Union Kool Aid
Sitting Out The Season Doesn't Add Up

D'Arcy McGrath
June 30th, 2004

In every city under the National Hockey League flag you hear very similar comments from hockey players.

"We are prepared to sit out the entire season".

"Players sacrificed for us in 1994, now it's our turn".

Give Bob Goodenow credit, his union appears to be very strong - a solidified group ready to due battle, with very little in the way of dissent to crack that fortified foundation.

For now.

With any strike or lockout however, you just have to wonder if the pains of the effort will ever really be justified by the spoils of victory. In most cases the answer is a resounding "no", and that includes unions representing workers that have considerably less at stake than NHL hockey players.

Athletes, as the story goes, have two very significant differences than Joe Average and his union in cities across North America.

Their careers are short. They make a boatload of money.

When coupled together it makes for a very interesting situation, one where the question of bad advice comes to mind. Simply put, the numbers don't lie, each individual player would be much better off looking out for number one and letting future players fend for themselves.

The average NHL salary this past season has been estimated in and around the $1,750,000 US range, a pretty good gig if you can get it. Estimations for the average length of career has been reported any where from five to eight seasons.

For this example we'll use seven years.

One more assumption ... for the purposes of calculation we'll state that players starting their career don't immediately make the league average but do achieve that mark by their third season.

These assumptions lead us to an example player that just completed his third season in the National Hockey League, made $1.75 million and only has four years left to play. Since this player makes the league average he isn't entitled to an automatic ten percent rate based on the current CBA this summer.

Is sitting out a season really an option for this player?

Recent seasons have seen the salary escalation slow to roughly five percent per annum. With that said, under the current CBA this player could expect to make $1.8, $1.9, $2.0 and $2.1 million for the final four years of his career, for a total of just under $8 million.

By missing the entire 2004/5 season, his fourth in the league, his remaining earning power drops to $5.8 million, a hit of $2.2 million due to the lost season, and the lost year of increasing salary at 5%.

That's a 27.5% hit against his career money earned total! Way to take one for the team!

A player further up the pay scale, say Jarome Iginla, is risking even more. If everything stayed the same for Mr. Iginla he'd stand to make almost $32 million in the last four years of his seven year run (keeping him at the same timeline point as our example player), but that number drops to $23 million with the lost season, a hit of $9 million bucks.

The confusion increases when you think of the risk reward balance in the union's stance. What is it that they truly have to gain? This CBA negotiation isn't about increasing salaries, it's really about entrenching and holding future earning power under the current system. Or in simpler terms, about keeping things exactly as they are. Essentially, each player in the union membership is willing to sacrifice 14% of their tenure in the National Hockey League with no visible reward to justify their actions.

For fun however, lets assume that there are gains to be had, that the NHLPA can increase the escalation of player salaries through a prolonged work stoppage. In fact as a result they double the rate of increase on player salaries, moving from 5% per annum to the 10% per annum they were getting five years ago.

Even in this scenario it still isn't worth it to our average NHLer. Said player gives up 1.75 million in a missed season but only gains back $1.5 million through the doubled escalation.

And that's the unrealistic upside of the situation.

In reality, it's much worse than that for the players with the union already presenting a 5% across the board roll back on players salaries as an opening offer.

Essentially the owners are looking for close to 30%, and an average NHL salary of 1.35 million if the losses of $273 million league wide are to be believed.

If they are successful in gaining that financial perch, the average NHLer will lose his fourth year entirely plus a roll back of 30% in year five, and then a nominal gain for the final two years of his contract - a net resulting loss of almost 3.7 million.

With an offer of a 5% roll back running smack dab into a request for a 30% cut you just know the final answer will fall somewhere in-between. Gary Bettman's 75% veto power all but ensures the ownership group won't capitulate too far towards the players side so the middle may just be the best case scenario for the skaters, a cut in salaries of roughly 17 to 18%.

For the interests of analysis, lets assume the players are more successful and settle with a 12% roll back. The resulting average NHL budget would be down from 40 million to a form of cost certainty pegged in and around 36 million dollars.

Joe NHLer loses almost 3 million dollars in this scenario, a decision that actually sits closer to the players offer than the owners demands. They lose the fourth year in their contract entirely, plus the losses on the roll back for the subsequent years.

So what does it all mean?

One of two things I suppose.

a) The average NHL hockey player is well aware of the numbers but have decided for the purposes of negotiation to put out a brave unified face

b) The average NHL player is completely in the dark and will only surface with knowledge after the lockout ends and the bottom line is all too clear.

As much as the players' side speaks to a strong position and a willingness to last it out, the two sides just simply aren't evenly matched.

The owners are losing money in business, so losing a bit in a lock out won't scare them.

The players go from making oodles of money to having to seriously scrutinize their expenditures all while seeing the sand slip through their career hourglass.

Logic dictates a player revolt on their union leaders and a deal being done just after Christmas in order to avoid a full year of lost wages.

But then, when has logic ever come into player salaries? The league is chock full of examples like Peter Nedved sitting out a season at 4 million US under the demands of an additional million for that contract season. Remedial math may not be my strong point but one is less than four almost every time I add it up.

If Bob Goodenow keeps serving up that Union Kool-Aid they may just take turns jumping off that cliff.

However, it only takes a couple of lemmings to change their mind to halt the stampede and bring common sense to the equation.

Until then ... keep sipping that Kool-Aid.

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