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THE NHL LOCKOUT Introduction

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FREEZING THE PUCK: THE NHL LOCKOUT YV Introduction It was all tied up early in the third NHL: We Need a Salary Cap Focus period of the championship game of the The main issue in the labour dispute is a Canada’s passion World Cup of Hockey when Shane wage control mechanism called a salary for hockey took a wallop in the fall of Doan took a Joe Thornton pass from cap. The owners claim that player 2004 when the NHL behind the net and beat Finnish salaries gobble up over 75 per cent of decided to lock out goaltender Miikka Kiprusoff for the go- league revenues, leaving only a fraction its players. With ahead goal. That made the score 3-2 for left over to handle other expenses. mounting losses Canada. With a combination of grit and Other professional sports do not have and no collective luck, the Canadians hung on to win the bargaining agree- this problem: the National Football ment in place, the game and the World Cup. Canada’s League spends 64 per cent of its rev- league felt it had squad of elite NHL players had estab- enues on player salaries, while Major no option but to lished themselves as the dominant League Baseball spends 63 per cent and lock out its players. global hockey power. One would the National Basketball Association News in Review expect that the celebration after the spends 58 per cent. These three leagues examines the issues behind the lockout game would reflect the euphoria of a have a salary cap. If the NHL owners and considers the team that had done their nation proud. could put a cap on salaries, they could future of Canada’s However, the post-game celebration lower the percentage ratio between favourite game. lacked passion. Why? Because the salaries and revenues so that they could players—the Canadians, the Finns and make a profit. According to a report the other NHLers who participated in commissioned by the NHL, teams YV Sections the tournament—were about to be collectively lost $273-million in 2002- marked with this symbol indicate locked out by team owners the next 2003. It is estimated that the league lost content suitable for day. It was a great hockey moment that another $225-million in 2003-2004. younger viewers. lost its lustre to a labour dispute. According to the owners, these colossal losses will lead to the death of a number Lockout!!! of franchises. Based on this situation, Hockey fans got official news the next NHL commissioner Gary Bettman is day. NHL commissioner Gary Bettman arguing for a salary cap in order to announced that the league’s inability to provide owners with an accurate idea of negotiate a collective bargaining agree- club costs from season to season, ment (CBA) with the players’ union something he calls “cost certainty.” meant that the long-rumoured player lockout was a reality. When employers The Players: We Want a Free Market and employees cannot come to terms on Meanwhile, the NHL Players’ Associa- a CBA, there are two legal paths that tion (NHLPA) says they will never can be taken: the employers can prevent agree to a salary cap. The owners got their employees from working—and themselves into this mess by willingly thereby earning a paycheque—by offering huge salaries to players in a locking them out, or the employees can free-market system. No one forced the withdraw their services in the form of a Colorado Avalanche to pay Peter strike. In the case of the NHL, the Forsberg $11-million per season—the owners chose to keep the players from team chose to pay him that much playing, much to the disappointment of money. The NHLPA does agree that the the players and the fans. players are well paid, but soaring CBC News in Review • November 2004 • Page 45 salaries are a problem created by own- put aside since 1999 in anticipation of a Further Research ers who drove the salaries up trying to lockout or a strike. The NHLPA was To stay informed build winning teams. It is insincere for warning players for over a year to save about recent developments the owners to turn on the players and money because a lockout was coming. concerning the NHL call for the elimination of a free-market Meanwhile, the league, after near owners and players, approach to salary negotiations just bankruptcies in cities like Ottawa and visit their official because they mismanaged their own Buffalo, have secured a group of ex- Web sites at businesses. According to NHLPA tremely wealthy owners—many of www.nhl.com and executive director Bob Goodenow, whose net worth exceeds the $2-billion www.nhlpa.com. “They [the owners] say they want a that the NHL generates each season. relationship between revenues and Some optimistic hockey fans are hoping player costs. We say it already exists.” that the league and the players will come to their senses and get back to the What’s Next? bargaining table. After all, this isn’t the What comes next is anyone’s guess. first lockout in NHL history. The The owners and the players are at polar owners locked out the players in 1994, opposites on the issue of a salary cap. and the two sides managed to negotiate No talks took place in October 2004 a new CBA and salvage the season. and, as the month drew to an end, there However, hockey insiders are not quite were no plans for future talks. In the as optimistic this time. Both sides seem meantime, both sides have amassed to have the will and the money to watch huge war chests to weather the storm; this lockout go into perpetual overtime. the NHLPA has $100-million put away Meanwhile, the fans wait. while the owners have had $300-million To Consider 1. Why was Canada’s World Cup victory celebration cut short in September 2004? 2. What is a lockout? How is it different from a strike? 3. Why does the NHL think it needs a salary cap? Support your answer with information from the article. 4. Why does the NHLPA oppose a salary cap? 5. Whose side are you on? Support your answer with evidence from the article. CBC News in Review • November 2004 • Page 46 FREEZING THE PUCK: THE NHL LOCKOUT YV Video Review 1. What happened in September 2004 to put the NHL hockey season in Carefully respond jeopardy? to the questions as you view the video 2. Who is Gary Bettman? Further Research 3. Why was he angry when he appeared before the media on September 15, To satisfy your 2004? interest/need for hockey, consider a visit to these Web sites: The Canadian 4. Who else stands to be affected by the NHL lockout? Be specific. Hockey Hall of Fame at www.hhof.com. The National Hockey League itself is at www.nhl.com. The 5. What other labour troubles has the NHL had to deal with in its history? National Women’s Hockey League is at www.nwhlhockey.com and the National Hockey League Fan 6. Are Andrew Ference’s comments accurate? In your opinion, is there too Association is at much animosity between the players and the league? www.nhlfa.com. 7. Why do you think Bettman and Goodenow refuse to talk to one another? 8. Are the owners supporting Bettman’s approach to negotiations? 9. Where else can NHL fans get their hockey fix during the lockout? 10. How long do some sports-watchers think the lockout will last? 11. In your view, will there be any long-term effects of this dispute? Explain carefully. CBC News in Review • November 2004 • Page 47 YV FREEZING THE PUCK: THE NHL LOCKOUT YV The Issues So what are the issues in the latest battle met the conditions of the rookie salary between the NHL and the NHLPA? cap but, with bonuses and incentives, pushed his salary to over $2.3-million a History season. Meanwhile, Colorado’s Joe The last CBA was negotiated in 1994 Sakic was offered a three-year, $21- after a 104-day lockout by the owners. million contract by the New York By all accounts, the players looked like Rangers. Under the terms of the CBA, they had lost the negotiations, but time the Avalanche had the right to match would prove the skeptics wrong. The the Rangers’ offer—and they did— new CBA included a rookie salary cap, making Sakic the highest paid player in serious restrictions on free-agent move- the NHL, surpassing all other players ment, and changes to the league’s salary by $1.5- million per season. Those two arbitration system. By 1997, the CBA cases are cited by many as the begin- took a turn in the players’ favour. In ning of a spending spree that put the that year, the Boston Bruins signed Joe league into the mess in which it found Thornton to a contract that technically itself by 2004. The Issues Issue NHL Owner’s Position The NHLPA Position Salary Cap - set salary cap between $30-million - no salary cap - keep the free-market and $40-million per team. The league system. The players feel the owners wants to create “cost certainty” so that have voluntarily agreed to pay players clubs will know how much money they large salaries and that it is unfair for can count on from year to year. them to come back and demand that players agree to limit their wages. Payroll Tax - not interested in this idea - teams that pay more than $50-million (also called a in player salaries could be taxed on luxury tax) their excess spending, with the money redistributed to the teams that stay under $50-million.
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