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National Hockey League Labor Dispute (2004)A National Hockey League labour dispute began in 2004 and, as of March 2005, remains unresolved. The NHL and the National Hockey League Players Association have been unable to agree to a new collective bargaining agreement (CBA) which will govern the basic relationship between the NHL's clubs and the players. The current CBA, in effect since 1995 expired on September 15, 2004 (one day after the World Cup of Hockey final in Toronto). When no agreement was reached by then, a lockout commenced. Sporadic negotiations have been unable to resolve the dispute, and on February 16, 2005 the remainder of the 2004-05 NHL season was cancelled. The league is believed to have saved $300 million to sustain itself during the lockout, and the NHLPA is believed to have a substantial strike fund of its own. A showdown over the CBA had been predicted by many hockey analysts for the past few years. Issues The NHL, under Commissioner Gary Bettman is attempting to convince players to accept a salary structure which will guarantee the clubs what the league calls cost certainty. According to an NHL-commissioned report prepared by former Securities and Exchange Commission chairman Arthur Levitt, NHL clubs currently spend about 76 percent of their gross revenues on players' salaries (a figure far higher than those in other North American sports) and collectively lost 273 million dollars in the 2002-03 NHL Season. On July 21, 2004, the league presented the NHLPA with six "concepts" to achieve "cost certainty". These concepts are believed to have ranged from a hard (inflexible) salary cap similar to the one used in the National Football League to a centralized salary negotiation system similar to that used in Major League Soccer. According to Bettman, a luxury tax similar to the one used in Major League Baseball will not satisfy the league's objectives with respect to cost certainty. The NHLPA, under Executive Director Bob Goodenow, currently disputes the league's financial claims. According to the union, "cost certainty" is little more than a euphemism for a salary cap which they had vowed never to accept, but later began to entertain. On August 18, the union rejected each of the six NHL "concepts", claiming they all contained some form of salary cap. The NHLPA would prefer to retain the present "marketplace" system where players individually negotiate contracts with teams. However, the union has proposed a system since October 1, 2003 that includes revenue sharing, a luxury tax, a one-time five percent rollback in players' salaries and reforms to the league's entry-level system. The league rejected this proposal. At a meeting of the two sides' executive committees on September 9, 2004 the NHLPA made another proposal to the league that is believed to be similar to their earlier proposal. The league again rejected the union offer, claiming the union's new proposal to be worse than the offer they rejected in 2003. After that, the negotiations stopped for several months. On December 9, 2004, NHLPA made another proposal still involving a luxury tax but increasing the proposed one-time rollback in players' salaries from 5 to 24 percent. The NHL rejected the offer and countered with a proposal that included what it considered to be cost certainty and modified the union's rollback proposal. That offer was rejected by the union. 11th hour discussions were held on January 19, 2005, without the participation of Bettman, Goodenow, and the negotiators from both sides. The NHL was represented by Executive Vice President Bill Daly and Board of Governors Chairman Harley Hotchkiss, who also co-owns the Calgary Flames, and the NHLPA was represented by President Trevor Linden and Senior Director Ted Saskin. Each side also had a lawyer present. The next day, the same group met again without Hotchkiss, who was not available. After the meeting, Daly said the two sides "still have very strong philosophical differences" but that they would meet again. However, Linden posted a message on the NHLPA's internal website stating that he saw no need for further meetings because the league still refused to compromise on the salary cap issue. Two more meetings with this group (including Hotchkiss) were held on January 26, 2005, and January 27, 2005. New Jersey Devils General Manager and CEO Lou Lamoriello joined the original group of 6 at the request of Bettman. There are conflicting reports on the proposal the league presented, but all say it included a salary cap, which the players refused. Once again, Saskin emerged saying the sides still had "significant philosophical differences". On February 2, 2005, the league, represented only by Bill Daly and outside counsel, presented the union, represented only by Ted Saskin and outside counsel, with a formal proposal that included a revised arbitration system, maintenance of guaranteed player contracts, and a salary range tied to team revenues starting at $32 million to $42 million. The agreement would run through 2010-11, and the NHLPA would have the unilateral right to reopen the agreement after 2008-09. The players' association, represented by Saskin, rejected the proposal, saying that it was "not the basis for an agreement." According to Daly, the NHL felt the proposal made many concessions to the players, including the retention of guaranteed contracts and salary arbitration, and concessions relating to free agency and the entry level contract system. On February 5, it was announced that the February 3 negotiations had failed. On February 9, Bettman declared that if the lockout was not resolved by the weekend, there would be no hope of saving the season. When talks broke off between the NHL and the NHLPA the next day, there was no progress in negotiations. On February 14, the union offered to accept a $52 million salary cap under the condition that it was not linked to league revenues. The league proposed a counteroffer with a $40 million cap plus $2.2 million in benefits, which the players association refused. The next day, Bettman sent Goodenow a letterhttp://www.nhlcbanews.com/news/bettman_letter021505.html with a final proposal of a $42.5 million cap plus $2.2 million in benefits, setting a deadline of 11:00 the next day to accept or refuse the offer. The NHLPA presented a counteroffer involving a $49 million cap, which the league refused. With no resolution by the 11:00 deadline, Bettman announced the cancellation of the 2004-05 season on February 16, 2005, making the NHL the first professional sports league to cancel an entire season because of a labor dispute. On February 18, The Hockey News reported that a deal with a $45 million cap had been reached "in principle" with the help of owners Wayne Gretzky, a former player, and Mario Lemieux, a current player. Both camps immediately denied this report. A 6½-hour meeting took place on February 19, 2005, but no agreement was reached. Lockout After not reaching an agreement in the negotiations, the NHL announced that by a unanimous decision of all clubs, a lockout would begin on September 16, 2004. As a result, it was believed likely that the 2004-05 NHL Season would be cancelled, which indeed happened. An even more pessimistic prediction is that two seasons will not take place, at least not without declaring an impasse as discussed below. A Canadian public opinion poll conducted by Ipsos-Reid in September 2004 found that 52 percent of those polled blamed NHL players for the lockout and only 21 percent blamed the owners of NHL teams. This may be due to the fact that the NHL has put much more effort into the public relations war than the NHLPA has, leading to a large amount of one-sided public feeling on the issue. In November 2004, Forbes magazine issued a report estimating the NHL's losses to be less than half the amounts claimed by the league, bolstering the union's claims regarding the league's financial data. In response, the NHL claimed that the magazine did not have access to all of the teams' financial data. Effect on other leagues As of December 2004, the majority of the NHLPA's membership have not agreed to play in other leagues. The NHLPA is distributing modest lockout pay, and some NHL players have argued that NHLPA members should not take jobs away from other players during the dispute. Despite this, a sizeable minority of NHL players have agreed to play elsewhere. On January 15, 2004, with hopes for a season fading, the NHLPA was believed to have advised its members to seek employment elsewhere and even accept contract offers that extend into the 2005-06 season. Europe As of January 2005, the majority of players who have agreed to play elsewhere are playing in Europe. Over 300 NHL players play in European leagues. The most popular countries are Russia, with 75 NHL players, Sweden, with 71 NHL players, and the Czech Republic, with 56 NHL players. Russian Elite league team AK Bars, Kazan has signed 11 NHL players, including Ilya Kovalchuk and Vincent Lecavalier. Pavel Datsyuk plays for Dynamo Moscow. Czech superstar Jaromir Jagr plays for Avangard Omsk. Other Czech players have returned to the Czech Republic, including Milan Hejduk, Martin Straka and Martin Rucinsky. Canadians Joe Thornton and Rick Nash have signed with HC Davos of the Swiss league. Swedish superstar Peter Forsberg returned to his original club, MODO Hockey, in a move that he had planned before the lockout. Several other Swedes, including Daniel and Henrik Sedin, joined Forsberg at MODO; still others joined other Elitserien sides. Most of the NHL players playing for European clubs have contract clauses allowing them to leave for the NHL once the lockout ends; Forsberg is a notable exception. North America As of December 2004, there have been two attempts to form alternative professional leagues in North America during the lockout, but both appear to have failed. The new World Hockey Association had been planned since 2002 and was to start play shortly after the lockout was expected to begin. Despite having former WHA star Bobby Hull as commissioner, however, the league is not expected to play a game before the 2005-06 season, if ever. A lack of stable financing undermined plans to sign both locked-out players and top prospects such as Sidney Crosby. Another league, the Original Stars Hockey League (OSHL), had been established in Canada and was expected to play four-on-four exhibitions games in various Canadian cities, until the lockout was settled. More than 100 players, including Dominik Hasek, signed up to play in the OSHL. However, escalating salary demands by players quickly bankrupted the OSHL after a few exhibition games. The league is not expected to play any further games. As of the time of this writing, it would appear that NHL players looking for a place to play now prefer stable, established European clubs to upstart leagues that are now being derisively dubbed as "fly-by-night" operations by their critics. A small number of players play for established minor league teams. In particular, Scott Gomez is playing for his hometown team, the Alaska Aces of the ECHL. In addition, minor hockey leagues have benefitted from the lack of competition from the major professional league. The Ontario Hockey League is a particular beneficiary, with the coinciding record breaking undefeated streak of the London Knights garnering considerable attention. International hockey The lockout has already had a substantial effect on international tournaments run by the International Ice Hockey Federation. The most notable effect was in the recent 2005 World Junior Ice Hockey Championships in Grand Forks, North Dakota and Thief River Falls, Minnesota. With the NHL not playing, the top eligible U-20 players were not playing in that league and thus were available to their countries for the tournament. The country that benefitted most as a result was Canada. The Canadians not only ended a seven-year gold medal drought at this competition, they outscored their opponents 41-7 and defeated Russia 6-1 in the final game. Many analysts believe that the Canadian team was the most dominating ever in this tournament, aided in no small part by players such as Patrice Bergeron who could have expected to have commitments in the NHL. It is not yet clear how the lockout will affect the 2005 World Ice Hockey Championships, since the season is now cancelled. Normally, NHL players from teams that failed to qualify for the Stanley Cup playoffs participate in this tournament. Since the playoffs are not being held, theoretically all NHL players could participate. In reality, however, it is likely that many NHL players will decline to participate, and that national teams will be reluctant to select players who lack game conditioning. For all of the teams (including the North American ones), the bulk of the national teams' rosters will likely consist of European-based players. It is also unclear how the lockout will affect the ice hockey tournament of the 2006 Winter Olympics in Turin, Italy. Since the 2004-05 season has been cancelled, it is likely that the current agreement regarding the use of NHL players by the International Olympic Committee will be suspended. However, locked out players could still theoretically participate if the lockout is not settled by February 2006. Possibility of impasse Since the 2004-05 season has been cancelled, there is now the possibility that the league could declare an impasse. Under American labor law, the league could proceed to unilaterally impose new work rules and sign replacement players for the 2005-06 NHL season. Such a move would carry legal complications. Declaring an impasse under such circumstances would almost certainly be legal under U.S. labor laws. In Canada, however, labor relations are under provincial jurisdiction and the authorities in many provinces are more favourable to unions. The labor law of many provinces does not recognize an employer's right to declare an impasse, or, in British Columbia and Quebec, even to hire replacement workers. While using replacement players in concurrence with the American teams would not likely be a problem for the two Albertan clubs, the other four teams may run into legal challenges from the NHLPA. Relocation of these four teams is also not an option, due to the potential of labor-related fines. However, it is to be noted that the NHLPA is not certified as a union in British Columbia, while in Quebec, NHL players are not covered under the Quebec labor code. It is important to note that the fact that impasse is not available in Canada means that the pressing issue - as it pertains to Canadian labour law - is the owners' right to use replacement players, not whether there is an impasse. Therefore, many Canadian legal experts believe that the NHL would actually have a much easier time trying to implement a new economic system in Canada than they would have in the U.S., at least in Alberta and Ontario. Should replacement players be used, the American teams may only use American players while the Canadian teams (if they were to be operational) may only employ Canadian replacement players, due to immigration laws in both countries. This might also mean that Canadian teams would not be able to play against American teams. The NHLPA is thought to be preparing other contingencies in preparation for a possible impasse. The union has been in close contact with its player agents, who must carry NHLPA certification in order to negotiate on behalf of union members. The union is believed to be in the process of imposing new rules for agents, such as forbidding them from negotiating contracts in leagues where the NHLPA does not have a CBA. The NHLPA may also form a rival, union-run league. Perhaps the most serious caveat to any impasse declaration is how fans would react. If few NHLPA members cross the picket line, the NHL could find itself using replacement players of a substantially inferior skill level to the NHLPA membership. Fans might not accept this "new" NHL, especially if the union starts its own league or the WHA manages to commence operations. External links Official sites run by the parties involved News coverage Fan viewpoints
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