Fehr: ‘Pretty hard’ to see players give up a lot again
NEW YORK – He wasn’t rattling a saber as he said it. He wasn’t banging a fist on the table. He was calmly answering a question with a matter-of-fact statement. Still, with the collective bargaining agreement between the NHL and the NHL Players’ Association expiring one year from today, he spoke volumes.
“The players made an awful lot of concessions in the last agreement,” NHLPA executive director Don Fehr said over breakfast recently in a Manhattan hotel. “It’s pretty hard to see them being willing to do that again.”
The immediate context: During an hour-long interview, Fehr was asked about lowering the percentage of revenue that goes to the players and the minimum amount teams must spend on salaries. He paused for a moment before answering, and then said that you hear a lot of rumors and he doesn’t know whether they’re serious.
Interestingly, he raised another example – something the NBA owners are trying to get via their lockout and NFL owners have long had.
“Somebody says, ‘Well, you know, it would be a lot better for the clubs if we got rid of guaranteed contracts,’ ” Fehr said. “Sure, it would be. It would be a lot better for the clubs if we paid everybody 10 dollars a week, too. It’s pretty hard to see the players come to that under any sort of circumstances.”
The larger context: The last time the league and the union negotiated a labor agreement, the owners locked out the players and canceled the 2004-05 season. They got the system they wanted. They achieved what they called “cost certainty,” a hard salary cap linked to league-wide revenue. Salaries were rolled back 24 percent. Team payrolls were limited to $39 million. Players were required to put money in escrow so the owners could recoup cash if they spent too much.
The union was broken. There was infighting and turnover. The NHLPA went through four executive directors (including an interim) and two periods in which the position was vacant – until last year’s introduction of Fehr, the longtime leader of the Major League Baseball Players Association.
Now some in the NHL are unhappy with the system they sacrificed a season to get. The league has grown from a $2.1-billion business to a $3-billion business during this CBA, and the game and competitive balance are perhaps better than they have ever been, but the revenues vary dramatically from market to market. The salary cap is now $64.3 million, and the floor is $48.3 million – $9.3 million above the original cap. Detroit Red Wings owner Mike Ilitch has said publicly that he hates the salary cap because it keeps him from spending as much as he wants; other league executives have said privately that the floor makes them spend more than their teams can afford. A variety of factors created what at least two general managers called a “perfect storm” this summer, with middle-tier free agents landing high-priced contracts. Boston Bruins GM Peter Chiarelli has said he expects the cap to go down.
“Clearly,” one NHL GM said, “the system is going to have to be fixed in some way.”
The NHL is ready to talk. Deputy commissioner Bill Daly wrote in an email that league officials are well prepared. Daly wrote that they have gone through a thorough analysis of the current CBA, “where it is working well and where it needs to be improved,” and are “far along in identifying our priorities and the core issues” for the next negotiation. “We have informed Don that we are at his disposal and that we are prepared to engage substantively whenever he is ready,” Daly wrote.
But Fehr isn’t ready yet. He said his best guess is that formal talks won’t begin until after the All-Star Game on Jan. 29 in Ottawa. The players haven’t finished the process of identifying their priorities and core issues, because Fehr has been going through a methodical rebuild of the union, analyzing the economics of hockey himself and educating the players about everything involved.
What are the odds of another lockout? Hard to say, especially because the sides haven’t outlined their positions to each other, let alone the public. Both sides say they would prefer a quiet, successful negotiation, but it depends on how far each wants to go.
Do the owners want the players to go from receiving 57 percent of revenue to, say, 47 percent, which the NFL players just accepted after a lockout? Do they want to lower the salary floor, and if so, how far? Do they want to tighten restrictions on the structure of contracts to prevent cap circumvention, and if so, how much?
Do the players want to oppose the salary cap again – or at least introduce a mechanism that allows owners to exceed it with a luxury tax like the one in baseball? Do they want to overhaul the revenue-sharing system? If so, how so?
Fehr is the key figure. He is the fresh face. He brings his experience in baseball, and he is the one who has put the players back in position to negotiate.
“The debate at the table is hopefully going to be driven by numbers and it’s not going to be driven by philosophy,” Fehr said. “Having said that, the league with far and away the most stability and the least problems is baseball, and that’s true since ’94. It’s the only one with no cap.”
Asked if the NHLPA wants this to be a revolutionary agreement or an evolutionary one – in other words, whether the union wants a new system or just adjustments to the current one – Fehr said: “I’m not prepared to make that judgment yet because the players haven’t made it, and that’s an involved process. But everybody understands that trying to change something radically, unless both sides start from the premise that they want to, is much more problematic in terms of getting an agreement done than not.”
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Fehr has risen to his position and rebuilt the union from scratch. He joined the NHLPA as an unpaid advisor two years ago. He was supposed to help with the union’s constitution. Not only did he help the players rewrite that, but he helped them form the criteria for a new executive director, helped with their search for the new executive director and ended up becoming the new executive director himself.
It was almost exactly a year ago – on Sept. 11, 2010 – that the NHLPA announced its executive board had accepted the search committee’s recommendation of his hiring. But it wasn’t until Dec. 18 that the union announced the players had voted overwhelmingly in favor of him. Fehr had gone on a fall tour to meet with players team by team. After everything that had happened in the union, Fehr had to make sure he had a mandate from the membership – to glue together the organization, to ensure his effectiveness as a leader.
Talk to players, agents and union officials, and they all say the same thing: Fehr’s resume speaks for itself, and he’s smart. He led the baseball players for more than a quarter of a century. He is a giant of sports labor law.
“We didn’t have much direction,” Tampa Bay Lightning star Martin St. Louis(notes) said. “Now with Don, I feel he brought a little soothing effect. ‘OK, we’ve got somebody who’s going to guide us, that’s been through it.’ “
Talk to Fehr, though, and he says his reputation both helps and hurts. He stresses that he works for the players, and he has made an effort to get that across to them. When he started in baseball, he was 29 – a contemporary of the players, almost one of them. Now he’s in his early 60s. His hair is gray. He speaks like a lawyer and can be intellectually intimidating. “They’ve got to see that I’m not just some Dutch uncle that’s telling them how to live their lives,” he said.
Fehr is a jeans guy. He sometimes sits on a chair backward when he talks. When he met with teams in the fall, he met them in restaurants, not conference rooms, so the atmosphere would be comfortable. He wants to get to know the players; he wants them to get to know him.
“He can be laid-back,” the New York Islanders’ John Tavares(notes) said. “It’s just like you’re sitting for lunch and having a conversation. You can joke around a little bit. But when he talks, you’re really intrigued. He really intrigues you, and you can really see that he knows what he’s talking about and he understands that part of the game and this side of the business.”
Said agent Ian Pulver, who was an NHLPA lawyer from 1990 to 2006: “I guess the most important thing is that his style in baseball, his style here is, players first. He absolutely understands who he works for, who he’s accountable to, and it’s not the owners, the media, the fans, the agents. Whether you are a fourth-liner or a first-liner, they’re all the same, and they’re part of a group, and that’s who he’s accountable to.”
That group is largely new to how a union operates – or at least to how it should operate. Roughly half the players were in the NHL during the 2004-05 lockout, when the union lost a season and the argument; the rest entered the league in the wake of the lockout, when the union was weak and dysfunctional.
Hockey also has a culture in which players take pride in focusing on the game itself, not outside issues. It has players from several different countries – with different backgrounds and native languages – and a growing number of young players who might be uncomfortable speaking up even if they are already stars.
Take Taylor Hall(notes). The Edmonton Oilers drafted him first overall last year, and he had a strong rookie season. But he’s only 19. When the NHLPA held regional meetings in more than a dozen cities across North America and Europe this summer, he declined an invitation to one in Toronto.
“It’s about a three-hour drive from my house,” Hall said. “I was going to go, but I’m still pretty young. I don’t know if that’s really my place to be changing rules in the league. … When I’m a little bit older, then I can have my say for sure.”
No matter the age of his audience, Fehr has gone back to basics with the players. You might call it Union 101. “I compare it to a college class,” said St. Louis, who went to the University of Vermont. Fehr would compare it to a lab instead of a lecture. He said he kept the groups to about 13 or 14 players at the regional meetings so there would be give and take.
“You need to draw people out,” Fehr said. “You’ve got to make them feel a part of it if you can, and you’ve got to make sure they understand something that I think a lot of players in this organization – especially with the younger ones, who came in after the lockout – didn’t really understand, which is who works for whom and what the organization does and how central it is.”
When players enter the NHL, they’re thrilled to be there. Their concern is figuring out what the rules are – how the draft works, what kind of contract they can sign and so on. Rarely do they worry about why the rules are the way they are or how they are written.
“These rules did not arise by an act of the U.S. Congress or the Canadian parliament or an international treaty or the IOC handing something down or any of these other things,” Fehr said. “There’s no hockey god out there who says, ‘This is the way it is.’ This is all negotiated.”
What goes into determining a player’s pay? Fehr explains the factors to the players: The first two are independent of the system – the type of player he is, his propensity for injuries. The third matters only in exceptional cases – how much revenue he directly generates for the team. Finally, there is leverage – his rights and constraints.
“And that’s all bargained,” Fehr said. “That’s where the difference is, and that’s why it’s important. You try to basically talk that through. You talk about how the whole system meshes. You can’t in professional team sports, for example, meaningfully talk about a salary structure unless you talk about revenue sharing. It doesn’t matter.” He linked his fingers together and added: “They go together like this.”
Fehr gives examples to illustrate the issues. Take goaltender Antti Niemi(notes). He wins the Stanley Cup with the Chicago Blackhawks in 2010, but the ‘Hawks are up against the salary cap and walk away from his arbitration award. As Fehr put it, “he’s out the door before the condensation dries on the Cup.”
“There’s something that needs to be examined there,” Fehr said. “So you bring it down to cases, because it’s always easier for people to understand the impact of the broad-scale provisions when you bring it down to an individual situation. Players identify with one another, and they can see themselves, just like anybody else can, in those kinds of situations.”
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The NHLPA won’t be ready for bargaining for a little while yet. Fehr has been studying the economics of hockey in detail – how the CBA actually works, how it affects players, how revenue is generated – and said he still has “a ways to go on that.” He has been rebuilding the staff, hiring former NHLer Mathieu Schneider(notes) as an advisor and multiple lawyers. The NHLPA announced just Wednesday the hiring of general counsel Don Zavelo, a 30-year veteran of the National Labor Relations Board in New York. Zavelo, who will participate in bargaining, won’t start until mid-October at the union’s office in Toronto.
“Then you have to go through a process, which we’re halfway done with, of rebuilding the guts of the operation,” Fehr said. “What I mean by that is, what happens when an organization gets broken is, if you have good people that care about their jobs, who care about the players – and in the main, the organization does and always did – then they sort of do their own jobs, but in large part they do it mostly independently of what other people are doing or overarching or long-term coordinated goals or things like that. You have to bring it back in.”
In other words, Fehr has to get everyone on the same page. The players and staff all have to understand what a union is and what it does. Then they have to understand the specifics of the situation. Then the staff has to present the players with options, and only then can the players set their course for bargaining. That will start to crystallize as Fehr makes another team-by-team tour this fall.
Fehr always declines to get into specifics and cautions against extrapolating too much from the past. “It doesn’t mean that things which happened before don’t have an impact,” Fehr said. “It doesn’t mean that things that happen in other industries don’t have an impact. But every negotiation stands on its own, and therefore I think the ability to make predictions based on prior experience or other experience is just not very good, and yet there’s a tendency for everybody to do that.”
That said, based on Fehr’s experience in baseball and some of his comments, it would make sense if the players propose some type of luxury tax and increased revenue sharing, freeing rich teams to spend as much as they want while supporting poor teams. Like MLB teams, NHL teams generate the vast majority of their revenue locally, but NHL teams do it to an even greater degree. The key would be striking the right balance to generate revenue across the board – not taking so much from the rich that it discourages investment, not giving so much to the poor that it encourages standing pat.
It would be interesting to see how the owners would respond to that. Does Daly think the league’s revenue-sharing system has worked in this CBA? Would the league consider a system that did not involve a hard cap?
“I think that by and large, the revenue-sharing system that was incorporated into our current CBA has operated as it was intended to operate,” Daly wrote in an email. “That doesn’t mean it can’t be modified or improved in our upcoming negotiations, and we have discussed that with the clubs. I think it would be premature (and likely also inappropriate) to comment specifically on items that I expect will or won’t be the subject of negotiation at the table – once we get to the table. As you know, those discussions haven’t begun yet.”
We’ll find out in a few months.
“The economy of our game, we’ve grown it from 2.1 to 3 billion dollars,” St. Louis said. “We’ve done a great job. But you know, where do we go from there? How do we manage that growth? I think that’s what’s on our mind, and I always feel it’s about deadlines, so we’ll see what happens.”
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