What is the issue?
The National Hockey League (NHL) is locked out for the second time in the last eight years. This dispute is stemmed from the inability for the National Hockey League’s Player’s Association (NHLPA) to come to terms with the NHL, and this is mainly due to a disagreement with how to divide the approximately $3 billion of revenue that is generated from the NHL games. The first game of the regular season of the NHL was supposed to be last weekend, but the two sides are locked out and can’t come to terms over the lack of agreement over a collective agreement. Talks have continuously broken, with each side keeping committed to its ideas and not willing to compromise.
The parties were supposed to sign the agreement approximately four weeks ago, but there hasn’t been a lot of progress on the major issues in the collective agreement. The first 82 games of the regular season have been cancelled due to the lack of agreement. The NHLPAexecutive director Donald Fehr has called the decision to lock out those initial games a “unilateral choice of the NHL owners,” (Duhatschek, 2012). He suggested that negotiations can continue even with the NHL beginning. But NHL commissioner Gary Bettman has taken the path of having the NHL continue during negotiations twice before. In the 1991-92 season, the players were on the ice even though there wasn’t a signed Collective Agreement. The issues with that collective agreement, which eventually led to a lockout late in the season, was that there were issues with free agency, playoff bonuses, arbitration, pensions and how to divide the revenue generated from trading cards.
While there are many issues to be sorted out between the two parties today, there has been an agreement with player safety and drug testing. However, the parties haven’t been able to come to terms with the ways in which the profits from the NHL are shared. Both sides, however, appear to be willing to work together towards a solution, (NHL, 2012).
Why is it important?
It is important to come to an agreement because of the fact that many of the NHL players are going to other leagues to play. Once they sign a deal to play in another league, which is usually in Europe, they are obligated to keep playing there. This can take a lot of the top-quality players out of the NHL for the entire season and possibly longer. Even if the NHL does return to action after the canceled 82 games, many of the top players might not return, (2012, Janicek). This would make the season somewhat pointless to many of the fans, because many of their favorite players, and the players that make their team what it is, wouldn’t be there to carry them through to the playoffs and possibly the Stanley Cup. Teams that would otherwise be in the bottom five in the league would all-of-a-sudden be in the cup finals, for example.
Both sides are losing a considerable amount of money. Owners of each team are also losing out. The fans are also becoming exceedingly frustrated that the NHL continues to have lockouts. The sport is particularly popular in Canada, and many of the people there find the sport helps them get through the long Canadian winters.
During the previous lockout, this eight-year collective agreement was struck and it has just expired. In the year preceding that lockout, there was an entire NHL season canceled. It is a major issue for the organizations that they have to cancel NHL games every eight years, particularly if the lockout lasts for an entire season each time the parties have to negotiate a contract. The NHL could lose a lot of supporters if the union and the NHL has to cancel so many games each time an agreement has to be made. Many of the fans are very passionate and both parties would suffer if the supporters began to lose faith in the ability of the NHL to be a continuous form of entertainment.
Who are the key stakeholders?
Among the stakeholders is NHLPA executive director Donald Fehr. Gary Bettman is the NHL commissioner. Under his watch, the league has been locked out three times, including 1994, 2004 and 2012.
Ferh has made it clear that he would like to continue the season while making the negotiations, but Bettman wants to keep going with the NHL locked out. Bettman used to be the third-in-charge of the NBA before taking the seat as the NHL commissioner in 1994. He is very experienced at negotiating in these lockouts, as he has experienced three of them. One of the key features that he knows is his leverage is locking out the NHL from playing. If Bettman were to allow the NHL to continue, there would be little sense of urgency on the part of the NHLPA to get things done.
Bettman is a graduate of Cornell University. He is the first commissioner of the NHL and the league has experienced tremendous growth in popularity since that time. The most prominent areas of growth include that in broadcasting, marketing and expansion of teams. He was the Chairman of the NBA before beginning his career with the NHL. Prior to being involved with the NBA, he was with the law firm Proskauer Rose Goetz and Mendelsohn. He is a member of the Dean’s Advisory Council with Cornell University. He also services on the Athletics Advisory Council and the Jewish Studies Campaign, (Alumni, 2012).
Not as much is known about Fehr, other than he was a major part of the Major League Baseball strike in 1994. That strike ended the season early and cut into the 1995 season. So neither of the men are unfamiliar with canceling seasons or portions of seasons. That might make them too comfortable to do so again, and it obviously has.
What are the main challenges in resolving the problem?
A main challenge in this problem is that there is little trust for each side. Each part refuses to trust the other side to come to an agreement that will benefit all parties involved.
During the lockout in the 1991-92 season, the lockout began with only 10 games left in the regular season, as well as the playoffs. Because each party didn’t want to sacrifice the playoffs, an agreement was made in 10 days and all the missed games were made up. The issue with the current problem is that there isn’t as much of a rush to come to an agreement. Both sides wanted to have the dispute settled before the beginning of the regular season. The first 82 games aren’t as big of a deal as the games near the end of the season, when the majority of money is made in the NHL. It should be noted that the 1991-92 agreement only lasted for one year, so the problem wasn’t solved; instead, it was delayed.
In the 2004-05 lockout, the NHLPA helped initiate the first move by offering the NHL a 24 per cent salary rollback. The salary cap was also sacrificed, which puts a cap on the amount of money a team can pay all of its players. The salary cap is intended to ensure that teams are more competitive by having players that add up to a similar salary. These major changes could be one of the reasons why the NHLPA doesn’t want to undergo a similar situation. The NHL doesn’t want to play without a Collective Agreement because that is their leverage in negotiations, though both parties are losing out.
I haven’t noticed any reports on this, but I think one of the main issues is that there are so many players who are now on the union or they are working for the NHL corporation. These people are given jobs simply because of who they know and they likely don’t have human resources training. This can be a major problem when trying to get sides to work diplomatically. However, from what I have seen in many other cases, diplomacy isn’t often a feature when it comes to negotiations between human resources and the unions.
What steps have been taken to address the issue, if any?
Both sides need to be more honest with what they want and with what they are willing to give up. Everyone is losing a lot of money due to the lockout and in order to move forward, the two parties need to work together. That can only be accomplished if they are willing to make sacrifices and work together. I think there could be a problem with how stubborn Gary Bettman is. In only about two decades as commissioner of the NHL, he has already been involved in three lockouts.
It would also be helpful if each side set up a realistic schedule to achieve the outcomes. There are so many issues that are being discussed that they should each be dealt with accordingly. It has become evident that this isn’t being done: According to an article in Sports Illustrated, the monetary issues aren’t scheduled. “Neither side has indicated it is prepared to make a new offer now regarding how to split up the more than $3 billion annual pot of hockey-related revenue,” (NHL, 2012). The negotiators appear to be taking a strategy to deal with the smaller issues first, so that the larger issues might be dealt with later. Generally, once each party begins to make some agreements, these smaller ones can lead to larger agreements and a possible resolution can be made.
Alumni Affairs and Development. (2012). Cornell University.
Dehatschek, E. (2012, Oct. 12). Both Sides Sticking to their Play Books as Lockout Drags on. The
Globe and Mail.
Janicek, K. (2012, Oct. 12). Ovechkin, other locked-out NHL players seek refuge in European
Leagues. The Associated Press.
NHL, players resume bargaining. (2012, Sept. 12). Sports Illustrated.