Will the NHL Self Destruct?
If you listened to Gary Bettman the lockout that cost the NHL the 2004-05 season was to allow the NHL and the NHLPA to become partners and to ensure the viability of NHL hockey in all current NHL markets but only two years after that CBA was signed I am beginning to wonder if disaster on several fronts could be looming in the near future.
Based on recent developments it is apparent that NHL commissioner Gary Bettman seems intent on doing whatever he can to preserve hockey in the existing NHL markets and it appears he is going to do whatever he can to do this. As more and more information comes out it is becoming pretty clear that he played a significant role in blocking Jim Balsillie’s bid to purchase the Nashville Predators. ESPN.com’s Scott Burnside has written that the Balsillie group blames Gary Bettman for current Predators owner Craig Liepold backing out of the deal to sell the team to Balsillie.
“We were advised by Mr. Leipold that the commissioner had found out about the existence of the negotiations and ordered him to immediately cease any further communications with us,” Balsillie’s legal representative, Richard Rodier, told ESPN.com this week.
The common belief is that Bettman preferred Liepold to sell the team to William ‘Boots’ Del Biaggio III whose intent is to move the team to Kansas City. I believe this is not the case and Bettman really urged Liepold to seek local ownership of the Predators to keep the team in Nashville. Surprisingly, or maybe not, a local group surfaced and held meetings with the league last week and there was also a ticket drive organized for last Thursday to also ensure the team would stay in Nashville. I don’t think any of this is coincidence and I believe that Bettman will do whatever he can to keep the Predators in Nashville.
But why would Bettman do this if the Nashville community isn’t fully supporting the team and the team is going to lose money even if they only spend the minimum $34.3 million required of them all while collecting significant revenue sharing money? I believe there is some personal legacy issues at stake and Bettman doesn’t want to see a team fail which he brought into the league. But more importantly I believe that it is the intent of Bettman, the league and its owners to expand. Over the past week there has been rumours that Bettman has told NHL owners that he expects he can collect up to $500 million in expansion fees to expand to Las Vegas and Kansas City. If you do the math that would equate to more than a $16.5 million windfall to owners and the owners wouldn’t be required to share any of it with the players.
But that is only a part of it. Another side effect of expanding to two almost assuredly small revenue cities is that it would bring down the salary cap and more importantly the league minimum. Expanding to those two locations could see the salary cap drop by as much as $2 million. Ever wonder why a local ownership group suddenly popped up in Nashville? Well maybe Bettman’s promise of up to a $16.5 million windfall a year or two from now and a promise of a potentially lower salary cap (and minimum) is one of the reasons.
From a short term purely financial point of view this seems like a perfect plan and a plan that can be extended further. Why stop at 2 expansion teams? Why not also expand to Portland (or Seattle) and return to Hartford, Quebec City and Winnipeg and whatever other city wants to join the NHL including possibly European expansion? You can argue that the NHL can’t be supported in some or all of those cities but remember expanding to small market cities brings the salary cap down which makes survival in those small market cities more likely.
Noticed how I left Hamilton out? The NHL does not want to go to Hamilton because Hamilton is likely going to be a larger revenue location that will not only infringe on the Leafs and Sabres territory but will also likely cause the salary cap to rise making Bettman’s small market franchises less viable.
And there is the problem. The above plan is a plan of short term greedy owners, and not a plan based on what is good for hockey and the fans both now and in the future. Talent will be even more sparse divided, scoring will drop even more, rivalries will diminish even further, and the schedule will feature more uninteresting games between untalented teams. If that itself doesn’t cause fan interest to drop and eventually break the NHL, the irritation of the players just might and it may very well be the players who stop this plan in its tracks.
Gary Bettman enthusiastically proclaimed the new CBA to be a new a partnership with the players but the players are now beginning to think that this partnership is a little one sided. Where as the owners are interested in generating expansion fees and overall team value (neither of which gets shared with the players), the players are interested in generating revenue which means locating franchises where the greatest fan interest resides. That means Hamilton, not Nashville or Kansas City or Las Vegas. Tim Wharnsby has written a good article on the situation and the growing player discontent with the league blocking the sale of the Predators to Balsillie.
In June Martin Brodeur unexpectedly quit his role with the competition committee largely because he didn’t believe the league wasn’t listening to the views of the committee. He doesn’t believe the partnership on the competition committee is working either.
“I didn’t feel I was making a difference, and I hate wasting my time when it doesn’t seem to matter,”–Martin Brodeur
The NHLPA is in a state of flux right now after the firing of Ted Saskin and the NHL may view it as an opportunity to push some of these things through but it is likely going to backfire against the owners because the players are rebuilding their organization almost from scratch and they are likely going to rebuild it from a disgruntled player point of view and it could very well be an unhappy, militant NHLPA when done. That could lead to more labour problems in the not too distant future. The NHL CBA is currently set to expire in September 2011 but the NHLPA has an option to terminate the agreement prior to the 2009 season which is only two years from now. If the relationship between the NHL and the NHLPA doesn’t change (which I suspect it won’t) I fully expect the players to invoke the option to terminate the CBA to negotiate a real partnership or abandon the partnership idea altogether and try to get to push for a luxury tax idea again. More labour strife is on the way and it could be a long players strike next time.
What the NHL will look like after another lengthy labour conflict is anyone’s guess. With enough small market teams essentially controlling the NHL the NHL will not likely be very flexible in negotiations. But with the players being annoyed by being bullied around in the last CBA negotiations and the players developing view of a non-existing partnership they might be stronger than ever. Who blinks first is anyone’s guess.
What is interesting in all of this is that prior to and during the 2004-05 lockout most fans and casual observers (I was not one of them) believed it was the players greed that was the problem and most sided with the owners but as it stands right now owner greed is the problem and the players interests are currently are the most closely aligned with the fans interest (i.e. locating teams to where the most fans exist). These are interesting times in the NHL and it would not surprise me if the not to distant future is more ominous than the not to distant past.