“In a market system, the owner decides how much to pay the players. The owner knows the value of his business better than any paid consultant or league employee and the owner uses this knowledge when he sets player salaries. In our view, there is no better indicator of the true value of the players and the business."
With that rather plain statement, the president of the NHL Players' Association shrugged off prophecies of hellfire and damnation echoing from the league office. Everyone else might be cowed by Arthur Levitt’s report on the financial state of the NHL. But Bob Goodenow, on behalf of his skating employers, remains unbowed.
The Levitt study was released February 19, with the author himself taking the stand to defend his findings. Levitt is no hockey man. He used to be chairman of the U.S. Securities and Exchange Commission. In the eyes of the NHL, it was as if a god of economics had descended from the heavens, casting thunderbolts of anger and retribution.
"The results are as catastrophic as I've seen in any enterprise of this size," Levitt told a press conference. "They are on a treadmill to obscurity, that's the way the league is going. So something's got to change."
The bottom line, according to the man: 19 of 30 NHL teams lost a total of $272.6-million last season. The other 11 franchises averaged a profit of $6.4-million. The reason for the financial misery? Players’ salaries, which account for 75 percent of all costs.
NHL commissioner Gary Bettman looked a little traumatized. The report is, after all, an indictment of his 11-year regime. The Bettman vision - of hockey's imminent conquest of America and the riches that would flow from it - lies in tatters.
Goodenow’s terse response, meanwhile, could not have been more dismissive: Levitt was hired and paid by the owners. He never called us during his study; we didn’t even know there was a study. The report uses inaccurate accounting numbers provided by the teams. All in all, “the Levitt report is simply another League public relations initiative.”
But it is the conclusion of Goodenow’s statement, his defense of the “market system,” that strikes at the heart of the flourishing dispute between the NHL and its players.
The numbers are eye-glazing, the issues varied and potential solutions complex, but the fundamental disagreement is rather simple: A player wants to sell his services for whatever he can squeeze out of his current or prospective employer. The owner wants some sort of regulated limit on how much that will be.
Let’s assume that, after digesting the document, the NHLPA finds the Levitt report to be watertight. No matter how they pick apart the numbers, Goodenow and his underlings are forced to acknowledge irrefutable facts: the NHL is a model of corporate incompetence, “on a treadmill to obscurity” because it pays the players too much.
Would Goodenow amend his position? Would he finally come around to Bettman’s way of thinking, ready to negotiate a restraint on salaries?
Probably not. If Levitt's findings are correct, the NHLPA already has the solution: pay the players less. Under the current system, teams are perfectly within their rights to offer the hired hands less money. There was evidence of just such a correction last summer, when several players accepted pay cuts or settled for less than they might have commanded a few years previous. This, Bob Goodenow would argue, is the marketplace at work.
The argument is somewhat disingenuous. The National Hockey League, as Goodenow knows, is not an open, unfettered market. If it were, every player would be a free agent at the end of his first contract. If it were, any millionaire could rent an arena, hire some skaters and demand to be included in the NHL schedule starting tomorrow. The NHL is more of a monopoly with 30 branch plants.
But those branch plants are in fierce competition, and the players – particularly those who hang on for more than four or five years – feast on the antagonism. Somewhere between Nashville and Dallas, between Edmonton and Manhattan, today’s NHL player has found his value in an exclusive, lucrative business in which the big spenders simply cannot control themselves.
The player won’t sacrifice that position unless his livelihood is threatened, which is presumably where Arthur Levitt’s dire forecast comes into the picture. There is still a major trust issue between the two sides: NHL teams have a long history of opaque accounting; and why wasn't the union invited to be a partner in Levitt's study? Perhaps the findings can help bridge that gap. Without agreement on the basic numbers, there is no starting point for collective bargaining.
But philosophically, it hardly matters whether the Levitt report is NHL propaganda, indisputable truth, or something in between. Goodenow and his players have staked out their territory, and for now at least, all the red ink in the world won’t move them from it.
