Tuesday, August 31, 2010

Fehr of the Unknown

A fractured and fragmented National Hockey League Players Association has- apparently- found their man to lead them. Donald Fehr, the former head of the Major League Baseball Players Association agreed to accept the position of Executive Director of the NHLPA pending a vote of the Player Association representatives.

So, what does this mean for the Player's Association? More importantly, what does it mean for the upcoming negotiations of the Collective Bargaining Agreement?

Should fans of the NHL be Fehrful?

Already, concerns have been voiced over the ascension of Fehr to the position of Executive Director. Some have presumed that this means that there will be a strike by the players in a militant stance against the owners. Fehr's past has conjured up this grim vision as he famously led the MLBPA on a strike that lasted for part of two seasons and caused the cancellation of the 1994 World Series.

Does that same fate await hockey fans in 2012?

Is the NHLPA under the direction of Donald Fehr a work stoppage waiting to happen?

Perhaps not.

Step away from Fehr's reputation as controversial and tenacious negotiator and looks at the issues surrounding the PA and the League, and one can see where having Fehr in charge of the PA could be beneficial both to the union and the League.

Fehr can step in to the role of Executive Director and provide strong leadership to a union that has, at times, been dysfunctional, to put it generously. Having a leader that is experienced in tough labor negotiations and in handling the disparate interests of union members can form a fractious membership into a reasonably functioning body. Does this mean that a cohesive union would be ready to walk out when the Collective Bargaining Agreement expires in 2012?

Not necessarily.

What strong, consistent leadership will- hopefully- bring to the union is an end to the backroom, backstabbing deals that have occurred throughout the history of the union. Remember Paul Kelly? Ending the internal strife is healthy for the union, and ultimately will be healthy for the game. It may not appear that way now, but having a healthy union to represent the players is good. A healthy union can reasonably represent the players position when it comes to negotiating a CBA, something that could be argued has not effectively occurred in the past.

As it now stands, the union feels like they got hammered in the last CBA negotiations. The natural tendency is to want to "get back" at the owners and the League. This is unhealthy for both sides.

There is a natural adversarial relationship between owners and the players. When that relationship gets out of balance, the stage is set for labor unrest and confrontation that is obviously bad for the game and for the fans. If the union, and the players, feel that their interests have been represented adequately and fairly, the probability of labor unrest diminishes.

Fehr is familiar with some of the players on the other side of the table. Brian Burke, President of the Maple Leafs and Bill Daly, Deputy Commissioner of the NHL, served with Fehr on the Board of Directors of the Sports Lawyers Association. There is an element of respect between Fehr and those that will be involved in the negotiations for the NHL.

That respect is healthy.

Fehr and the PA will have a number of issues that will have to be resolved in the next CBA. Those issues could be contentious, and it remains to be seen if these issues will be contentious enough to lead the players to strike. Looking at these issues is instructive.

The Olympics 

The players are nearly unanimous in their desire to have an opportunity to play for their respective country in the Olympics. The League has to recognize and honor the desire of its players to perform on the world stage, and it is expected that this issue will be one that generates much discussion.


The League loathes the two week shutdown and fears for injury to their players. The players love the world stage. Stars such as Alex Ovechkin have even gone as far to say they would leave their team to play in the Olympics if the NHL does not allow players to do so. This untenable situation has to be resolved. One idea may be for the IIHF to compensate the League for the use of their players. This does not resolve the potential for injury to a key player for an NHL club, but may be a step in the right direction to resolving this issue.

Allowing the players to participate in the Olympics may be one of the the most powerful bargaining chips the NHL holds in the upcoming negotiations. By agreeing to Olympic participation, the League signals an acknowledgement of the importance of the world stage to the players and a respect for their desire to represent their country.

Contracts

The Kovalchuk contract has brought the cap circumventing nature of the the long term contracts to to the forefront, and it is expected that this will be a point of negotiation to determine what constitutes a valid contract.

The Kovy contract points out some of the weaknesses that currently exist. Although Richard Bloch was appointed as an arbitrator for this particular situation, the fact is that since the ratification of the last CBA, both the League and the PA have been without a full time systems arbitrator.

Why is that important?

The systems arbitrator is agreed upon by both parties to review and rule on player contracts. The League can compel a team to provide records and information on an existing contract, but it cannot make a player or his agent do so. That is the role of the systems arbitrator.

Without the agreed upon arbitrator in place, we have situations like the disallowed Kovalchuk contract and the re-examination of other lengthy contracts. This is unhealthy for both sides. Clearly defining the parameters of an acceptable contract eliminates  the "do-over" and the resulting friction that occurs.  And frankly, it will save some GM's and owners from themselves. And that is good for the game.

The Kovalchuk situation has defined the unacceptable nature of a long term contract. The question for the League, the PA and the agents representing players is what is acceptable? That, I believe, will be a significant part of the next CBA negotiation.

Salary Cap and Escrow

The salary cap was implemented in the last CBA as a way to level the playing field between large market teams and teams in smaller markets. The claim was that smaller market teams could not compete on a revenue basis with teams that had a larger television market and population base. This sounds eerily similar to the arguments made by the owners in professional baseball in 1994 when a salary cap was proposed for that sport.

Unlike baseball, a salary cap was implemented in the last CBA. Like baseball, there exists an element of distrust between the players and the owners, although it can be argued that it is not a severe in hockey as it was for baseball in 1994. Nevertheless, the attitude of the players is one of being taken advantage of in the last CBA.

That sense of aggrievement is, in my mind, exactly the reason that Donald Fehr is being proposed to head the NHLPA.

Fehr lead the MLBPA through a contentious strike with the owners that changed the relationship between owners and players. The players had been wronged (witness a settlement from the owners to the MLBPA of $280 million for charges of collusion) and Fehr was the leader that led the union through the recovery of lost wages and the dismantling of the proposed salary cap.

Could Fehr be tasked with dismantling the NHL salary cap and eliminating the escrow arrangement? That remains to be seen, but there is no doubt that his experience in the down and dirty of hardball negotiations has factored into the decision to bring him on board as the Executive Director of the NHLPA.

The risk to the good of the game and to the fans who passionately support their hockey team rests with the end goals of the PA. If they feel a need to get back at ownership; if they genuinely feel that they have been wronged by the owners, then the upcoming negotiations for a new CBA will be contentious at best.

Currently, the revenue generated by the League is split with 57% going to the players and the balance to the owners. The escrow is held back to make certain the revenues hit the agreed upon percentages. Escrow is great if the players are receiving funds at the end of the season; not so fun if revenues dip and the escrow is held by the league.

It is speculation on my part, but I believe that on the table in the upcoming CBA negotiations will be the escrow arrangement; the determination of the cap amount; calculation of salary for a player sent to the minors or shipped overseas (the salary "dump" to free up space); and the acceptable type of contract that clubs and players can enter into (see above).

I also believe that owners will use as a bargaining chip the removal of the salary floor. As the cap has risen, small market teams are being required to pay more dollars out to meet the minimum payroll requirement. I would think that an upper limit will remain in place, but that the floor could be eliminated in negotiations (stick tap to Stu Grimson for bringing that option to my attention).

Make no mistake, if Donald Fehr takes the reins of the NHLPA, expect a brawl when it comes to negotiating the next CBA. In March, while serving in an advisory capacity to the PA, Fehr was quoted as saying:

"It is an organization that has, I believe, a membership that is ready and willing and interested in making things right so that it is an effective voice for the players."
A unified PA under the direction of an effective and tenacious Executive Director with great experience doesn't mean that a strike and a lockout is imminent.

It does mean that negotiations will be tough, and there will be some give and take on both sides. The days of owners dealing with a disjointed and dysfunctional union are most likely gone.

The upcoming CBA negotiations are a cloud of the unknown for all sides- owners, players, and fans. Hopefully, the parties to the CBA will realize how bad it was to have a lost season due to a lockout and how long it has taken for hockey to regain its footing in the U.S.

The admonition to both sides is to remember your fans and to negotiate the upcoming CBA fairly. Negotiate diligently, even toughly, but keep the bigger picture of the good of the game and its fans in the forefront of these talks.

And don't fear the unknown.

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