Tuesday, October 16, 2012

Lockout II: The Slowening

The National Hockey League season was supposed to have started by now, but their ongoing lockout has prevented that.  Personally, I'm not too bothered; my interest in hockey has waned over the years, and I've been mainly paying attention to the sport only because it's pretty much impossible for a sports fan in Canada to ignore it.  No hockey hasn't bothered me: as long as football and baseball are still going, I'm happy with them.  Along with occasionally enjoying the schadenfreude I always get from watching NHL management in action.

But things often get in the way of watching the NHL shooting itself in the foot: reporters, analysts, and other fans.  This being Canada, everyone is compelled to talk about the hockey labour dispute, even if they don't understand it.  Though come to think of it, that's true of hockey itself, too.

Sports business can be an interesting topic: because it's dealing with a very public and familiar business, it's often easier to relate to than some of the more esoteric industries out there.  But it can be pretty annoying too: people have a lot of emotions wrapped up in the subject, so they often lack any objectivity.  And of course there's the sports journalists.  Sports reporters aren't exactly the sharpest pencils in the newsroom to begin with, and every time there's a work-stoppage they're forced to report on a subject they have no experience with.

Everyone in and out of the media end up spouting the same myths, misconceptions and unrealistic solutions over and over.   So I'll do my part and try to counter them here:

This is a strike

A strike is when workers try to force negotiations by refusing to work.  A lockout is when management tries to force negotiations by refusing to let the workers work.  This and the last NHL work-stoppage were lockouts.
 

The players are looking for more money

I'm still surprised how many people jump to this conclusion.  Sure, we're constantly hearing about escalating athletes' salaries, but in both this and the last labour dispute, the players would have been more than happy just to keep what they already had.  Admittedly, one could argue that with the state of the game's finances, trying to keep the status quo is just as selfish as trying to get more.

This is all about greed

I hate greed as much as the next guy, but it's not quite like that.  The fact is this isn't about grabbing for more money; it's really about dividing the money that they already have.  Fans are often (justifiably) angry about how high player salaries have gotten, but remember: if the players didn't make that big money, it would be the owners making it. As silly as it sounds for people to make millions playing a game, I think everyone would agree it would seem even more unfair for an owner to get that money.  Which is related to...

High salaries lead to high ticket prices

To understand this, imagine that tonight all the players are visited by the ghosts of sports past, present and future, and wake up tomorrow as changed people.  They demand that they make nothing more than the average person.  The owners (who just dreamt of seat licenses or whatever sports owners dream of) are more than happy to massively reduce everyone's salaries.

What do you suppose the owners would do then?  Many would answer: lower ticket prices, say from $100 to $1, now that their expenses have been greatly reduced.  But why would they do that?  They know that there are 20,000 people in town willing to spend $100 to see the game.  If they can sell 20,000 tickets at $100, they'll do that, even if their expenses are much lower.  

The truth is, the causality goes the other way:  Ticket prices don't cause higher salaries; high ticket prices enable high salaries.

If the owners don't want to lose money, they shouldn't sign players to such huge contracts

The trouble is, the owners are in a Catch-22: if they spend big on players, they'll lose money because their expenses are too high.  If they don't spend big on players, they'll be perennially unsuccessful, and lose money because their revenue is too low.  If salaries are determined by a free market, the only ways around this conundrum are: have universal rules limiting spending (such as a salary cap) or live with inequality and uncompetitive teams.

The owners should just agree to stop giving out big contracts

There's a word for that: collusion.  (And it's illegal.)

2 comments:

  1. "If my boss had to pay 57% of his revenue in labour costs, he'd go broke."

    True, but his primary source of income isn't having people pay to watch you work. While it's true in any business that without labour there's no final product, in sports the labour is the product.

    And if you think that people pay to cheer for the teams and not the players, look up the attendance figures and tv ratings for the 1987 NFL replacement games or 1995 MLB spring training.

    "The players should be thankful they get anything. I'd play for free."

    Of course you would, you probably pay to play in a Rec League where the only people watching you play are the players in the next game waiting for you guys to finish up your 50 minutes of ice time.

    But if you were one of the top 0.0001% in your profession that only employed 700 people a year in a career that lasts an average of three years and makes its owners $3.3 billion in revenue, you'd probably feel you deserve some compensation.

    "This is all because Bettman expanded to cities that can't support hockey and now he has to prop them up."

    It was only ten years ago that, thanks largely to a 67-cent dollar, the NHL was propping up the Oilers, Flames and Senators to save them from relocation or bankruptcy. Now the favour's being returned.

    I will grant you, however, he's just being stubborn when it comes to the Coyotes.

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  2. Good points, especially about how the changing dollar has switched who's propping up whom. I find it's just accepted among many Canadian hockey fans that our teams are keeping all the American teams afloat, oblivious to how close we came to losing ours (and how much the Rangers make.)

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