- The Washington Times - Wednesday, October 8, 2003

NHL executives would love to talk about nothing but the return of Detroit goaltender Dominik Hasek from a one-year retirement, the drastic reloading of the Colorado Avalanche or rising teams like Ottawa, Tampa Bay and Minnesota. But as the league begins its 87th season tonight, only two words truly matter.

Work stoppage.

The collective bargaining agreement between owners and players expires Sept.15, and already a pall looms over the new season. Management — claiming nearly $300million in operating losses last season and a financial state in which three-quarters of all revenues are tied up in player payroll — desperately wants some type of salary cap.

Players remain rather skeptical of the owners’ claim of financial stress, calling the league’s fiscal reporting “garbage in, garbage out,” and want to see a continuation of the free market system under which the average salary more than tripled in the last decade to nearly $1.8million. The union also is pushing for a far greater degree of revenue sharing among teams.

Both sides are bracing for a work stoppage that could last months and perhaps even years, making the 103-day lockout of 1994-95 seem a mere moment by comparison.

“We are fully prepared to discuss economic issues and consider changes and compromises so long as they fit in the basic free market framework this league has used since its inception,” said Ted Saskin, NHL Players Association senior director. “Management has been very insistent on a hard cap and cost certainty. We think that has been a far less conciliatory approach.”

Numerous meetings, some under a heavy cloak of secrecy, have occurred among NHL commissioner Gary Bettman, players association executive director Bob Goodenow and their lieutenants to begin the negotiation process. But the two sides, long bitter and hardened opponents, are even disagreeing as to what officially constitutes a meeting and how many negotiating sessions have taken place in the last year.

Just the mere prospect of a lengthy work stoppage has begun to have significant effects upon the hockey industry. This past summer’s free agency period was easily the quietest in recent memory, with teams reluctant to take on large, multiyear contracts. Goodenow and other union executives are imploring players to save money and prepare for a long period without personal income. Owners have similarly built up a financial war chest, also nearing $300million, to help them remain solvent through a work stoppage.

A growing number of owners and players have opined that several financially strapped teams will fold if a work stoppage lasts more than a year.

Bettman, for his part, remains optimistic the clash of wills can be resolved without a disruption of play. And Saskin said as of now, the players have no plans to strike. But last year Bettman admitted a long work stoppage would be worth the inevitable loss of some fans if the league comes out fiscally stronger as a result of the labor fight. And NHL executives continue to call for a “revolutionary change” to the league’s fiscal landscape.

“I’m not looking for a fight,” Bettman said. “We’re hoping not to have a work stoppage. But I don’t believe that if we have one it would put any of our franchises at risk. To the contrary, if we don’t have the right economic system, the risks then become astronomical.”

Bettman’s line of speech follows somewhat the labor playbook of Major League Baseball commissioner Bud Selig, who spent 2001 and much of 2002 giving one gloomy fiscal forecast after another on his industry and then used his expressed need for change as the foundation of management’s negotiating platform.

Bettman and executive vice president Bill Daly, however, have distanced themselves from the luxury tax system that baseball revived as a result of its labor talks, a system that would require several years to manifest itself. Rather, NHL management continues to beat the drum for a strictly defined relationship between revenues and expenses and an economic system that would produce far more immediate change.

According to Saskin, the owners last week produced a proposal for a hard salary cap.

“The economics of this league make no sense,” Washington Capitals owner Ted Leonsis said. “Do you hear this kind of talk in NFL or NBA? No. We need to have a league where economic discussions in offseason are not what people focus on. The Redskins cut Stephen Davis. Does that mean they are cheap or not committed to winning? No. It was salary cap issues.”

Though much of the hockey dispute focuses on the expense side of the ledger, it’s actually the revenues that could prove much more nettlesome over the long term. The NHL has more than doubled its total annual revenues to nearly $1.9billion since 1993. But the fuel behind that fiscal growth — new arenas, expanded corporate sponsorship and domestic broadcast coverage, and nine expansion teams since 1991 — has all but expired.

Similarly, attendance and ticket prices are reaching maximum levels. Taking the place as the new revenue drivers are international broadcast coverage and high-definition television. Though both emerging trends are interesting, neither has the same kind of broad fiscal impact — at least not yet. And with franchise values also falling and two teams recently having emerged from bankruptcy, another result is more resistance from banks to lend money to cover revenue shortfalls.

“The NHL certainly has its challenges with revenue,” said Jeffrey Citron, a Toronto-based corporate finance attorney and industry consultant. “The ‘90s were a real time of expansion with new teams, the build-out of arenas and so forth. There are opportunities still out there, but the jury is still out on a lot of this technology. I think the NHL is aware of this and why, right now, you’re seeing them want to hold the line more on the balance sheet and where expenses are.”


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