US hockey league faces activity freeze

Listen to this article

00:00
00:00

Unless someone blinks between now and Wednesday night, we will probably not be seeing much if any of the National Hockey League this year. The league's Collective Bargaining Agreement (CBA, for the acronym-inclined), which sets the rules governing player compensation, expires at midnight on Wednesday and, with no new deal evidently in the offing, a “lockout” appears certain.

With the league haemorrhaging money, the owners of the NHL's 30 franchises want the players' union to agree to a salary cap and are prepared to keep their arenas shuttered until they get their way. Indeed, most of them seem to believe that a lost season is the only thing that will finally bring the employees to their senses.

The inability to reach an agreement is at least partly due to the unwillingness of the union to even acknowledge there is a grave problem. Last February, independent auditors led by Arthur Levitt, the respected former Securities and Exchange Commission chairman, issued a damning report on the state of the NHL's finances. The study found that the league was losing nearly US$300m annually and that 19 of the 30 teams were submerged in red ink.

In an argument that will sound familiar to followers of English football, Levitt put most of the blame down to the failure of the NHL to control costs; player salaries were eating up an astonishing 75 per cent of the league's roughly US$2bn in revenues, versus 64 per cent in the National Football League, 63 per cent in Major League Baseball, and 55 per cent in the National Basketball Association.

Unveiling the report, Levitt was harsh: the NHL, he said, was “on a treadmill to obscurity”; he would not “invest a dollar of my personal money in what appears, to me, to be a business heading south”.

The players' union responded by questioning the objectivity of the study and challenging its figures. Union head Bob Goodenow, noting that the NHL itself had commissioned the audit, dismissed the study as “simply another league public relations initiative” and accused Levitt and the league of understating revenues and overstating losses.

Goodenow's apparent unwillingness to compromise is hardly surprising; he is used to getting his way. When the CBA was negotiated nine years ago, during a 103-day work stoppage, the Harvard-trained lawyer stared down the league and not only persuaded the owners to drop their insistence on a salary cap, but got them to agree to salary arbitration, which subsequently sent player compensation into the stratosphere. Ten years ago, the average NHL salary was US$572,000; these days, it is US$1.7m.

Of course, no one forced the owners to accept Goodenow's terms, nor did anyone force them to start overpaying for superstars and mediocrities alike. Similarly, no one forced the league to add nine franchises over the last 13 years, which has diluted the talent pool and taken ice hockey into places it probably does not belong, such as Nashville, Tennessee. Sure, the players have been greedy it is hard to think of too many pro athletes who are not but it is a bit rich to suggest that player avarice is solely responsible for the NHL's woes.

The NHL season is scheduled to begin on October 13. The consequences of a prolonged lockout are anyone's guess. It would likely have the beneficial effect of putting several teams out of business at a time when contraction is badly needed.

A number of players, including some big names, have indicated that they will head to the European leagues if the NHL season looks to be a lost cause. Most will surely return once the NHL resumes play, but some of the Europeans may decide to stay. Meanwhile, attempts are being made to bring back the World Hockey Association, which in the 1970s was a fairly formidable rival to the NHL. A revived WHA would certainly benefit from a NHL lockout.

One thing can be said with certainty: a cancelled season is not going to help the NHL win back the millions of fans who have tuned out the league over the last decade or so. The NHL has lost its appeal principally because the style of play has become so unappealing (lots of hitting and clinching, little if any artistry). Should the league disappear for a year, its absence is probably not going to make too many hearts grow fonder.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.