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Who do you trust to fix NHL revenue sharing: Owners or the players?

Greg Wyshynski
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The single most overrated victory in collective bargaining between the NHL's owners and players will be in the "public relations war", because one side never had a chance to claim victory.

The owners won the last lockout, implementing a salary cap system they wanted and giving the players 57 percent of the revenue cut. They then spent the next seven years circumventing their own rules before attempting to cut the players' share down to an even split, with justifications ranging from "hey, basketball did it!" to crying poverty for teams whose own foibles — bad contracts, arena deals and transactions — have caused their ills.

Frankly, the owners lost the trust of the fans and media that supported them in 2004-05. They also don't have a clear ideological rallying call as they did back then, when "saving the game" wasn't necessarily just a hyperbolic mantra but a viable goal.

So the players went into the CBA negotiation having already won the PR war — hell, the NHL couldn't even successfully hang the death of realignment on them.

Donald Fehr and the NHLPA aren't taking anything for granted in winning the popularity contest. They're measured and cohesive where Bob Goodenow's union was hair-trigger and permeable. They've used media surrogates and social media outlets to hammer their opponents. Their first "alternate" proposal was as reasonable as the NHL's was extreme; offering solutions to pressing issues that seemed, at face, like a jumping off point for a settlement.

Chief among them: Revenue sharing. Reading a Donald Fehr proposal without meaningful revenue sharing would be like seeing a Dane Cook concert without hearing anyone else's jokes. The only mild surprise was the lack of a luxury tax for teams that exceed to cap — perhaps sensing that it's a non-starter for the NHL.

But you know who else proposed an increase in revenue sharing?

The NHL, in its opening proposal.

But this is what happens when you've already lost the PR war, and when your concepts are crushed under the weight of flawed ideas: The NHLPA offers a revenue sharing plan that's celebrated like a New Year's baby, and the NHL's own plan — which they believe is the better plan — is summarily ignored.

The good news for us: They both want expanded revenue sharing to teams that don't currently qualify for it.

The bad news for us: They have significantly different theories on how to effectively accomplish this.

Fehr suggested that "the players partner with the financially stronger owners to help stabilize the industry and assist the less financially-strong ownership groups."

Part of that stabilization would come from the players capping their salary escalation for three years at an incremental 2-percent rate, before reverting back to 57 percent of the revenue in an optional fourth year.

But it was the NHLPA's suggestion to "fix" the current revenue sharing model — and expand it to more "have-nots" than are currently served by it — that had outlets like The Sporting News calling Fehr's gambit "a stroke of genius."

This probably had the NHL jumping up and down, waving its arms and wondering what it had to do to share in that genius. After all, it was proposing the same broadening of revenue sharing as the players were, but getting none of the adulation.

The Globe & Mail was one of the few to notice:

In addition to the paper work the owners turned over, they also made their first proposals on revenue sharing. There is some revenue sharing in the current agreement, which expires Sept. 15, but the players are expected to demand much greater revenue sharing between the NHL's wealthy and poorer teams in the new agreement.

The NHL's revenue sharing plan was pushed aside by Fehr upon arrival: "We haven't evaluated the changes from current revenue sharing to determine whether we think it's the appropriate thing to do or if it misses the mark in some respect," he said.

The current model for the NHL's revenue sharing has the teams in the bottom half of the League-wide revenues eligible for revenue sharing. Which means if you're in the top 15 revenue-generating teams but are playing through a mountain of debt — hello, New Jersey Devils — you aren't eligible under the current system.

According to NHL sources, the League has proposed that the system will be opened up to any team in the NHL that might require revenue sharing, and not just the bottom 15 revenue generators.

Essential to that broadening of the system: Dropping the current CBA rules that prohibit teams in big media markets — 2.5 million TV households or more — from being eligible for revenue sharing. In theory, teams like the New York Islanders, the Devils, the Anaheim Ducks and the Dallas Stars that should logically qualify for revenue sharing would be eligible under the new model.

As David Shoalts of the Globe & Mail detailed earlier this summer, the NHL's revenue sharing system is tangled and baffling.

Part of that confusion comes from a "clawback" system that incentivizes teams to maximize their local revenue streams — if they hit certain growth targets, usually at a rate above the League's average revenue growth, then they qualify for a larger share of the revenue. If they miss the targets … they don't.

The NHL intends to loosen those restrictions and make it easier for teams to qualify for a larger share of revenue sharing.

Now, if the NHL expands revenue sharing, that means it needs a bigger pot to draw from, right?

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Where oh where might that money come from … a TV contract? Nah, not as big as the NFL's or the NBA's.

Ticket sales? Nah, that's already the financial lifeblood of the entire League. The NHL Guardians Project? Uh, yeah, about that …

Oh, that's right: It'll come from a reduction in player salaries and reallocation of those funds by the NHL's revenue-generating big market teams.

Which is how you convince teams like the Toronto Maple Leafs, Montreal Canadiens and Philadelphia Flyers — all opponents of expanded revenue sharing in the past — to buy into a new system: By taking from the players to broaden the current system, without draining more dollars from the big market teams already subsidizing the Phoenix Coyotes of the world.

As James Mirtle wrote in July:

"Bettman and Co. believe they will have far more luck prying $200- or $300-million out of the players than the big moneyed teams, the owners of which feel they've given up enough of their advantage by agreeing to a cap, some limited revenue sharing and greater parity."

The players and owners agree that revenue sharing needs to be strengthened, but the devil's in the details.

Using a 12-percent revenue-sharing figure that was calculated by Justin Hunt, a sports attorney in Columbus, OH, the New York Times figured that the owners' portion of revenues came to $1.42 billion last season, and at 12 percent the shared revenue among struggling teams that qualified would have been $170 million.

The League believes its current system, and the expansion of that system, would lead to the "meaningful" revenue sharing both sides desire. The NHL estimates that its revenue sharing would increase by 30 percent under its proposal.

Donald Fehr believes the players' revenue sharing partnership with big-market teams would generate as much as $250 million for teams.

The NHL's concern with the NHLPA's system? That it may hurt more clubs than it helps, particularly because the players' share of League-wide revenue would remain in the neighborhood of 54 percent.

As Gary Bettman said, there's a "gulf" between the two sides after dueling proposals. Without fully knowing the numbers being considered, it's difficult to determine if the players or owners have the right approach to expanded revenue sharing. It may not even be a "make or break" issue when it comes to a work stoppage, although it's inherently tied to one that is — the players' percentage of revenues.

One thing's clear: The players own the issue right now. Their proposal was built on revenue sharing. Donald Fehr's reputation as Mr. Revenue Sharing greets him whenever he walks into a room.

In 2004, the NHL won majority support with a proposed reinvention of the system and by gaining the trust of fans that their ideology would stabilize the League's economy.

Now it seems the NHLPA have that high ground in the early stages, especially when it comes to spreading the wealth.

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