NHL Work Stoppage

Author: Scott Taylor

October 30, 2009

Scott Taylor's E-Take is sponsored every Friday by Manitoba Harvest, the global leader in hemp foods & oils, and your online source for natural, sustainable and certified organic hemp food products. www.manitobaharvest.com.

Sitting around talking to a certain NHL player the other day, I got this response to a question about Hallo’ween.  You know, that time of year when National Hockey League fans come to the rink dressed up as empty seats.

“Yeah, it’s pretty scary in some of those markets (no comedy intended),” said my friend, a Manitoba-born NHL player.  “You look up into the stands in some of these rinks and you see all your escrow money just flying off into the breeze.”

Most hockey fans and, hey, even some of the players, aren’t that familiar with the league’s escrow fund.  It’s where 25 per cent of all salaries are put into an account that the league can divide up if the revenues drop.  After the 2008-09 season, the league took $120 million out of the account and shipped $4 million to each team.  It was the first time the league took the money.  In two of the first three years of the current collective bargaining agreement, the players got all of their money back plus a little extra because revenue exceeded deductions.  According to the NHLPA, in that one “bad” year (2006-07), the year in which the players lost money to escrow, it was a meager two per cent.

This season, however, the shit is about to hit the fan.  After taking $120 million out last year, the players could lose every single nickel they put away this year.  The league has big financial stress.  For one thing, the announcement was made this week that Jerry Moyes would sell his Phoenix Coyotes to the NHL for about $150 million.  After the league pays for that mess and tries to operate the team, it will be at least a quarter of a billion dollars behind last year.

Meanwhile, buildings are virtually empty all over the league.  Remember, we’ve talked about “drop numbers,” the difference between “tickets distributed” and “people in the seats.”  The drop numbers this year have been stunning, but so too have the announced attendances: Oct. 9 at Carolina, 13,597; Oct. 12 at Nashville, 12,179; Oct. 13 at Atlanta (vs. Washington), 13,192; Oct. 13 at Columbus, 13,280; Oct. 15 at Phoenix, 6,899; Oct. 17, at Phoenix, 9,162; Oct. 21 at NY Islanders, 9,122.  If those are the announced attendances, I can’t imagine how empty those buildings are.

Folks in Winnipeg shouldn’t worry about having a 15,001-seat arena.  So few people are going to hockey games in some of the big American markets, that if half of them had 13,000-seat arenas, they’d be just fine.  Throw in the average drop number (approx. 1,500) and these buildings are virtually empty.

It’s no longer a matter of “if” a team is coming to Winnipeg, but “when.”

Of course, the big problem isn’t so much the draw – or lack of same – but the over-valued dollar placed on the players.  Vincent Lecavalier makes $7.7 million in Tampa, a city where announced crowds of 14,000 are actually about 6,000.  If he made $1 million in Tampa, he’d be overpaid.  Nobody cares.

Rick Nash makes $5.4 million in Columbus.  Why?  He might be worth $5.4 million in Montreal, where people actually go to the games, but in Columbus?  Nobody would noticed if he was gone.  Eric Staal makes $8.25 million in Carolina.  No wonder they’re losing money.  If he didn’t play there at all and they saved the $8.25 million would the Hurricanes be that much worse?  Anaheim is averaging about 15,000 a game (announced crowds) and yet the Ducks top six players earn a total of $31.6 million.

While more Americans get caught up in a terrible recession (the unemployment rate in Tampa is 11.7 per cent while the rate is 8.6 per cent in Phoenix and 10.5 per cent in Atlanta), people have to make important decisions about their money.

Take Detroit as a for-instance.  The Red Wings are announcing 19,125 fans at each game, but if you watch the games on TV, you can see that half the seats are empty.  The unemployment rate in Detroit-Warren-Livonia, Mich is 17.3 per cent.  Those people aren’t going to hockey games.

Look, nobody is going to hold a tag day for NHL players, but once their union gets its act together – and it will – there will be trouble.  The league is losing big money in at least 12 markets while the players watch this escrow deal take 25 per cent of their cheques.  What’s worse, they look up into the stands and see even more money heading down the toilet with each empty seat.

Looming over all of this is the fact that the NHLPA can re-open the CBA at the end of next season.

If those empty buildings don’t start filling up or if the league doesn’t either move teams or drop franchises altogether, you can pretty much bet the lockout of 2004-05 will pale in comparison to the next work stoppage.

And that next work stoppage could arrive at the end of next season.

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