Lock-out Talks: Where are we Now?


Another day, another round of lock-out links and negotiation items. The World Junoir championships will soon arrive and with them some relief from the hockey-less-ness and legal navel gazing that has plagued us since October. For now, though, let’s concentrate on the on-going rich man slap fight.

Disclaimer of interest

We talked about the NHLPA’s threat of decertification (what’s now being referred to as "disclaimer of interest") a few weeks ago when it started to become clear the two sides weren’t really getting anywhere. In the battle of exceptionally wealthy men with diversified finances and a eye on the long-term bottom line versus a conglomerate of disparate hockey players who lose and risk more with every passing game, it was clear the league held most of the leverage in the negotiations. 

The PA’s ace up the sleeve was decertification, a nuclear option that would disband the union, nullify collective bargaining and potentially expose the league to anti-trust lawsuits. 

Bettman and company made a pre-emptive strike against such an action recently, filing a suit in New York seeking to essentially declare any move to decertify or disband the union as a bad faith negotiating tactic on the part of the PA, which would potentially shield the league from any sort of anti-trust actions. Tyler Dellow has more on the legal nitty-gritty of the league’s suit here and here

If you click through the first link, you’ll find evidence the league has actually been building this obstacle for some time, no doubt prepped by the action of NBAPA last year as well as some of the talk by players and hockey media over the last month or two.

If Bettman and the league succeed in their bid to more or less bind the players to their union and the CBA talks, they will effectively cut the last leg from under the PA. Aside from continuing the current game of chicken, in which each side tries to wait out the other while staging ever more ridiculous PR stunts in front of the media, the players won’t have any other cards to play. Their options would fall to capitulation on the current contentious issues (5 year contract caps, 10 year CBA, etc.) or killing the season in an effort to score at least some sort of pyrric victory over the owners. 

The league’s lawsuit hasn’t deterred the players from moving forward with a disclaimer of interest, however. As we speak, the PA is voting en masse on the subject: a two-thirds majority will give the PA’s executive board the required support to file the disclaimer, which would have to be done by January 2. 

What it Means

The effect these things will have on negotiations and the NHL season depends on a number fo factors. Primary amongst them is whether the league’s move to block the union’s dissolution/anti-trust litigation is successful or not. As mentioned, that would put a knife in the heart of the union’s last, best maneuver and likely give the owners the leverage they need to beat the players into submission.

On the other hand, if the NHL’s suit fails and the union is allowed to pursue its planned course of disbanding, then one of two things happens:

1.) It scares the owners enough to get them back to the negotiating table and to stop talking about "take or leave it" proposals or "hills they will die on". This is more or less what happened in the NBA talks when the basketball players sought decertification. Talks went into overdrive as soon as the motion was passed by the union and the NBA had a new CBA about two weeks later.

2.) The PA really does dissolve and the two sides decide to duke it out in court. The players would have to argue that the league’s lockout is illegal under anti-trust laws in the States and NHL would face a brave new world in terms of player compensation, free agency, etc.

It’s impossible to plot the course of the NHL if #2 is the route these things take. The lock-out could be stricken down as illegal and the previous compensatory rules/contracts/salary cap under the last CBA would likely go away, resulting in a free agent free-for-all across the board. GM’s in New York, Montreal, Philadelphia, Chicago and Toronto would be thrilled, existing rosters would be thrown into total disarray and nobody would be quite certain how clubs like Coyotes or the Islanders would compete for talent.

Many of the games stars would make out like bandits under a completely free market no doubt. There’s a view that third and fourth line players would suddenly be battling for scraps, but Im not certain that would necessarily be true – as NHL GM’s have proven time and again, they have no problem voting up even nominal talent in the league. After all, there are only so many roster spots and so many people in the world who can ably fill them. If I was to guess, stars and superstars would get more expensive and most of the support guys would at least run in place compensation wise (although a Bobby Holik at $9M/yer would occassionally pop up as well).

The players share would likely approach the 70-75% of HRR like it did previously and the league would be severely stratified between the "haves" and "have nots". 

Which is why most owners outside of NY and Toronto rightfully fear the end of the union and CBA. Collective bargaining makes things like the salary cap, entry-level contracts and contract caps possible. Without it, it’s a player-by-player negotiation and a competition across teams to acquire the best talent by any means necessary.

Moving Forward

The CBA talks are stalled while the PA votes on the disclaimer of interest. Once the outcome of the vote is revealed, we’ll know whether the PA intends to dissolve the union and whether it is allowed to pursue anti-trust litigation. As mentioned, if the disclaimer is shot down or the anti-trust pathway blocked, it could lead to a quick resolution with the owners getting more or less everything they want. On the other hand, if the union votes to disclaim interest and the league’s move to render their anti-trust strategy illegal fails, the league and owners will have a powerful new incentive to salvage negotiations.

Those are the "best" outcomes from the perspective of having an NHL season this year. On the other hand, even if the PA is disallowed their anti-trust move the PA could dig in for a long fight, with the new goal being to break the cyce of lock-outs by making this one as painful for the league as possible. Conversely, the players could decertify, take the league to court and the ensuing battle could tie things up indefinitely.

From a wider view, one wonders just how much damage either side is willing to inflict on the league and the brand in order to win this battle. At some point the dollars either side is fighting over begin to pale in comparison to the future earnings they are flushing away by alienating fans and sponsors alike. I’m not sure we’ve crossed that particular Rubicon yet in these talks, but it could be fast approaching.

The MLB spent nearly a decade trying to repair the league’s image and relationship with fans after their last work stoppage in 93/94 – and that sort of sustained fan anger/apathy may be the only outcome that will ultimately deter similarly acrimonious labor relations in the future. 

  • RexLibris

    When you have bad blood fueled by the legal system it is never going to be positive. The lawyers are the ones who “make out like bandits”. They create conflict and drag things out to line their already full pockets at the expense of the fans, the owners, the players, everyone.

    Even with resolution there will be so much tension between ownership and the players that all aspects of the game will suffer. Team Operations: Management, GM’s, Coaches, Support Staff, etc are being impacted as they are stuck in the middle. The tension (CBA or no CBA) will force talented people to leave the game.

    “Money, it’s a gas
    Grab that cash with both hands
    And make a stash…

    Keep your hands off my stack…

    Money, so they say
    Is the root of all evil, today”

    Roger Waters.

  • Can,t see this ending soon.These two sides appear to hate each other.IMO the league will have a hard time convincing anyone that they are attempting to promote economical stability moving forward,after the signings that took place just before the end of the CBA.I don,t beleive that Bettman and the owners are as smart and savvy as promoted,and have shown time and time again that they are there own worst enemies.They,ll drag this out until they lose.And of course the biggest losers will be the fans and the players.It,s too bad that the owners pulling the strings don,t love the game.

  • My old man is in the middle of his own CBA negotation right now with the union he employs. His comments surrounding this whole thing that I found interesting have been:
    1. No business will ever agree to binding arbitration, because an arbitrator is not an expert in your business, and may rule a deal that the business can’t survive with.
    2. Every negotiation he has been in has an element of business explanation. He felt the NHL has done a poor job in this. The players clearly confuse revenue with margin, and not having complete information about the economics leads to them feeling the business is in a better state than it really is.

    My view on 2 is the NHL will never share this information, because it has 30 different distinct markets, and with that information, players will just point to a more rigorous revenue sharing model. Owners can’t agree to this, because they have already paid the large entry cost to buy their team, and it would kill resale of the “have” teams.

    I think the players are going to get killed in court. They continually say that disclaimer of interest led to deals in the NBA and NFL. If the players want the terms of either deal, I’m sure the owners would gladly sign. Both associations went the disclaimer route, and quickly found out their hand wasn’t that strong. The owners then negotiated from power.

    And on the anti-trust thing, players think this is a bigger threat than it really is. I work in the midst of antitrust concerns every day, and the NHL’s risk is small. Having a CBA waives a lot of antitrust law, and free agency has clearly operated as a free and open market in recent years.

  • not to say antitrust is a small deal, its a very big risk in big business, but the NHL in the scheme of things is not a big business.

    Revenue of 3 billion may mean total profit of say 333M with 10% profit margin. A high risk venture, may means it would be valued at 3-7 times earnings. even if you go the 7 route, that makes a market capitalization of roughly 2.1 billion if it were to be publically held. That is a small company. It they were publically held, they may wind up on a lesser exchange like the NASDAQ. Small potatoes in the scheme of things, yet owners some how find a way to get gov’t handouts for arenas…. odd

    • Not sure this matters, but as far as I know the NHL isn’t even considered a “company”. Officially, it’s a (tax exempt!) non-profit organization to promote hockey and such. The individual teams are companies.

      • Yep you’re right Kent,

        But it is the 30 small companies that have anti-trust risk.

        If say, a boistrous Toronto GM offered to pay someone to not offer a free agent he wants a contract, or agrees to not offer another free agent a contract in exchange for the other gm not offering his desired GM a contract, you have big big issues. This is market segmentation, and would be chargeable even with the CBA present.

        The players argument that if they dont have a union, therefore the NHL locking them out is illegal as a negotation tactic is pretty thin. There was a union when the lockout started. I dont think there is a judge in the US that will side with the players in that respect.

        • You think? I dunno, I’d have a hard time seeing the court (ultimately) deciding to defacto grant the NHL immunity from the Sherman Act via effectively removing the only legal recourse employee’s would have in an ununionized environment (effectively forcing them to be unionized).

          • I dont think the issue is so much antitrust issues arent their, but moreso, when they took place. NHL locked a union out months ago. A judge wont look fond at using disclaimer as a negotiating tactic

            Disclaimer is the players finding a creative way to force owners into commiting an antitrust violation. If there is a union, antitrust is null and void.

            Check out sporstnet.ca, their legal guy did a good job explaining this.

          • Effectively, disclaimer is the union leaders quitting the union because of disenfranchisement. Yet they had a vote to allow the players to vote whether they should quit (pretty convoluted)

            If the union were doing this right, they would have entered into the 45 day decertification process months ago. Decert is a unions legal recourse, disclaimer is the recourse available to the leaders of the union, because the union members have become peons.

          • I get that… I just think the NHL is “jumping the gun” by asking the U.S. court system to issue rulings on a hypothetical situation. I just don’t see the courts being at all inclined to make a ruling on something that may or may not happen. If the NHL had waited until an actual disclaimer had happened I think they’d have a better case to make.

            I mean it’s not at all hard for the NHLPA to claim that a desertification vote is going to take place and likely pass and therefor they saw no point in waiting and simply decided to use the more expediant process. And that’s to say nothing of the possibility of them (the players) proceeding with legal action in Canada (where any hypothetical U.S. second circuit rulings would hold little to no weight).

            In short I think Bettman et al are overplaying their hand here.

  • I actually think the owners have a not insignificant chance of losing this round of court battles. It seems like a reach for the NHL to ask a court to pre-emptively rule something lawful. There has been no disclaimer as of yet so the league is asking for a binding court ruling on something that is just a hypothetical future action the exact circumstances of which are unknown.

    Seems more likely to me that the court would logically dismiss the NHL’s action without prejudice (meaning they could bring suit again in the future). But that’s just me the U.S. legal system is wonky. I wonder if the Players could/would bring suit in Canada instead? Any legal eagles know whether it would be more or less beneficial to initiate legal action in Canada rather then the U.S.?

  • ChinookArchYYC

    Kent, one thing to mention in favour of the owners if that #2 scenario blew things up is yes, star players will make out like bandits. However, the players can say bye bye to guaranteed contracts & even retarded GM’s wont be able to give guaranteed contracts to even star players for more than 5 years. The player wants longer than that, then nothing is guaranteed. So much for that option of players fighting over contract lengths.

    Interesting point as well is the paradox of this DOI the players are voting on. The players have been publicly supporting and tweeting their support of their Union & leader Donald Fehr. Yet they are voting to abandon the leader & union after Fehr stated how close they were in a press conference. Seems to me that this is pretty blatant about being a negotiating tactic. Just saying, I dont understand the end game of the NHLPA, maybe I’m missing something. We love our union & leadership, now lets vote & apply to fire & get rid of them.

    Sure would like someone to explain to me why, players are making life changing money in the best league in the world, treated like royalty & working in the most first class work environment possible. Sooooooo….. I hate my employers & I want to financially cripple the owners & the league that is making this lifetime dream happen. Okay, there is no pyschosis going on here.

    Last, heard from excellent source who are involved in managing different sports facilities where players(not neccessarily Flames players) training & maintaining conditioning, that think the last owner offer was good enough to get back to playing hockey. I think if the players were able to vote on the last offer, they would have been finished the mini training camp by now & we would have had games through Christmas here.

    • Scrubs can say bye to guaranteed contracts… but you can bet real money that any NHL’er that’s worth a damn will get a guarantee written into his contract much like no trade clauses (or have 95% of the money paid upfront in the form of a signing bonus) and they’ll be zero term limits.

      • Oh, no doubt the DS’s of the world would give guaratees like no trades. Thing is, even the DS’s would have trouble giving guaranteed contracts beyond 5 years. But all we can do is speculate. So, what percentage of scrubs in that category would vote to go down this route? If they are actually properly informed by the Union, there is no way in God’s green earth the vote goes 2/3rds in favour of DOI. So much for unions protecting all its membership if this is all they have to negotiate with. 2/3rds then would be better off with voting in favour of the last NHL offer.

        • ChinookArchYYC

          I think you radically over-estimate the number of scrubs. I’m talking goons, 4th liners,6/7 d-men, back-up goaltenders… AHL/NHL tweener types. Not legit third line guys… third line guys will get guarentee’s.

          Basically the question will be “are you a replacement level player?” by which I mean is your talent easily fully replaced with someone currently toiling the the minor-pro ranks if the answer is “yes” then you won’t get a guarentee but if the answer is “no” then there will be competition for your services where someone will offer a guarentee as a signing incentive.

          • ChinookArchYYC

            I think you are ignoring the fact that the 30 owners are totally aware that if they want to maintain that size of league, there has to be cost certainty & in the “new” post apocolyptic NHL, the owners will structure a form of cost certainty to maintain the franchises. Not sure why you think it would just go to one big free for all & not expect franchises to fall by the wayside. These guys wont let that happen.

          • ChinookArchYYC

            The owners can’t have any cost certainty external to their own individual franchises in a CBA-less NHL. They can of course individually set their own budgets to create their own cost certainty (Owner to GM: “We made Y dollars last year so this year your Payroll Budget this year is X dollars, spend it wisely”) but any joint cost control work done externally would fall squarly under cullusion and would of course be illegal.

            I suppose they could break the law but these guys wouldn’t do that the reprecussions would be too severe.

          • ChinookArchYYC

            I dont agree with you here. The NHL I believe is set up as basically a non profit organization and the Owners have the franchises. In a new NHL this could easily be set up as a franchise structure with franchise rules, ie salary structure as part of those rules. There is no union & therefore would not fall under that collusion pit hole. If I set up a business with franchises where there is no union, I can set a pay structure anyway I see fit.

          • ChinookArchYYC

            I think you’re essentially making the single entity claim that the United States supreme court has already rejected. Specifically the court held that each of the teams is a substantial, independently owned, and independently managed business that compete with one another, not only on the playing field, but to attract fans, for gate receipts and for contracts with managerial and playing personnel.

            Absent a CBA they’re not allowed to collude to fix prices (in this case the price of an NHL player). Where there is no union you as a business owner can set a pay structure you see fit but you are not allowed to get together with a bunch of other competing business owners and collectively set prices.

          • ChinookArchYYC

            I’m with you. I think the biggest concern for “replacement” players shouldn’t be salary – since if you play you’ll get paid. I think the NHLPA is being blind to all of the less tangible benefits of being in a union, like the insurance, per diems, access to medical staff, etc. which players in a weaker bargaining position might not get access to(which, in my mind is also the only rational purpose for unions since it’s no longer the 1800s, but I digress)…

            How many 18 year-old kids are going to make bad decisions to chase their dream a the potential cost of insuring their eyesight, brain-health and spines?

            Decertification(sorry… “disclaimer of interest”) would ultimately just shift the war to a new battlefield if the NHL is succesful in declaring all of the existing contracts void because they were entered into under the auspices of a CBA. Owners could choose not to do business for as long as they wanted to and any attempt by a class-action lawsuit on the part of the players declaring it to be “anti-trust” means we move to stage 2 of this ridiculous stand-off: The Owners threatening to shut down the NHL.

            I actually think this group of donkeys (NHL and NHLPA both) are just egotistical enough to believe that the only way to win a game of chicken is to total both cars in a head-on collision.

  • ChinookArchYYC

    I can’t believe the players are actually dumb enough to try this route. My guess is that if they were successful in de-certifying and then end up in a true free market, that at least 8 teams would disappear. That is a lot of union jobs. I don’t care how rich these groups of owners are, how many of them would be happy funding a perennial losing NHL team in a soft hockey market. It’s just bad business.

    • ChinookArchYYC

      Contraction is such a red-herring claim… it wouldn’t happen. I’d argue that in a non-cap/linkage based league there would be more financially solvant teams (or at least more potentially solvent teams provided they were properly managed) since there isn’t a minimum spending requirement anymore.

      The cost of going to a desertified league isn’t “teams lost” or “jobs lost”, those teams are worth significant money no one’s going to just abandon them… some may relocate but few if any would fold.

      • ChinookArchYYC

        Would love to hear your rationale on this. If 12-13 teams are either losing money or breaking even, what assumption are you using that these teams could survive on giving players 70-75% of HRR. When the cdn dollar was .65, it created an economic environment for Canadian franchises that currently exists in the US & their financial cliff today. We just about lost our Calgary & Edmonton franchises. That threat was real. The model didnt work then & its obviously not working now. If it was just ownership greed, we would have been playing hockey instead of analysing how Court room battles are going to go.

        • ChinookArchYYC

          The rationale is that without the floor teams would no longer have a minimum spending threshold that they would be obligated to meet. They could therefor slash payroll in accordance with their financial situation.

          The cost of a desertified league isn’t lost teams and lost jobs… it’s lost parity.

          • ChinookArchYYC

            You may be right for the 1st year or so but lost parity will sink some of these existing franchises. Not many fans will pay to watch their young future stars walk away to greener pastures as they hit their prime & they little will become an NHL farm team. I think you really are under estimating what parity brought to the growth of the league & total HRR revenues. Some franchises will struggle for longer than others but the small market teams will fade away & there arent that many large markets with the ready arenas to take on this kind scenario.

          • ChinookArchYYC

            And to Kevin R’s point, there was no floor when Calgary & Edmonton were struggling and ready to leave for more profitable markets. The difference today is that there are no better markets to retreat to. I couldn’t blame an owner who’d want to shut his franchise down rather than face multi-million dollars Loses each and every season.

            And as for the ‘significant’ value of a franchise, tell that to the Phoenix Coyotes, they literally couldn’t give that team away.

  • Old Soldier

    Most of the factors you mentioned in the blog are bang on with the exception of one massive factor that will play more of a part than any other.


    If option 2 comes to pass, the NHLPA decided to decertify, the first step is to sue the NHL under the grounds the lockout is illegal. This is where the NHLPA are playing with fire. Both the NFLPA and NBAPA went this route, with the NBA owners choosing to negotiate before going to court. In the NFL case the courts initially sided with the PA, but on appeal decided the lockout was legal. The advantage the NHL has it was able to observe both of these. I doubt they will “panic negotiate” like the NBA did, and with the precedent of the NFL ruling, it would be hard for the NHLPA to win this one.

    As for anti-trust lawsuits etc….that can only happen if once again, the lockout is proven illegal (slight chance), or if the NHL decides to continue operating as is without a new CBA (unlikely).

    But all of that does not happen overnight. The earliest arguments could be heard would be anywhere from a month to 3 months…..season over either way.

    The ONLY WAY the players win this now is 1. The owners panic and cave, or 2. they somehow get their membership to accept that going through years of courtroom battles to “maybe” win their final big payday. To paint the picture, the players have to decide if for most of them they will never play again but “could” possibly recieve a huge payday financially years down the road. But the players should bear in mind, the only historical settlement in anti-trust was awarded against the NFL when the USFL won $3.87. Yep almost 4 dollars.

    The players are playing chicken with some pretty tough customers who have already given up on a season before, and despite their image of tough athletes, I personally believe they will be humbled big time this time around