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Alyssa

What Fans Should Know About Labor Battles In Sports: They Aren’t, And Shouldn’t Be, About You

The National Hockey League’s 113-day lockout of players is over, and for players, owners, and everyone involved in the game, that’s great news. It is also good news for sports fans, who have endured lockouts in three of the four major American sports in the last two years.

Even better news is that after such volatility in the world of sports, we could be entering an unprecedented era of labor peace. Since 1968, when the National Football League first locked out its players, there have been 19 work stoppages in the four major leagues, but we’re now guaranteed labor peace until at least 2016, when Major League Baseball’s collective bargaining agreement expires. If MLB does what it did in 2011 and negotiates a new agreement without a stoppage, and if both the National Basketball Association and its players union refuse to opt out of their current agreement in 2017, we will make it until at least 2020 without a stoppage, meaning the next eight years could become the longest period of labor peace in professional sports since the players’ union movement began.

Whenever the next dispute rolls around, though, here is something for fans of the four biggest sports to keep in mind: labor disputes in sports aren’t, and shouldn’t be, about you.

Every time sports leagues stop because of a labor fight, fans get up in arms about how they are the only people truly hurt by lockouts and strikes. Observers, including the president of the United States, often urge both sides to come together and strike a deal, ignoring that there are real issues at stake and real points of disagreement. That view couldn’t be more misguided.

Labor battles, in sports and elsewhere, are about workers’ rights — to fair pay, to safety, to health care, to retirement security. They are about workers who feel they are entitled to those rights and owners or executives who feel the workers are entitled to less. Whether those workers are locked out from Caterpillar or from professional hockey, whether they are median wage construction workers or millionaire athletes, doesn’t diminish the importance of their issues. And since, as I’ve written, labor battles in sports reflect the same issues as labor battles elsewhere, the implications of a labor fight in sports often stretch far beyond the playing field.

The idea that fans are the victims also ignores those who are adversely affected by work stoppages. Small businesses — restaurants and bars, fan shops, an assortment of others — lose customers. Arena workers, the people who ensure you, the fan, can watch a game in a safe environment and the people who clean up your mess once you leave, lose paychecks. Some front office workers take pay cuts. Others are laid off. In the case of hockey, it even hurts charities.

Players, who provide the labor that makes our sports so enjoyable (and so profitable), lose paychecks. They face attempts to reduce their pay, to eliminate their pension, to make their health care less generous. Sound familiar? It’s the story of every labor battle in America, played out on a far more public (and far more expensive) field.

You? Assuming you’re not in an industry that depends on one of those sports, you lose the ability to watch a game. That certainly isn’t fun, and I suppose it’s even justified if you choose to stop coming back. But losing a leisurely activity isn’t the same as losing your livelihood, and it’s time to stop pretending it is.

Alyssa

Breaking Down The Deal That Ended The National Hockey League Lockout

The National Hockey League and its Players Association agreed on the framework of a new collective bargaining agreement early this morning, and while league owners and players must still ratify it, the deal will almost certainly end the owners’ 113-day lockout of players.

The deal comes just five days before the league’s self-imposed deadline to cancel the season, and it should get teams back on the ice in the next two weeks. Players largely acceded to ownership’s demands, but given the absurdity of the NHL’s previous offers, the NHLPA managed to mitigate at least some of the damage. Here’s a breakdown of the major issues in the dispute:

“Hockey-related revenue”: The league and players will split so-called “hockey-related revenue” evenly, a rollback from the previous bargaining agreement, which split revenue 57-43 in favor of players (it is important to note that hockey-related revenue is not comprised of all revenue NHL teams make, so this isn’t actually an even split). Players had agreed to a 50-50 split early in negotiations, even though that concession will likely lead to salary reductions. The union did, however, succeed in getting $300 million for “make whole” payments, which should partially mitigate at least some of the early salary reductions.

Salary cap: The league’s salary cap, the amount each team can spend in a year on player salaries, will rise to $70.2 million this year before falling back to $64.3 million next season, matching its previous level. Players wanted to move the salary cap higher, owners wanted it lower. The lower cap will likely lead to higher player payments into escrow accounts, which are used to ensure that the league’s hockey-related revenue split works over the course of the season. Players have previously expressed fears that higher payments into escrow accounts could lead to de facto salary reductions if league revenue falls short of projections.

Contracts: The NHL won concessions on player contracts, which are now limited in length (to seven years, or eight if the team is re-signing one of its current players), and in how they can be structured. In the past, teams could structure deals in a way that paid players highly one year and much less in others, an effort to circumvent the salary cap. That structuring, known as variance, is now limited — the amount a player is paid in one season cannot vary more than 35 percent from the previous year. Players opposed both limits, but neither is as strong as owners sought in previous offers.

Pensions: Players will receive a stronger pension plan in which owners assume some liability if there is a revenue shortfall, resolving an issue players called a “centerpiece” of the deal. Owners had wanted players to assume that liability — if revenue fell, the shortfall would be made up from the players’ share of revenue. Under this deal, though, at least some of the shortfall would be covered by owners, though how much is unclear since the pension plan has not yet been finalized.

Details of the final deal are still emerging, so it’s way too early to declare winners and losers. But it appears owners got most of what they wanted — particularly, a larger share of revenue and limits on player contracts — even though they didn’t get as much of it as they had sought in previous offers. And, at the very least, the deal prevents the entire season from being canceled, as it was during the NHL’s last labor dispute in 2004-2005.

Alyssa

The NHL Lockout Is Driving Down Donations To Canadian Charities

The National Hockey League lockout is now 93 days old, and there doesn’t seem to be an end in sight, at least not with both owners and the NHL Players Association turning to the legal system to maneuver through negotiations. That is certainly bad news for owners (the NHL is losing an estimated $20 million a day), for players who aren’t being paid, and for people who just want to spend their winter watching hockey.

It’s also bad news for Canadian food banks and charities, who are starting to report that their donation levels are down heading into the holidays. Many charities in Canada benefit from food drives run by teams and by bars and restaurants around arenas, but the lockout has prevented many of those food drives from happening, the Canadian Press reports:

“We’ve received calls from 23 different businesses, mostly sports bars who last year collected food for Sun Youth and this year, because of the strike, they have to lay off people,” said Tommy Kulczyk, director of emergency services at the Sun Youth community centre in Montreal.

“They’re not in the mood to do any kind of collection.”

He also noted that wives of Montreal Canadiens players had in past years organized a successful food drive at a Habs game tapping a potential 21,000 donors.

“It’s not going to happen this year.”

The obvious reaction here is to yell at players and owners to set aside their differences and get back on the ice, but I don’t think it’s useful or accurate to paint labor disputes in sports as simple fights between spoiled millionaires and billionaires. There are important issues at stake, particularly for the players who gave up so much in a lockout just eight years ago, and the outcome of a labor dispute is important whether it takes place in the NHL or at a construction company.

Still, it’s worth remembering that the nature of the sports industry means labor disputes and work stoppages can have huge impacts on people whose livelihood depends on the games being played, from arena workers to front office staff to people who depend on donations to charities. And when those games aren’t being played, it isn’t just the owners and players who have to deal with the consequences.

Economy

Why The National Hockey League Lockout Isn’t Killing Your City’s Economy

The National Hockey League’s second lockout of players since the 2004-2005 season is now 67 days old, as league owners continue their attempts to extract huge concessions from players. Now that nearly two months of games have been canceled, cities across the country are beginning to worry about lost revenue from those cancellations.

Pittsburgh says it stands to lose $2.1 million for each lost home game. Long Island, New York said in September the lockout could cost it $60 million. Detroit pegged its potential losses at $1.9 million per lost game.

But cities often inflate the impact sporting events and sports stadiums have on their economies, and recent studies show that they’re likely overstating the losses from the NHL lockout too. When economists Robert Baade, Richard Baumann, and Victor Matheson examined monthly taxable sales in three Florida metro areas that have multiple franchises in each of the Big Four sports leagues, they found that work stoppages in professional sports had “no statistically significant effect on taxable sales“:

Our detailed regression analysis of taxable sales in Florida over the period from 1980 to mid-2005 reveals that none of the labor disruptions in the big four professional leagues have been associated with any statistically significant reductions in taxable sales and none of the franchise expansions or new stadiums have been associated with any statistically significant increases in taxable sales.

If that seems counter-intuitive, it shouldn’t. Baade, Baumann, and Matheson, and a host of other economists, have done extensive research that supports the idea that professional sports franchises, and the publicly-financed stadiums in which they play, have little overall economic impact on their home cities. That’s because most of what is spent by fans in and around stadiums isn’t new money injected into the local economy; rather, it’s money diverted away from other sectors of the city’s economy. So when the NHL cancels games, most of the money doesn’t leave the local economy. It’s just spent elsewhere.

“Money not spent by local fans on the NHL is money available to be spent elsewhere in the economy. The NHL’s loss is a gain for local restaurants, theaters, and other entertainment options,” Matheson said in an email. “So, the $2.1 million figure is probably a pretty good estimate of gross losses but an extremely poor estimate of net losses.”

The loss of revenue from NHL games certainly has negative effects for businesses in the neighborhoods around the arenas where those games would be played, and for the people who work at those businesses and staff arenas. But like the effects of stadiums and teams in general, Matheson said, the effect of lost games on the entirety of metro area economies is negligible.

Economy

How The NHL Owners’ Money Grab Is Hurting Canada’s Economy

The National Hockey League has been dormant so far this season due to a continued lockout of its players by the league’s owners. The first two months of the season have been canceled, and it looks like more cancellations are imminent.

According to one economist, the continued lockout is dealing a minor blow to the Canadian economy:

In Canada, where hockey is part of the national culture, the void is unsettling—and potentially costly.

Doug Porter, deputy chief economist at Canada’s BMO Capital Markets, said earlier in the lockout that a canceled season would shave 0.1% off Canada’s annual gross domestic product. Even if both sides settle, he said, a truncated 2012-13 NHL schedule could pare 0.05% from GDP.

In the grand scheme of things, one-tenth of a percentage point is not a huge economic hit. But it’s occurring because of a craven money grab by the league’s owners at the expense of players.

In addition to demanding that the players give up a percentage of their stake in league revenues, the owners — led by commissioner Gary Bettman — want the right to retroactively alter existing player contracts. As Columbus Blue Jackets defenseman Jack Johnson wrote, “The concept that the owners are trying to dismantle existing contracts that they in good faith offered, signed, and committed to is appalling, unprofessional, and disgraceful.” The NHL was profitable before the lockout, but Bettman and the owners want to boost their bottom line at the expense of their employees.

In fact, Bettman expects the players to literally concede to the league’s demands across the board. As New York Post sports columnist Larry Brooks put it, “What the league is proposing — no, what the league is demanding — is that the players accept the most restrictive system in pro sports. Concede on rights. Concede on money.” And in the meantime, the Canadian economy gets the short end of the (hockey) stick.

Alyssa

NHL Owners Still Aren’t Serious About Ending The Lockout

When National Hockey League owners presented a proposal two weeks ago that would have ended their lockout of players, the NHL Players Association spent two days crafting serious counter-offers and ultimately returned to the table with three proposals of their own. According to NHLPA head Don Fehr, it took the league all of 10 minutes to reject all three proposals.

According to Fehr, the players offered to split so-called “hockey-related revenue” evenly between the players and owners — exactly what owners asked for, even if the players sought to do it gradually over a few years instead of immediately as the owners wanted. The one sticking point for players, though, was that the reduction in their share of revenue (from 57 percent) not lead to salary rollbacks, or reductions in the pay they receive under already-negotiated contracts. As Columbus Blue Jackets defenseman Jack Johnson made clear in a blog post yesterday, though, the owners aren’t having it:

The concept that the owners are trying to dismantle existing contracts that they in good faith offered, signed, and committed to is appalling, unprofessional, and disgraceful. I negotiated my own contract, without an agent, with the confidence and belief that the owner offering me that contract operated by the same convictions and principals as I do.

That players are willing to budge on every issue except for the preservation of existing contracts, which the owners obviously had a hand in negotiating and signing, seems a perfectly reasonable position. What isn’t reasonable is that owners weren’t willing to entertain such a proposal for longer than 10 minutes.

Throughout negotiations, players have given ground. They offered to begin the season without a collective bargaining agreement and negotiate a new one as the season wore on, preserving the games for the fans, salaries for themselves, and revenues for owners. They responded to owners’ offers with counter-proposals that included significant concessions.

The owners, meanwhile, offered a series of laughable deals they knew would be rejected last summer. They locked out the players this fall. And they finally presented their most serious, if flawed, offer two weeks ago in a take-it-or-leave-it fashion. They rejected the players’ counter-proposals out of hand, and they have since refused to meet to further negotiations.

The result is that the league has now canceled all games through November 30, and the Winter Classic, the NHL’s most prized regular season event, is now on the chopping block. With serious negotiations, some semblance of a hockey season can be saved. If the owners continue down this path, though, the second full-season cancellation since 2005 seems far more likely.

NEWS FLASH

NHL Extends Lockout, Cancels Games Through November 1 | The National Hockey League canceled all games through November 1 today, adding another week to the two weeks of games it had already canceled due to its lockout of players. The cancellations don’t remove the possibility of a full 82-game schedule, which NHL commissioner Gary Bettman said could be saved if the NHL Players Association accepted the deal owners offered earlier this week. Another round of cancellations, though, would shorten the season, a scenario that seems likely after the NHL rejected the players’ counteroffer yesterday. “It’s clear we’re not speaking the same language,” Bettman said about the league’s second lockout since 2005, when the entire season was lost. No new talks have been scheduled. “To hear those words kind of shuts it down pretty quickly,” Pittsburgh Penguins star Sidney Crosby, a leading player in the negotiations, said. “In a nutshell, it doesn’t look good.’’

Alyssa

NHL Owners Make Most Serious Attempt To End Their Lockout, But It Likely Isn’t Enough

NHL commissioner Gary Bettman (via Getty)

The National Hockey League made its most serious offer to settle the league’s labor dispute with its players union yesterday in an attempt to end current lockout in time to preserve a full 82-game season.

The NHL has already canceled the first two weeks of its season, which was supposed to begin last weekend. If an agreement is reached before October 26, though, the league could still fit in a full 82-game schedule by adding just one game every five weeks, NHL commissioner Gary Bettman said Tuesday. Bettman’s offer deals primarily with the major economic issues dividing the two sides, including how revenue should be split and whether players will see reductions in salaries:

“Hockey-Related Revenue”: The NHL’s offer would split so-called “hockey-related revenue” evenly between owners and players, a significant reduction from the 57-43 split players received under the previous collective bargaining agreement. Hockey-related revenue is the portion of each team and the league collectively makes that is then split between owners and player salaries. Hockey-related revenue is calculated through a complex formula that allows owners to set aside some revenues and deduct costs from others. For example, owners can deduct the costs of operating concessions and parking before calculating revenue; they also only contribute a certain about of revenue from luxury suites to the hockey-related revenue pool. So the 50-50 split isn’t actually 50-50 at all, and it’s not completely accurate for owners to claim they need a larger split to pay costs, since they are allowed to deduct a portion of costs before hockey-related revenue is even calculated. Rather, the 50-50 split would be an even split of a certain portion of revenues, while owners keep other revenues to themselves. Prior to this offer, the NHL sought to make the hockey-related revenue formula even more generous for owners, but it abandoned that proposal.

Salary “rollbacks”: After the 2004-2005 lockout, players took a 24-percent immediate salary reduction (or rollback), and owners began this year’s negotiations asking for another 24-percent reduction. They abandoned that request in this offer, essentially agreeing to honor the contracts they already negotiated and signed (not exactly a major concession). The switch to a 50-50 split would necessitate a roughly 12 percent reduction in salaries upfront, but in this offer, owners pledged to “protect” players by making up salaries over time. It is unclear how exactly that would work.

Escrow: The NHL’s offer could also change the way its escrow account works. In short, because the league bases hockey-related revenue off of the past year’s revenue, it has no way to accurately project revenues that will be divided between owners and players. So players pay a portion of each paycheck into an escrow account, and if league revenue falls short of projections, the NHL takes money out to make the agreed-upon hockey-related revenue split work. If revenue exceeds projections, the escrow money is split among players to make the hockey-related revenue balance. An increase in escrow contributions could work as another form of rollback if league revenues fall short, something the players are already concerned about.

The owners’ offer came a day after Deadspin broke the story that the league was using GOP strategist Frank Luntz’s firm to figure out how to market the lockout to fans and the media. The 50-50 HRR split, which certainly sounds reasonable on its face, was explicitly mentioned as a strategy in the documents Deadspin obtained, and it is one that has had success before: National Basketball Association owners used that terminology during their lockout in 2011. It seems clear that the strategy was to make laughable offers all summer to make what the owners really wanted look generous by comparison.

Further, there is Bettman’s clear pitch that this is the only way to save the 82-game season, a claim likely designed to win over restless fans who already hold him largely accountable for one lockout (and the full cancellation of the 2004-2005 season) and don’t want to see another. But that claim ignores that Bettman could have saved the season this summer when players offered to play through the lockout while owners and the union negotiated a new bargaining agreement. Instead, Bettman and the owners locked the players out.

The 50-50 deal on hockey-related revenue is where owners wanted to end up all along. The offer, Bettman said Tuesday, “was done in the spirit of getting a deal done.” But this is probably the point where serious negotiations to end the lockout will begin, not where they will end. If Bettman was interested in preserving the 82-game season, the owners should have started making offers in the spirit of getting a deal done a long time ago.

Alyssa

National Hockey League Cancels Season’s First Two Weeks As Lockout Of Players Continues

The National Hockey League, eight years removed from a lockout that devastated its revenues, was finally healthy again. But after another dispute over how to split revenues and the owners’ lockout of players ensued, the league has canceled the first two weeks of its season, including all four of Tuesday’s opening night games and 78 others.

More cancellations could be ahead, as both players and owners indicated in statements that a deal over how to split the league’s $3 billion in revenues probably isn’t close. According to Players Association head Donald Fehr’s statement, the players were willing to take the ice while a new collective bargaining agreement was being negotiated, but ownership decided to lock them out anyway:

“The decision to cancel the first two weeks of the NHL season is the unilateral choice of the NHL owners. If the owners truly cared about the game and the fans, they would lift the lockout and allow the season to begin on time while negotiations continue. A lockout should be the last resort in bargaining, not the strategy of first resort.

For nearly 20 years, the owners have elected to lock-out the players in an effort to secure massive concessions. Nevertheless, the players remain committed to playing hockey while the parties work to reach a deal that is fair for both sides. We hope we will soon have a willing negotiating partner.”

The primary issue in the lockout is almost identical to the one in last year’s NBA lockout. Under the last collective bargaining agreement, NHL players received 57 percent of the league’s $3 billion in revenue; NHL owners want to lower that to less than 50 percent (their preferred number is 47 percent). Under their previous CBA, NBA players also received 57 percent of their league’s $3 billion in revenues. NBA owners wanted to lower that share to 47 percent before the two sides settled on a 50-50 split.

The NHL’s owners don’t need this lockout. The league is as healthy as it has been since the 1990s, its championship series back on national television, its revenues are rising, and its big markets are competitive, strong, and making money. Another labor dispute only risks putting the league back to where it was in 2004, and for little reason.

But here’s the thing: successful lockouts breed more lockouts. NBA owners were in a similar situation (just 12 years removed from a devastating lockout), and they won. The league suffered little backlash from the media or fans for the second lockout go-round. NFL owners locked out their players last year and won. By the time the season started, fans were just happy to have the games back. The NFL tried again this year with its officials, and again they won. Now, it’s the NHL’s turn. And when corporations lock out workers and win, other corporations use the same tactics to make their own situations better. It’s why the number of lockouts is rising so quickly.

These are not isolated incidents, and that’s what makes the disputes so important not just for the players involved, but for all workers who could one day be subject to a corporation or business that has a lockout in its arsenal.

Alyssa

Learning From Corporate America, NHL Owners Might Lockout Players Just Because They Can

The National Hockey League is less than a week away from becoming the third major American sports league to lockout its players in the last 13 months, after owners in the National Football League and National Basketball Association forced their players off the job last year. Players and owners have until Saturday to reach a deal on a new collective bargaining agreement; otherwise, owners are committed to locking out players for the second time since 2004.

Contra 2004, though, there doesn’t seem to be much of a legitimate reason to lockout the players this time around. Back then, the league was in dire straits financially, and ownership had a semi-legitimate reason to jeopardize the entire season (even if I disagreed with them). That’s not the case this time around, as The Atlantic’s Armin Rosen outlined this week:

The NHL is in the middle of what should be its golden age. Twenty-one of the league’s teams played their home games at 95% capacity or higher last season; 16 of them sold out every home game. The league just signed the largest national television deal in its history, and last year marked the first time that every game of the two-month long Stanley Cup playoffs was available to American TV viewers. This year’s Winter Classic–if it happens–will draw over 100,000 fans to Michigan Stadium for a game between the Detroit Red Wings and Toronto Maple Leafs, teams with a combined franchise value of over $850 million. While the league is saddled with several struggling and probably non-viable franchises (the bankrupt Phoenix Coyotes and reeling New York Islanders come to mind), there are hockey-mad markets on either side of the U.S.-Canadian border that could easily accommodate an NHL franchise. The NHL is a profitable league with a global profile, a stable of marketable stars, and actual growth potential. The pre-lockout mania of exploding salaries, unstable profits, and agonizing hockey is behind it.

It would be easy to think the NHL owners would have the incentive not to go through the pain of a lockout again. The 2004 lockout led to the league playing for years with no major network television deal in the United States, and league attendance and popularity fell off a cliff, at least until it was rescued by young stars like Sidney Crosby and Alex Ovechkin.

The league is as healthy as it’s been in decades. Yes, salaries are up, but so are franchise values, and the league’s first national TV deal since the lockout added even more money to the league’s and owners coffers. But that doesn’t matter to the owners who are ready for another labor war. After all, the owners won the last lockout, extracting huge concessions from players who were desperate to get back on the ice, and there’s no reason to believe the owners won’t win again.

The looming NHL lockout is emblematic of corporate America’s view of collective bargaining and labor rights. American corporations are reporting record profits, but with plenty of labor sitting on the sidelines thanks to high unemployment, they are willing to shutdown production to extract what they want out of unionized workers to gain pennies on the dollar. Take Caterpillar, the heavy machinery giant that raked in record profits and paid its chief executive $17 million last year, but insisted on locking out its workers to freeze their pensions and wages. Compare that to the NHL or NFL, the league that locked out officials over pension and salary increases despite its $9 billion revenue haul and incredible economic health.

These fights aren’t just getting more common in sports, where labor fights are prominent and dominate the news. They’re happening across America, where lockouts now make up a record share of work stoppages. One thing, though, is clear: sports leagues and corporations aren’t locking out players and workers because they need to, they’re doing it because they can.

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