Article

July 2013

The hockey lockout of 2012–2013

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Bob Goodenow, a Detroit lawyer and a player agent, took over the union when Eagleson departed in 1992. Goodenow led the union in its first work stoppage, a 10-day strike at the end of the 1992 season. Following this strike, the NHL hired Gary Bettman as commissioner.7 Bettman, also a lawyer, had previously been an executive at the NBA, serving under commissioner David Stern. While at the NBA, Bettman designed and implemented the first modern-day salary cap in team sports.

Soon after becoming NHL commissioner, Bettman had a collective bargaining conflict with league referees. When the referees struck for 17 days, he hired replacement officials and negotiated an agreement favorable to the league. With this victory behind him, Bettman entered negotiations with the players in 1994, determined to limit their salaries with a surcharge similar to the luxury tax in MLB, which penalizes teams with outsized payrolls.

In January 1995, following a 102-day lockout, an eleventh-hour settlement was reached. Only 48 regular-season games were played, the same number as was to be played in the 2012–2013 season. Although the agreement was hailed as a clear victory for the owners, they continued to pay big salaries to players. Consequently, average player salaries rose threefold, from $558,000 in 1993–1994 to $1,830,000 in 2003–2004.8 Player salaries outstripped revenue growth, causing the league to claim in 2004 that it lost $1.8 billion during the previous decade.9

In the 2004 negotiations, the league was committed to the idea of “cost certainty,” which would be provided by a salary cap. The union was adamantly opposed to this notion, insisting that it wanted salaries based on market conditions and that it would never agree to cap team payrolls. Goodenow and Bettman did not mix well and engaged in a battle of words in the media. In a last-ditch effort to save the season, the league dropped its demand that salaries not exceed 55 percent of revenue. In response, the union reconsidered its initial position and indicated its willingness to accept a salary cap. However, the parties were far apart on how much the salary cap should be and could not close the gap.

When neither side made further concessions, time ran out. The league canceled the 2004–2005 season, resulting in teams losing an estimated $2 billion in revenues and players giving up about $1 billion in lost salaries.10 One consequence of the lockout was that the NHLPA agreed to a salary cap. When games resumed for the 2005–2006 season, few, if any, observers would have imagined that the league and the union would ever reach the precipice of a lost season again.

New leadership came to the NHLPA in 2005, as Goodenow was replaced as executive director by Ted Saskin, the union’s senior director of business affairs and an active negotiator and media correspondent in 2004–2005. Saskin, however, was fired by the union in 2007 after being accused of spying on players by tapping into their email accounts.11 Saskin’s replacement, former U.S. attorney Paul Kelly, had earlier prosecuted NHLPA executive director Eagleson for embezzlement.12 After less than 2 years on the job, Kelly was fired for being too closely associated with the owners.

Notes

7 For a biography of Bettman, see Jonathon Gatehouse, The instigator: how Gary Bettman remade the league and changed the game forever (Toronto, Viking Canada, 2012; and Chicago, Triumph Books, 2012). See also Michael Farber, “Lord of the lockout,” Sports Illustrated, March 11, 2013, pp. 52–57.

8 NHL data.

9 Stefan Fatsis, “Hockey league locks out players,” Wall Street Journal, September 16, 2004, p. D8.

10 Stefan Fatsis, “NHL calls off its entire season with labor face-off cold as ice,” Wall Street Journal, February 17, 2005, p. B2.

11 “NHL’s union’s Saskin fired,” Los Angeles Times, May 11, 2007, p. D4.

12 Helene Elliott, “NHL’s union has a new man with a plan,” Los Angeles Times, January 26, 2008, p. D6.

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About the Author

Paul D. Staudohar

Paul D. Staudohar is professor emeritus of business administration at California State University, East Bay, in Hayward, California, and a member of the National Academy of Arbitrators.