Friday, December 10, 2004

It's Your Move

Very interesting and bold proposal from the NHLPA yesterday, offering to slash salaries 24% across the board. Bettman and the owners are now going to have to change their tack a bit, or a lot of their polled support is going to switch sides.

If I was sure of one thing when these negotiations started, it was that the eventual deal would not include a hard salary cap. That seems even more obvious to me now. There may be a relatively severe luxury tax (like, for example, the NBA), but no deal where Total League Revenues = $X, total player salaries = 55% of X, each team gets 1/30th of this to spend on players.

The realist frequently notes that this hard cap is necessary "to save the owners from themselves". There is some truth behind this sentiment, but the actual language confuses the issue. There is no instance I can imagine where the Phoenix Coyotes wish to pay a player $5M, and they need to be prohibited from doing so for the good of the Phoenix Coyotes. None. The owners of the Coyotes are capable of making these decisions.

What the saying should be is, "We need a contract to save the owners from each other." I have a relatively simple plan to solve the NHL/NHLPA dispute. I think if you accept (or stipulate) the following three premises, the solution follows rather naturally.

Premise #1: There is no quantifiable dollar figure that is "too much money" for a given hockey player to make. Gather up a bunch of people who never go to the movies. How many of them will say it's because ticket prices (& snacks etc.) are too expensive, and how many of them will say it's because Bruce Willis and Jim Carrey make too much money?

Premise #2: Most fans' loyalty is to the jersey first and the players second. Certainly any cap enthusiasts arguing that the NFL is the gold standard of pro sports leagues would have to concede this. You could also cite the popularity in U.S. of college sports (and state flatly that support for college sports in Canada is not weak because "the players change too much").

Premise #3: There are numerous reasons why the NFL is so popular, many of which are more instructive than the year-to-year momentum-reset resulting from the hard salary cap. (Sidebar: I understand what the sportswriters are aiming to say, but I don't think 'parity' is a word you can use describing a league with three 11-1 teams.) The weekly nature of the scheduling facilitates fan routines. It's also fantastic for gambling and office pools. They promote the hell out of their game. Having only 9 or 10 home games a year (which are virtually never on a work day) means that middle class fans can afford $80/seat season ticket packages. Oh, and people really like football.

OK, so, if you are willing to stipulate those three premises, the solution should be this:
  • Eliminate restricted free-agency
  • Eliminate arbitration
  • Eliminate the rookie wage scale
  • Institute a luxury tax of whatever threshold, severity, and escalation the two sides can agree on

Restricted free-agency is a mechanism to allow teams to hold onto players they drafted and developed through their prime years. Arbitration is the frequent sub-mechanism for solving wage disputes in these relationships. But the costs have simply not been worth it. Both these policies force teams to pay what is labelled "market value" for players, but is actually nothing of the sort, unless "market value" means "what the Rangers paid for a similar player last month".

Too many fans assume that without the controls that are already in place, salaries would skyrocket even more. Balls. The player budgets of the Rangers, Avalanche, Red Wings, and Flyers are large, but they are not infinite. They can also only dress 20 players a night. They are already spending whatever they want. My proposal would force these teams to pay a tax while they're at it, and it would halt the present situation where the rich teams define the player salaries for every team in the league.

Per premise #2, teams don't need to be able to hold onto their drafted players until they are near retirement; what they need is to be able to afford to replace a good player with another good player. Under this agreement, poor teams will have some extra cash from luxury tax redistributions, and they will have more negotiating freedom in a much freer market. No more agents saying "pay Jones X much money, because that's what he'd get from the Rangers or Flyers if he wasn't restricted". The Rangers and Flyers each only need 12 forwards and 6 defensemen, and they're not going to pay All-Star salaries to all of them. For evidence of this, look at the recent market for unrestricted (roughly, over age 31) free agents. It's weak, or rather, there are good deals to be had for every team in the league.

Pre-conclusion: So what is the remaining problem here? It's that Gary Bettman has stated repeatedly that the contract agreement must result in 30 strong franchises. There's really only two ways this could maybe happen:
1) A hard salary cap low enough that even the poorest 5 teams are able to pay it and still be profitable, perhaps with the help of some revenue sharing.
2) Massive redistribution of revenues from rich franchises to poor ones, so that every team's revenues are about equal.

#1 will not and should not happen; it's a license for the Rangers, Flyers, et al to print money while being prohibited from compensating the players accordingly. #2 will not happen: wise owners with good markets don't want straight-out welfare for stupid owners with weak organizations and markets; the players don't want this near-total disincentive for individual teams to maximize their own revenues.

Conclusion: my proposal above is the owners' best chance at a workable "economic situation", especially combined with some amount of immediate wage rollback. Certain teams will need to move or fold, I just don't see much way around that. I'm not sure if they'd admit it, but I would venture that (say) the Flames could accept a deal where big-spending teams would have to kick some more dollars back to them, and where their own salary negotiations were not based on a de facto wage scale established by the contract dealings of the richest teams in the league.

Coming Soon: even if the NHL and the PA only come to an agreement in February, how they can salvage a season, bring some fans back, and solve a few other nagging problems


At 1:19 PM, Anonymous Anonymous said...

Hope you don't mind, I linked you to a thread at the Oiler's forum on Hockey's Future to see what the wonks have to say.

- jass

At 1:33 PM, Blogger Matt said...

Hello Oiler fans! Full disclosure:


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