CHAMPAIGN, Ill. – The lockout of players by the owners of the National Hockey League will harm fans and the sport as owners try to impose cost-saving labor rules.
A sports-law expert at the University of Illinois at Urbana-Champaign reached this conclusion in an article published this week by the University of British Columbia Law Review.
“The public has often regarded the disputes between owners and players as a food fight over their respective slices of the revenue pie, resulting in no dessert for the rest of us,” said Stephen F. Ross, a professor at the Illinois College of Law. “I offer the view that the NHL owners’ position not only increases their share of the pie, but also makes the pie less tasty.”
Ross argued that NHL Commissioner Gary Bettman’s demand for a rigid cap on club payrolls, which triggered yesterday’s lockout, amounts to a restraint of trade that, in the name of saving faltering franchises in some cities, will prop up inferior teams and reduce the incentive for decent teams to excel.
“Rigid salary caps will actually harm competitive balance because they lock players into existing teams and prevent lousy teams from quickly improving and good teams from obtaining the one or two key players they need to become Stanley Cup contenders,” Ross wrote. “This results in measurable economic loss to the economy and an immeasurable loss to the psyches of sports fans wishing their teams would get better.”
At present, Ross pointed out, the NHL has remarkable competitive balance, with 12 teams among the four finishers of the last three seasons.
The last hockey lockout lasted 103 days in 1994-95 and cut the regular season almost in half. Few believe the pending lockout will end any time soon given thelong-stalemated negotiations between the NHL and NHL Players’ Association.
In fact, the NHL may become the first pro league to wipe out an entire season, affecting nearly 20 million fans who attended games last season. In Canada, where hockey is the national sport, the parliament should seriously consider “whether the NHL deserves to remain the unregulated guardian of the sport,” Ross wrote.
The demand for salary restraints at a figure far below the current expenditures of many clubs is not a good way to save marginal teams. In fact, the Illinois expert noted, “It is difficult to conceive of a more inefficient and anti-competitive scheme than one whose principal effects are to reward front-office mismanagement with guaranteed profits, hamstring the ability of new owners or general managers to repair prior mismanagement, and to consign fans of lousy teams to years of mediocrity, while not taking steps to enable well-run small-market teams to achieve success.”
Ross said there are ways for hockey owners to stanch their losses, claimed to be a combined $273 million in the 2002-2003 season. These include greater revenue sharing that would improve the economics of smaller-market Canadian teams and new franchises in the United States.
The sports-law specialist also recommended cash sales of players. “If an NHL club believes it needs a top-line scorer, it can weaken itself by bidding for one of the few scorers who are free agents in any given season. The scarce supply of these scorers drives up the price,” Ross wrote.
In Europe, a soccer club that needs a top-line player will pay cash to another club, which promotes financially sound payrolls. Limiting player contracts to three years would reduce the burden of keeping overpaid older players.
Ross also proposes restraints on individual teams that persistently lose money.
“Although the NHL has never persuasively explained why so many clubs lose money (11 of the 30 did not lose money in 2003, including small-market teams such as Vancouver), some claim this is because owners irrationally spend more to win, even if their payroll is not financially responsible,” Ross wrote.
A rule that requires a team to slash its payroll to break-even levels after two or three years of losses would encourage fiscal responsibility and have less impact on the league-wide labor market than the player salary cap, Ross argued.
His article is titled, “The NHL Labor Dispute and the Common Law, the Competition Act and Public Policy.” Ross also is a visiting professor at the law school at the University of British Columbia.
