As I haven't read the CBA's, I'm not 100% on some of the processes.
Mods: Although this is CBA related, I feel that rather then discussing current CBA issues, news and updates. I would start a thread where members can read up to understand some misconceptions of some proposals, discuss logistics and debate our own opinions on what the NHL - NHLPA should agree on from a business POV.
In a traditional business, if Net Profits are less to stay closed then they are to open, then changes must be made. Is this the case for few NHL franchises? We don't really know for sure, but we can assume that some teams may be on the tipping point. Why on earth would Betman move teams down to places like Pheonix, Nashville and Columbus in the first place when they pose this risk?
What are some options people have been discussing?
With the current CBA deadline right around the corner, the prospect of a full 12-13 season is beginning to appear bleak at best. Especially with Gary Betmans latest interview stating "Negotiations have been stalled, and will restart on Friday Sept. 7th."
When looking for places to expand the NHL to, there are a few places that make most people stand back and say "What were they thinking...Florida, Phoenix?" When the NHL or any viable business is looking to expand, you do your demographic analysis, average age, working class, average income, population, etc. Surely if a market like Vancouver (population of 600,000) can sell out every night, a team like Phoenix (population 1,500,000) can do well as well? After your due diligence, these high populated cities should be able to support these teams, but they're not... now what?
Option 1: Relocate the Dog Teams
People often say "Move teams like Phoenix to a Canadian market, like Quebec"; common sense dictates that of course the new franchise will be tremendously more profitable then its current Market. But lets analyse the decision from a business standpoint.
Will the net fans increase?
When you look at Quebec, what percentage of their population is already supporting NHL teams like Toronto and Ottawa? You don't want to simply absorb these fans, thus taking away from Toronto's and Ottawa's profits; you want to acquire new fans that didn't support any NHL team in the first place. These new fans you gain must exceed the fans Phoenix will loose due to the move.
This is the issue with relocating to a saturated market like most of Canadian cities, we are Hockeys greatest nation, were already loyal fans of current teams... giving them a local team will simply reallocate profits, not increase the fan base enough to compensate for the relocation costs.
In addition, past relocations are almost always due to arena issues. So do these prospect citys (Seattle, Quebec etc.) Now have arenas to support an NHL team
Option 2: Roll back player's salary's to 43% (NHL's Offer)
Usually when a business cant be profitable, it gets shut down employees thus don't get paid. But this cant happen to NHL teams. So they need to figure out new methods of adjusting to their environment. As mentioned above, relocation can be pointless if your net fans don't increase drastically, relocating from one market to another without fixing the issue would be the worst case scenario.
So the owners have decided to target their expenses, by reducing their largest expense by 27% Thus increasing their bottom line, making it easier for teams to make it in these struggling industries until/if their fan base increases. This clearly will fix the issue long term, its not a band-aid but at the players expense.
You cannot expect the players... your key employees to suddenly take a pay cut of 27% on contracts you the owners agreed to pay. This is a classic case of bad management. The NHL is firm on this and doesn't appear to be budging, using the threat of a lockout to gain bargaining leverage.
Option 3 Meet Somewhere in the middle 50-50 Split
Fans are starting to get worried, as they should. As a result we're saying "Well if you cant agree on something just meet in the freaking middle and lets play some hockey!" But this doesn't really do anything.
It doesn't reduce owners expenses enough to the point where low revenue teams are able to be independantly stable - so the NHL isnt happy.
It reduces the contracts to players salaries. Contracts the owners already signed, agreeing to pay in full.
If a manager/owner need to compensate unprofitable business by revisiting contracts that are already being served then this is just a result of bad management. Any sort of roll back to current salaries is going to result in the NHLPA not being happy. As they should... its a binding agreement.
Option 4: Fix the salary cap; Revenue increases go to owners (NHLPA's offer)
Now here's a system that was really well structured. Over the next 3 years the players are agreeing to lock in their salary cap at 70.2 million a season, when the revenue increases in following years, the increase will go to the owners.
If the NHL's revenues continue to grow at the 8%/year they have been since 2005. The players will forfeit approx $500-$800 million. But what happens if the revenues drop? Players are still locked in at 70.2 million dollars. and suddenly their percentage has increased. This system is completely perfect except for the fact that it assumes the NHL's revenues will continue to grow as they have been, by turning variable costs to fixed costs and letting the owners keep the spread.
What if a system was put into play that duplicated the NHLPA's proposal, where the salary cap is a hard cap and any revenue increases moving forward are absorbed by the Owners, combined with a roll-back clause that states that if the NHL's revenues are less in a following year then the previous, then players salaries and cap would be rolled back the percentage the revenues dropped. In subsequent years following the drop the salary's and cap they can increase to their original amounts but never exceed the $70.2 million salary cap and original contract amounts.
This will allow teams to mitigate the unknown, and give them more flexibility in the future so the struggling teams are able to become profitable.
This proposal doesn't addresses the NHL's short term need to address their "Core economic issues" but when negotiating both parties have to give in a little.
Edited by Neufy161, 07 September 2012 - 11:26 AM.