The Hockey Lockout: A Lone Washingtonian’s View

It’s October 2004 and, because of the NHL Lockout, there is no hockey to fill those boring nights between Washington Redskin games for the first time in over a decade.  Every hockey fan is dying to see the first game between heavily touted rookies Alex Ovechkin of the Washington Capitals and Sidney Crosby of the CAPS arch nemesis, the Pittsburgh Penguins, but ESPN is just showing a re-run of a generic NFL analyst show spouting the same tired rhetoric for the twentieth time in the last 48 hours.  

We all hoped for a simple solution that would end the misery, but both sides – the NHL owners and Players Association – dug in for the long haul.  For the next 10 months, there was no hockey… an entire season lost.  Fans became disillusioned, bitter, even apathetic, often proclaiming that they may never watch hockey again.  Even die-hard fans questioned their loyalty to a league that obviously did not appreciate its fanbase; “If they [the NHL] don’t need us [the fans’, then we don’t need them” was a common rallying cry.  When hockey finally returned, the fans did not come running and the league faced a harsh reality, punctuated by a slap in the face from ESPN when they low-balled an offer for continued TV coverage.   The

With words of apology and statements of sincere gratitude to the leagues loyal followers, the NHL’s fan base eventually returned, even expanding beyond its previous popularity by the end of the 2011/2012 season.  Pundits often argue that exclusive national TV contracts with Versus, formerly OLN and now the NBC Sports Network, was key to expanding the reach of the NHL and directly lead to the inking of a marquee deal with NBC Universal, which dwarfs the leagues former media coverage on ESPN.  In fact, at the end of last year, the league could boast that it was stronger than at any other time during its long and storied history – talent was at its highest and most evenly distributed across the league in decades, attendance and league-wide revenue was at all-time highs, and an excitement was present that hadn’t been there for a long time.  The NHL was finally healthy again and all was right in the hockey world…

Fast forward to October 2012 and to our disbelief, here we are again, suffering through yet another NHL lockout, merely 5 years after the last one – the lockout that was supposed to end all disputes (Ha!).  The fans weren’t born yesterday, we realized that disputes would arise and collective bargaining would rear its ugly head once again in the future (like 20 years in the future), but not this soon… not THIS YEAR!  I mean, “C’mon Man!”  Everything is going so well; the game is strong, the die-hard fans are back and then some, the players are making good money, the owners are making money – everyone is happy, right?  Of course not, that would make too much sense.  Besides, it’s just good old American Greed – “a lot is great, but more is even better”, and “if it ain’t broke, keep messing with it until it breaks.”

In all seriousness, the NHL is a business, just like the NFL, NBA, MBL, etc., and we all understand that business is about money.  It does, however, beg the question, “If all of the country’s sports leagues face the same issues, why does the NHL seem to resort to such extreme negotiation tactics (lockouts and strikes) much more often than other leagues?”  In my opinion, it’s a matter of perspective and the NHL perceives success and value with a much shorter outlook than the other professional leagues.  Perhaps this short-term viewpoint is driven by an organizational inferiority complex that stems from being the only major sports league promoting a game that is not native to the United States. Whatever the reason, it is clear that the NHL owners and players are more concerned with short-term monetary gains than they are in building a strong foundation that will fuel growth and success well into the foreseeable future.

The previous NHL lockout, although detrimental to the popularity of the game, could be rationalized by an essential need to re-set economics of the league, which had deteriorated to a critical state as a result of bloated player salaries and inequitable distribution of wealth across markets.  The collective bargaining agreement (CBA) ratified in 2005 initiated a salary cap that would keep player salaries in check, and implemented a salary floor and revenue sharing model to encourage competition across the league.  To the NHL’s credit, these initiatives proved to have their intended effect, as the league recognized immediate financial benefits and an improved on-ice product that generated an excitement that attracted new fans.  It is worth noting, however, that these benefits could have only come at the behest of the players, many of whom agreed to change their contracts and accept severe salary cuts.

Many would ask, “If the last agreement was so good for the game, then why would we even have to worry about another work stoppage so soon?”  Honestly, that is a great question and one that I can’t really answer, but I’ll try.  The simple answer is Greed.  To encourage the players to accept the severe terms of the last CBA, the owners conceded more than 50% of league revenues, on an escalating scale that is tied to overall league revenues.  According to this scale, when the league’s revenue exceeds $2.7 Billion, which it did in 2011/2012, the players are entitled to 57%.  Considering the leagues growth trend, it is safe to assume that league revenue would remain above $2.7 Billion for the foreseeable future.  Facing the inevitability of only receiving 43% of revenue, the owners are no longer happy with the terms of the CBA, for which they convinced the players to accept only 5 years prior.

To recap, the owners are no longer happy accepting a smaller piece of a very large pie that is growing at a record pace despite championing the arrangement to encourage concessions from the players during the negotiations for the last CBA.  Okay, given that the growth of the NHL vastly exceeded the expectations five years ago and is a crucial factor to equitable distribution of proceeds across the NHL into the foreseeable, the owners desire to renegotiate may not be entirely unreasonable.  On the other hand, juxtaposed against the back drop of an ailing National economy with the highest unemployment rate in over 30 years, fighting to make a few million more dollars just wreaks of excess and greed.  Not to mention, invoking a work stoppage as a mechanism to gain the upper hand in negotiations will inherently eliminate the revenue being disputed. 

A prolonged work stoppage will open the wound that has not completely healed from the last lockout, driving a wedge of distrust further between the league and its fans.  It will also negate the recent growth of the league’s fan-base among new fans, whose interest are not yet vetted and could easily wane in the absence of games.  In other words, the long-term effects on growth, fan loyalty, and financial stability far outweigh the perceived short-term gains.

Unfortunately, the NHL’s myopia is the primary stumbling block to widespread acceptance across the American sports market and long-term financial stability that accompanies being a major U.S. sports league.   Until the NHL discovers this truth, the die-hard fans and the game they love will continue to suffer.