Thursday, November 29, 2012

The NHL lockout, a perfect example of what is wrong with America

Well,  I'm guessing that the NHL lockout currently underway is not something on most radars here.  I know some of you know of this strange game played on ice, but in case you don't, there is still something useful to be observed in studying what is going on. In some ways, this is a capitalist's dream. IE, the owners of the team who are sort of the owners of the capital (if you disregard fans) have locked out the players and told them they can not play until they, the players, accept less money and take a pay cut, even though the owners have signed contracts with the players to the contrary. Interestingly enough, this happened just a few short years ago in the 2004-2005 season. Without a doubt, the players were making too money relative to the revenue that was coming in. What the owners wanted was a salary cap that blocked players from earning more then a certain percentage of the revenue, regardless of what their contracts stated. The owners wanted this cap because they wanted, "cost certainty". Sound familiar?

Coming out of the lockout, the owners got every demand they wanted, the players lost an entire year of salary and the game resumed. Even though the players "lost", something interesting happened. Revenues started to grow and so did players salaries. In part, because players salaries were tied to revenues, they automatically started to make more money. The owners had their cost certainty, because of the cap, but the cap cut both ways and owners found themselves getting capped at a time when revenues were climbing. Additionally, after the owners created a hard cap to specifically block themselves from overpaying individual players, the owners promptly found a way to structure the pay deals to circumvent the cap. It's not easy to explain, but in a nutshell, if you pay a player 70 million dollars over ten years, the yearly cap hit is 7 million dollars. However, if you decide to pay the player 50 million over the first three years and 20 million over the remaining seven, that is your prerogative and you cap hit remains 7 million dollars. Predictably, in just a few short years, salaries AGAIN skyrocketed and many teams are again financially struggling.

As a separate but important side issue, the NHL is comprised of 30 teams throughout the US and Canada. In Canada, where hockey is the national sport, you can put steaming dogshit on the ice and the arena will be full. These teams will make money no matter how bad they suck. Because of this, these "rich" teams are incensed that they are capped from spending as much money as they want to more or less buy a Stanley Cup. Additionally, it frosts their balls to no end that they are forced to subsidize smaller market teams by sharing revenue. In short, they want small teams to just fail and go away so that they can control the game as they see fit and to their advantage. Again, sound familiar?
To the players, well, in principle, they have a pretty solid beef. They had the owners demands shoved down their throats in the last lockout and they actually lost money through contract clawbacks. However, they also received a ridiculous share of the new revenue split, 57%. While it's not the players fault the owners could not contain themselves, the reality is that this revenue split does not remotely reflect what is reasonable compared the NHL's popularity and say the NFL.

At this point, the players are going to lose again, and truth be told, they should. But, what you hear from the players is akin to them saying that going from making 5 million a year to making 4 million a year is going to throw them into poverty. And here again, sound familiar? Ultimately, it is the fans who pay their salaries and the owners are just a pass through. To the fan, like me, it seems ludicrous that a single player can make 14 million a year while the rank and file grind it out year after year for 2.5 mildo or less. Just as in the real world, the best players and the most financially successful teams believe the universe revolves around them and that the majority of players and teams in smaller markets (and of course the fans) should just accept they exist for the benefit of a select few. Coming out of the last lockout, the word parity was bandied about quite a bit. If there is parity in the league, then there is real competition on the ice. Of course, the teams with the most money do not want this at all and could give a damn about a smaller market team that can't afford to pay players 10 million dollars a year.

Comparing to the real world, I see the same exact paradigm. Through allowing our legislative process to be sold to the highest bidder, we have slanted all rules solidly in favor of those with wealth, at the direct expense of those in the middle class. The middle class, of course, accepted a lifestyle that was clearly not sustainable and there is no choice but for them to accept a pull back. Still, what needs to happen in both the NHL and the real world is an acknowledgement of the need to equitably distribute revenue in a way that keeps the entire system going. Right now, the NHL owners are offering the players a 50-50 split in revenue. In the real world the bottom 50% of earners take in about 13.5% of all income. Yes, taxes are an issue here and undoubtedly someone is going to latch on to that like stink on shit and disregard the entirety of what I'm saying here, you can't fix stupid. Be that as it may, there seems to be a lot to be learned from watching the greed and mismanagement of the NHL. Sorry for the long post and thanks for reading if you stuck with it.

5 comments:

  1. Nice post, Max. Remember, you invited me to jump on the 'Hawks bandwagon. You gotta be jonesing big time ...

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  2. Thank you mistress of Funk for indulging that long post. Surprisingly, I am not missing it. Or maybe a better way to put it is that I have found enough hockey to watch that I am happy to ignore their punk fight. Since we moved withinVegas this year, I finally got Direct TV and there is an enormous amount of college hockey which is actually pretty in to watch. But, here is Vegas we also have an ECHL team, which is two levels below the NHL. I just went tonight and the home team won 6-5 in overtime. It's kinda fun to support minor league hockey and feel like I'm sticking it to the man by not spending a dime on the NHL this year. I hope they do cancel the season now so I don't have to face the oral dilemma o whether to buy the center ice package and contribute to their deviancy LOL!

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  3. Nice analysis Max. While the talent to play the games of any of the top sports leagues in the world are truly limited, labor to manufacture and assemble goods is quite ubiquitous. The USA was able to build an unbelievably successful economy after WWII partly due to the values that were developed in the western world up to that point. We also had a patriotic spirit. I believe that a long period of relative peace has been good for the world, but bad for us. We have felt comfortable to go out in the world to develop and utilize talent. We really should have a competitive edge to win this new game, but we need to look at what won the games in the past.

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    1. The problem is the sports is it is no longer a sport played for the love of the game but played for money.

      The owners cannot get enough and the players want more. Much like our society today.

      Union, owner relationships are the same. The only difference is sports the owner is an individual and in business the management is beholden to the owners, the stock and bond holders.

      In Denver we have the best quarterback money can buy. Sacrificed a future quarterback with many good years to come for immediate gratification. The may win a championship may not, in either case I won't turn the TV on to watch then nor cheer them on. I will help them move to another city.

      The immediate gratification thing is just like the USA's citizens today. I want it all and I don't want to pay for it.

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    2. "The immediate gratification thing is just like the USA's citizens today. I want it all and I don't want to pay for it."

      Yeah, that's been a theme I've been pretty obsessed with lately. I probably infer something about the years after WW II that may not be there. IE, I believe there was a societal view that the country was going to take care of those who fought, which was basically the middle class. It is undeniable, however, that the US was truly in a sweet spot to dominate while Germany and Japan rebuilt themselves.

      I'm not a Michael Moore fan, but my wife and I recently watched his propaganda film against Capitalism. While there was much of the film I just rolled my eyes at, he makes the point that after WW II, we basically dictated terms to both Germany and Japan and the way of life they came away with was drastically more socialistic then our way of life. Eventually, they again became very strong, very efficient and quite a few guaranteed benefits for all their citizens. They are also heavily taxed. It's a contrast.

      As for the NHL and America, I believe it comes down making a decision. True middle class living to me means you have insurance and the ability to live in a modest house (not 5k feet for three people) and the ability to put your kids through college. In the NHL, that would mean instead of a select few making 10 million, you see a lot more guys making 1.5-2 million while the top players make no more then 5. That would allow for all 30 teams to stay competitive. In both cases, the top would still live very nicely, but they would not earn an obscene excess that they will never use. Deep down, this is a socialist outlook and until we truly return to a 1930's style desperation, we are not going to see many takers willing to try and recreate the attitude we had after WW II.

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