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NHL appears to be thriving, but work stoppage remains a real possibility

The league's revenues have been strong, but owners want to reduce the percentage that goes toward player salaries.

January 01, 2011|By Helene Elliott

NHL owners hired Gary Bettman away from the NBA to get them a salary cap, but he failed on his first try despite locking out players and reducing the 1994-95 season from 82 games to 48.

The second time around he succeeded — and made history.

The NHL in 2004 became the first major North American professional sports league to cancel an entire season, a drastic measure Bettman contended was necessary to control costs and reduce the percentage of revenues funneled toward players' salaries.

That the lockout broke the NHL Players' Assn. was a side benefit to the NHL, which steamrolled the union and got the hard salary cap it wanted, plus a 24% rollback on existing contracts. The NHLPA went through four executive directors and constant confusion before hiring Donald Fehr, former head of the Major League Baseball Players' Assn., as its new leader in December.

By many measures, the NHL appears to be thriving. The Canadian dollar, whose weakness led the league to create a financial-assistance plan for franchises based in Canada, has grown strong. League revenues reportedly exceeded $2.7 billion last season, remarkable in a tough economy. The salary cap for this season is $59.4 million and the floor — the minimum amount each team must spend — is $43.4 million. That floor is $4.3 million more than the ceiling was in 2005-06, the first season after the lockout.

Special events such as the Winter Classic and the emergence of successful teams in such major markets as Detroit and Chicago have driven TV ratings to respectable numbers on out-of-the-way Versus and on NBC, which shares profits from its broadcasts with the league rather than paying a rights fee.

Why, then, are owners claiming losses of tens of millions of dollars each season and fueling speculation that another work stoppage is likely when the collective bargaining agreement expires Sept. 15, 2012?

One reason is Fehr, who is seen as an antimanagement hardliner because he led the baseball players through a strike that led to the cancellation of the 1994 World Series. But he also presided over an era of relative labor peace and he's smart enough to know that hockey's economics aren't the same as baseball's.

Fehr played it firmly down the middle when asked about labor unrest possibly leading to another lost or curtailed season.

"We treat a work stoppage, a strike, as a last resort, and it's something you consider only when you believe that all alternatives have failed," he said. "If you would ask me if I anticipate a stoppage, I would say no and I certainly hope we won't have one, but I'm not going to predict what happens in negotiations."

Several points are likely to come up in those negotiations.

The current labor deal has been amended to curtail long-term contracts that teams had given players in hopes of minimizing the salary cap hit. That issue will be addressed, maybe to make the cap hit the actual salary paid in each season instead of an average. There has been sentiment in favor of allowing a team that trades a player to continue to pay part of his salary, a practice that is not permitted under the current deal.

Revenue sharing also will be discussed. Teams such as the Ducks, the New Jersey Devils and the New York Islanders are not eligible for revenue-sharing funds because they are in large markets, even though they're not the primary team in those markets or, it could be argued, actually are in separate markets. In addition, many profitable teams are reluctant to continue subsidizing small-market teams and want to revamp the revenue-sharing formula.

Are these issues big enough to cause a war? It's tough to say. But it's likely that neither side will steamroll the other this time.

What the league wants: To pay players a smaller percentage of hockey-related revenues.

What the players want: To maintain a healthy slice of the revenue pie; assurance they can participate in future Olympics.

CBA expires: Sept. 15, 2012.

helene.elliott@latimes.com

twitter.com/helenenothelen

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