Replacements & revenue sharing are divisive issues for owners

Sunday, April 24, 2005

When representatives from a group of teams met in Dallas recently to talk about replacement players, Stars president Jim Lites claims the point wasn't to discuss the pros and cons of replacements, but to be prepared if replacements become reality.

Lites told the San Jose Mercury News: "For the purposes of that meeting, the question wasn't, `Should we play with replacement players?' It was, `If the edict comes, what do we do?'

"How much are we going to discount our tickets? Are you going to sell a month at a time? Do you change your price if players come back? How many would have to come back?"

How much focus there is on replacement players in Wednesday's NHL Board of Governors meeting could hinge on what happens in Tuesday's negotiating session between the league and the NHLPA.

If Tuesday's session turns sour or if no progress is made,  then it could be a contentious Board of Governors meeting on Wednesday if the replacement players issue dominates.

The Stars, Los Angeles Kings, San Jose Sharks, St. Louis Blues, Chicago Blackhawks, Minnesota Wild, Columbus Blue Jackets and the league were represented at the recent Dallas meeting.

Lites told the Mercury News that those teams have plenty in common and that's why they were involved in the meeting.

"They were all American teams that are kind of similarly situated,'' Lites told the Mercury News, "not the teams like Detroit that are locks, or the teams that had special needs like Nashville.

"What we may have had in common is we had to work harder to get season-ticket holders in the first place than maybe Detroit and Philadelphia, and we may have to be more sensitive in coming out of this. We all have a million questions."

But others have seen another common theme among those teams. Stars owner Tom Hicks, Kings owner Philip Anschutz and Sharks owner Greg Jamison have been named in some media reports as being three of the owners who have been pushing hard for replacements if there is no agreement with the NHLPA.

"I have no idea where that's come from," Jamison told the Mercury News. "I don't know what's driving that. I'm not aware of any pro or con list anywhere in the league when it comes to replacement players."

Jamison wouldn't say where the Sharks stand on the issue of replacements, but Lites admitted it was a contentious issue.

"There's a big divide, certainly a wide divergence of opinion on whether we should play with replacement players," Lites told the Mercury News.

Last week TSN's Bob McKenzie summed it up it this way:

"We also know there are a large group of owners who want nothing to do with replacement player hockey. They are philosophically, morally and practically opposed to it. A lot of NHL general managers don't want anything to do with it either but they may have to follow orders from their owners if they absolutely have to."

Phoenix Coyotes managing partner Wayne Gretzky said he wouldn't coach replacements, that the Coyotes don't like the idea, but that the team would go along with it if that's the way the league decides to go.

"To go get replacement players is not the right thing to do," Gretzky told the Arizona Republic. "But we're just one of 30 teams, and if the league says that's what it's going to do we can't not go along with it."

The Toronto Maple Leafs are also said to be among the major opponents of replacements and apparently made that known to commissioner Gary Bettman in a meeting late last week. But even Leafs GM John Ferguson has said the team is preparing for the possibility of replacements.

"We are modeling, projecting, doing our homework in that regard, yes," Ferguson said when asked about the issue last week.

But the fact that teams are preparing for the possibility doesn't mean it will be any less of a fight over whether the league should go that route.  There's still a group that believes that if there is no deal the best thing to do is to continue to not play. According to one report, a lawyer for the league will make that argument Wednesday.

Revenue sharing another sticky issue

Even if the negotiations move forward with the NHLPA, there is another potential contentious issue looming for the league -- revenue sharing.

Revenue sharing has always been a tough issue for NHL teams because a vast majority of the money is locally generated.

There is no big TV contract as in other sports. Gate revenue, local broadcast and cable contracts and sponsorships are key. Big market teams, which generate the most money, have been reluctant to ship off their money to low revenue clubs. 

Revenue sharing is also a big issue in the negotiations with the PA and is expected to be a topic of discussion when negotiations resume again Tuesday in New York.

"Of equal importance is a discussion on whether the NHL is prepared to move in the direction of having a real revenue sharing program," NHLPA senior director Ted Saskin told the Canadian Press Monday. "We are certainly looking forward to hearing what they have developed in this area."

There are indications the league may be reversing course on the revenue sharing issue and approaching a model closer to what the NHLPA has been pitching in its offers.

The revenue sharing issue apparently came up last week when commissioner Gary Bettman met with the Toronto Maple Leafs. Bettman apparently is asking the Leafs and other high revenue teams to get on board with a plan that would see them share more of their locally generated money with lower revenue clubs.

That's a reversal in policy for the league, which had been advocating a plan that would have seen the majority of the revenue sharing pool generated from the playoffs.

Some have seen the playoff revenue sharing pool plan as a tradeoff for big revenue teams buying into a salary cap system.

The theory goes like this:

Those big revenue teams, most of which had high payrolls and consistently made the playoffs, would see their spending advantage disappear and their chances of making the playoffs fall closer in line with the rest of the league.

As a result, their chances of making the post-season and generating playoff revenue would diminish. For those teams that playoff revenue was at times the difference between a profit and a loss.

Under the new system -- with a lower payroll and lower chances of consistently making the playoffs -- their regular season revenue would be more important, and with revenues sharing being funded through playoff money those teams could keep that important regular season revenue.

But now, in an attempt to get a deal with the NHLPA, the league may be moving towards a plan less dependent on playoff money and more dependent on a system where those top revenue teams would move some of their regular season revenue to lower revenue clubs. That could meet some resistance.

The reason the league is tossing out the idea of expanding the playoffs to 20 teams from 16 could be the league's way of tossing a bone to those high revenue clubs. More playoff teams would increase the chances of big revenue teams generating post-season revenue and making up what they lost in revenue sharing. 

End of theory.

When it comes to revenue sharing, the NHL has always lagged far behind the other major team sports. What the NHLPA has been proposing and what the league may be moving towards would be a big change. And change never comes easy.