Good afternoon, everyone. I’m here just to report on the recently concluded Board of Governors meeting. The Board met for two hours. As I predicted to those of you who met with me yesterday, there really is no news to report.
We gave the owners a complete and thorough update of everything that’s transpired to date. We’ve reviewed all of the proposals, counterproposals and discussions. The Board had very little discussion, asked a couple of questions, and there was a complete show of support both for what we’ve been doing in bargaining, how the negotiations have been conducted, the positions we’ve taken, and the fact that, as we’ve been saying — including to the union as far back as November — we’re not prepared to open another season until we have a new Collective Bargaining Agreement.
So that is the update I have for you.
I do want to clarify something from yesterday’s media availability. Some of you have been suggesting that we gave the union a take-it or leave-it proposal. That is absolutely not true.
What we said was the proposal that we made and the various things that we were prepared to do to try to avoid the damage to the business that is occurring and will continue to occur would not be on the table because of the damage, and those proposals no longer make any sense after the expiration of the Collective Bargaining Agreement. It wasn’t a take-it-or-leave-it at all. It was, again, an invitation to try to continue negotiations in a timely fashion.
Interestingly enough, the proposals that we have received from the Players’ Association have been couched in identical terms, namely that their proposal should be considered off the table once the Collective Bargaining Agreement expires.
To the extent people were suggesting we gave an ultimatum or take-it-or-leave-it, we didn’t. What we did was perfectly consistent with what the negotiations have been on both sides.
With that, I’d be happy to take questions.
Was there any discussion whatsoever about the timeline that you’re working on right now, what happens as of Saturday night?
There’s no change in the timeline. The Board was given a thorough, soup?to?nuts, everything that’s transpired in these negotiations. The conclusion remains, as it has been our position from the outset, we need a new Collective Bargaining Agreement to move forward with the season.
Today a number of players, Sidney Crosby among them, say they feel like the League has been using a potential lockout as a negotiating tactic. How do you react to that?
I’m not sure I understand it. That is a bit of a non sequitur because the fact of the matter is we have been clear that the Collective Bargaining Agreement, upon its expiration, needs to have a successor agreement for us to move forward because the league is not in a position, not willing to move forward with another season, under the status quo — which is the Collective Bargaining Agreement that is expiring.
One thing we have heard from the players is there’s nothing in any of the offers that they can grasp onto that is deemed as anything other than a retrenchment from where they are now. How would you respond to that? Do you think that has been an obstacle in negotiations?Well, again, I’m not exactly sure that I understand the punch line of it being an obstacle in the negotiations, to quote them or quote you.
The fact is we believe 57% of HRR is too much. There are lots of reasons for that. At least – as we have discussed previously – two other leagues, the NFL and NBA, their players have recognized in these economic times there was a need to retrench. We’re trying to have a negotiation over that. But in terms of getting your arms around it, and we discussed this yesterday, under our most recent proposal, player share gets reduced in the first year in the 9% range, second year in the 7% range, third year in the 4% range. These are amounts out of escrow, not rollback, that are perfectly consistent with what the players have experienced during the seven years of this Collective Bargaining Agreement when there has been an escrow reduction to their contracts five out of seven times, once for as much as 12%.
Frankly, as I think I told you yesterday, if you used the Players’ Association’s projections of revenues going forward, the one projection that they’ve been using in their proposal, the impact in terms of reducing player share is 7.1% in the first year, 4% in the second year, and in the third year we’re all caught up and we move forward.
In terms of what it all means if you’re trying to get your arms around it, even a brief lockout will cost more in terms of lost salary and wages than what we’re proposing to do to make a deal we think we need to make.
What, in your offer, would you deem is attractive to them? Going back to your original offer, it was a rollback, but also tightening up of contract rules and language. What I’m hearing from them is they don’t see anything that is a trade-off, it’s all something they’d have to concede.
We’ve had seven years of incredible competitive balance. Twenty-nine clubs have made the playoffs. We have had seven different Stanley Cup champions. The game on the ice has never been better. That’s a function of this system.
The system, as originally negotiated, in our view, needs some adjustments. If it turned out to be too rich a deal for the first seven years, we lived with it, but I’m not going to apologize for saying, ‘You know what? We need to adjust it.’
Also, one other point, I think it gets overlooked: When we agreed to a percentage of HRR for the players, we’re paying out that amount of money. The rules that we’re looking to correct relate to the allocation.
For example, if you compare what the Group Threes as a (free-agent) group got eight years ago, compared to the Group Twos, that amount of money has dropped by 12%. What we’re focused on is, what is the right allocation. We’re not looking to necessarily save money; we’re looking to make sure the system is working the way it was intended.
The lockout will happen Saturday night at 11:59?
Unless we have a deal.
Eight years ago, three months went by between the lockout commencing and the next real negotiating between the two sides. What’s your sense now what the timeline will be like?I’m not really sure. We have been telling the Players’ Association for more than a year that we are ready, willing and able to meet any time, anyplace for as long as they want.
The tenor in terms of scheduling and frequency of these negotiations has been dictated by the Players’ Association. We’ll continue, within reason, to let them do that. We will meet, as I said, any time and anyplace. If they choose not to have any reason to get together with us, we’ll have to accept that.
As we demonstrated yesterday, when you get into a negotiation, it’s good to be able to react quickly. We got a proposal, we understood it. We understood that it represented absolutely no movement of any significant nature. We decided it was time to craft another proposal, which we did in about an hour.
If you’re dedicated to the negotiating process, you can move this along quickly. If for whatever reason you’re not interested in making a deal, you drag it out.
Are the governors permitted to talk for themselves on their view of this Collective Bargaining?
We have By-Law 17.17 which doesn’t enable anybody to speak on this subject except me or Bill Daly. We do that because we are the most able to address these issues. Frankly, in this era of digital media, we will be responding to stories non?stop, most of which will not be accurate or will be out of context, and we’re much more comfortable, as we’ve been throughout this process, taking a low?key approach to the public relations aspect of this. You know we haven’t been out there campaigning or hammering or doing whatever. We think the negotiations have to take place across the table between the parties directly.
You said you want to have more control over the allocation, who gets what, how the funds are allocated to the players. Which group of players?
I think you’re mischaracterizing it. My point is, however we ultimately negotiate the player contracting rules, it doesn’t change ultimately, as it relates to that, how much is paid out in a given year because that’s a function of the percentage we agreed to.
Was there any vote by the Board today?
Actually, it’s interesting you should raise that. When we were all done, I asked for a show of hands as to whether or not the room was supportive of how we had been approaching negotiations: the positions we took, what we were doing, the fact that we ?- and I didn’t need additional authority for this -? but that we were not going to proceed without a new Collective Bargaining Agreement. When I asked for a show of hands, one of the clubs asked for a formal motion, which was made, seconded. A vote was taken and it was unanimous.
Will you contact and try to engage again before Saturday night?
I don’t remember how we left it, as to whether or not he said he was going to call. Actually, we made the last offer. I guess, other than what we may be reading in the blogosphere, Twitter?sphere, what have you, we haven’t gotten a formal response to our proposal. I’m hoping we get one and I’m hoping it is one that recognizes we made yet another meaningful move and we are trying to engage in a negotiation.
Yesterday you talked about your offer in terms of getting them to negotiate. You talked about their offer as not being what you wanted. Can you explain why you can’t look at their offer and start negotiating off that? Today we sort of understand more fully at least it’s a reduction.It’s only a reduction potentially in percentage moving forward. It’s not a reduction in real dollars. In fact, it guarantees future dollars increasing.
When they talk about percentages, and I don’t want to be too specific because you know I don’t like to negotiate publicly, the percentages that they’re referring to are assumptions and speculation based on their projections of league growth as against a guarantee — which is a fundamental change from the system we have now, in dollars as opposed to percentage: a fundamental change in that regard.
So they’re asking for a guarantee of dollars. They’re giving you percentages that they think it might be. They use, as we discussed yesterday, a 7.1% assumption rate in terms of the growth of revenues, which far exceeds what is realistic.
As far as getting to a deal goes, is it harder to bridge the gap on those percentages or is it harder on the revenue?sharing issue at this point?
The consistent offer that they made, basically the same offer they’ve made three times in a row, is so complex and so -? I want to choose the right word – has so many machinations, that’s why yesterday we decided to simplify it, keep it within the structure we have, go to a straight percentage. We hoped that that would cause everybody to understand better where we were and cause us to both engage in a more simplified fashion.
In other words, there’s been a lot of discussion back and forth about ‘not talking the same language.’ We tried to simplify the language.
The players seem intent on doing the best they can to hold on to what they have, certainly in Year One, probably Year Two of whatever new deal. You want to reset right away to a new economic structure. Given that they seem willing to give up on the percentages later in the contract, isn’t that kind of a win for you? How different are your projections for league growth from theirs?
Enough that it makes a difference. And their offers are rather insignificant when you evaluate them in terms of both the percentages in realistic growth assumptions and in actual dollars.
Again, they haven’t budged, particularly on the first three years. What we have tried to do in our offers was reach to them in a way that doesn’t have a rollback and that gives them the possibility of escrow in line with what they’ve been used to under this agreement.
As I’ve said before: five of the seven years, they’ve had escrow give?backs as much as 12%. We tried to stay within that framework and, in fact, be less than that framework.
When you spoke to us early June, did you have any expectation at that time for September 15th? Has it changed, your view, from then to now?
That’s really an interesting question because I haven’t been asked it before, so let me think about it.
We went to the union last summer, a year ago, and said, ‘We’re ready to begin negotiations.’ We were told, ‘We’re not ready. All-Star.’ All-Star we were told, ‘We’re not ready. Playoffs.’ Playoffs we were told, ‘No, Stanley Cup Final.’
We actually met, Bill and I, with Steve and Don on June 4th before Game 3 to give them a sense of where we thought we needed to go. Again, they said they weren’t prepared to meet until June 29th.
Looking back in hindsight, it looks like there was no urgency on the part of the Players’ Association to engage or get anything done. What’s happened over the summer seems to be reinforcing that. I can’t and I won’t speculate as to why that might be their intention, but it is what it is.
If you look at the record, you look at it in hindsight, I think it’s crystal clear.
It seems like what you’re saying is you’re comfortable with the cash payments that are going out at the level they are at this point.
No, no, we’re looking to reduce them.
Not just in relation to the overall revenue?
I’m not sure I understand the question. What that translates to, in dollars and cents, is more than we’re prepared to pay out. This goes back to the last question, as well. You know, the Players’ Association has known since November that we weren’t going to play without a new deal, and they’ve repeatedly offered to play another year under the same terms and conditions. This is the same union that had the option to and extended the Collective Bargaining Agreement for the ’11 and ’12 season.
It’s clear there’s a comfort level they have with the current Collective Bargaining Agreement, and I guess there’s some notion that delaying it gives them more hope that they’re going to hold onto it another year.
That’s not something we’re comfortable with. I think we’ve been clear; that’s no surprise to anybody – certainly not the Players’ Association.
Obviously there was a press conference earlier this afternoon with Don Fehr. He said the owners’ proposal is less money and fewer rights. What is your assessment?
I didn’t hear his press conference. I was in a Board meeting. I don’t think it’s really constructive for me to comment on somebody else’s comment that I didn’t hear myself. If that’s what he said, that’s what he said. Obviously we’re going to disagree on lots of things.
Why would it be so hard for this upcoming year to arrive at a figure that would ensure players will get paid out in full, you wouldn’t almost guarantee losing money to escrow?
Because that would result, in all probability, in us paying out more than we’re prepared to.
It’s an amount you paid already. Presumably revenues are going to grow alongside.
That would mitigate the impact of what we’re seeking to accomplish. There seems to be this notion that because we agreed to 54 escalating to 57 seven years ago, that’s a perpetual entitlement. There’s a reason this Collective Bargaining Agreement had a term. The term was originally six years. The players could have terminated it after four. They chose not to. The agreement could have ended after six, before the ’11/’12 season. They chose to extend it by another year.
That doesn’t mean that the league has to be prepared to continue to do the same thing. We honored what we were obligated to do. I don’t expect any awards for that. That was our obligation both legally and morally. That doesn’t mean we have any responsibility to do that going forward.
Other than the contracts having been signed. We can argue about the math, but it would seem you enter into a situation next year where a lot of those contracts would be reduced. When you sign a contract, you’re morally obligated to pay what it says.
Except for the system that we agreed to contemplated escrow – specifically provided that contract amounts could be reduced – and the SPC (Standard Player Contract) exists by virtue of the Collective Bargaining Agreement. While we’re not seeking a 24% rollback or anything close to it, that’s hardly unprecedented based upon what the union proposed. That was a union proposal eight years ago to do the rollback. They did that in November or December if you check the history on that.
The reason why the league is not prepared to, as you say, pay out the 57% anymore, is that because there are clubs that are suffering, clubs that are losing money?
I’m not going to get into a public economic debate. That will cause all of us to get a headache. We believe as a league we are paying out too much money.
Why is it unrealistic for the union to project the continued annual growth rate you’ve experienced the last seven years?
The numbers they’re using are inflated. 7.1 includes the increase in the Canadian dollar, it includes one?time special events such as the new United States television contract with NBC, and the move of Atlanta to Winnipeg, and it includes what we think is an unrealistic base year.
Frankly, if they’re prepared to use the 7.1%, they really believe it, then the offer we made should certainly be very palatable to the players because giving up possibly an escrow or players’ share reduction, let me be more accurate, of 7.1%, then about 4% over two years, when compared to the losses that would be sustained in a work stoppage, it’s not even a close debate.
As you mentioned yesterday, the longer this goes, some of the elements you offered yesterday may not be on the table. On the flipside, from the side of the Players’ Association, so far they’ve been negotiating within the general context of a cap system. They’ve stayed within the system in their offers. Is there not a fear perhaps that if this goes long, that’s something they come after as well?
Are you asking me if they put the cap back on the table? That certainly wouldn’t be a positive development in these negotiations. The league and the players gave up an entire season to get a system that, as I mentioned before, has given unprecedented competitive balance with 29 teams making the playoffs in the last seven years, seven different Stanley Cup champions. It’s enabled us to grow revenues from $2.1 to $3.3 billion. Not only would it not be constructive, I think it would defy logic as to why somebody would want to take that kind of system off the table.
It’s potentially the second lockout, the last time was a full year long. What do you say to the fan who is possibly facing missing another big chunk of hockey?
Listen, nobody wants to make a deal and play hockey more than I do, okay? This (hockey) is what I do. This is what my life is about in terms of how I spend most of my waking hours.
This is really hard. So you only get involved in this situation when you understand what the issues are and you know you’re doing the right thing for the long?term ability of our game and our sport.
It’s very hard and I feel terrible about it.
As long as the players insist on not taking a tangible reduction from $1.873 billion in player salaries, as long as the National Hockey League looks for a tangible decrease in that number, how do we solve this?You know, that’s a really good question, but it goes a lot deeper. If you look at the players’ proposal, whatever they put across the table three times, there’s really no change in it in any material way, particularly in the first three years.
We’ve moved fairly dramatically in an attempt to engage and get a negotiation going, and we’ve been rebuffed at every turn. I know there’s a lot of spinning going on, characterization, mis-characterization. That’s all part of what goes on in this process. But if you look at the numbers, we’ve made very dramatic movement, and the response has been nothing.
You cited the 50% with the NBA and the NFL. Besides those two examples, can you explain why 57% is an inappropriate share for the players?
Because we believe 43% to the clubs and the league to pay all the expenses is not a fair balance. We believe as a league we’re paying out too much.
My point is, and I didn’t refer to the 50%, I referred to the fact that the players in two other leagues recognized that it was not inappropriate or unfair to reduce what they were getting. That’s in a challenging, recent ?- in terms of those negotiations -? economic climate.
Just as they talk about your initial offer, why are we talking about 57% when what they have on the table is 52%?
It’s not. If you fully understand the proposal it’s not 52 or anything close to it. That number, and based on how they put together the offer, you have to look at the dollars they want guaranteed. The dollars are an actual increase. They’re projecting that down the road, at 7% plus revenue growth, which is a very high assumption, that you might get the 52%.
Their proposal is not a percent proposal, it’s a guaranteed dollar proposal, which is very different. I think, for those of you who are getting lost in the numbers, we are happy to respond to your questions and show you in specifics what we’re talking about. But they did not make a percentage-of-growth offer, which is why yesterday we decided it was time to simplify the language, stop the games playing, make it clear. This is about the percentage under the current system.
Is paying players less enough to get the balance that you’re looking for and basically solve the problems you have identified in your industry?
We have discovered over the last seven years there are things about this system that haven’t worked as well as we anticipated. We believe, with the adjustments that we think are appropriate, the league as a whole and our clubs will be healthy and stable and that we can continue to grow the game. That will, over time, make sure that the players continue to grow their salaries in a fair way. We haven’t done a bad job of growing revenues over the last years. The average player’s salary has gone $1.450 million to $2.550 million in seven years. There’s so much revisionist history relative to what happened eight years ago in terms of either players not being unified — they were completely unified; that’s how we lost it (the season) – that somehow they got slammed in the negotiations last time. They didn’t. We made at the time what we thought was a fair deal. It actually turned out to be more fair than perhaps it should have (been).
If you don’t receive a counterproposal from the National Hockey League PA in the next hour, can you still go back and negotiate with them?We haven’t gotten a response on our proposal. Like I said, we’re available 24/7. We spent last weekend in New York waiting for phone calls that never came, Bill and I. Like I say, the union has been dictating the pacing and scheduling, the way, from a timing standpoint, these negotiations have been going.
The players said they requested or asked the league if there were costs other than player costs that the National Hockey League would consider reducing. How would you respond to that or how did you?
We’ve done a very good job of growing revenues, particularly at the top line, so that HRR has increased. I don’t think it makes sense to be putting that limitation on how the clubs run their business.
A lot of the increases and costs over the last seven years have related to things that we’ve done with respect to the players. Whether or not it’s trainers, massage therapists, coaches, the fact that jet fuel has increased in the last five years 175% for the chartered jets that we use to move the players around.
You know, the 43% that we’ve been keeping compared to the 57%, those costs have increased dramatically, but our clubs have been dealing with that and we’ve been growing revenues.
I don’t think it’s appropriate for us to be limiting such other costs. By the way, there are things I won’t go into detail, that the players have asked for, that would result in increased cost, separate and apart from players’ share of revenues for salaries.
You mentioned a couple of times that you’ve moved dramatically. Their response to that is that you’re moving dramatically off an initial offer that they say was preposterous. The numbers they threw out, it was the equivalent of them asking for 71%, now moving to 68%. Could you respond to that?
Yes, I think I will as follows.
One, like any Collective Bargaining situation, it’s an invitation to negotiate.
Two, I think if you check on this, I could be a little off, the NBA’s first offer was 40.5%. The NFL coming off of 60%; I think their first offer was 45%.
We were clearly within the range of what other unions have bargained against and ultimately resolved.
The fact of the matter is if you think 43% is unfair, remember that we have been getting 43% to operate the league and pay all of the expenses.
As I started to say, hope to see you all soon. I hope it’s with better news the next time. Thank you for coming.