NHL Lockout: Why the NHLPA Must Give in to Gary Bettman's Demands to Save Season

Alexander SmithCorrespondent IDecember 5, 2012

NEW YORK, NY - DECEMBER 05:  Following the NHL Board of Governors meeting, Commissioner Gary Bettman of the National Hockey League addresses the media at the Westin Times Square on December 5, 2012 in New York City.  (Photo by Bruce Bennett/Getty Images)
Bruce Bennett/Getty Images

The NHL Lockout may soon be coming to a close.  Recent reports reveal there has been positive progress over the last few days and finally both sides seem to be heading in the right direction.  However, all of us hockey fans must still proceed with caution, as Gary Bettman is still at the head of the NHL’s bargaining team.          

Throughout his tenure, specifically during the 2004-05 lockout, Bettman has proven unafraid of going to great lengths to get what he and the owners want. Considering the advantage the league currently holds at the bargaining table, unless the players decide to give in, an end is not really in sight.    

In imposing his hard line collective bargaining tactics continuously on the NHLPA, Bettman has now led the NHL into a third lockout under his watch.  

While these lockouts have angered many of hockey’s most loyal fans and the media, each agreement has led to the overall growth of the sport and greatly benefited the owners—Bettman's bosses.       

For example, since the 2004-05 bargaining agreement, the NHL has seen a noticeable growth in both team values and parity.         

According to Forbes, the average NHL team is now worth $282 million, an 18 percent bump from last year alone, and the Toronto Maple Leafs even became the first team in NHL history to be valued at over one billion dollars.   

To go along with this, 12 different teams have made Stanley Cup appearances in the last seven years, including small market teams like the Pittsburgh Penguins and Carolina Hurricanes.   

These successes have earned Bettman exceedingly favorable reviews from the owners, who are now more inclined than ever to give him free reign to act as harshly as he desires toward the NHLPA.

Adding to Bettman’s strength at the bargaining table is that the league holds a greater amount of strike leverage than the players.    

Professional athletes may play a prominent role in the community, earn millions of dollars and enjoy the luxuries of fame, but the nature of their work places severe limits on their overall earning power.  

The average NHL career is only five to six seasons and over 50 percent of players appear in less than 100 games.  Losing one season for the average NHL player amounts to losing roughly 16 percent of his total earnings from playing hockey and is a far greater loss than an owner simply operating in the red for a year.   

Also, if you look at the situation through the lens of Marshall’s Four Basic Conditions for collective bargaining leverage, it is evident the league holds an advantage.  Published by the 19th century British economist Alfred Marshall, the Four Basic Conditions are as follows:  

1. Irreplaceability of Labor 

2. Elasticity of Product Demand

3. Elasticity of Other Factors of Production

4. Labor’s Share of Total Cost 

The players do hold an advantage because their labor is irreplaceable; however, two of the three other factors point against them (the irreplaceability factor would play a much larger role if there was not the issue of short careers discussed earlier).     

Hockey is subject to fairly elastic product demand. This means as the price of tickets rise, there is a large drop in demand due to the large amount of alternative entertainment options available.  The elasticity of product demand means that the owners have a greater incentive for minimizing cost.  

Second, in the NHL, labor represents a large share of a team’s total cost, which means that for a team to significantly reduce its business cost, it must reduce the amount it is paying its players.     

The last of Marshall’s Four Basic Conditions, “Elasticity of Other Factors of Production” is largely irrelevant in this case because there are no other primary factors of production for an NHL team.        

This evidence shows the grand amount of leverage Bettman and the NHL holds over the NHLPA.  So while the talks of progress are good, unless Donald Fehr and his staff are willing to give into Bettman’s demands for decreasing the players’ share of total revenues and prohibiting the back-loading of contracts, it is hard to see the strike ending soon.     

There are two cards, however, that the NHLPA is trying to play right now to swing the advantage back into their favor.  

The first is to use the media and the fans to pressure the NHL into making a deal.  

Unlike most collective bargaining situations in factories and non-public occupations, NHL players are idols and role models in the community.  Fans identify with their favorite players and teams and now, with the power of the Internet, can make their dismay with the league heard.  

The drawback to this strategy is that no one in the league office answers directly to the fans. 

Gary Bettman can only be removed from his position as commissioner by a 75 percent vote from the league’s owners and thus far, there is no reason to believe the number of owners that oppose him is anywhere close to this.  The only way this strategy could truly work would be if the fans boycotted games once they start to damage teams’ business success.   

The second strategy the NHLPA could employ to swing leverage in their favor is decertification.  Decertification would allow the players in the NHL to file lawsuits against the league for violating anti-trust laws, as an employer cannot lock out nonunion employees, according to the Norris-LaGuardia Act of 1932.  

Once again, though, there are several drawbacks to this plan. Unlike the NBA or the NFL, the NHLPA is actually based in Canada and for a long time has not met many U.S. labor law requirements.  Also, it will be difficult to argue that the NHL is a monopoly when there are leagues all over the world, such as the Kontinental Hockey League and the Russian Major League.  

Unless the NHLPA is able to navigate around the flaws of either of these two plans, it will be necessary for the players to give into the league’s demands in order to save the season.  Whatever ends up happening, it is important to consider the perspectives of both sides. No matter how badly we want this season to be played, it is imperative for the long-term success of the NHL and the players that a fair agreement is reached.