Quick Update: NHL Lockout Official

September 17, 2012

Greetings, last night the National Hockey League (NHL) officially locked out players, making this the third lockout of Gary Bettman’s tenure as league boss.  I find it absurd that someone would be allowed to be the commissioner of a league after two lockouts, but now his leadership has presented us with a third one.  Of course, he really works for the owners, so as long as he is keeping the thirty or so super rich individuals across North America happy, he will stay in his job.

On Saturday, Bettman continued in doing his work for the owners when the league told the head of the players’ association (Donald Fehr) to not even bother trying to get a last minute face-to-face meeting to try and bring the sides to a compromise.  Granted, this may have been a waste of time as the sides are still too far apart on any deal happening.  The players had already taken a 24 percent cut in salaries to end the previous lockout in 2005, now the owners want the players to drop the percentage of revenues they share by around 8 to 10 percent.  The players weren’t going to agree to this, the Collective Bargaining Agreement was thus allowed to expire, and thus we are now in a lockout.

In my opinion the league has continued to slash costs, the previous time the league had some good arguments to reduce costs, but this time around it seems as if they just want to slash costs because they can.  The NHL is scheduled to begin play in October, but that seems to be in doubt as there is no way a deal will get done in time to get players to training camp and ready for the season by then… unless those players bolt to Europe.  The exodus has already begun, Evgeni Malkin has already left to play in the KHL in Russia.  The KHL was well prepared and set out rules about the number of players from the NHL a team can sign during a lockout, and that the salaries can’t exceed 75% of what the player makes in the NHL.

Already several players are headed over to play in Europe which makes me think that with other revenue sources for many players readily available, this lockout could last a long time. One wonders if this could be the end of the NHL as we know it.


Is the NFL in trouble for Collusion?

September 11, 2012

Thursday in a Minneapolis court room, the trial will begin in the case of Reggie White et al., vs NFL which alleges that the NFL owners were colluding to keep salary caps at a certain level, including that the owners had a secret agreement to keep the cap at $123 million a year during 2010 when the league had no salary cap.  The lawsuit alleges that such behavior has existed since the early 1990’s, and argues that owners have been working together to keep salaries low in the league.  The lawsuit indicates that this collusion has cost the players billions of dollars in potential lost revenue over this frame.  People have been discussing that the bounty gate and concussion problems would be the things that really hurt the NFL, but this new lawsuit brings a major issue for the league from a financial standpoint.

MLB owners were found guilty of collusion during parts of the free agency era, and were thus forced to pay back players, so this is not the first time this has potentially happened in North American professional sport.

Sport site Deadspin notes:

The only way to challenge the salary cap punishments now, after they’ve gone through the collectively bargained appeals process, is to “re-interpret” the entire 1993 settlement that allowed for a salary cap in the NFL and punish the owners’ collusion to the tune of $4 billion in damages.

This could mean big problems. NFL owners are probably cringing as the Judge presiding over the trial will be David Doty, a judge who is known for having ruled in favor of the union several times in the past.

You can also read (and download) the lawsuit on another deadspin article here: http://deadspin.com/5912702/

The NBA looks like it will be back just in time for Christmas

November 26, 2011

That’s right, after all the fighting between various groups that was highlighted in several posts here at the blog, the NBA owners and players association has come to a handshake deal after a 15 hour bargaining session lasting Friday and Saturday morning.  If the deal is accepted (they only have a handshake deal at the moment), the league is scheduled to begin play on December 25th, Christmas Day.  Reports coming in are saying that the first game will be a rematch of the finals, with Dallas playing Miami.  I don’t know if it the Holiday season that got the two groups together again to get a deal, but the owners are claiming that it wasn’t time or the calendar which was forcing them to get things done.  Really, it seems that the mounting financial pressures on both sides was what really helped get to the point where they are at now.  As ProBasketballTalk (NBC Sports) notes, the owners were not looking forward to losing an entire season of revenue, and the players were not looking forward to losing an entire season of salary.

So now that it looks like the NBA will be back, there is still the question of how long it will take for fans to get back into the league.  Research shows that attendance and fan interest in professional sport leagues tends to drop off after the league goes through a lockout.  And this was no short lockout, it lasted 149 days, and was the end point of almost two years of negotiations.  The NBA looks to overcome one big hurdle, but the new obstacle which may cause a drop in revenues is the lack of interest from consumers.  I’ll be curious to see how many people show up to games once it starts back up.

NBA losing sponsors

November 15, 2011

The NBA players association has decided to vote on decertifying.  There are still plenty of discussions about how this process will work out, but things are bleak, and most sport analysts and fans are writing off the entire season.  Lucky for fans of basketball, NCAA basketball has started and there are plenty of prime match-ups all week long.

But as the lockout now looks to be here for the long term (as if the previous few months wasn’t long enough), those who advertise and sponsor the NBA have begun to pull out their sponsorship of the league.  The Milwaukee Journal Sentinel reported that MillerCoors has pulled out its sponsorship of the Milwaukee Bucks during the lockout.  The value of the deal is unknown, but it is known that MillerCoors spends over $100 million a year on sport advertising alone.  As the lockout proceeds, it is most likely that more and more companies will not want to associate itself with the league.  As fan perception of the league, its players, and owners is all down, it makes sense for companies to pull out.

This is probably only the beginning, and the league looks to lose a lot more revenue sources as the lockout extends.

NBA on the verge of shutting down for the year?

November 14, 2011

Sure looks that way.  The players have just rejected the owners latest offer.  Derek Fisher the Union player representative is on television, quite emotionally talking about the issue.  He is announcing as we speak that the players have rejected the offer and will file an antitrust suit against the NBA and its owners.

Things looked positive on Friday, and everyone (even myself to some extent) were thinking that a deal was possible.  It turns out that the two sides couldn’t come together after the weekend, and it looks like this might be the end of professional basketball in North America until Fall of 2012.

I think a lot more people might pay attention to college basketball this winter/spring as the premier sport to pay attention to, alongside the NFL.

Will the new NBA season proposal hurt London Olympics Basketball?

November 11, 2011

The final deadline that David Stern put into place for the union to accept the owners proposal about the CBA or else things would get progressively worse.  Yet, the two sides are still at the table, which seems to indicate either than David Stern’s threats convinced the union, or that this was a shallow threat and that both sides have ignored as they made progress in talks.  In either case, things seem to be moving in a positive manner in the NBA CBA negotiations, though both sides still have distance between them.

The players are still moving towards decertifying the union today, and agents don’t like the new proposal either because it takes away their power.  Of course this means that many agents are telling the players to not agree to the new deal, and keep fighting the owners.

David Stern has proposed that if the deal gets done soon, the NBA could play a 72 games season (only losing 10 games off the schedule), including full playoffs, and would end only about a week later than the previously proposed season.  So how do you get in that many games in that little of time?  You obviously give players a much tougher and grueling schedule.  As ProBasketballTalk notes, its pretty much a schedule packed like sardines in a can.

This causes some issues I think.  First, with a tight schedule and shorter rest periods, players are likely to be more prone to injuries and fatigue.  This could actually be costly for some players who are required to play certain number of games for bonuses in their contract.  Really by playing a 72 game season, the NBA owners really look like they are trying to recoup as much lost revenue as possible.  If you look at tennis this year, there has been an increase in the number of injuries because of them playing one of the toughest schedules in history.

Then comes the Olympics.  Now that NBA stars play in the Olympics, it becomes worrisome that some NBA players might have to play a very hard schedule and then head to the Olympics with less time to rest and prepare.  I wonder if this might effect basketball at the Olympics in a negative manner.  Many star players might choose to sit out (or be injured) to just try and recover in time for the next season.  While it is only one week in difference from the previous cycle, the scheduling and number of games in such a short amount of time is the real issue.  The body can only handle so much.

Does America really care about the lockout?

November 10, 2011

A few interesting tidbits as the NBA labor talks continue.  I would like to point out that the deadline set by David Stern has passed, and they are still in sessions, which seems to hint that the deadline wasn’t the final offer as Stern made it out to be.

While not the best of science, the Poll Position polling company decided to conduct a poll on whether Americans really care about the NBA lockout.  While they only surveyed a small sample, they did find that 76% of those responded that they didn’t miss the NBA.  12% didn’t care either way, and another 12% stated that they missed the NBA.  If we extrapolate these numbers with a back of the envelope calculation, about 36 million of America’s roughly 300 million individuals miss the NBA.  That is a pretty large group of individuals who would like to see the NBA back and playing again.  In sports economics we often look at fan demand, attendance and viewership of sporting contests.  While it is probably the case that more Americans prefer to see the NFL than the NBA, the lockout does seem to be preventing a significant portion of the population from seeing games that they would like to see.

In an article of Forbes.com, Patrick Rishe notes that the losses the owners are claiming are not necessarily the truth.  Forbes estimates of revenues and team values are never perfect, but they are estimating that the league actually is not losing as much money as they are claiming.  It is noted that with the current estimates they are saying about 17 of 30 teams in the league have lost money, and that this is attributable to the structure of the league.  Dr. Rishe calls for stricter salary caps and steeper luxury tax to help fix some of the economic issues he sees in the league.  While neither the Forbes numbers nor the owners numbers are usually one’s we can fully believe, there are many who may lean towards the direction of Forbes.  Owners in professional sports leagues have been notorious for hiding profits, and reporting losses for their teams.  This helps to support the claim that owners are always saying they are losing money and that they need to lower salaries and have a larger piece of the revenue split to make up these costs.  The NBA has shown some franchises having very large yearly losses, but as long as teams keep their books hidden from the public eye, we will always have to doubt the owners argument.

Former Toronto Blue Jays VP Paul Beeston once said:

“Under generally accepted accounting principles, I can turn a $4 million profit into a $2 million loss and I could get every national accounting firm to agree with me.”

Hat-Tip (H/T) to vortex forum user “Surfing on a Rocket” for the link to the poll article.