• A Long CBA

    by  • December 8, 2012 • Hockey • 27 Comments

    One of the things that hasn’t been really been picked over in any detail from the CBA negotiations is the length of the CBA that the owners are asking for. The fans and media that I’ve seen are virtually unanimously in favour of a lengthy one. Don Fehr was asked about it on Thursday and gave what I thought was a pretty compelling defence of the idea that the CBA should be shorter instead of longer.

    One (my concerns) is an ethical or a philosophical one, which is to say that by the time you get to year five or year six, the majority of the players playing will never have voted on an agreement, will never have participated in the process, they will never have had the rights that union representation is supposed to give them, to have a say in their terms and conditions of employment. By the time you get to two (sic) years, you have two or more generations of players…

    Fehr’s response was to a question about a deal lasting for ten years; I assume that his reference to two years was meant to be ten years. It’s pretty difficult to argue with the moral view of the world contained within that statement. Fehr has other objections to a long agreement that strike me as equally reasonable, relating to the ability of each side to project the economics of hockey that far forward but the basic statement of principle that I’ve quoted there strikes me as even more powerful than that.

    The NHL’s latest offer involved a ten year term, with a mutual opt-out after eight years. If you go back and look at how many players were active in the 2003-04 season and the 2011-12 season, it’s awfully small – we’re talking about a group of 264 players, out of more than 900 who will play in the NHL in a given season. How can that group of players have any legitimacy in terms of making decisions for the 700 or so players who aren’t yet in the league? There’s always going to be a bit of a tradeoff in any union, some degree of the union making deals that will affect the rights of future workers without those workers having a say.

    This is exacerbated in professional sport, where the turnover is a lot higher than it is at somewhere like a Chrysler plant. It seems to me that it’s a question of how far you can push that before the union loses any legitimacy: deals affecting 30% of the membership? 40%? Having a deal that will bind the NHLPA in 2020-21, without 70% of NHL players at that time having any say over does seem to me to cross some sort of an ethical line. Fehr’s obviously cognizant of that; one wonders whether his membership are similarly conscientious.

    There’s another angle on this well: the idea of breaking the cycle of lockouts. A lockout is an investment for ownership of NHL teams. They are investing foregone revenues and damage to their brands in the hopes that they’ll be rewarded for that investment with higher profitability or franchise values or both. A longer deal equals a more significant return on their investment. If the NHLPA gives that deal to them, despite the undeniably valid concerns that Fehr raises about the legitimacy of the union entering into such a lengthy CBA, it increases the NHL’s return on its investment of foregone revenue, legal fees and goodwill in a lockout. Owners who come to learn that lockouts are wildly profitable to them have no reason not to do them again in the future.

    In other words, it’s a little bit like a variant on the old Ben Franklin line that those who would trade freedom for security deserve neither and will lose them both. If the NHLPA makes concessions on the term of the CBA in order to get back on the ice, they can pretty much guarantee that, in eight years, the 30% of them who remain will be precisely where they are right now, with the NHL prepared to spend an extraordinary amount of goodwill and foregone revenues, knowing that they can amortize it over another long term deal. This, combined with the ethical argument raised by Fehr, strike me as excellent reasons for the players to resist a lengthy term for a CBA.

    Email Tyler Dellow at tyler@mc79hockey.com

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    27 Responses to A Long CBA

    1. PopsTwitTar
      December 8, 2012 at

      What reason do the players have to believe that a short term is better protection against another lockout than a longer one? If “owners come to learn that lockouts are wildly profitable…” the owners would be thrilled with a 5-8 year term – because it gives the NHL just enough time to rebuild any damage to the brand before they play the lockout game again. I don’t follow other team sports that closely, but has any CBA negotiation ended in *better* deals for the players?

      I see s no reason for the players to believe that the next CBA negotiation will be any more favorable to them, unless this lockout has truly and substantially damaged the NHL revenues, which i doubt, especially with a new Canadian TV deal in the near future.

      Morality aside, and I have no reason to believe Fehr isn’t being honest, I believe the players always expected to end up with a 5-10 year term, and a 50/50 split [at some point]. But considering the little amount of leverage they had going into this negotiation, pushing for a short-term is something they could trade for the things they truly need to protect – contracting rights, and as many contract structuring flexibility they can get.

      • Tyler Dellow
        December 8, 2012 at

        It seems fairly straightforward to me – if a lockout can make a team $10MM a year (hypothetical number), their willingness to do it is going to be higher if they can get a ten year term than if they get a five year term. Am I missing something?

        • PopsTwitTar
          December 9, 2012 at

          I guess you and I are assuming different things: I think you’re assuming an analysis that says “the net increase in value is $10MM a year no matter what the term.”

          My assumption is that “the net increase in value is $10MM per year for a defined term, and as soon as that value decreases to a certain point (let’s just plug $5MM) it becomes better to lock the players out and slice another chunk of their pie.”

          I assume that the factors creating value are not static, and that the NHL, like most businesses I’ve been involved with, is a tough business to predict with confidence over a 10-year span.

          Considering that the owners tend to have the leverage in these CBA negotiations, in my view the players should be shooting for the longest term possible.

          • Kid Ish
            December 10, 2012 at

            Ceasing operations every five years would make lockouts more disruptive than good to the overall brand and business model. While the loss of one season every eight-to-10 can be turned around in foregone revenues, a shorter deal would make potential partners of the brand leery of inking long-lasting deals.

            NBC Sports isn’t reupping for another 10 years if the brand stops operations every five. That’s a very real loss of revenue.

    2. Smokinmecdic
      December 8, 2012 at

      Can you actually say that players who will come into the league in the future will want to be subjected to the absolute farse that we have endured since September?
      My son is 13 and a star player who hopes to make the NHL draft in 5 years. He has no interest in going through the roller coaster ride that is a players lockout and CBA talks.
      I am sure that most players that come into the league will feel the same as long as the CBA is working. It sure seems that it will be fair and the players will make great salaries because of it, much like the last 7 years.

      • Cory Dakin
        December 10, 2012 at

        Faith in humanity lost.
        *click* *boom*

      • December 10, 2012 at

        This is a great point.

    3. Roke
      December 8, 2012 at

      A few months ago I said the players should be looking for a long-term deal but having re-thought it recently when the attrition rate for NHL players was brought to my attention.

      Putting aside the morality for guys coming into the league or the owners’ Return On Lockout a long-term, CBA might make the players as a whole less militant in giving in to the owners’ demands. Guys who have gone through one lockout will probably be more fed up with the owners than guys who have just entered the league. There’s still the incentive to push the push-back against the owners onto the next generation of players but without veteran hard-liners the players could be more passive.

      Is having a (largely) clean slate of NHLPA members who haven’t been involved in a lockout or negotiations advantageous for the owners when the next lockout happens or am I just out to lunch rambling about something I know nothing about?

      • Triumph
        December 8, 2012 at

        It’s an interesting case – repeat lockout players are usually average to above-average players. On the one hand, they know how lockout dynamics work – how the league lies when it says offers are final, on how hope is increased and then dashed by negotiations. Still though it’s hard to imagine there aren’t a lot of older guys who’ve been through this before thinking like Roman Hamrlik – just take the deal and let’s play hockey. Younger players may be more controlled by union dynamics and player agents to believe that holding out is the right play (which, for younger players, it probably is in a lot of cases).

    4. Nick
      December 8, 2012 at

      I really don’t understand why more people aren’t on #TeamDecertify. I guess it’s just short term thinking, but apart from the fact that the league and owners won’t have the simple minded “50/50 is fair!” argument to make why would anyone think the owners won’t do this all over again in 5, 8, or 10 years without a fundamental shift in the way this system works. I am crazy frustrated by the state of NA professional sports, having given up on casual NBA fandom during their lockout, seeing the kinds of boondoggle that have gone on over stadia funding etc… etc.. etc… Blow it up!

      • beingbobbyorr
        December 9, 2012 at

        Count me as another member of #TeamDecertify. It strikes me that the logical extension of Tyler’s argument (“. . . deals affecting 30% of the membership? 40%?”) is a system where no player’s future is tied to the decisions of other players, and concerns about league demographics wrt some date in the distant past (for a hockey player’s career) are irrelevant. i.e., a true Free Market.

    5. Robert
      December 9, 2012 at

      Why shouldn’t Fehr and the players take a long term deal. One of their main points through all of this “we’re looking out for future players” well if that’s the case then signing a 10 yr deal shouldnt be a problem. The players (Fehr) said he will only sign a deal that he feels is fair to the players and protects their rights. If all the players believe he has their best interest at heart and haven’t voted on any for any of the proposals on the basis that they’re not yet getting the best deal possible then why would future players be affected? Fehr has all players best interest at heart…doesn’t he.

    6. Sliderule
      December 9, 2012 at

      I think it’s in the players interest to get a 10 year deal.The concessions made by pa are not going to solve NHL franchise problems.

      The players would have been happy to resign the old agreement.

      The NHL will be back trying to solve their broken business model at the next negotiation

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    8. Gerald
      December 9, 2012 at

      As an aside to the larger point I made above, it seems to me that there are very solid grounds for doubting the “compelling defense” of Mr. Fehr above.

      The entire essence of collective agreement is based on the principle that it is both fair and appropriate for existing members of a union to set terms and conditions that will bind the future members (and, with respect to pensions, even past members). If one is going to rely on a “principled” argument, it is fatuous to argue that the principle only applies when you get to 80%, 90% or whatever number of players that have not been part of a colective bargaining process. I wold be willing to bet that the NHL howled when they read that Fehr quote.

      Along this line, it is “ethical” to have an 8 year term as the NHLPA reportedly offered, but a breach of principle to have a 10 year agreement? How is it even ethical to have a 6 year term? How is it ethical to go beyond a single year? How is a union concept even ethical?*

      (* Please don’t take this as in any way supportive of the “TeamDecertify” notion. Putting aside its use as a bad faith bargaining tactic and taking it at face value, it is a silly notion, to be kind about it).

      Now I have no doubt that Mr. Fehr has good reasons to avoid a long term CBA. If I were him, I would be thinking of everything through the prism of “does it increase future union solidarity or not?” A big part of his entire agenda is clearly to radicalize the players. A long CBA would go far to put a dent in future solidarity, as there would be fewer vets around to remind the youngsters of the “sacrifices” and act as oracles of the labour battles of yore – particularly since Fehr himself will likely not be around. That was a HUGE deal in the MLB union process, and Fehr is very clearly trying to copy the MLB pattern (a very understandable preference on his part, for many reasons).

      For some of the risk allocation reasons mentioned in my longer post above, Mr. Fehr has good reasons to have reservations about a long term CBA. Philosophical concerns are not among them.

      • Tyler Dellow
        December 9, 2012 at

        The entire essence of collective agreement is based on the principle that it is both fair and appropriate for existing members of a union to set terms and conditions that will bind the future members (and, with respect to pensions, even past members)

        I don’t know enough about how unions negotiate pensions. Are you telling me that, for example, Ford could wipe out its pension obligations to past workers in a negotiation with its current members? Just a stroke of the pen and those obligations could be wiped out? Just casting my mind back to what little I know of pension plans, that seems inaccurate. I mean in the ordinary case, you’ve got a pension fund paid into by the employees and the employer, with the employees being beneficiaries of that fund. You’re telling me that the union can just negotiate with the employer to reduce benefits? Seems odd.

        If one is going to rely on a “principled” argument, it is fatuous to argue that the principle only applies when you get to 80%, 90% or whatever number of players that have not been part of a colective bargaining process.

        I think you have to strike some sort of balance between re-opening the CBA whenever a guy gets called up to the NHL and a 40 year CBA. It’s worth mentioning that I can’t see this being an issue in ordinary collective agreement negotiations, which would be premised on there being a long term workforce. The turnover in professional sport is, I would think, unique for a unionized environment.

        Along this line, it is “ethical” to have an 8 year term as the NHLPA reportedly offered, but a breach of principle to have a 10 year agreement? How is it even ethical to have a 6 year term?

        I think it’s more sensible to look at the points at which one side or the other can opt out. The PA was saying opt out after six years, the NHL saying opt out after eight. That’s why I looked at 2003-04. If there’s an opt out point, the new members effectively get a say in whether or not they’re satisfied with the terms and conditions.

        I talked about this above – it’s a tradeoff between efficacy and democracy. Do you think it would be appropriate for a union to sign a 40 year deal, leaving aside concerns about projecting the economics of the future?

        As for radicalizing players; I can believe that strengthening the union is one of Fehr’s objectives. I’m not really sure that the attrition that would occur between year 6 and year 8 is a particularly big deal though.

        • Gerald
          December 9, 2012 at

          Are you telling me that, for example, Ford could wipe out its pension obligations to past workers in a negotiation with its current members? Just a stroke of the pen and those obligations could be wiped out? Just casting my mind back to what little I know of pension plans, that seems inaccurate.

          No, I wasn’t saying that. I was referring more to the NHLPA requests for aged player support. I cannot say for sure whether unions can diminish the plans of existing retirees. THat is not the case here, so it matters little.

          I think you have to strike some sort of balance between re-opening the CBA whenever a guy gets called up to the NHL and a 40 year CBA.

          Yes, that is right in my view at all. You hit the point, though. It is a question of balance, not some fanciful issue of ethics like Mr. Fehr would have people believe.

          I talked about this above – it’s a tradeoff between efficacy and democracy. Do you think it would be appropriate for a union to sign a 40 year deal, leaving aside concerns about projecting the economics of the future?

          I don’t know that it is a trade-off of democracy per se. Unions elect their representatives in a duly democratic fashion. THere is always an implied covenant inherent in unions to take care of people who are not yet union members but will be (although the PA has not really complied with this covenant since during the Goodenow, given that they have always sold out entry level players first before anything). It is a trade-off for sure, but it’s merely a pragmatic one without the Fehrian highfalutin’ rhetoric.

        • Anonymous
          December 9, 2012 at

          Yes, that is right in my view at all. You hit the point, though. It is a question of balance, not some fanciful issue of ethics like Mr. Fehr would have people believe.

          You have that point right. We are in agreement on that point.

      • beingbobbyorr
        December 10, 2012 at

        (* Please don’t take this as in any way supportive of the “TeamDecertify” notion. Putting aside its use as a bad faith bargaining tactic and taking it at face value, it is a silly notion, to be kind about it).

        Yes, let’s put aside the use of Decertification as a bad faith bargaining tactic, and pretend that the players really want to do it . . . . perhaps because they now see that the 2005 framework results in 7+/-___-year-itch lockout cycles that attenuate the player share in perpetuity & will eventually relegate their sport to the soccer/lacrosse/WNBA ghetto in the American marketplace, where the real dollars are (no offense, Canada).

        Can you expand on why you think Decertification would be silly? (you don’t have to be kind about it) But, please, I beg you to avoid equating silliness with “uncertainty”, “unknown territory” or “brave new world(s)”. Those later terms all applied to the futures that Curt Flood, Rosa Parks, and Neil Armstrong once contemplated. Let’s assume that readers of this site already know that Rewards hardly ever come without Risks (that the future could be worse than the present).

    9. Tyler Dellow
      December 9, 2012 at

      No, I wasn’t saying that. I was referring more to the NHLPA requests for aged player support. I cannot say for sure whether unions can diminish the plans of existing retirees. THat is not the case here, so it matters little.

      That’s not what you seemed to be saying. The payments negotiated for former players are basically a gift. Yes, I agree that the PA can negotiate a gift for former players. If they have no capacity to reduce the benefits to which those guys are entitled, I’m not sure how their capacity to gift them money confers democratic legitimacy on them.

      It is a question of balance, not some fanciful issue of ethics like Mr. Fehr would have people believe.

      It strikes me that, without the ethical concern, the issue of balance doesn’t really arise.

      • Scott
        December 9, 2012 at

        Tyler, I don’t think you’ve addressed a rather obvious contradiction here. Fehr has repeatedly said that in capped sports, the management playbook in every negotiation calls for significant reductions in the player’s share of revenues. If that’s true, and the PA believes its in a permanent cycle of concessionary bargaining, is it not in the PA’s interest to sign the longest term possible?

        On ethics,is it more ethical to ask current dues-paying members to risk another work stoppage (and potential further concessions in the next round) solely so future non-dues paying members can vote on the concessions?

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    11. Saj
      December 10, 2012 at

      I think it’s important to bring up how Fehr would be personally affected by a longer CBA as well. It’s in his interest to see short-term CBAs so people like him are more valuable (or perceived as such), and he’s thus likely to dig up or over-emphasize reasons for why long CBAs are bad for his clients.

      • RiversQ
        December 10, 2012 at

        What are the chances that Fehr is back again in 5-10 years? Not great. I reject the notion he is interested in the welfare of “people like him” out of hand.

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    14. matt
      December 15, 2012 at

      Is it possible that fehr is hedging on the future? Five year cba would expire in 2017. 2017 Is the league’s 100th anniversary I believe. You have to think fehr is banking on the fact that the league would be very afraid of locking out its players before that mareting bonanza. Or maybe it would mean nothing cause league already missed a year so maybe 100 years is actually 2018…. meh. Good read.

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