August 11 2011 09:12AM
(Only a few entries left in the Blog-off. Today, Mr.Bader talks about the business side of things)
By Byron Bader**
A debate raging around the league is whether or not you should be signing players now that a new CBA could be in the works after this season or if you should wait it out until everything is settled. I’d see no point in not signing the players for several reasons.
Owners are thinking that they might not want to sign players right now so that if a new CBA is reached, where they’re getting a significant increase in the profits than the 43 ish % that they’re currently receiving, they don’t want to be handcuffed into these huge contracts. But the thing is things won’t change that drastically. The NHLPA has gotten increasingly smarter and better at playing hardball with the league ever since the2004-05 lockout. The players realize now more than ever that they hold a lot of clout because they cannot easily be replaced like employees can in other industries. These are the best hockey players in the world, hands down! I mean the owners can threaten to pull a plot out of an awful Keanu Reeves movie and replace the whole NHL roster with the minor league players. They could and they would see their ticket sales drop tremendously. There’s a reason why AHL rinks aren’t packed to the rafters. They’re great players, don’t get me wrong, but they’re not NHL players ... yet. They’re not the world’s best. The amount of power the NHLPA has in the negotiations is incredible because of their best and brightest stars, essentially the league’s top 5%.
Fans aren’t paying just for a great game of hockey; they want to see the players they read about every day, such as Crosby, Iginla, Ovechkin, Stamkos, etc. The owners might get a little more of a cut if they really play their cards right, an extra 5% maybe, but it might come at the cost of cancelling another season. Is that worth it? Players are still going to want the majority of league revenue because they are the product that drives the entire business; that will always be the case. Also, there are so many “elite” leagues in Europe that will pay any money to pry any NHL caliber player out of the NHL and into their league to give them some credibility. So unlike the olden days where great hockey players just wanted to play hockey for their favorite team and they didn’t care about the money, now every one of them, mostly through their agent, has become a firm negotiator because they know the stock they hold in the NHL’s future. It will never be a situation where the owners get exactly what they want; nowadays it’s a case of the owners having to meet the players at least 70% of the way. They can wait it out as long as they want, cancel a season or two, but eventually the owners will be caving more so than the players.
Furthermore, although contracts are set and owners can’t weasel their way out of one single contract, that’s not to say that league-wide contracts can’t be altered. For instance, when the last CBA was signed in July of 2005, all players agreed to a 24% pay-cut across the board, on salaries that they were already making. So if it actually does come down to a situation where the American debt-crisis cripples the United States, which will ultimately affect Canada’s economy as well, there are loopholes to reduce contracts if the boundaries of the crisis stretch as far as professional sports. It’s also important to note that inflation very rarely ever goes down, especially in extremely developed nations like Canada and the United States. You might see inflation stand still for a few years or only increase slightly but it will never go down, that’s just how economics works. So you’ll never see a case where players start earning less than they would have previously, assuming their skills have remained the same or increased. It just won’t happen. Owners will never be in a situation where they can say “son of bee sting! I could have had that guy for $ 3 million instead of $ 5 million now that the economy is in the crapper, now I’m screwed.” Owners need not worry about that.
Third, owners can’t hold out on signing players because you don’t know what will happen in the future. It creates a problem of loyalty between the player and the team and this is especially the case for the higher caliber players. If there’s an asset out there that most every team wants, there will always be somebody who will sign them, regardless of the situation next year, because they want to have that individual once everything is worked out. You don’t want to be the owner who says “yeah we’re gonna give you your money but once we figure out how everything comes out with the new CBA”. You might like to but you can’t. The player will flip you the proverbial bird and walk to the next team that meets his demands and needs. So to keep your players happy, you have to be loyal to them, regardless of the circumstances of coming years. That means signing them as early as you can.
The fact is the league has done great since the lockout, in large part to the NHL’s award-winning marketing campaign that was set out days after the lockout ended and executed perfectly. Everybody feared that fans would walk away from the game after that … dead wrong! Attendance has increased significantly since the lockout in many arenas. Fans couldn’t wait to snatch up their tickets once the drought was finally over. People who love hockey weren’t going to abandon it when it came back in. It’s something we love and gives us something to do every winter night … “what do you want to do tonight? Let’s watch the game!” It’s something that we can’t wait to get to after working a long hard day at work. All hockey fans want to do after a long day is watch their favorite team. Also, human-beings, as a whole, are incredibly resilient and forgetful of things. While you may have been angered at the players or owners for holding out and cancelling an entire season at time, the common fan is so far removed from those individuals that they couldn’t possibly “take it personal.” They forget that Bryan McCabe said he didn’t want a salary cap because he didn’t want his wages limited because he wanted to be able to “provide for his family” when at the time of the comment he was making over $ 5 million a year, easily a hundred times the average North American’s annual income. You just want to see good hockey again. So I would say owners and teams have to go about their business, sign the players that will help the team in the long-run. For one, you don’t have to pay a player during a lockout so why not, although the ones with the best agents got a significant signing bonus this year to get a lot of that money early in case there is another lockout (e.g., Brad Richards and Christian Ehrhoff). But also you have to sign the players so that when the smoke eventually clears, which it will at some point … it has to, you want to be able to compete and not have to build up your team again.
**While I have a blog (with five entries total), I’ve never written anything to do with hockey. While I have a job, it has nothing to with hockey. But I thought I might as well give it a shot because what’s the worst that could happen … I write an awful article and you commentators bring me to tears, I suppose. I love hockey (never played competitively, just an observer) and everything about it interests me. Not just the game itself, but the business side as well (I’ve read over the main points of the CBA a few times, in my leisure, and haven’t fallen asleep yet). I have no idea why it’s so interesting but I can’t get enough. Hope you enjoyed my initial article and I look forward to your comments.