- The Washington Times - Monday, February 9, 2004

ST. PAUL, Minn. — The angry exchanges between NHL management and the players union over the All-Star weekend revealed a split so deep the sides can’t agree on the most fundamental issue: whether the league is losing money.

That argument illustrates just how little trust exists between the league and the players union. The two sides remain worlds apart on the future economic structure of the NHL, even as its labor agreement spirals toward a Sept.15 expiration date.

“We can’t get to a full agreement as to what the business is,” Ted Saskin, NHL Players Association senior director of business affairs, said yesterday.

NHL officials say the league is losing $300million a year, the cumulative loss built up by the vast majority of franchises. The Buffalo Sabres and Ottawa Senators filed for bankruptcy protection last year, a fate several other clubs narrowly averted. The losses have accelerated, league officials say, because the clubs collectively pay out 76 percent of their revenues in player salaries. That figure is close to 60 percent in the other major sports leagues.

The union says the financial numbers are inaccurate and that the league underreports many key revenue sources, such as luxury seating and broadcast contracts. More than five months of squabbling on this one issue, mostly through the media, has produced no movement toward a resolution.

The battleground in this particular dispute is the Unified Report of Operations (URO). In this document, each team provided the league a financial statement similar to the quarterly and annual reports filed by publicly traded corporations. The league forwarded these URO documents to the union in an effort to make its case for salary restraints in the next labor deal.

“We have shared with the union URO reports for the past five years, and not once have they had an issue with the general findings,” said Bill Daly, NHL executive vice president. “There have been disputes on a few particular clubs, but they have accepted the methodology.”

The union does not fundamentally disagree with the NHL’s characterization of the league as a business that generates roughly $2billion a year in gross revenues. But a detailed union review of four of the 30 individual franchise URO reports found $52million in unreported income that Saskin says should have been included.

If that $13 million a team average held true across the entire NHL, the union says, there would be an additional $390million of unreported income that should be part of any discussion of player compensation. The union has not yet studied the other 26 team URO files in the same fashion.

More troubling to the union, Saskin says the URO documents do not include any supplemental data and fail to explain how key figures were determined. Nor do they account for legal accounting moves like reporting portions of income from a hockey club under a separate but related entity such as a holding company or arena management firm, Saskin says.

In one example, several players said the Chicago Blackhawks reported zero income in its URO from its large, sold-out battery of luxury suites.

“I laugh when [the NHL] talks about financial transparency,” Saskin said. “The URO is an unaudited, voluntary system. The best example I can make of this if you had the option to file your taxes with the government, and in it, you could base it on what you wanted to tell them. Some teams will be honest and give a full picture of what’s happening. Others will use other criteria.”

On Saturday, NHL Commissioner Gary Bettman said he remains confident the union understands the depth of the league’s financial problems, regardless of what union leaders say publicly. In time, Bettman says, players will respond to the call for economic change.

Yesterday, the back and forth sniping simply continued, giving hockey fans little hope NHL teams will be playing when the beginning of the 2004-05 season arrives in October.

“Frankly, I’m perplexed by a number of things Gary says,” Saskin said.

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