MacDaddy TLC*
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To summarize, what is the reason the NHL is in the mess they are in? Here are some of my thoughts:
The 1994-95 lockout: the League was on a high coming off a great Stanley Cup final where the Rangers ended a 50 year drought. Hockey was hot. The NBA was on the decline. Baseball had just cancelled their World series and fan backlash was tremendous---it took forever, a juiced ball and juiced Ball players to recover. The league had just signed a lucrative television deal with Fox and were on Network tv for the first time in decades. When the league finally returned to the ice most of the momentum was gone. They earned respectable ratings for Fox, but they were about 20% of what the NFL got. The numbers declined each year of the Fox deal and at the end, the league was unceremoniously dumped by the network.
Salary Disclosure: Nobody knew what other players were making. Everyone assumed Gretzky or Lemieux were the highest paid player during the 80s when in fact it was Dave Taylor. (In 1988 McNall made Gretzky the highest paid player and in the years following upped the ante when Mario's salary briefly topped Wayne's) **Does anyone remember the year that Salary disclosure came into effect?**
The 1990s expansion: The league grew too fast into non traditional markets in what was basically a greedy cash grab by the players and owners. The owners received millions in Expansion fees with a total disregard for the effects on the product. The players saw jobs being created and opportunities to stretch their careers and increase their earnings.
Bettman vs Goodenow: No matter what they say, the two have a very adversarial relationship and do not like each other personally or professionally. This is in stark contrast to he Aieglar and Eagleson relationship which was too friendly. During the Eaglson years, he sold to the players concessions to the owners in exchange for improvements to the pension. Short term pain for long term gain. What the players later found out, thanks to Carl Brewer and company is that those gains were not there. The trust between the players and the league was broken and the effects are still being felt today.
The 1995 CBA: The owners apparently were the winners in the 1994-95 lockout....or so they were led to believe. The reality is that they went into the lockout with the goal of a salary cap and being led by the father of the NBA salary cap, came out empty handed. Instead, they got a system that Eric Duhatschek in his Calgary Sun column said:
"By getting a deal without a salary cap/luxury tax, the players effectively put the onus on owners to run their businesses efficiently. Some will try, but others... will not be able to change the spending habits of a lifetime. All it takes is a handful of free-spending teams and all the contracts you couldn't comprehend before... will appear almost logical in two years."
Apparently acting responsibly was beyond the capabilities of the NHL owners and Genral Managers. The entry level Salary cap instituted to prevent deals like the one given to Alexandre Daigle in 1993 by the Ottawa Senators failed miserbaly. It didn't take long for teams to find loopholes to get around the cap. This was clearly demonstrated by the Boston Bruins in 1997 when they signed first overall pick Joe Thornton to the maximum, but included bonuses that could help him earn 2.4 million. To make matters worse, the Bruins gave their 2nd choice, eigth overall Sergei Samsonov a similar deal. In the end, the teams that got antsy about the season being cancelled and got the ball rolling to get a deal done without a salary cap caused for a deal that didn't serve to protect them from themselves.
Salary escalators: There were too many problems with the 1995 CBA that made it too easy for the owners to spend like drunken sailors on shore leave.
The main escalator of salaries is the qualifying offers of Restricted Free Agents. To retain the rights, the teams were required to give the players a 15% pay raise irregardless of performance. (** Is there a different rate than 115% for players making over a certain amount?**)
Another excalator for owners was the expansion. By adding 9 new teams from 1991 to 2000, the league created nearly 33% more jobs for the players. This was off set minimally by the political changes in Europe and the availability of players from the broken Soviet Union and the Czech Republic and Slovakia. Unfortunately for the league this meant that highly skilled players were at a premium and greatly affected the supply and demand. It was a seller's market and the players took full advantage of the owner's desperation.
Arbitration became a factor in the 1990s. Prior to salary disclosure, arbitration was hardly a tool. An agent couldn't make solid comparisons to assist a client in salary arbitration because he couldn't say how much comparable players to his client were earning and say his client was worth the same. Once disclosure was introduced the players had a great weapon at their disposal.
Finally, Unrestricted Free agency played a huge role in the players' salaries growing. By setting the Unrestricted Free agency age at 31, the league has limited the number of players available each season. (**What is the average age of an NHL player**) This aided in making the supply and demand problem a crisis. With limited talent available, teams offered contracts that were more lucrative than the players worth. The average salary increased from $560 000 in 1993-94 to $1.79 million in 2002-03.
Extending the CBA: Twice during the term of the Collective agreement reached in 1995, the league and players association decided to extend the term of the deal. This, despite the fact that salaries were spirally out of control. The reason being that the teams didn't want to jeopardize their expansion fees or lose their exposure at the 1998 and 2002 olympic games that they hoped would help them regain a lucrative television contract from a network in the United States. League revenues in 1993-94 were $732 million and player costs were $414 million. Salaries ate up 57% of revenues, which was in line with the NFL, NBA, and MLB. During the Collective agreement revenues increased by 173%. You would think this would be good news until you look at the escalating player costs. Salaried increased by 261% and in 2002-03, 75% of revenues went to salaries.
The system was broke, yet twice the league decided to not attempt to fix it and created problems that today have the league on the brink of extinction.
The 1994-95 lockout: the League was on a high coming off a great Stanley Cup final where the Rangers ended a 50 year drought. Hockey was hot. The NBA was on the decline. Baseball had just cancelled their World series and fan backlash was tremendous---it took forever, a juiced ball and juiced Ball players to recover. The league had just signed a lucrative television deal with Fox and were on Network tv for the first time in decades. When the league finally returned to the ice most of the momentum was gone. They earned respectable ratings for Fox, but they were about 20% of what the NFL got. The numbers declined each year of the Fox deal and at the end, the league was unceremoniously dumped by the network.
Salary Disclosure: Nobody knew what other players were making. Everyone assumed Gretzky or Lemieux were the highest paid player during the 80s when in fact it was Dave Taylor. (In 1988 McNall made Gretzky the highest paid player and in the years following upped the ante when Mario's salary briefly topped Wayne's) **Does anyone remember the year that Salary disclosure came into effect?**
The 1990s expansion: The league grew too fast into non traditional markets in what was basically a greedy cash grab by the players and owners. The owners received millions in Expansion fees with a total disregard for the effects on the product. The players saw jobs being created and opportunities to stretch their careers and increase their earnings.
Bettman vs Goodenow: No matter what they say, the two have a very adversarial relationship and do not like each other personally or professionally. This is in stark contrast to he Aieglar and Eagleson relationship which was too friendly. During the Eaglson years, he sold to the players concessions to the owners in exchange for improvements to the pension. Short term pain for long term gain. What the players later found out, thanks to Carl Brewer and company is that those gains were not there. The trust between the players and the league was broken and the effects are still being felt today.
The 1995 CBA: The owners apparently were the winners in the 1994-95 lockout....or so they were led to believe. The reality is that they went into the lockout with the goal of a salary cap and being led by the father of the NBA salary cap, came out empty handed. Instead, they got a system that Eric Duhatschek in his Calgary Sun column said:
"By getting a deal without a salary cap/luxury tax, the players effectively put the onus on owners to run their businesses efficiently. Some will try, but others... will not be able to change the spending habits of a lifetime. All it takes is a handful of free-spending teams and all the contracts you couldn't comprehend before... will appear almost logical in two years."
Apparently acting responsibly was beyond the capabilities of the NHL owners and Genral Managers. The entry level Salary cap instituted to prevent deals like the one given to Alexandre Daigle in 1993 by the Ottawa Senators failed miserbaly. It didn't take long for teams to find loopholes to get around the cap. This was clearly demonstrated by the Boston Bruins in 1997 when they signed first overall pick Joe Thornton to the maximum, but included bonuses that could help him earn 2.4 million. To make matters worse, the Bruins gave their 2nd choice, eigth overall Sergei Samsonov a similar deal. In the end, the teams that got antsy about the season being cancelled and got the ball rolling to get a deal done without a salary cap caused for a deal that didn't serve to protect them from themselves.
Salary escalators: There were too many problems with the 1995 CBA that made it too easy for the owners to spend like drunken sailors on shore leave.
The main escalator of salaries is the qualifying offers of Restricted Free Agents. To retain the rights, the teams were required to give the players a 15% pay raise irregardless of performance. (** Is there a different rate than 115% for players making over a certain amount?**)
Another excalator for owners was the expansion. By adding 9 new teams from 1991 to 2000, the league created nearly 33% more jobs for the players. This was off set minimally by the political changes in Europe and the availability of players from the broken Soviet Union and the Czech Republic and Slovakia. Unfortunately for the league this meant that highly skilled players were at a premium and greatly affected the supply and demand. It was a seller's market and the players took full advantage of the owner's desperation.
Arbitration became a factor in the 1990s. Prior to salary disclosure, arbitration was hardly a tool. An agent couldn't make solid comparisons to assist a client in salary arbitration because he couldn't say how much comparable players to his client were earning and say his client was worth the same. Once disclosure was introduced the players had a great weapon at their disposal.
Finally, Unrestricted Free agency played a huge role in the players' salaries growing. By setting the Unrestricted Free agency age at 31, the league has limited the number of players available each season. (**What is the average age of an NHL player**) This aided in making the supply and demand problem a crisis. With limited talent available, teams offered contracts that were more lucrative than the players worth. The average salary increased from $560 000 in 1993-94 to $1.79 million in 2002-03.
Extending the CBA: Twice during the term of the Collective agreement reached in 1995, the league and players association decided to extend the term of the deal. This, despite the fact that salaries were spirally out of control. The reason being that the teams didn't want to jeopardize their expansion fees or lose their exposure at the 1998 and 2002 olympic games that they hoped would help them regain a lucrative television contract from a network in the United States. League revenues in 1993-94 were $732 million and player costs were $414 million. Salaries ate up 57% of revenues, which was in line with the NFL, NBA, and MLB. During the Collective agreement revenues increased by 173%. You would think this would be good news until you look at the escalating player costs. Salaried increased by 261% and in 2002-03, 75% of revenues went to salaries.
The system was broke, yet twice the league decided to not attempt to fix it and created problems that today have the league on the brink of extinction.
