Growing Costs Are Sore Issue in NHL

The NHL, which contends its clubs spent 76% of their revenues on player costs and lost nearly $300 million last season, doesn’t have a revenue problem, according to Bill Daly, the league’s chief legal officer.

Daly said the NHL can increase its revenue beyond the 163% growth it enjoyed in the nine years under its current labor agreement.

“What has hamstrung us is that our player costs have grown at a much faster rate, 252%,” he said. “And that’s where you get to the need to tie your revenue growth to your salary growth so you don’t get out of step like that.”

But the players’ association disputes the NHL’s calculations. The Unified Report of Operations the NHL requires of each club -- a list of hockey-related income and expenses that form the basis of the NHL’s figures -- is “unaudited.... It’s garbage in and garbage out,” Ted Saskin, the NHLPA’s director of business affairs, said Wednesday from Toronto.

“There are a number of significant categories missing and a number of teams that understated cable revenues and didn’t report concessions,” Saskin said.

“We’ve made it clear we’re prepared to respond to all their stated concerns. We’re not prepared to negotiate a salary-cap system. We believe in a marketplace, market-driven system.”

As 2004 began, 259 days remained until the Sept. 15 expiration of the labor deal and a resolution appears no closer than after the last substantive talks on Oct. 1. Uncertainty over the timing and nature of the economic picture has affected sales of clubs that are on the market -- including the Mighty Ducks -- and made general managers reluctant to sign free agents last summer for fear they’d limit their flexibility if a salary cap is instituted.

The uncertainty has also chilled negotiations with ABC on a new U.S. over-the-air TV rights agreement, Daly said.

The NHL will get $140 million in the final year of a five-year, $600-million deal that is its most lucrative ever. Ticket prices can’t rise, he said, and most teams occupy new arenas that provide revenues from suites and other sources. But the cost of building an arena in Ottawa was a factor in the Senators’ bankruptcy last year; the Buffalo Sabres also went through bankruptcy. Fixing player costs and plumbing potential income sources such as HDTV are among the NHL’s main objectives.

“Those two bankruptcies and what the players’ association knows about our economics should give them enough information to know it’s not an idle threat. There are franchises who will refuse to continue on if this isn’t fixed in a meaningful way,” Daly told Times reporters and editors Tuesday in Los Angeles. “I would suggest the pendulum has swung too far [toward players] in our sport and has to come back to the middle a little bit....

“The point that makes me lose sleep at night is I don’t understand a position that will force a situation where the NHL doesn’t exist going into the future in the same form it exists now, where there are not as many franchises and there’s not as many jobs. That doesn’t benefit the union leadership, that doesn’t benefit the union’s constituency, and to force us to that situation I don’t think serves anybody’s goals.”

Saskin said the NHL demanded a $31-million hard cap in the Oct. 1 talks. “I think they know we won’t accept that,” Saskin said. “We need to have a negotiating partner.”

No new talks are scheduled, though that could change after the holidays. “I don’t think it matters who starts the dialogue,” Saskin said. “We’ve made it very clear we’re prepared to respond to all their stated concerns. But we’re not prepared to negotiate a salary-cap system. We believe in a marketplace system.”