Fehr Takes Over as NHLPA Head

The National Hockey League Players’ Association (NHLPA) voted overwhelmingly to appoint Donald Fehr as their new Executive Director on Saturday.

Fehr, 62, is the former Executive Director of the Major League Baseball Players Association (MLBPA), where he worked for the players for 33 years. During that time, Fehr cultivated a reputation as a fierce negotiator, most notably when he successfully challenged the owners’ collusion, leading to the owners paying $280 million in damages to the players. Prior to his appointment as the MLBPA’s director, Fehr worked closely with predecessor Marvin Miller, whose leadership completely overhauled the landscape of the owner/player relationship in professional sports.

”I am both humbled and honored by the expression of confidence that the players’ vote reflects,” Fehr said in a press release. ”I’m looking forward to working closely with the membership and the Executive Board.”

The NHLPA has been in a state of tumult for much of its existence, most notably during the corruption-riddled 25-year reign of Alan Eagleson. Things improved dramatically for the players from a negotiating perspective when Bob Goodenow took over in 1992, with the average annual player salary rising from $368,000 to $1.83 million in only 13 seasons.

But when Goodenow refused to budge on the owners’ demands for “cost certainty” during the 2004-05 lockout and the entire season was lost, an effective mutiny led to the players agreeing to the current Collective Bargaining Agreement (CBA) and to Goodenow being asked to resign.

The CBA hasn’t worked out too poorly for the players, mostly because the owners failed to enforce a direction connection between individual teams’ revenues and player costs. By pooling all 30 teams’ revenues — much of which is generated locally — to determine the salary cap and payroll floor, there is absolutely no relationship between what teams like the Panthers, Lightning, Predators, Coyotes and Islanders earn and what they’re expected to spend on players.

Theoretically, the CBA was supposed to create parity, making it far easier for all 30 teams to compete for the league’s top players (and for the Stanley Cup), but it’s abundantly clear that some teams’ Cup hopes (for this season and the foreseeable future) are far brighter than others. For example, it’s difficult to imagine the Panthers ever being able to spend enough to ice a Cup champion, even with top-tier architect Dave Tallon running the show. Yes, it’s possible, but it’s not looking likely given the team’s financial situation, attendance, etc.

Meanwhile, the NHLPA has been in a state of constant tumult since Goodenow’s unceremonious exit, with Ted Saskin’s email hacking controversy and the unsuccessful tenure of Paul Kelly.

Without question, the union needs a stabilizing presence, and there’s good reason to believe that Fehr is the right man to get the union back onto solid ground. And while many worry that Fehr’s presence means another labor stoppage is likely following the expiration of the current CBA (on¬†September 15, 2012), there’s good reason to believe that such tumult can, should and will be avoided. Major League Baseball is heading into what will be its 16th consecutive season without a labor dispute, certainly a good sign. And while it’s true that hockey fans returned in record numbers following the 2004-05 lockout, there’s good reason to believe that they’ll be a lot less forgiving if games are canceled again.

When NHL commissioner Gary Bettman announced that the owners would be locking out the players in 2004, he said the following: “It is my somber duty to report that at today’s meeting, the NHL Board of Governors reconfirmed that NHL teams will not play at the expiration of the CBA until we have a new system which fixes the economic problems facing our game.”

During that lockout, the fans were largely in the owners’ corner, with the rise in player salaries under Goodenow’s tenure serving as inarguable evidence that salaries had spiraled out of control and that the game needed “fixing.” When the lockout ended, the league implemented numerous rule changes designed to open up the game and eliminate the obstruction and interference that had plagued the on-ice product for much of the previous decade.

The combination of a labor agreement that ostensibly offered all 30 teams a fair shot at the Cup – and a dramatic improvement of the quality of play on the ice – made it easy to sell the “new NHL” to hockey fans desperate for the return of their favorite sport.

But just five years later, it’s clear that the CBA doesn’t actually provide cost certainty (for the reasons stated above), and it’s a good bet that the owners will demand more certain “cost certainty” in the next agreement. They’ll point to player salaries continuing to rise over the current agreement as justification, and once again hockey fans will find themselves choosing sides in another battle between billionaire owners and millionaire players. But in today’s economic climate, such a dispute isn’t likely to yield much sympathy for either side, and hardball negotiations aren’t going to be well received.

Indeed, it will be very interesting to see how Fehr approaches the situation. It will likely be a tough battle simply to maintain the status quo (the current CBA), much less to secure additional concessions from the owners. And if there’s a wide gap between what the players and owners want in the next agreement, it’s hard to see either Fehr or Bettman folding quickly.

“When it comes to labor negotiations, I can tell you … that you have an obligation to negotiate in good faith with the owners and we will do that,” Fehr said in a conference call on Saturday afternoon. “They have an obligation to negotiate in good faith with the players and I trust and hope that they will do that also.¬†We treat a work stoppage, a strike, as a last resort. It’s something that you consider only when you believe that all alternatives have failed. We certainly hope, and I certainly believe, that the owners will treat it as a last resort on the other side, too.”

Without question, it’s in the NHLPA’s best interests (and the NHL’s for, that matter) for Fehr to take a business-like approach to the negotiations, evaluating any and all opportunities to increase the size of the overall economic pie perhaps even before worrying about how it might be divided. If the size of the pie is meaningfully increased, it might just be possible for both sides to win. But that’ll require substantial creativity and cooperation, with the players and owners working together to figure out ways to increase the game’s popularity and reach.

Nostalgic hockey fans are hopeful that the next round of “fixes” might include the NHL’s return to classic markets like Winnipeg and Quebec City, but that would probably create more problems than solutions.

For while it’s undeniable that the populations of Winnipeg and Quebec City are far more passionate about hockey than the populations of South Florida and Atlanta, that’s actually the problem. Having the NHL in Winnipeg and Quebec City would do very little for national revenues, as the league’s TV income from the major Canadian networks wouldn’t increase appreciably if teams relocated to those markets. And furthermore, the market for vintage Jets/Nordiques merchandise would effectively dry up in concert with the return of the NHL to those cities.

Given the relative differences in average household income in Winnipeg and Quebec City as compared to South Florida and Atlanta, it’s quite conceivable that relocation to those burgeoning hockey markets would actually make things worse than leaving the teams where they are [for more on this topic, check out Derek Zona's excellent article on SB Nation].

There’s also a large contingency of hockey fans clamoring for contraction, claiming that the latest round of expansion did serious damage to the NHL’s talent pool. But it’s hard to see how any hockey fans can seriously be waxing nostalgic for the days when a 21-team NHL engaged in an 80-plus game regular season for the sole purpose of eliminating five teams from the 16-team playoffs. And before making the claim that the talent pool is watered down by those additional nine teams, consider this: the fall of the Soviet Union, the rise of “Miracle on Ice” babies who grew up to be a generation of top-tier American players, and the increased migration of Nordic players to the NHL has made the current talent pool far deeper/better than it was in 1990-91 (the last season before the latest round of expansion began).

Without question, the talent on the ice today far surpasses what it was prior to the fall of the Soviet Union and the coincidentally corresponding NHL expansion.

Truth be told, the NHL’s future doesn’t lie in television (at least not the current rights/ad-driven model) and it doesn’t lie in expansion nor contraction. And unfortunately, it doesn’t lie in relocation to tiny Canadian markets, no matter how nostalgic we might be about the teams that used to play there. In the interests of full disclosure, I’m the proud owner of both a Nordiques jersey (Joe Sakic) and Jets jersey (Teemu Selanne, with “Goals for Kids” patch, Jets fans know what I’m talking about), and I wish it were possible for the NHL to succeed in those markets. But unless a lot of other elements change first, it won’t be possible for the league to seriously evaluate those markets as legitimate alternatives to South Florida and Atlanta.

Back in the early 1960s, NFL Commissioner Pete Rozelle convinced the NFL’s owners to agree to pool together all TV rights, then to share equally the revenue generated. At the time, the owners were skeptical about television, worrying that it would eliminate the need to attend games (at the time, the lion’s share of NFL revenue was local, just as it is for the NHL today). The NHL needs to take a similar approach with regard to its distribution today, with the Internet essentially replacing “television” in the NFL example.

And while they’ve already done this to a point (see: the NHL’s battle with the New York Rangers over their website), much more steps are needed.

It will be interesting to see where Fehr falls on this debate. On the one hand, it’s better for the union when teams like the Red Wings and Rangers are bidding aggressively for free agents in an uncapped market, opening up the possibility that Fehr would push for a baseball-style luxury tax over a cap-based system as the NHL/NHLPA currently employ. It’s clear that the cap-based system has severe limitations given the disparity in team revenues, and it’s possible that a luxury tax-based system might actually be preferable. But in order for either system to work, the rules likely must be changed.

Rather than judging the teams by the size of their respective markets, the teams should probably be judged instead by their revenue.

Right now, the Islanders are penalized for their proximity to New York City, though it’s abundantly clear that their fan base is almost entirely Long Island-based. If the Isles qualified for revenue sharing, it might be possible for owner Charles Wang to ice a more competitive roster, even given the team’s difficulty in securing desperately-needed facility improvements. Shifting the focus to revenue from market size would be an important alteration, as would the league taking steps to help each team succeed in their current market.

Look back at the Nashville Predators’ entrance into the NHL for one excellent example. Rather than taking the $80 million Craig Leipold paid for the team and investing it in Nashville’s hockey future (building rinks in the Nashville area, staffing them with talented instructors, providing youth players with free gear for a few years, marketing hockey in Music City), that money was instead divided amongst the 26 teams and inevitably spent on player salaries. And today, instead of having Nashville be a successful market on the rise, it too is held up as a team that should perhaps be relocated. It didn’t have to be that way.

Given the success that Major League Baseball has enjoyed with its luxury tax-based system, it’s a good bet that Fehr will at least want investigate whether such a solution would work for the NHL. For while MLB’s national (league-generated) revenue is substantially higher than the NHL’s, it is (like the NHL) a business where the majority of the revenue is generated locally.

But before any negotiations regarding these details can begin, Fehr must undertake a very steep learning curve in order to fully understand the issues, both local and league-wide, that are essential to the next CBA.

“I think what’s fair to say is there are a lot of things that they would like to see examined with the way things are working now and then following that, try to make a judgment on if they want to try to change them, and if so, to what,” he said. “It would be unfair at this point to go beyond that. What goes right along with this is educating the membership at the same time as I educate myself as to what those issues are, what’s important about them, how various things affect the players and then additionally what changes in the agreement –either that we might propose or that the commissioner’s office might propose — could affect them.”

It will be very interesting to see how things develop over the coming weeks and months. And while the NHL owners might be a bit wary of the Fehr and his reputation as a “hawk,” the reality is that the league’s long-term interests will be far better-served with the shrewd, experienced Fehr at the head of the NHLPA than they’d be if the union remained a fractured mess.

Good leadership on both sides of the bargaining table will make for more equitable negotiations, but more importantly, should lead to a better overall product. And for this reason, hockey fans on either side of the player/owner debate should be very pleased with today’s developments.

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