Another Lockout of the Players

...with no end in sight

The 2012/2013 hockey season is supposed to be starting soon. Instead, the league has locked out the players, suspending play indefinitely. The fans are caught in the middle, again. This was an avoidable situation; the league and players knew that the last agreement was going to expire in September, 2012. Commissioner Gary Bettman announced that the season would be on hold if a new deal was not signed by September 15, 2012. That date came without a deal so the players were locked out.

The economic reality is said to be driving the league's position in the contract negotiations. Finances are tight for many teams, especially those in certain cities. Teams in other cities are doing very well. In fact, the teams with the better finances are subsidizing the weaker teams. This in turn drives the negotiations. The league insists on paying players less money in order to lessen the expenses of the teams. This lets the weaker teams spend less which strengthens them. The stronger teams also spend less money and are stronger too. The stronger teams are then better able to support the weaker ones. This is a very strange way to run a business.

When an organization is in business, each component is expected to pay its own way, generating profit. In some cases, brief periods of financial deficit are tolerated if the component can demonstrate a reasonable expectation that it will generate real profit at some future point. This is not the case with the weaker hockey teams. Instead, they have spent money with barely any hope of being able to cover expenses. The Phoenix Coyotes, for example, have struggled financially ever since the team was moved from Winnipeg, Manitoba some 15 years ago. In 2009, the financial position of the team became so dire that the league took over ownership in order to prevent the collapse of the Coyotes. Clearly, the standard model used by businesses does not apply to the National Hockey League.

A business organization does well when it emphasizes its strong points and divests its weak ones. A restaurant chain, for example, will open more outlets in regions that support the brand and close regional outlets that are failing. The National Hockey League is, instead, bolstering teams that are failing in some cities and ignoring lucrative expansion possibilities elsewhere. The Phoenix Coyotes illustrate the point well. The team has essentially struggled monetarily ever since it moved to Arizona. With less money, the team was hardly able to vie for the more valuable star hockey players. Consequently, they did not win very many games and fan support wavered even more over time. The Winnipeg market was ignored by the league until the 2011/2012 season when a failing team was moved from Florida back to Manitoba. The new Winnipeg Jets did very well in their first year.

Other cities would be very good financial choices for hockey teams. Hamilton, Ontario has a quality facility ready for a National Hockey League team. The population is ready to support a team. Due to the proximity to both Toronto and Buffalo, a new Hamilton team would have natural rivalries from day one. This would be a great way to boost the interest of fans in all three cities. The league, however, continually rejects any thought of establishing a team in Hamilton. Instead, they support teams in Phoenix and other southern American cities. The league's action has been to squeeze the players for money rather than concentrate on generating profit in the most lucrative regions. Not many, if any, successful businesses operate this way.