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Manipulators, Myths & Minions


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I couldn't have summerized this better myself so here it is...

Manipulators, Myths and Minions

By Ice Hawk on Hockeybuzz

http://my.hockeybuzz.com/blog.php?post_id=14156&user_id=127057

"First of all I would like to clarify that I was pro-ownership last lockout. Owners had bumped up salaries to the point the league’s finances were in rough shape. However, it was basically a few ownership groups who were driving the pay-escalation, and it was difficult to indict the group as a whole.

Some owners had been victims themselves and had come out and criticized some of the more obvious offenders. Two examples of teams guilty of putting upward pressure on salaries are the NYR who inked Joe Sakic to an offer sheet which paid him $17 mil in 1997-98 and Carolina who signed Sergei Federov to an offer sheet that paid Feds $14 mil in 1998-1999. As we all know both Colorado and Detroit matched the offer sheets and retained their stars, but they were none too happy about it. Nearly a decade and a half later these numbers are still way out of line according to owners.

The players agreed to a sizable pay cut because of these indiscretions in the 2005 CBA, which featured the additional accoutrement of an owner-insisted-upon salary cap. But it took a year of stubborn bickering and acrimony along with dark rinks to get back to playing hockey, which caused the rabid fans arguably more grief than the players or owners.

So here we go again.

This time however, instead of a few renegade teams imprudently pumping up player-costs, it is literally a league-wide indulgence from which no team can claim exemption.

What is the proposed solution to the problems this indiscriminant spending has caused for some teams? Player pay-cuts and the owners once again reneging on contracts supposedly negotiated in good faith.

I can’t support this again, and can’t understand how the manipulative owners manage to garner support from their minions in the form of the mythical rhetoric we see on Internet bulletin boards. I would like to take the time to address a few of these myths.

Myth #1: No other business pays 57% of their revenue to their employees, and it is ridiculous for the owners to be expected to keep up that rate.

Well for starters that percentage was negotiated by the owners with the players. But beyond that there are many businesses who pay as much or more than 57% of their revenue to their employees.

In a business where the employees supply the competitive advantage for their employers, as in the case of NHL players, businesses can pay up to 90% of their revenue to employees. One example is a consulting firm whose profit is a direct consequence of the success of their consultants. Another example is American investment banks who pay up to 67% of their revenue to their employees. There are many examples, but generally speaking businesses who provide a service rather than a product routinely pay upward of 50% of their revenue to their employees.

Myth #2: The owners invest millions of dollars in their teams and have the right to make a profit.

No they don’t. No one has the right to make money. I got spanked back in 2008 when I made bad investments in TSE listed companies. I would have loved to have been able to approach the companies and say “hey, I invested in your company and I have the right to make money”. But in that context the claim showcases the derisory nature of this myth. The simple fact is, if you make prudent investments you will make money, if you make bad investments you will lose money.

Who could reasonably expect to make money by purchasing the Phoenix Coyotes, who have never turned a profit since their inception?

Furthermore, if a team is part of a conglomerate, the owners may actually want to lose money in one or more of their operations to offset taxable income made by other arms of the company.

Myth #3: The owners take all of the risks and the players should consider themselves lucky and take what is being offered.

This is complete nonsense. Every player who signs a contract takes the risk that when the next CBA rolls around the owners will once again renege on contracts negotiated in good faith, and demand players give back a portion of their earnings to subsidize a league whose owners have largely caused their own problems.

This scale-back on salaries is a clause the owners are trying to enforce for the second CBA in a row. It is an attempt to offload onto the players, the risk taken by the low grossing, small market teams. The alternative is calling upon the successful teams-some of whom are incredibly profitable and shoulder no risk at all-to share more revenue with teams who are losing money.

Who takes the risk?

Factoid: The NHL's 2005 CBA eliminated the right of players to renegotiate contracts in the wake of players sitting out to try to force teams to increase their salary. However the NHL owners retain the right to lock out players in an attempt to force them to renegotiate lower salaries."

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Ask Eric Lindros, Keith Primeau, Ian Laperriere or Chris Pronger.

You could also ask Adam Deadmarsh, Mike Richter, Pat LaFontaine, Stu Grimson, Steve Moore, Dave Scatchard, Geoff Courtnall, Scott Stevens, Matthew Barnaby, Dean Chynoweth (13 career concussions!!), and Marc Savard.

And these are just the guys whose careers were ended early by concussions. There's hundreds of retired NHLers out there plagued by all sorts of ailments from their playing days.

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These are cattle willing to risk permanent disability in order to give the owners even the opportunity to make dollar one.

Keith Primeau suffers symptoms on a daily basis.

Chris Pronger will likely never be the same.

Eric - and his brother - will have post-concussion symptoms on a daily basis for the rest of their lives.

Ed Snider needs to make a few more bucks before he dies.

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These are cattle willing to risk permanent disability in order to give the owners even the opportunity to make dollar one.

Keith Primeau suffers symptoms on a daily basis.

Chris Pronger will likely never be the same.

Eric - and his brother - will have post-concussion symptoms on a daily basis for the rest of their lives.

Ed Snider needs to make a few more bucks before he dies.

Well, if this was a real ranch they would have just taken Lindros out back and shot him! Oh wait, that's for a horse with a broken leg...

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I'm really glad a lot of regular posters are squarely in the players corner. I can't wrap my head around people who read up on the topic are still pro owner....I *just* don't get it. It's hard to get all emotional about millionarie players, but damn, they are getting a raw deal here. The owners are not only greedy, they are aloof about it.

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Well, I'm often pro free enterprise unfettered and all but...

This is just ridiculous in my books from the owners! Maybe many (but not all by a long shot) are millionaires but it's easy for me to distill it down to normal folks salary. I'm not one of them who believes the rich should pay more or re-distribute there money. That's why I'm against the rich teams paying for the poor teams. You either gotta make it or eventually call it quits. It's one thing to help them out a little bit but enough is enough with some teams. Atleast try and move them. The league does the opposite and throws away good chances to move and potential new owners rather than solve the problem. And it isn't the players fault either. They live in a free society and if their market value is 5 million a year then so be it. It isn't for me to be upset in any way about that anymore than it's my business how much Snider makes. Good for them all. I have no jealousy over money what so ever. I hope to join them on some level one day...

That was long winded but simply put I don't care if we are talking 10 dollars or 10 million dollars, fair is fair and not honoring signed contracts is screwed up in my books...

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not honoring signed contracts is screwed up in my books...

Exactly. And you know the players have some good polling data showing that people overwhelmingly feel that way. It's just not cool. Some owners knowingly signed players to deals confident that they were going to get 20+ percent discounts. That is the definition of bargaining in bad faith!

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I'm really glad a lot of regular posters are squarely in the players corner. I can't wrap my head around people who read up on the topic are still pro owner....I *just* don't get it. It's hard to get all emotional about millionarie players, but damn, they are getting a raw deal here. The owners are not only greedy, they are aloof about it.

Haha, well jammer, put me squarely in the camp of the owners ;) Ok, ok, maybe not squarely, but I have absolutely no pity for the players who are supposedly getting "a raw deal."

Where's the raw deal? I just don't really see it. Can it be tweaked? Sure, but no way is it grossly unfair or 'raw'.

I certainly 'blame' the owners for handing out ever-escalating contracts both in monetary value and term length, but that's what they have to do inside of this broken economic model of a league. Compete against each other, but whoa, not too much?? That's why that Bain Capital article really resonated with me... ONE owner for the league instead of thirty would really bring things in line. I don't know how all the details would work, but I'm sure there are lots of smart people who could figure it out. ;)

At the end of the day, I see players who are handsomely compensated for playing a game where they get to show off their world-class skills. They are set for life.

The average NHL player rakes in $2.4M per year, which averages out to $29,900 for each game played. The median household income in the US is $50,054. That's HOUSEHOLD income, so in two games, the average NHL player makes more money than both partners in a median-level household make in a year.

Now, I know this is comparing apples to oranges. The only point I'm trying to make is that I simply do not sympathize with the players, period. They can fight back all they want for what they believe is fair, and if they can reach an agreement that is more favourable to them, power to Fehr and his little minions.

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@brelic

How would you feel if your mortgage owner came to you and said, "I know we agreed and signed a contract for you to pay 6 percent but I decided I am not making enough money on that, I changed my mind and now you are going to pay 10 percent to cover my poor financial planning." Are you just going to say ok, the contract must not have been binding, oh well, I will go ahead and pay the extra...now the mortgage company has raised your rates again for the same reasons. So now the mortgage company has decided they are going VIOLATE their good faith contract for a 3rd time, raising your rate yet again. Does that seem fair to you? Oh, and you have no recourse, if you don't like it you can just move out.....

That is the impression I have of how Gary Bettman operates, and he has done so for the last 18 years or so. Do you honestly find that fair?

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Thats almost why the players HAVE to play for all marbles here. They can't cave or they will forever be Bettman's bitc*hes...

Yeah exactly. Brilliant move Bettman: poke a bunch of proud pro athletes in the chest and challenge their manhood. There's a word for that and it rhymes with runty.

It doesn't matter what one does or who they do it for: a deal is a deal among men. You signed a contract under the terms at the time. You can't just move the goal posts.

The players will not budge on this. Eventually teh two sides will find a deal to "make it whole" over some term of time that the players can live with, but if you're a player how could you ever trust Bettman to bargain in anything but bad faith. He has needlessly poisoned things by taking this ridiculous stance on a rollback.

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@brelic

How would you feel if your mortgage owner came to you and said, "I know we agreed and signed a contract for you to pay 6 percent but I decided I am not making enough money on that, I changed my mind and now you are going to pay 10 percent to cover my poor financial planning." Are you just going to say ok, the contract must not have been binding, oh well, I will go ahead and pay the extra...now the mortgage company has raised your rates again for the same reasons. So now the mortgage company has decided they are going VIOLATE their good faith contract for a 3rd time, raising your rate yet again. Does that seem fair to you? Oh, and you have no recourse, if you don't like it you can just move out.....

That is the impression I have of how Gary Bettman operates, and he has done so for the last 18 years or so. Do you honestly find that fair?

I completely agree with you that existing contracts need to be honoured. That's the way it works in our society. No argument there.

I don't really buy the mortgage analogy because the banker and I are not in business together and we certainly don't share any profits. The players and the owners are and do. The players are employees, but they're also more than that. They are partners. They're just trying to figure out how to divide the pie.

I guess where I see a big difference between the two is that (most) players need the NHL to practice their trade and earn enough money in 7-10 years to carry them through 'retirement' or bridge the gap between this career and the next. The very best ones - maybe the top 25% - could easily find lucrative paying jobs in other leagues. I'm not so sure about the other 75%. Maybe, maybe not. They could find jobs, but would the salary even come close to sniffing what they can make in the NHL?

On the other hand, the owners do not need the players to survive as business people. They could take their NHL venture or leave it. If not an NHL team, then maybe a basketball team, or a baseball team, or a new convention center, or a cable company, or a private space exploration company! There are SO many better places to put your money. There might be some sentimental value in it for a very few owners, but for most, it's a business like any other.

So in my book, that gives the owners all the leverage they need.

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@brelic

I used a mortgage company as an example because of the binding contract. I see you agree with me on the signed contracts need to be honored. It takes TWO entities to sign a legal and binding contract with the owners being one of them. They(the Owners) signed the contracts that they themselves want to stop? How is that the players fault? Several of the Owners went out of their way to sign players to contracts KNOWING what was in the new CBA. That they now want a "break" on those contracts is not only unlawful but immoral. They(the owners) INTENTIONALLY SIGNED THE CONTRACTS UNDER A LEGAL AND BINDING COLLECTIVE BARGAINING AGREEMENT OF THEIR OWN DESIGN!!!!!!! There is no way I will ever see the owners as "victims".

I know most of the time I can relate to your point of view and more often than not agree with them but I think we will always be on opposite sides of the fence here. Peace, Rod

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On the other hand, the owners do not need the players to survive as business people. They could take their NHL venture or leave it. If not an NHL team, then maybe a basketball team, or a baseball team, or a new convention center, or a cable company, or a private space exploration company! There are SO many better places to put your money. There might be some sentimental value in it for a very few owners, but for most, it's a business like any other.

So in my book, that gives the owners all the leverage they need.

Then leave it. No one is forcing them to make stupid deals that they can't afford and lose money hand over fist.

Sell it to a competent person who won't spend recklessly and then blame it on the people they offered the deals.

Ed Snider isn't doing this "to make money" - certainly not any more. I'll wager the Illitches, Molsons and Wirtzes of the world, aren't either. I *know* Terry Pegula isn't "in it for the money."

If you don't like the business you are in - get out. It really is that simple.

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@brelic

I used a mortgage company as an example because of the binding contract. I see you agree with me on the signed contracts need to be honored. It takes TWO entities to sign a legal and binding contract with the owners being one of them. They(the Owners) signed the contracts that they themselves want to stop? How is that the players fault? Several of the Owners went out of their way to sign players to contracts KNOWING what was in the new CBA. That they now want a "break" on those contracts is not only unlawful but immoral. They(the owners) INTENTIONALLY SIGNED THE CONTRACTS UNDER A LEGAL AND BINDING COLLECTIVE BARGAINING AGREEMENT OF THEIR OWN DESIGN!!!!!!! There is no way I will ever see the owners as "victims".

I know most of the time I can relate to your point of view and more often than not agree with them but I think we will always be on opposite sides of the fence here. Peace, Rod

And that's fair ;) Like I said, I completely agree that signed contracts should be honoured. In other situations where an employee has a fixed-term contract, if the employer lets them go, they still have to buy them out at face-value. I've seen it first-hand. It's the right thing to do. For that, the owners are pretty douchey to want to roll these back.

And just to be clear, I don't consider the owners to be 'victims' one bit. I see both sides as being unable to relate to the average person because they live in completely different realities. I love hockey, but if they ruin the NHL because both sides are acting like out-of-touch morons, so be it. I'm convinced that a new, stronger league would emerge.

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Then leave it. No one is forcing them to make stupid deals that they can't afford and lose money hand over fist.

Sell it to a competent person who won't spend recklessly and then blame it on the people they offered the deals.

Ed Snider isn't doing this "to make money" - certainly not any more. I'll wager the Illitches, Molsons and Wirtzes of the world, aren't either. I *know* Terry Pegula isn't "in it for the money."

If you don't like the business you are in - get out. It really is that simple.

No one is forcing them to make stupid deals, except that the way the league is structured - with a finite pool of elite level talent - forces teams into a zero-sum game of chicken. Whether or not that's true is irrelevant... they believe it to be so. To make money, you need to make the playoffs, to make the playoffs, you need to be competitive, to be competitive, you need to spend. This often plays out as a 30 GMs (or, really, about 8-10 GMs that can afford it) trying to outbid each other to the point of absurdity!

I wouldn't watch the Flyers if they were the Panthers or the Stars or the Coyotes or any team whose ownership is unwilling or unable to spend to get elite talent. And I know, money isn't the only way to build a contender, but well-spent money is.

So that leads to the question... what's the point of having teams who cannot or will not spend to make themselves better? There is no point, unless they are merely farm squads for the Flyers and Rangers of the league. The other point is to provide 'jobs' for players, which is why the PA is dead set against contraction.

As far as Snider and the Wirtzes of the world, you're right. They're no longer in this to make money. But they sure ain't in it to lose money either! Hehe, if so, I've got a few business proposals for them ;)

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Fact of the matter is that the players allowed the clause in the last CBA that stated the owners have the right to do what they are doing. I'm on the players side but at the same time they really screwed the pooch last time by allowing that clause in there. This will not end well, one way or another. Hockey will be back when it's back but both sides will be bitter and embattled... That sets up an even more contentious battle down the road...

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@brelic "Where's the raw deal? I just don't really see it. Can it be tweaked? Sure, but no way is it grossly unfair or 'raw'."

It's grossly unfair. It's the owners problem...and they are trying to solve it on the backs of the players...AGAIN. The owners are the ones overspending, they created this mess. The league is making profit hand over fist, the fact they can't divide it up properly is not the players fault. You can only got to the well so many times asking for concessions. If your boss was continaually asking for concessions....like 25% of your salary concessions, and tried to starve you out to get it, you would be livid....like get a gun and blow his head off livid.

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