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Contract Law Question


J.I.A.H.N

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I hear what you're saying, but I disagree with you here. I realize that Bettman isn't a dictator and works for the owners. But he also doesn't operate in a majority rules environment. As a matter of fact, he only needed 8 out of 30 BOG's on his side to lock out the players.

What I was trying to suggest was that as a result of this type of environment, you have a core group of power brokers on the BOG...Jacobs, Leonsis, Dolan, Snider, Tanenbaum...etc...that are known to exert major influence on decisions of the BOG, and if you believe some reports, their methods border on intimidation. If this group didn't want these penalties, then we wouldn't have them...even if the majority voted for them. That's what happens when you only need 8 out of 30 freaking votes. This group are the dictator for all intents and purposes.

Just for fun, I looked at the list of these back-diving contracts in the cross-hairs:

  • Vinny Lecavalier, TB Lightning - 11 years $85 Million; Still remaining - 8 years $61 Million

  • Johan Franzen, Detroit Red Wings - 11 years $43 Million; Still remaining - 8 years $31 Million

  • Scott Gomez, Montreal Canadians - 7 years $51 Million

  • Rick DiPietro, NY Islanders - 15 years $65 Million

  • Ilya Bryzgalov, Philly Flyers - 9 years $51 Million; 8 years remaining

  • Christian Ehrhoff, Buffalo Sabres - 10 years $40 Million ($18 Million in first two years)

  • Roberto Luongo, Vancouver Canucks - 12 years $64 Million; 9 years $42 Million

Interestingly enough, only one of these contracts (Bryzgalov) are from a team that I'd consider a power broker on the BOG. This small group not only wanted to close the loophole, but also wanted to rub salt in the wound and hang the body from the street lamp. I think Provost makes a great point in the post above yours saying that the penalty was initially drawn up by Burkie, whom by the way was involved in these negotiations even though he'd been fired months earlier, and we all know how much love there is between Burkie/Nonis and the Vancouver Canucks these days.

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Collusion

Definition

In the study of economics and market competition, collusion takes place within an industry when rival companies cooperate for their mutual benefit. Collusion most often takes place within the market structure of oligopoly, where the decision of a few firms to collude can significantly impact the market as a whole. Cartels are a special case of explicit collusion. Collusion which is not overt, on the other hand, is known as tacit collusion.

Variations

According to neoclassical price-determination theory and game theory, the independence of suppliers forces prices to their minimum, increasing efficiency and decreasing the price determining ability of each individual firm. However, if firms collude to all increase prices, loss of sales is minimized, as consumers lack alternative choices at lower prices. This benefits the colluding firms at the cost of efficiency to society.

One variation of this traditional theory is the theory of kinked demand. Firms face a kinked demand curve if, when one firm decreases its price, other firms will follow suit in order to maintain sales, and when one firm increases its price, its rivals are unlikely to follow, as they would lose the sales' gains that they would otherwise get by holding prices at the previous level. Kinked demand potentially fosters supra-competitive prices because any one firm would receive a reduced benefit from cutting price, as opposed to the benefits accruing under neoclassical theory and certain game theoretic models such as Bertrand competition.

Collusion is illegal and I am not naive enough to think you could prove it, in this case. But I do know that contract law does not supercede Canadian and US civil law.

Hey, I was only dreaming, ain't going to happen, but you know it happened!

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