NHL forecast: Doom and gloom for some teams
As a labor battle looms, some speculate small-market franchises, like Lightning, won't survive work stoppage.
By DAMIAN CRISTODERO, Times Staff Writer
© St. Petersburg Times
published February 10, 2003
Tim Taylor shook his head, partly for emphasis, partly in resignation.
The Lightning center was asked if he saw any ray of light that indicates the NHL will not shut down when the collective bargaining agreement with the Players Association expires Sept. 15, 2004.
Taylor, Tampa Bay's player representative, was not reaching for the sunglasses.
"I don't see any progress or any hope right now," he said. "Both sides are pretty adamant in where they stand. Nobody seems to be moving."
On the contrary, both sides are moving toward a showdown that some predict could shutter the sport for a season or more. While commissioner Gary Bettman said his interest is to ensure the 30 teams survive in the cities in which they play, there is concern that small-market teams already losing money, such as the Lightning, might not survive a prolonged work stoppage.
Anticipation is such that Bettman spent more than half of a 60-minute news conference the day before the All-Star Game answering questions, but offering little new, about the impending doom. It also was the talk of media day with the All-Star players.
"I think a lockout could be catastrophic, and I think it will be more catastrophic for the teams than the players," Flyers center Jeremy Roenick said.
"The players have made good livings, and they've put money away. But I think a lockout would destroy some of the teams. You'd see some teams move and go bankrupt. There's just too much at stake to start playing with the possibility of a lockout."
Both sides are digging in. Owners put $10-million each into a $300-million fund to help teams survive. The NHLPA has advised its members the past three years to put money into personal strike accounts and privately has told them to expect a lockout to last at least a year.
The issue is not new. Owners say player salaries are out of control and want a salary cap -- Bettman calls it "cost certainty" -- to put on the brakes. Players, for the most part, say the market determines salaries, and if owners are offering big contracts, they must have the money to spend.
Salaries have increased from an average $733,000 in 1995, when the labor agreement took effect, to $1.76-million. Hockey is the only major sport without some form of salary cap or tax, and it lacks gold-plated national TV deals to offset costs.
NHL teams received about $6-million a season from such deals in the United States and Canada. That does not come close to covering the Lightning's low-end $28.1-million payroll much less the league average of about $42-million. NFL teams, with a $71.1-million salary cap last season, received about $77-million from TV.
That means ticket sales, local media rights and advertising must pay most of hockey's bills, and that apparently is not doing the job. Forbes reported 16 NHL teams are losing money. The Washington Post said it could be 26. Lightning owner Palace Sports & Entertainment estimates it lost about $38-million since taking over the team in June 1999.
Palace Sports always has said it is committed to keeping the team in Tampa. But if those losses are valid, the company undoubtedly hopes a new collective bargaining agreement, anchored by a salary cap and perhaps revenue sharing, will fix costs and create parity as happened in the NFL.
Lightning president Ron Campbell declined comment. Bettman said he does not comment on the finances of specific teams but has said a system in which salaries increased 244 percent and revenues 170 percent is unworkable.
"If you're paying out more than you're taking in, you have to look at your expense components," Bettman said. "There is no secret as to what our largest expense component is, and we're going to have to deal with that."
Avalanche defenseman Rob Blake wondered why players must babysit owners.
"If someone is willing to pay the money, they must be making the money," he said. "I think players are like anyone. If someone offers you the money, you're going to take it."
"I never thought I'd be making the money I'm making," said Stars right wing Bill Guerin, who signed a five-year, $45-million contract over the summer. "But that's what the market was and, to me, that's fair compensation."
Fair or necessary?
"It's competition," Red Wings vice president Jimmy Devellano told the Detroit News. "When a guy is an unrestricted free agent, and you're trying to improve your club, we've all done it, we overpay to get that player because we need him and don't want other teams to get him."
Still, Devellano said, "There has to be some kind of correction to make the business work. Salaries can't be as high as they have been."
Owners have an unlikely ally in Red Wings superstar Brett Hull, who said 75 percent of NHL players are overpaid. Roenick agreed and included his $8-million salary in that category.
"I think we all have to make concessions," he said. "I don't think we as players can go into the collective bargaining talks saying we're not going to give up anything. The NHL has to make concessions too."
The most likely will be a lowering of the age for unrestricted free agency from 31.
Bettman said he could have a proposal ready from the owners in "five minutes" if NHLPA executive director Bob Goodenow gave the word. But because negotiations do not have to begin until the current agreement expires, Taylor said, "I don't think there will be any movement until crunch time."
By then, it may be too late.
"With everything the past players have fought for, it's tough for us to go back and go against them because everything they fought for would be for nothing," Taylor said. "But we have to find some common ground. We have to do everything we can with the owners and players to get something done."
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