NHL Revenue and how it’s confusing the issue – Part 1

The more one reads about the current NHL lockout, the easier it is to become confused about the revenue issues.  In part, this is because the issues are complex. It’s also because both the league and the NHLPA muddy the waters with their terminology and statistics.

At the risk of seeming a bit pretentious after 4 whole blog posts, I’m starting a three-part series examining some of what’s been said and written about NHL revenue (and a little on profit).

In this opening salvo, let’s take a look at the recent rhetoric from the NHLPA regarding revenue splits. On October 18, the NHLPA made three mini-proposals to the NHL, attempting to bridge the gap on revenue sharing. James Mirtle of the Globe and Mail summarized them succinctly. In the first proposal, “Players would receive a set revenue figure for a small raise in Years 1, 2 and 3 but would have their salary frozen at the Year 3 number until their share hit 50 per cent. If league revenues increased at 5 per cent a season, the players would receive a share of 55.4 per cent in Year 1 and 50 per cent in Year 5.”  The NHLPA trumpeted this as a big concession in which they agreed to a 50/50 split of revenue. To be fair, it’s a big step from the guaranteed 57% they received in the previous CBA. But this proposal only gets to 50/50 if NHL revenues continue to increase as quickly as they have the past few years. Let’s say, just for the sake of argument, that the lockout really affects the fan base, and the NHL revenues begin a slow decline over the next several years. With fixed revenue amounts, actually increasing over the first 3 years, that would have the effect of actually increasing the players’ share above that previous 57% number. You could say that decreasing revenue is the fault of the owners, especially having tested the fanbase with this lockout, but you definitely can’t say that the players have agreed to a 50/50 split. They’ve agreed to a plan that could conceivably end up in a 50/50 split one day, but that’s a far cry from what the owners are asking for. (And I’m not even confusing the issue further by talking about the so-called “make-whole” proposal, which would return some money to the players over the first few years in order to soften the blow of an immediate move to a 50/50 split.)

We’ve heard the the league complaining that the NHLPA has refused to negotiate off the league’s proposals. Ever wonder why that’s a big deal? Why can’t the league work off the players’ proposals? Because the players, until this week, have never proposed any deal which tied the cap to league revenue on a percentage basis. And while they did finally do so this week, they also included a “ratchet” clause, which essentially means that as revenues change over time, the dollar amount of the players’ share can increase but never decrease. (Think the league’s going to agree to that one?) Every proposal by the players thus far has had guaranteed minimum dollar figures, regardless of what happens to league revenues. The NHL prefers to share the risk and reward of revenue movement, which is why they’ve appeared appalled at the players’ proposals so far.

So why haven’t the players wanted to go to a percentage split? At least in part, it’s because they wanted to try to hold the league’s feet to the fire on the revenue split in year one. The NHLPA has argued that revenue losses due to the league-imposed lockout should be the responsibility of the owners. Let’s back up and think about it. They’ve proposed to have their share go up slowly – for the sake of argument, let’s say $1.8B in year one, $1.85B in year two, etc., and as league revenues grow at 5% per year, maybe from $3.3B in year 1 to $3.45B in year 2 and $3.6B in year three, pretty soon you’re down to 54% instead of 57%.  Keep going and you eventually hit 50%. But what happens in year 1 when the season is only 64 games, or even 48 games as we had in 1994? League revenue goes way down in that year – given that the league is largely gate driven, every game lost might mean $30-$40M. In a 64-game season, you might reasonably assume that a $1.8B player share would be around 70% of league revenues. In a 48-game season, it might be more like 90%. With that as a starting point, eventually agreeing to a pro-rated number for this first shortened season might seem like a huge concession. Remember the league’s first proposal, which was completely unreasonable? Well, so is the idea of a non-prorated amount for year one, aka. making the owners responsible for the losses incurred by the lockout.

After this week’s proposal, NHLPA head Donald Fehr sent a memo to the players, informing them that the owners had declined their offer. In it, he said “Under our proposal, it is now undisputed that the gap is only $182M over 5 years.” Since then, many respected journalists have parroted that statement, yet NHL Commissioner Gary Bettman has said that the two sides are still far apart. You can see why they’d disagree, given the numbers above.

All of this leads me to wonder why the NHLPA has been so set on fixed numbers rather than percentages. I suppose it could just the year 1 issue, but I don’t think so.  I think that the players think the current rate of growth of league revenue is unsustainable, thus they’re better off locking in some numbers rather than allowing their share to float up and down along with league revenues. So, in part 2 (coming soon), let’s take a look at revenue growth, the myth and the reality.


Pass or Fail – Bure to the rafters in Vancouver

On Monday, the Hockey Hall of Fame finally did what they should have years earlier, in admitting Pavel Bure.  Bure was one of the most exciting players in league history, but had his career cut short by injury, which, presumably, is why they made him wait six years.  He finished his career with 0.623 goals per game, third among the 100 highest goal-scorers of all time, behind only Mario Lemieux and Mike Bossy.  Suffice it to say, he loved scoring goals, and he did so better than almost anyone else, during an era in which other players were allowed to waterski behind him to slow him down.

Monday’s induction kicked off a fresh round of debate as to whether Bure’s number should be retired in Vancouver.  For a time, Bure was one of the most-loved Canucks ever.  From his first shift against the Jets, he lifted fans out of their seats.  For the first time ever, the Canucks had a star, and Vancouver fans could hardly believe their eyes.  In his second and third seasons, Bure scored 60 goals, proving him an elite talent, and it appeared that the best was yet to come.

Then came the 1994 playoffs, and with a 2nd-overtime series winner against the Flames in the 1st round, Bure became a legend.  His 2nd-round flying elbow on Shane Churla made it clear he wouldn’t take any crap from anyone, and had the Canucks won game 7 in the Stanley Cup Finals, Bure could have run for mayor.

What happened instead was a series of rumours that Bure, whose agent had been renegotiating his contract, had threatened to pull himself out of the lineup during the playoffs (something GM Pat Quinn publicly and vehemently denied).  Ultimately Bure signed a new 5-year deal, but he later admitted he had already asked to be traded.  It’s never been clear why Bure wanted out of Vancouver, though it’s commonly thought that he felt mistreated by Canucks management.  It might have been reasonable for him to feel that way – GM Pat Quinn, while generally an honourable sort, has been accused of a number of less-than-friendly tactics, and there’s enough smoke that there must be some fire.

Then came the 1994 NHL lockout, after which Bure held out for 4 days and eventually sued the team, over a claim that his contract was guaranteed to be paid even during a lockout.  It can’t be a good situation to be playing for a team that you’re also suing, and the shortened season wasn’t among the best for either the team or for Bure.

Before the 1995-96 season, Bure changed his jersey number from 10 to 96, then tore his ACL.  The following season he played through a neck injury and his point totals suffered.  In 1997, he switched back to #10, and his point totals rebounded – he finished the year in 3rd place among the NHL’s scoring leaders.  But another report of a trade request proved accurate, and Bure chose not to play again for the Canucks, finally forcing a trade to Florida for Ed Jovanovski and some spare parts.

I tell that whole story to illustrate that it’s fair to say that Bure’s time in Vancouver was a mixed bag.  Ask some Canucks fans for adjectives describing Bure, and you’ll get “selfish” just as often as you’ll get “incredible”.  The way he left Vancouver has soured some on Bure, and that group of people would vote against retiring Bure’s number.  Some have even said that Bure wouldn’t want to attend a retirement ceremony out of fear that there would be as many boos as cheers.

So, should Bure’s sweater be retired?  The arguments for retiring Bure’s are somewhat obvious – he’s still 7th in Canucks team scorring, 5th in goals, 3rd in hat tricks, 4th in game-winning goals, 2nd in power-play goals, 1st (by a long shot) in short-handed goals, 3rd in playoff scoring, 2nd in playoff goals; he also had the most goals in a season (60, twice), and most goals and points in a playoff season, not to mention his leading role in the team’s magical playoff run in 1994.  He was the most exciting player in team history, and he was the person who turned many non-Vancouverites into Canucks fans.  In the 90s, if you saw a Canucks jersey outside of Vancouver, it was likely Bure’s.  Quite simply, Vancouver has never had a player like him before or since.

However, the arguments against retiring his jersey are also out there.  The way he left Vancouver is the one quoted most often – when a guy can’t wait to get out of Vancouver, it’s not hard to argue that he doesn’t belong amongst the team’s most revered players in history.  This argument is also the most petty.  It says nothing about the way he played or how beloved he was for most of the time he was here.

People outside Vancouver point to his career stats and the fact that he’s been inducted into the Hockey Hall of Fame, and say if he’s good enough to be honoured among the league greats, how could he not be good enough to be one of the top Canucks ever?  This argument has merit, but only to a point.  Bure spent only 7 of his 13 seasons in Vancouver, and had two of his best four years offensively while in Florida.  428 of his 702 games were in Vancouver, along with 254 of his 437 goals, but that also means that much of his career success came in Florida, and to a lesser extent in New York.  Compare that to Markus Naslund, who spent 884 of 1117 games in Vancouver, and scored 346 of 395 goals there.

There’s also an argument that can be made for the Canucks having some specific criteria for their retirees.  Each of the 3 who were previously honored were longtime captains and each was very involved in the community, to go along with team-leading career statistics.  Bure, on the other hand, was rarely seen in the community outside of Vancouver’s night-life scene – he preferred to make his statements on the ice, and as a young kid only learning to speak English, he was never comfortable as a spokesman for the team.

Personally, I have a different argument that gives me pause.  The Canucks, as a 41-year-old franchise, have 3 sweaters in the rafters of Rogers Arena already.  Few in Vancouver could argue with those choices.  And let’s be honest, if Daniel and Henrik Sedin finish their careers in Vancouver, theirs will go up as well, for many of the same reasons we see Linden’s and Naslund’s up there, bringing the total to five, or six if you include Bure.  Now, let’s just dip into fantasy for a moment – let’s say the Canucks win a cup or two in the next 5 years.  I have to think that would ultimately result in a couple more retirements – Kesler, maybe Bieksa, possibly Schneider depending on how the rest of his career goes and how long he stays in Vancouver.  Now you’re up to somewhere between 7 and 9.  Let’s compare that to the Detroit Red Wings, an original-six team with 11 cup wins.  They have six jerseys retired, soon to be 7 once they put Lidstrom’s up.  Does it seem right that Vancouver, with no cups and a 40-some year history, should have so many numbers retired?  At some point you have to hold the bar high in order to keep the totals from getting ridiculous.  Should Bure be above the bar? Arguably, yes, but you can definitely debate it.  Some would say that if it’s debatable at all, then there should be no debate.

Regardless of how you see it, it’s fair to say that it’s not a slam-dunk either way.  Most-loved or most-hated, or both?  It’s clear that he should be honoured in some way by the team, but is retiring his jersey the best way?  It’s been reported that Bure was offered a spot in the Canucks’ “Ring of Honour” but declined.  If that were true, then it would be jersey retirement or bust.  Tough call.

What say you?  Bure’s #10 to the rafters – Pass or Fail?

Wherein I begin my blogging career

I’m not really a blogger, or even a writer. I’m not an NHL insider. I have no connection to any particular player. There’s no compelling reason for you to read my blog. Let’s get that out of the way.

So why am I starting my own blog? I read a lot of NHL-related news and commentary online. Like, a LOT. And increasingly I find myself want to connect with the authors of the material I’m reading, to share with them an alternate point of view. So many times I either disagree with the premise, or I find it very one-sided. I end up adding a lot of comments to their posts, and hope to hear back from the author. Sometimes the author comes back with some well-reasoned arguments, which I appreciate. Sometimes they don’t respond at all. But most of the time they have their point of view and that’s the way it’s going to stay.

Why do I disagree with them so often? I’m sure that in many cases they merely wish to stir the pot. In other cases they are firmly in the camp of one party or another, and that colours their views. Often, though, in my opinion, they just don’t seem to have any interest in exploring both sides of a story.

I really enjoy and respect some blogs and writers. Some of my favourites are Puck Daddy writer Greg Wyshynski, CBC staffer Elliotte Friedman, and Vancouver Province writer Jason Botchford, among others. I read them whenever possible, and they inform my own opinions.

But here’s my chance to put some of my own thoughts out into the ether. I hope they inform your own opinions. If not, perhaps I’ll hear about it in your comments. 🙂