

What the NHL Lockout Reveals About Capital and Labor - ecounysis
http://blogs.hbr.org/hbr/hbreditors/2013/01/what_the_nhl_lockout_reveals_a.html

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brudgers
> _"The NFL has managed this shift quite remarkably, in a fashion that has
> gotten them so that virtually very team is profitable"_

Professional football's labor economics are radically different from other
sports. They have virtually no development costs associated with talent -
development of talent is largely done by universities (many tax supported).

In addition the market value of players is based upon barter - trades
typically don't involve transfer fees, they involve other players sometimes
and usually involve draft picks.

Draft picks are interesting because high round picks are associated with a
greater out of pocket expense for the team receiving them should they choose
to exercise the pick - i.e. the signing bonus and salary of the first overall
pick are substantial outlays, whereas a second round pick will involve less
money.

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cube13
>Professional football's labor economics are radically different from other
sports. They have virtually no development costs associated with talent -
development of talent is largely done by universities (many tax supported).

The NHL has a similar system, though. They draw on NCAA and international
minor league talent, neither of which are paid for by the league.

The NBA is similar, though I would argue that the out of high school and "one
and done" draft rules have hurt the league much more than anything else.

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msbarnett
> The NHL has a similar system, though. They draw on NCAA and international
> minor league talent, neither of which are paid for by the league.

Not at all. Most NHL talent development is done through an extensive farm
system affiliated with and financially supported by their NHL teams, similar
in some but not all respects to the MLB.

Prospects pursuing the NCAA route vs junior leagues and the AHL are widely
regarded as inferior, facing significantly less stiff competition. A typical
player (ie, more than 50% of current players) would grow up advancing through
various levels of midget hockey, forgo college to play in one of the CHL
leagues (QMJHL, WHL, OHL), from which they would be drafted by an NHL team and
assigned to their AHL or ECHL affiliate. This is true even of international
players, who are often sent from their home countries to stay with Canadian
host families while playing in the Canadian junior leagues.

Making the NHL out of NCAA is the exception, rather than the rule. The system
is much, much less subsidized by tax payer funded schooling than the NFL's.

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malyk
The big difference is that NFL players are typically drafted at the age of 22
after they've gone through college. NHL players are typically drafted at 18.

Very few of them go the NCAA route. Those that do go that route can't be paid
in any way by NHL teams, so these players are just like their NFL brethren
with the exception that NFL players are a known commodity coming out of the
NCAA. NHL teams picked their players before they entered college, so it's a
little bit of a crap-shoot whether or not they'll turn into an NHL player.

Those who don't go the NCAA route either play for the CHL or in Europe. When
they turn 18, if they don't make their respective NHL teams, they typically
join a teams AHL affiliate or maybe even their ECHL affiliate. Both of those
lower tiers are supported by the NHL clubs.

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correctifier
This really isn't much more than a fluff piece giving an excuse for bad
management.

It ignores many of the detailed issues and instead makes it entirely about
overall revenue using unsourced and likely made up numbers. Missing was any
reference to revenue sharing and fact that some teams are turning large
profits while others are losing money year after year, but the league insists
on keeping teams in unsuccessful locations. The Phoenix Coyotes are a great
example of this full of bad business decisions from the start, and only got
worse when Jim Balsillie got involved. This shows little evidence of a
successful long term plan.

I am not a fan on unions in general, but I see this as a typical issue with
American business. Bad decisions are made and instead of management taking
responsibility, the blame is simply put onto labour costs, wages are pushed
down and the same mistakes happen again.

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msbarnett
This article seems poorly researched and poorly reasoned. Most observers are
crediting the end of the lockout not to "the players realizing the owners were
willing to scuttle the season", but instead to the players having voted to
authorize the NHLPA to disclaim their representation of the players,
effectively removing the players from the union, thereby opening the owners up
to anti-trust lawsuits.

Only once the NHLPA took that step did the league seem to start negotiating in
earnest, having previously pursued a strategy they hoped would break the union
as it did during the previous lockout.

It's essentially the same tactic that ended the NBA lockout.

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parineum
I disagree about the disclaimer of interest threat ending the lockout.

If you look back to the previous two lockouts, you'll see that the NHLPA was
bullied (or felt like it) and wanted that to end. The hiring of Donald Fehr, a
known hard liner on the side of labor with a history of labor disputes. When
Fehr was hired, there was going to be a lockout. Almost no negotiation was
done prior to the actual lockout which is par for the course for the NHL but
something new for the NHLPA. Fehr's strategy was to make lockouts in the
future not seem like such an painless move for the NHL and he did so.

As the process moved from forward after the lockout, it was the NHL
negotiating with itself. All of the proposals the NHLPA suggested were only
small ideas of what could eventually be in the final agreement. Each
successive comprehensive NHL proposal incorporated some of the ideas the NHLPA
had suggested. It wasn't until Bettman announced that there would need to be
at least 48 games in the season for it not to be cancelled and that the
deadline for that amount of games would be Jan. 19. Only when that deadline
approached did we see the NHLPA actually counter an NHL proposal with their
own, comprehensive proposal. That's when the horse trading began and the deal
was done relatively quickly after that point.

Donald Fehr's strategy all along was to drag his feet for as long as possible
to not only get the best deal for the NHLPA but to, more importantly,
frustrate the NHL and show them that a lockout is not an easy button for labor
disputes.

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rprasad
That's an inventive take on the owners demanding the players give up 15% of
their profit stake on top of 10-35% cuts to salaries, contract rights, health
benefits, and licensing rights.

The owners started with a ridiculous offer and maintained the same ridiculous
offer through the negotiations. In the end, the players union was forced to
fold because the players did not have the same financial resources as the
owners did to weather a lost season. The players union was negotiating against
itself the entire time; the owners got everything they wanted.

 _Donald Fehr's strategy all along was to drag his feet for as long as
possible to not only get the best deal for the NHLPA but to, more importantly,
frustrate the NHL and show them that a lockout is not an easy button for labor
disputes._

If that was his goal, he failed, miserably. It also ignores the previous two
NHL lockouts, which did not turn out so badly for the players union.

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jonknee
The title was the best part of this piece. It included hardly any details and
doesn't even come to a conclusion about what was revealed other than that the
owners have more money than the players (and that the NFL has more money than
the NHL).

At minimum it should have discussed what the issues both parties disagreed
with. For starters, it wasn't that the owners "still think they deserve to
make an attractive profit on this game".

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dangerfang
Bettman is undeniably an awful commissioner. He was instrumental in forcing
the expansion that created the teams that can't make a profit. He has been the
driving force for 3 lockouts now.

It's a fault of management, not a fault of the players who have given up
ground in each lockout. The leafs are a billion dollar team, the coyotes are
worth almost nothing. Cutting player costs by a few million per year wont
change this dynamic.

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nwjsmith
Fortunately for everyone outside of Glendale, this is an 8 year (minimum)
deal. Over that period the Coyotes won't make it, Columbus doesn't look like
they'll make it, and the Panthers might not either. I think the _length_ of
this CBA is the most transformative part. There's nothing Bettman can do now
except move or shut down franchises.

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mattm
What I find incredibly interesting about sports "unions" is that the unions
use the threat of disbanding as a labour tactic. In every other industry, if
the labour union even hinted at disbanding, the owners would ask "How can we
help you along?" In North American sports leagues, the owners fight it.

You have to wonder exactly who is benefiting from Players Associations?

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MisterBastahrd
That isn't incredibly interesting at all. The members of Players Associations
are the best at what they do in the entire world. Leagues immediately suffer
financially when these players aren't competing. Leagues are contractually
obligated to fulfill agreements to various television networks, which is
impossible if the best players are not competing. Likewise, teams make a large
amount of money on the likenesses of players through advertising and
merchandising.

Players Associations differ from most other unions because of artificial
constructs like free agency, the draft, and the salary cap which are
ultimately beneficial to both the players and the leagues. Beneficial, but
illegal in the US. PAs collectively bargain with the leagues and give their
right to sue for these things away in order to secure long term benefits
agreements with sports leagues.

Disbanding the union in order to file an antitrust suit is the nuclear option,
and the owners know it.

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halo
Strikes would not happen if US sports leagues were based around free market
principles rather than monopolies that set artificial restrictions on athletes
salaries and conditions.

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SeanLuke
Your approach is more or less what happens in world soccer. Clubs like PSG or
Manchester United essentially purchase their championships. Libertarianism
doesn't make for very interesting games or teams.

I think sports leagues could do with a little less privatization and a little
more Green Bay.

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mattm
And yet the Premier League is one of the most successful leagues in the
world...

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forrestthewoods
Depending on one's definition of successful. Is the EPL the most popular
league? Probably. Are the EPL teams the least profitable and most indebted?
You bet they are! To the tune of 3.9 billion USD of debt across the league.

[http://www.mirror.co.uk/sport/football/news/premier-
league-c...](http://www.mirror.co.uk/sport/football/news/premier-league-clubs-
are-24-billion-854183)

