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Revenue split at center of NHL talks
The phrases "hockey-related revenue," "players' share" and "salary rollbacks" dominate the conversations as the NHL heads to a lockout at midnight on Saturday.
Most of the words and proposals exchanged by the NHL and the NHL Players' Association center around how to split the league's estimated $3.3 billion annual revenue between the owners and players. Beyond figuring out who gets their fair share of the revenue pie could be the real reason hockey is set for another work stoppage.
"After (the) league was shut down in 2004, the fundamentals of several teams didn't change," said David Carter, executive director of the USC Sports Business Institute. "All through the bargaining process, the league didn't consider moving or shuttering these teams. Instead, after all these years the league is back in the same situation."
The answer, as far as NHL Commissioner Gary Bettman and the league's owners is concerned, is to once again ask for a major rollback in player salaries, which are currently taking up 57 percent of league revenue — an agreement both sides agreed to after the 2004-05 season was cancelled. When that agreement expires late Saturday night, Bettman said the league will impose its third lockout in 18 years.
Canadian French-language sports network RDS reported last week that the NHL has lost $240 million over the past two years. A source with knowledge of the negotiations told FOXSports.com that those numbers — if accurate — are largely due to a handful of struggling franchises.
"If there are NHL franchises and ownership groups that need assistance, the players are prepared to take salary concessions . . . and partner with the higherincome teams to provide the assistance needed," NHLPA executive director Don Fehr told reporters on Thursday. "So far, we don't have any indications of their willingness to do that.
"The concessions they want apply more or less equally to Toronto and Phoenix."
The Toronto Maple Leafs, according to the latest Forbes Magazine survey, are worth a league-high $521 million. The Coyotes, which the league has controlled after its previous owner went bankrupt three years ago, are valued at a league-low $134 million. The team only recently found new ownership, pending league approval.
The NHLPA, understandably against contracting franchises that would cost its membership jobs, has advocated increased revenue sharing. In its latest proposal, the NHLPA advocated revenue sharing to increase to $260 million, which, in part, would come from a rollback in player salaries.
As it stands now, the league's revenue sharing sits at about $190 million.
"I am not going to get into a public economic debate," Bettman told reporters on Thursday after he was asked about expanded revenue sharing. "That will just cause all of us to get headaches. But, the fact of the matter is that as a league we are paying out too much money."
Fehr said he was "a little bit surprised and significantly disappointed" that the league was reluctant to agree to expanded revenue sharing.
Bettman has fought for years to keep the Coyotes in Glendale, Ariz., one of several non-traditional markets the NHL under Bettman has entered through either relocation or expansion. Another was Atlanta, which saw its second NHL franchise relocate after the Thrashers moved to Winnipeg before the start of the 2011-12 season.
But Canada can handle just two more hockey franchises, according to a leading Canadian think tank. The Conference Board of Canada pinpointed those two potential markets as Quebec City and Hamilton, Ontario.
"I don't think there is a reluctance (to relocate to Canada), but I think the league wants to show everything has been done to keep a team in a current market," said Mario Lefebvre, director of the Center for Municipal Studies at The Conference Board of Canada. "They can't just pack up and leave quickly. Once they show they did everything in the book and it doesn't work, than it makes sense to make that decision."
Lefebvre said the most likely landing spot — if there is one — for relocation is Quebec City, which currently has a $400 million arena under construction. A frontrunner for relocation within the US could be Seattle, where an investor is seeking to build an arena that could house NBA and NHL teams.
Contraction was something two other leagues — Major League Baseball in 2002 and the NBA last year — considered in relation to the collective-bargaining process. So far, that topic hasn't been given serious consideration in the NHL.
"It would be like ripping a Band-Aid off," Carter said. "As the options to relocate to Canada (dwindle), you might hear contraction gaining interest. It's a steady simmer of bad news that doesn't help the league."
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