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09-17-2012, 08:29 PM
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Common Sense True Sharing and a Partnership

I want to start by setting out two things:

(1) I believe that a majority of the NHL teams are either at a breakeven point on net income or are suffering operating losses. This makes sense and must be one of the fundamental real reasons why the NHL owners are locking out the players.

(2) I support neither the NHL owners or the NHL players.
If you accept point (1) above (and forget all of the "words" on both sides) then it makes real common sense why the owners would lock out the players and why at the same time the players (who have no or limited access to such information) are upset with the owners.

Where and how does one move from here:

(1) In order to settle the current situation the owners should consider paying the players a one-time settlement bonus to allow them to not feel or believe that the players alone have to take the burnt of the "adjustments" by having to take an immediate salary roll-back and "return cash". Hence, a one-time bonus not a roll-back. The size of the bonus would be the 9% rollback discussed. A twist for sure, but one that I think the players will accept. While it will put a unpleasant strain on the owners - it does fairly deal with the reality that the owners (to a greater degree than the players) as the "operators of the league" must accept more responsible for getting back to this "imbalanced" financial situation and the operating results of their businesses. While the owners may have difficulty in this given that they have honored their financial commitments completely to the players to-date, it does give a fair reason to now permit the owners to "reset" the league.

(2) The players and the owners should compromise concurrently and agree to a 50% / 50% hockey related revenue (or HRR) share; hence a go-forward roll-back (from the current 43%/57%). New contracts are put in place to reflect this and the settlement in point (1). Coupled with this, the owners and players should agree that revenue sharing will be 50% / 50% but will also be tied to a jointly agreed breakeven or minimum profitability for the bottom 50% of the teams. Hence, if the bottom 50% of the teams are making either net profits or operating income losses then the split has to adjusted in that year up or down (based on independent audits of each team as performed by a jointly assigned independent auditor). It would then be reset to 50% / 50% for the next year with adjustments to follow. Given that profits are the measurements not revenues, the adjustment each year should not be that material. By using the bottom 50% of the teams (based on profitability) then the League can have certainty that it is financially solvent and this should create and maintain League parity, while still allowing the best operators to increase their operating profits. Conversely, if net incomes increase over the breakeven/minimum point for the bottom 50% of teams then the players should receive a predetermined (negotiated now) proforma portion of such increases. Unlike many businesses, this reflects the fact that the players (who are really entertainers) are the product and account for/drive much of the revenues. Hence a simple solution to a rather vague area, that makes the players and the owners true partners as it should make each move towards increasing profits (not just revenues) which is understandably much more important to the owners.

(3) Set contract term limits at no more than seven years (the mid-point between the two sides) and if you pay out big bonuses count them against the Cap. This will end contract manipulations.

(4) Free Agency in seven (7) years, not ten (10) years.

(5) Entry Level Contracts extended to four years.

Finally, get three owners and three players (a dove, hawk and moderate in each group) and let them finalize these terms. While Bettman and Fehr are very capable (and have moved the puck to this place) one needs to remove their personalities now and get real stakeholders involved to move past "positioning" and work towards a "simple deal".

I believe that this offers a simple, workable solution and I hope it finds its hands into the powers to be. I believe it would rekindle goodwill among the players and owners (which we all hope for) and also shows the fans that "men of goodwill" can accomplish anything.


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