The fact is we believe 57% of HRR is too much. There are lots of reasons for that. At least – as we have discussed previously – two other leagues, the NFL and NBA, their players have recognized in these economic times there was a need to retrench. We’re trying to have a negotiation over that. -Gary Bettman
The NHL and the NHLPA are set to meet on Friday, continuing negotiations on issues considered ancillary to the main issue at hand: the core economics of the league. As we know by now, the fundamental differences between the two sides have completely halted all negotiations, leading to the lockout itself and nearly three weeks since legitimate negotiations were last held.
The NHL is asking for the players to take a smaller share of Hockey Related Revenue, asking for a significant drop from the current 56 percent rate and likely closer to what the NHL ultimately wants: a pure 50-50 split between the league and the players.
The NHLPA, meanwhile, is saying that such a significant cut will never happen unless the league is willing to enact higher levels of revenue sharing between franchises so that the full burden is no longer fully on the players. The players are also unwilling to take such a drastic cut considering their belief that HRR does not come close to including the total amount of revenue the league is actually receiving each season.
Several times in this process the NHL lockout has been compared to what happened in the NFL and the NBA last year; the NFL situation has specifically been mentioned time and time again.
When the players bristled at the idea of a 50-50 split, Gary Bettman instantly admonished the union based on the fact that the NFL and the NBA players had agreed to much similar deals. In fact, the NFL players had agreed to 48 percent of revenues. If the NFL and the NBA players could play along, why can't the NHL players see the error of their ways.
The problem with this notion is that the comparisons to the NFL situation and the lockout in 2011 don't come anywhere close to the NHL lockout -- at least when it comes to how Bettman and the league want to resolve the situation.
The league wants the players to take a major salary cut to 48 percent or so, ideally, without increasing revenue sharing between franchises. The drop from the current 56 percent to 48 percent (or lower) would mean either salary rollbacks or increased escrow payments to make up for that large drop in percentages.
The NFL, meanwhile, employed a much, much different resolution to the lockout last year.
- In the previous CBA, NFL players received 60 percent of "total revenues" - a number that did not include a $1 billion credit that was designated as an expense credit for the NFL franchises.
- In the new CBA, players share dropped to 48 percent. However, the $1 billion credit was no longer available to teams and the share was said to be of "all revenues." The percentages dropped, but the amount of money for the players essentially stayed the same.
- NFL players did not see any changes to existing contracts. The players were upset with teams spending well below the salary caps, so the drop in percentages -- along with the redefinition of revenues -- allowed for teams to easily fit salaries into the new cap with the players' share going over the new percentage amount.
- The players agreed to a lower percentage in part because of massive changes to the health and safety of the players; shorter offseason workouts, changes to training camp, limited contact in practices, as well as added injury protection on a player's contract.
- The players agreed to a smaller percentage because the new CBA called for the league to spend to at least 99 percent of the cap in 2011 and 2012, while committing to spend to 95 percent of the camp from 2013 to 2020.
You can see just what incentives the players in the NFL had in taking a smaller percentage. There are some who believe the players actually received a very raw deal in the final CBA. The goal with this agreement, both between the owners and the players, was to grow the NFL and to continue to grow the league.
What is interesting is that the fundamental problems of the NFL and the NHL actually match up significantly. The teams at the top of the league are making significantly more than the teams at the bottom, driving up total revenues and creating a situation where teams were bleeding money just to keep up with the rising salary cap.
The difference here is that in the NFL, upwards of 75 percent of revenue is shared between franchises. After one year, the NFL is seeing vast improvement in the financial health of the struggling franchises, while the teams that had always enjoyed healthy profits are still enjoyed that same level of financial stability and abundance.
If the NHL is serious about adopting a financial agreement with the players similar to that of the NFL or NBA, then the league must also be willing to take the necessary steps to make that smaller percentage worth it for the players. While some may feel that the NFL deal was bad for those players, their overall share of revenue essentially stayed the same and the league is now back to enjoying financial prosperity. The NHL, meanwhile, is asking for the entire burden to be put on the players shoulders -- there's no doubting why the players have rejected such a proposal.
While it seems the two sides are miles apart, they are at least speaking the same language. The NHL has reportedly softened its stance on discussing revenue sharing between franchises and there are reports that certain owners and players are in favor of a moderate deal in order to get the season back on track. There's also the fact that in their last proposal, the NHL had dropped the redefinition of HRR that would have essentially dropped player revenue shares to 43 percent.
Bettman and the NHL continues to use the NFL and NBA as examples of why the players should accept the lower revenue shares, but when comparing the two situations the details don't come close to adding up.