NHLPA's Definition of "Free Market System" Flawed?

Here are some thoughts I put together regarding "free market system" that the NHLPA has insisted on from the beginning. Any feedback on this would be appreciated.

Link To Article

 

Also add to your article that a true "Free Market System" would be comprised solely of "free agents" under an "at will" employment scenario. Therefore there would be no guaranteed contracts, qualifying offers with built in raises, unilateral salary arbitration and on the flipside no restricted free agency or other convoluted free agency schema. There would be no entry draft, no waiver draft or entry level salary system either.

The NHLPA's insistence on the notion that the NHL or any other professional sports league is a free market is nothing short of absurd.

IMO any "Free Market" system without regulation is inherently flawed as the market offers little protection to any of the involved parties and simply follows the ethos of "supply and demand"; a very trecherous credo upon which to build a sustainable and viable paradigm for a micro or macro society.

 

The players want a free market system, on their terms.

Free market to me also implies no guaranteed contracts and the ability for the owners to fire at will and get rid of players for poor performance and replace them with guys willing to play for less if they want to.

Those are things the NHLPA doesn't want.

 

A free market system. :lol

How ironic coming from a union.

 

All valid comments... Although some would argue that the teams do have the right to fire players by releasing them and paying a % of their contract which would be like an average person getting severance.... albeit the % is much too high in the NHL.

Feel free to post comments on the blog, I feel the desire to write articles about hockey and would also encourage you guys to continue to post here and any feedback on my blog posts would be appreciated.

Let's hope for the sake of the game something happens shortly.

 

Haven't read your article yet, but would not a definition of a "Free Market System" include contracts not being guaranteed?

 

By free market system I think that what the players mean is that they want a system where the richest owners are free to spend as much as they can and to hell with everyone else.

 

Exactly. The NHLPA doesn't want a free market anymore than they want a cap.

All they truly want is a system that allows them to make as much money as possible, even at the cost of the leagues overall health.

This is horribly ironic because the players claim they are trying to get the best deal for those players in the future - when in reality, they may be destroying and drastically lowering what those players could ever concieve of having. Why? All because they refuse to play for a salary cap.

Its too bad many of them already are playing in a capped league in various other parts of the world. You show them NHLPA! You won't tolerate a cap - unless its any other league besides the NHL.

Hypocrites.

 

And this illustrates the disengenousness of their stance. If they were serious about a free market they would have to concede many of the benefits they enjoyed in the previous CBA. Benefits that acted as levers which catapulted their respective salaries and also gave them job security, etc. They obviously do not really want a free market system for reasons repeated ad nauseum in this thread and on this board. The PA wants a system by which they can extricate every last penny from their employers to the extent that it ulimately damages the financial viability of their emloyers. The owners' culpability in all this is not to be overlooked, but we must keep in mind that all owners do not share the same financial motives nor do they all have the same financial resources from which to draw. This is why the NHL is looking to "reset" the system and create a new one in which all franchises will be viable. Unfortunate that the PA does not see that what is best for the game is best for them as well in the long term.

 

Thi is true except in the event of individual contracts having any of these stipulations. Also, things like waiver and entry draft systems would be effective internally but subject to competition from other leagues (Sherman Anti-Trust law is anathema to a Free-Market solution).

Completely agree. None of the people involved (except the fans) would enjoy a free market solution to this problem.

Unfortunately, your opinion is the one dominating the economic landscape. The 'law of supply and demand' is, unfortunately for you, immatuble and not subject to human manipulation no matter how cleve we think ourselves. You can have the opinion that 'supply and demand' is a poor way for society's to organize themselves. Then again, I can have the opinion that the sky is purple.

That doesn't make it true.

A true Free Market solution would be a win-win situation for all involved. It is also a fantasy, as both the US and Canada have draconian labor/corporate laws that stifle both innovation and competition.

Ta,

 

I agree with MooseOak's response... Free Market in the eyes of the players means that spending has no restrictions on it... the rich teams can pay whatever they want to for players irrespective of any effect it may have on other teams in the league.

Once you put caps/restrictions in place, it's no longer a free market - at least in the eyes of the players.

 

At the risk of getting off topic, I feel that my questioning of running a any society based SOLELY on the law of supply and demand being folly is not dominant in the current economic landscape (see Bush Administration, degregulation, etc). I stated that the law of supply and demand is treacherous because it is often manipulated (see Enron) and further there is no accounting for the negative repercussions of this law. I would love to continue this discussion at length, but feel it would be best for this thread if it is done through PM.

To keep on topic, in your opinion, jochip do feel that a free market system would be the solution to the NHL's needs? If so, how do you feel that the fans would benefit from such a system?

 

First of all, no one in the union has ever said that they want a total free market. If that were true, the union could decertify and that would be the end of the CBA. What the players want is some semblance of a free market where they are free to go to the highest bidder without restriction. They are willing to sacrifice some of that (notice no one is fighting against restricted free agency or the draft), but not all of it.

Second, in talking about a total free market system, you are only mentioning the facts that would benefit the owners. A contract for employment at will can be terminated by either party at any time. So under a true free market, a player could be fired, but a player could also quit at any time (even in the middle of a season) and work for another team. Or a player could threaten to quit unless he gets a raise. The current system of guaranteed "personal services" contracts is advantageous to both sides because they both get security out of the deal. The other option of non-guaranteed contract is so awful for a player that it would only happen if the union were absolutely crushed (re: the NFL). In fact, without a CBA, a non-guaranteed "personal services" contract would be found illegal by the courts because it only binds one party.

Third, in your Procter & Gamble analogy, you fail to mention one crucial point. Procter & Gamble owns all of those companies. It bought or acquired them through various mergers. The NHL does not own any of the separate teams. In fact, the teams have to pay in to the NHL to be admitted. The best that they can do is say that they own the names and the logos. The better analogy would be to think of the NHL as a regulatory commission appointed by an industry of separate and financially distinct companies.

 

http://people.uleth.ca/~rockerbie/SportsText.pdf

Professional sports leagues don't come close to fitting the definition of a freely competitive market.

 

That's the premise for the article I wrote. The players idea of a free market is flawed. They treat the NHL as if it's the only place they can make a living. The NHL is just one employer of hockey players, yet the players feel they are entitled to have teams bid whatever they want irrespective of how the NHL does as a whole. That is extremely flawed in my humble opinion.

I agree to an extent. Do not forget that the players have guaranteed contracts but also have arbitration on their side under the current CBA. The owners do not have that right. Therefore,they are clearly not on equal grounds.

I'm in favour of maintaining guaranteed contracts with equal arbitration rights for both parties.

Valid point, but the analogy still holds as far as the NHLPA treating the NHL as if it's the only market on earth that employs hockey players. NHL players have the right to play where ever they desire. They can play in Europe as many are now.

 

No one is arguing that sports leagues are freely competitive. That's obviously not the case. But in trying to create a workable analogy, people tend to use things that are noncompetitive (i.e. a group of companies owned by one parent corporation). That ignores the fact that teams do have to compete with each other for players.

 

your logic is incredibly flawed. you point out the case of proctor and gamble- each of their companies works and reports back to the top- proctor and gamble. this couldnt be any further from the reality of the nhl. the red wings, avalanche, flyers, etc. dont report back to the nhl- they keep their profits. that's what makes the nhl a free market system...the nhl doesnt own any of the teams. in fact, the nhl doesnt have any say in how any of the teams are managed either.

 

I don't know what you're trying to say here ...

A 'free-market' or pure/perfect/price competition model is a pipe dream and completely unattainable in real life. With or without regulation, it's not a free-market any way you slice it.

And imo, if it was attainable and did exist, it would not be beneficial for anybody (owners, fans, 99% of players) except the top 1% of players.

snuffle: joechip is right, S/D models are a projection of human behaviour. Enron has nothing to do with S/D but accounting issues.

As per topic, yes, the NHLPA is out to lunch with the 'free market system' line. As well as all the other PA zealots that think that ticket prices are not associated with S/D.

 

It's a valid point, but as far as the NHLPA is concerned, the NHL is the only hockey market available. The entire purpose of the NHLPA is to deal with the NHL. And it only works if you assume that the NHL is like a corporation that owns a number of companies. And even in that situation, the parent corporation will not handicap the profitable companies to the benefit of the unprofitable companies.

I agree. I have no problem with two-way arbitration. I was arguing more against the general sentiment on this board that the players should not have guaranteed contract because the average worker can be fired.

It's not the only market, but again you're thinking as the NHL as one entity whereas I see it as 30 corporations with different ownership. I think we have to agree to disagree on this point.

 

Quick OT comment: The Bush administration is no where near Free Market in it's thinking.... Corporate Fascism? Yes. Voluntary Capitalism? No way. If you're interested in this stuff I have a wealth of sites/info I can point you to... PM me and I'll be glad to hook you up. I'll cross-post this to my blog for those that want to flame me for that statement.

On topic comment: I would love to see a real free market in all things, and as such, yes I do think a Free Market would be a boon to hockey fans and ultimately the NHL. How?

Well, the NHL could operate very similarly to how it does now if US/Canada anti-trust law didn't force them into strained negotiations with the player's union. The NHL could set up whatever drafting system they wanted (but their claim to a player would only be binding vis a vis other NHL teams) but other leagues would be able to bid for the player's service, just like any other potential employer (read the WHA from the 1970's and possibly 2005, the AHL or any other potential HL) NHL Franchises would have to agree amongst themselves to the system by which players (under contract) could be moved around within the NHL (trading, 'free agency," waivers etc.). I don't have any earthly idea what that would look like right now b/c I haven't really thought about it.

The reality is that there probably isn't enough money out there to support more than one major Hockey league and as such the NHL would be the de facto 'Big Leagues' just like MLB, NBA, and the NFL. All of the major sports leagues had serious competition before 'free agency' when the quality of their product slipped. The younger leagues were subsumed but the level of play rose, and the leagues got the hint to improve their product or face sincere competition. Who wins? The fans, of course.

The problem is, as I've stated before, the legal environments of both the U.S. and Canada prevent a real free-market solution. And, honestly, I think Curt Flood and the Sherman Anti-Trust Act have done more to hurt the quality of competitive sports than the other way around.

The players would be free (when not under contract) to play for whomever will pay them the best and the leagues would be incentivised to produce a quality product or face losing market share. Within a league, though, the original poster's idea is sound, the franchises are all competing amongst themselves for the purpose of improving the health of the larger organization. The internal economics of said macro-organization must be sound for that to work.

Considering the system as it is right now, a salary cap/linkage/budgetting system is the only thing that makes any sense. The NHL has been granted a franchise monopoly (something only government can grant... the only natural monopolies are those legislated by government) on the talent and for that privelege must negotiate with a union of said talent. The legal structure creates the animosity by taking choice away from the players and the owners to contract for services on an individual basis. The real losers are the fans as they have to spend more time worrying about the next labor situation then who's going to win the championship.

Ta,

URL for blog: http://palmereldrich.blogspot.com

 

That was a very poor description of the NHL and modern sports leagues rife with a whole lotta Marxist baggage about cartelization and the like.

I prefer to think of the teams like franchises within McDonald's, but the notable exception is that McDonald's isn't stupid enough to put franchises close enough to each other to undercut the other's potential business, like the teams in the NHL.

This unique aspect of the 'sports league' almost screams for a need for a top-down budgetting system to mitigate the effects of local population/market size, tax-environment, local government intrusiveness, etc.

Add to this the inanity of 'anti-trust' law and it's no surprise to me that we have to go through this every time the CBA expires.

Ta,

 

Free Market System didn't exist until Bob Goodenow showed the PA how to screw the owners...and of course free market system has to be onn his terms...hopefully the players get rid of this guy, and soon...There will be no deal until he and Gary are out of the picture...