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Does This Sound Familiar?

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Once upon a time, there was a professional sports league at odds with the players' union. The owners' position was that the league's financial model was broken and that they were losing hundreds of millions of dollars per year. As such, they demanded greater cost certainty and greater restrictions on player salaries in the next Collective Bargaining Agreement. The players disputed the validity of these figures and countered with a proposal that the owners claimed was not enough to bring the league back to profitability. So, when the existing CBA between the two parties expired, the owners decided to lock the players out.

The two sides carried on negotiations during the lockout, but it was clear that there was a large difference between their positions. The owners insisted on dramatic structural changes in the league's financial system, while the players lobbied for a continuation of the previous system with a few minor changes. The players were willing to give back some money, but were adamant that they would never agree to the central provisions of the owners' proposal.

Eventually, games started to be canceled, as the two sides could not come to consensus on terms for a new CBA. On one of the major points of disagreement, the owners had a number that they insisted that the players agree to. The players responded with their own number, which was flatly rejected by the owners. Over time, both sides made slight adjustments to their 'number', but were never able to find a compromise agreeable to both. Many in the media called for the two sides to meet in the middle, but neither side was willing to budge that far.

In the midst of their disagreement, the executive director of the player's union accused the league of not being a 'real negotiating partner'. The league's commissioner responded by saying that the players were the 'best athletes in the world' and deserved fair pay, but on a level that the league could afford. Both made apologies to the fans for the lack of games being played.


Now, anyone who has been following the recent developments of the negotiations between the NBA and the NBPA might think I have been writing about the current lockout. But actually, this story is about what took place in 2004-05 between the NHL and the NHLPA. Late last year, I wrote that I thought that the NBA owners viewed the NHL lockout as a possible model for their current situation, and that they might follow the course that the NHL owners took 7 years ago. Sadly, nothing has happened to dissuade me from that perspective.

History tells us that the entire 2004-05 NHL season was eventually canceled and that no agreement between the two sides was reached until July of 2005. One of the major points of contention between the league and the union was that of a salary cap. The league wanted a hard salary cap of approximately $37 million. The player's union said that they would never accept such a cap. By February of 2005, the owners had moved to offer a $40 million cap while the union had begrudgingly made an offer of a $52 million cap. Eventually, the league went as high as $42.5 million and the union came down to $49 million. At that point, the media insisted that an agreement was possible if the two sides would just split the difference and compromise at $45-46 million.

Does this sound familiar, NBA fans?

How about this quote from NHL Commissioner Gary Bettman, courtesy of USA Today:

"In one additional last-ditch effort to try to save the season, I gave an offer of another $2.5 million," Bettman said. "We were stretching to get there because we were projecting that under that deal, we would probably lose money for the next two years. ... When the union came back at $49 million, it was clear that there was no basis upon which we could make a deal."

That doesn't sound like any other league commissioner, does it?

I've been pessimistic about the prospects of a 2011-12 NBA season for some time now. I certainly don't want this to be a repeat of what happened in 2004-05 in the NHL, but.....I find the two situations eerily similar.

Let me also say that in various posts that I've made over the last 18 months, I've tried to lay out, to the best of my ability, facts about the reported proposals made by both the NBA and the NBPA. In the midst of these posts, I've tried not to make judgments on these proposals - that is to say, whether or not either side was 'right' or 'wrong' in doing so. This has been intentional. It's not that I don't feel emotion about the situation - I do - but it's because, in the end, I don't believe that resolution will come about based on what is 'right' or 'wrong'. Instead, I believe that an agreement will be made based on leverage, not on which side is 'right'.

Take again the example of the NHL. I wrote above about the disagreement about the size of a salary cap. In February of 2005, the owners went as high as $42.5 million while the players went as low as $49 million. Any guess as to the actual size of the salary cap when a new CBA was agreed upon in July of 2005? Conventional wisdom might say $45 or $46 million, right? In actuality, the salary cap for 2005-06 was set at $39 million. That's not a misprint. The final number was even lower than the owners' offer in February. Other aspects of the final agreement - such as the rollback of existing salaries by an amazing 24% for non-minimum contracts - also seemed to dramatically favor the owners. Those aspects of the owners' original proposal that the players vowed never to accept in November of 2004 were, in the end, ratified by 87% of the union's members in July of 2005. Did the owners win because they were 'right' or because they ended up with more leverage? I would argue the latter.

So, I have tried to avoid getting caught up in the discussion of 'which side is right?' in regards to the labor crisis. Because, in the end, I think it's irrelevent.....

By the way, if you're interested in reading more articles from 2004 and 2005 on the NHL lockout, here are a few that I used for quotes and information in the creation of this post:

From Sports Illustrated, November 3, 2004

From USA Today, February 16, 2005

From CNN, February 16, 2005

From ESPN, February 16, 2005

From ESPN, July 13, 2005