NHL gets deal with union for six years

After missed season, hockey is back with salary cap, uncertain future


July 14, 2005|By Childs Walker | Childs Walker,SUN STAFF

The National Hockey League and its players association reached a six-year collective bargaining agreement yesterday, ending a 10-month lockout that cost the league a season and, many say, the interest of sports fans nationwide.

The league did not immediately release details of the deal, which still must be ratified by both sides. But wire reports said the agreement will include many changes the league and its owners sought, including a hard salary cap and revenue sharing. The deal also includes an unprecedented 24 percent rollback on existing contracts. A joint news release from the league and union said the deal would probably be approved next week.

"To be totally honest, I really don't care what the deal is anymore," Philadelphia Flyers star Jeremy Roenick told the Associated Press in a telephone interview. "All I care about is getting the game back on the ice."

Now, the NHL must attempt to build excitement around teams and players who were stunned by the apathy of casual fans toward the loss of the 2004-2005 season. And for the time being, the league must do so without support from longtime broadcast partner ESPN, which recently declined a $60 million option to carry the 2005-2006 season.

"If they think that all they need are incremental improvements, they're sorely mistaken," said Marc Ganis, a Chicago-based marketing consultant. "They need to re-brand and re-market their entire product."

Hard-core fans will come back, many agree, but attempts to build a new audience might prove more difficult.

"It's not a crisis of confidence, it's a crisis of apathy," said James Bernstein, a Los Angeles-based crisis consultant. "And that's a dangerous place to be for an operation that wants to make money."

The NHL, the first North American sports league to lose a full season to a labor dispute, has adopted a slogan of rebirth: "It's a whole new game."

The league is reportedly considering a series of rule changes, from a zero tolerance policy for defensive interference away from the puck to the elimination of tie games.

Marketers say the "whole new game" campaign is the right approach, because the league must convince fans they're getting additional value for their dollars.

"They need to not just have that as a marketing slogan but as a mantra that everyone in the league believes," Ganis said.

Rob Cornilles, a Portland, Ore.-based marketing consultant who has worked with more than half the league's teams, said the NHL should look at next season as "a total re-launch."

He said teams shouldn't make promises about on-ice performance but should focus on improving customer service and comfort in the arena while touting the overall excitement of the game.

"People don't want to feel like they're returning to a burned-out building," Cornilles said. "If the teams aren't ready for the reopening, I think that's when you'll see a real backlash."

Ganis agreed, saying the league should drastically lower ticket prices, promote a more free-flowing game and bulk up youth programs in American cities. He said the NHL should also take advantage of the chaos likely to ensue in the wake of the deal.

The league is expected to hold an abbreviated 2005 draft later this month, with Canadian super-prospect Sidney Crosby touted as the main prize. Then, hundreds of players will hit the free-agent pool, with some teams looking to fill more than half their rosters in a matter of weeks.

"I think it's great for them to have that kind of scramble, because it means they're in the news," Ganis said.

In broad strokes, the new labor deal is designed to create a bigger middle class, with stars less apt to dominate team payrolls and the lowest-paid players making higher salaries.

The radical turnover reflects a widespread belief among team and league officials that the NHL's previous economic structure had failed.

Many pointed to a report prepared by former Securities and Exchange Commission chairman Arthur Levitt - and paid for by the owners - that found the league's 30 teams lost $273 million during the 2002-03 season on revenue of $1.996 billion.

About 75 percent of that revenue went to player costs, the report said, as opposed to about 65 percent for the NFL and Major League Baseball and 58 percent for the NBA.

Under the new deal, teams will reportedly be subject to a salary cap approaching $40 million (the Detroit Red Wings led the league with an $82.9 million payroll in the 2003-2004 season) but will be required to exceed a minimum payroll in the low $20 millions. The cap could increase or decrease based on total league revenues.

Salaries for the remaining years of player contracts will be rolled back 24 percent, an unprecedented move for a major sports league. That means a player originally slated to make $5 million in 2006 will instead make $3.8 million.

No player will be allowed to earn more than 20 percent of his team's total payroll, and the league will not be allowed to devote more than 54 percent of revenues to player salaries.

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