NHL Lockout: Why Profitable Teams Must Share the Wealth
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The NHL locked out its players in 2004 and ended up losing the entire season.
The sport was in economic chaos at the time and needed to change the way it did business.
There was not much disagreement about the economic system at the time. The players eventually caved into the owners' demands, and the new system that was in place seemed to work out well for the NHL.
The league's revenues reached $3.3 billion last year, according to SportsNet.ca—well above the $2.3 billion the NHL brought in during the 2005-06 season (via NHLNumbers.com). Yet, apparently, the league is not making enough money.
On the surface, this sounds like greed on the part of the owner. But the biggest problem is the distribution of wealth.
According to Forbes' Kurt Badenhausen, three NHL teams are making a significant profit. Those teams are the Montreal Canadiens, the Toronto Maple Leafs and the New York Rangers. The Edmonton Oilers and Vancouver Canucks are also making small profits.
The other 25 teams are losing money. Per Badenhausen's report, the profitable teams are making $212 annually, while the 25 money-losing teams total $86 million in losses.
Currently, the money-making teams redistribute $150 million in profits to the money-losing teams. The NHLPA is suggesting that figure go up to $250 million. However, the league is balking at that figure, saying it doesn't want to go above $190 million.
Therein lies the rub. The money-making teams are dwarfed by those that are failing to turn a profit. While those teams are not losing lots of money, they are losing enough that they're refusing to start the season.
Though it seems understandable that the teams that are profiting want to hang on to the money they've earned, it doesn't seem reasonable that owners are asking players to give back more of their salaries after they endured a 24 percent rollback in the previous CBA (per the New York Post).
The issue may simply be one of owners tightening their own bootstraps, competing harder and not offering overwhelming contracts to players when they can't afford them.
According to the Forbes figures, neither the Philadelphia Flyers nor the Nashville Predators are making a profit. Yet the Flyers offered Nashville defenseman Shea Weber a 14-year, $110 million offer sheet during the summer. The Preds then shockingly matched that offer.
The Flyers were not financially wise to offer that contract, and the Preds were not prudent to match it.
The owners have to look out for their own financial interests. Penalizing the players for the owners' mistakes is inherently unfair.
Asking the players to subsidize the money-losing owners is wrong on so many levels. The biggest reason for that is that they paid a heavy price the last time.
The owners should figure out their own business problems and fix them. Sharing the wealth is one way; improving business technique is another. However, punishing players by demanding they forfeit a portion of their salaries is not a fair or reasonable solution.
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