NHL Lockout update and outlook

NHL Lockout

NHL LockoutThe NHL announced yesterday that the entirety of the 2012 Preseason is canceled, fueling more speculation that the start of the season October 11th is in real jeopardy. The NHL and NHLPA are set to meet this week to try to save the start of the season, but the outlook is bleak. Currently, the biggest point of contention is the revenue split, where the owners are asking players to cut their share of revenue from 57% to 46%. Many players have expressed deep concern with this split and have threatened to sit out the entire season is necessary This has subsequently prompted a mass signing campaign overseas as Alex Ovechkin, Evgeni Malkin, John Taveres, Erik Karlsson, and the like look for a home to play for possibly the duration of the 2012-2013 NHL season.

When you look deeper at the lockout, it is clear that revenue sharing is far from the only major issue. Another big issue at hand is contracts and free agency. The post 2004 Lockout NHL has featured some of the more insane contracts in NHL, if not sports, history, be it the length (Ovechkin, Suter, Kovalchuk, et al) or the distribution of money (ie Pronger’s front loaded deal and many like it). This has led the owners to ask for restrictions on salaries, including eliminating signing bonuses, uniform distribution of money, and maximum five-year duration for a contract. In addition, owners are seeking to control their drafted players for more time at less cost, as they have asked for entry-level deals to be extended from 3 to 5 years and for a player to become an unrestricted free agent after 10 seasons instead of the current 7 years.

Is the NHL’s proposal fair? In terms of revenue, I have always felt a 50-50 split is the way to go. There is no function NHL governing body with the owners, but there are no games without the players. It is a perfect 50-50 partnership and the revenue split should be obvious and logical. I realize there is a lot more that goes into that, but from the layman’s perspective, both groups are dependent on each other and should simple split the money. The contracts are another story. Owners and general managers should not be allowed to handout insanely front loaded contracts totaling tens of millions of dollars and then call foul and poor. If the argument is for competitive balance, then the league’s proposal is a bit stronger since many contracts signed in recent years have attempted to circumvent the salary cap designed to create balance. But the increase in entry-level deals and unrestricted free agency is garbage. The NHL is essentially trying to force young talent to have no negotiation rights at all for the first 10 years of their career, since the teams hold all the power until unrestricted free agency. Then, with a max 5 year deal, a player is in his 15th season and close to retirement and has only had one chance to cash in on his talent. There is no denying that the previous contract arrangement was flawed, but to handcuff the players like they want to is criminal.

So, what is going to happen? The NHL should really feel a need to act fast. The league’s popularity was on the upswing before this current lockout, finishing a long road to recovery from the previous lockout. Another lockout would be catastrophic for the league. The NFL and other sports are more popular than ever and the new fans of the NHL that came after the last lockout are not guaranteed to return to the ticket office. Also, more so than any other sport, the NHL has real competition from overseas leagues, particularly the KHL. NHL players do not need the NHL as badly as, for example, NFL players need the NFL.   What this all means is the NHL is in dangerous waters now in terms of fans and player participation, and in reality, the future of the league is at stake.