you make prudent investments you will make money, if you make bad investments you will lose money.
Who could reasonably expect to make money by purchasing the Phoenix Coyotes, who have never turned a profit since their inception?
Furthermore, if a team is part of a conglomerate, the owners may actually want to lose money in one or more of their operations to offset taxable income made by other arms of the company.
Myth #3: The owners take all of the risks and the players should consider themselves lucky and take what is being offered.
This is complete nonsense. Every player who signs a contract takes the risk that when the next CBA rolls around the owners will once again renege on contracts negotiated in good faith, and demand players give back a portion of their earnings to subsidize a league whose owners have largely caused their own problems.
This scale-back on salaries is a clause the owners are trying to enforce for the second CBA in a row. It is an attempt to offload onto the players, the risk taken by the low grossing, small market teams. The alternative is calling upon the successful teams-some of whom are incredibly profitable and shoulder no risk at all-to share more revenue with teams who are losing money.
Who takes the risk?
Factoid: The NHL's 2005 CBA eliminated the right of players to renegotiate contracts in the wake of players sitting out to try to force teams to increase their salary. However the NHL owners retain the right to lock out players in an attempt to force them to renegotiate lower salaries.