Article

July 2013

The hockey lockout of 2012–2013

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In mid-August, the union made a counteroffer to the league, proposing a 3-year deal with an option for a fourth year. With the old agreement expiring on September 15 and the regular season set to start on October 11, the possibility of a lockout became apparent. Negotiations took place, but the parties were unable to gain any traction toward compromise. The union’s counterproposal would have left the players with about 53 percent of revenues; for its part, the league moved its position to 45 percent for the players. Because the sides remained far apart, the league took the preemptive step of declaring a lockout on September 15, following a unanimous vote by the owners. This was the third lockout since Bettman became commissioner in 1993.

As it became evident that the chances of a settlement were remote, players began to sign contracts with teams in Europe and the American Hockey League. For instance, San Jose Sharks captain Joe Thornton signed with Davos in the top Swiss hockey league, where he had played during the 2004–2005 lockout. Rick Nash of the Rangers also returned to Davos. Evgeni Malkin of the Pittsburgh Penguins signed with Metallurg Magnitogorsk in the 7-nation, 26-team Kontinental Hockey League, which became a popular destination for the nearly 300 NHL players who contracted to play elsewhere.23

Although Bettman and Fehr were the chief negotiators, deputy commissioner Bill Daly took an active role for the league and Steve Fehr assisted his brother for the union. Jeremy Jacobs, owner of the Boston Bruins and chairman of the NHL Board of Governors, was a strong voice for cutting the players’ share of revenues, as he had been in the 2004–2005 lockout. Several players—notably, Sidney Crosby of the Penguins, Ryan Miller of the Buffalo Sabres, and Jonathan Toews of the Chicago Blackhawks—were on hand to lend support for the union.

On September 28, the parties met for the first time since the lockout. Progress made on secondary issues was overshadowed by the league’s announcement that the remaining preseason games were canceled. Negotiations continued regarding minor matters, but with little attention given to the core economic issues. As the start of the regular season drew near, the league announced that it had canceled the first 2 weeks of regular-season games.

A few days later, however, the NHL made a surprising offer of a 50–50 split of hockey-related revenues.24 An important question stemming from this offer was what would happen to the value of existing player contracts. Would they be scaled down in accordance with the decrease in the players’ share of revenue from 57 percent to 50 percent? This was to become a nettlesome issue. The league further proposed to increase revenue sharing from $150 million to $200 million, but short of the $240 million the union wanted.25

Fehr balked over the league’s offer, contending that it would constitute a 12-percent pay cut and cost players $1.6 billion over 6 years.26 The offer also did not guarantee the full value of current player contracts, or what the union called “make whole.” Although both sides were ostensibly in favor of a 50–50 split, which sounded simple in principle, reaching a division of revenue deal was complicated because the parties were making different assumptions about the timing of the split and its effect on existing contracts. Frustrated with the union’s response, the league withdrew its offer.

Notes

23 Mike Sielski, “NHL races back to business,” Wall Street Journal, January 7, 2013, p. B1.

24 Jeff Z. Klein, “N.H.L. proposes even split in revenue,” New York Times, October 17, 2012. Interestingly, a former owner of the Florida Panthers had proposed a 50–50 split and an increase in revenue sharing about 2 weeks earlier; see Stu Siegel, “The big matter of small markets,” Sports Illustrated, October 1, 2012, pp. 17–18.

25 Ibid.

26 Jeff Z. Klein, “Fehr, union leader, is critical of N.H.L. offer,” New York Times, October 18, 2012, p. B14; and “Fehr not high on NHL offer,” Contra Costa Times, October 18, 2012, p. D2.

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About the Author

Paul D. Staudohar

Paul D. Staudohar is professor emeritus of business administration at California State University, East Bay, in Hayward, California, and a member of the National Academy of Arbitrators.