By: Evan Wainer
Dallas Stars owner Tom Hicks didn’t exactly help his friend George W. Bush recently when he laid off 14 employees from his team’s front office.
Hicks, who was Bush’s No. 1 money contributor during his 1998 Texas gubernatorial campaign, didn’t add statistically to the nation’s unemployment level, but his move signaled that he and other National Hockey League owners may have already lost confidence in the supposed economic recovery that the president has been touting. And so the NHL lockout may have already begun much earlier than the anticipated Sept. 15 date, when the current collective bargaining agreement expires.
New York Rangers fans, though, could argue that they’ve been locked out for seven years because the Cablevision-owned Broadway Blues have not been in the chase for Lord Stanley’s Cup since 1997.
So, while the National Hockey League is holding its crown jewel event, the Stanley Cup Finals, this week, the industry seems far more concerned about changing its economic structure than promoting its sports product. The owners are promising change, just like the owners of Von’s (Safeway), Ralph’s (Kroger) and Albertson’s did when they locked out grocery-store workers in southern California last October. Those employees did come back to work at the end of February, but with fewer benefits than they had before they left. The National Hockey League could lock out its players for a longer period, say the entire 2004-05 season.
The issues in the grocery dispute were health benefits and money. The hockey fight is strictly about money, yet there are similarities that go beyond the overlapping marketing and corporate partnerships. The supermarket owners contended that they could no longer afford to pay the kinds of salaries and benefits the workers wanted because of some bad investments they made, coupled with the threat from Wal-Mart’s new Superstores. The National Hockey League owners’ beef is strictly with the players’ salaries and how certain teams like the Rangers have blown apart the salary structure in the league. Surprisingly, the two Stanley Cup finalists have very low payrolls, making them the equivalent of NHL’s Wal-Marts. Here’s where the contradiction lies: It’s not about money, it’s about knowing how to spend money.
It’s owners like Tom Hicks and Cablevision’s Charles Dolan who have created the problem, and you don’t have to look any further than former NHL President John Ziegler to support that claim. Ziegler said the owners were just outsmarted by clever agents who drove up the salaries.
Smart businessmen drooled over average hockey players and the salaries got out of hand. Agents would use Wayne Gretzky as the standard. If Gretzky scored 92 goals and their client scored 23, then their client is clearly 25 percent as good as Gretzky and therefore should get a quarter of Gretzky’s salary, which was the highest in the league in the 1980s and 1990s. The owner would agree and grab that 23-goal scorer at a higher price. Then a different owner, not to be outdone, would sign someone else’s 23-goal scorer at a slightly higher salary, ratcheting up player costs.
There is no greater example of irresponsible spending than the New York Rangers’ organization. The Rangers under both Neil Smith and Glen Sather could not say “no” to over-the-hill high-priced players. NHL owners are asking their employees to police themselves from making bad investments, just as the grocery store chains made their workers pay for their owners’ misdeeds. And this is why, once the Stanley Cup Finals are done sometime this week and the World Cup finishes around Sept. 14, the National Hockey League owners will shut down the industry. And they will do so to protect themselves, hoping that their customers (i.e., their fans) understand that it’s just business, nothing personal, but costs have to come down and it’s up to the employees not the owners to be fiscally responsible.
Despite the rhetoric, sports commissioners do not set policy; the owners do. The NHL produced a study by Arthur Levitt, the longest-serving chair of the U.S. Securities and Exchange Commission and former chairman of the American Stock Exchange, which contended that its 30 teams had lost a collective $273 million in 2002-03. The NHL had Levitt say business is bad. But how bad could it be if the New Jersey Devils were recently sold to Jeffrey Vanderbeek? He is leaving Lehman Brothers and Wall Street for sticks and pucks.
Vanderbeek is entering the rink because he must see a great business opportunity, especially if NHL Commissioner (and owners’ negotiator) Gary Bettman gets “cost certainty,” which could include a salary cap. And that is something the players will never agree to unless they’re faced with the loss of their careers. Which may be the owners’ real strategy behind their power play.
Evan Weiner is a commentator on the “Business of Sports” for Westwood One’s Metro Networks.
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