Mike Smith: Why the players will win in the long-run

Who will be the winners in the current collective bargaining agreement negotiations? The players will win. In professional sports, the players’ salaries always rise, regardless of the CBA. But, first, in this case, the players will have to give a portion of their current salaries back. The question is how much the players are prepared to lose before agreeing to give back.

I have been told by some people on this side that NHL commissioner Gary Bettman has the total support of his owners to stay the course. I believe it. But, as in the past, there are always teams that want to play. At this stage in the negotiations they have no influence. Nor is it likely they will ever have enough clout to change the dynamic.

On the players’ side, Donald Fehr has done a remarkable job creating solidarity. I have been told by a number of agents that, unlike with Bob Goodenow in 1994, Fehr actually will talk to individual players and agents about the process. He has taken a softer approach, abandoning the tools of intimidation and fear. So far, the result has been the same: no agreement, no games and no paychecks.

Let’s get to the numbers. The average player salary is $2.4 million. If a deal can be reached with a 50/50 split of the revenues, the players would be giving back roughly 12 percent. For the average salary, that reduction would be $288,000. The player making $5 million would get a reduction of $600,000; the million-dollar player would receive a reduction of $120,000.

Let’s take a look at the numbers for a work stoppage. If one-quarter of the season is lost, the gross salary reduction would be $450 million. For the average salary, it would be $600,000, for the $5 million player it would be $1.25 million and for the million-dollar player it would be $250,000. And these numbers only get bigger as the number of lost games grows.

From the player side, I keep hearing, “What the hell, the league won the last battle, why should we give back money on a new deal?” But, they may want to ask recently retired players if the lost salary was worth it in back in ’94-95. Not to mention that in our system of capitalism, owners do have the legal right to fix their businesses.

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Now, how are players going to be the winners when they are the ones getting salary reductions? Those reductions are only temporary. History has shown this as fact in the NHL. There are three glaring reasons why it will only be temporary.

First, NHL revenues have grown close to 50 percent in the past decade. This growth should continue. Yes, a lot of this growth is tied to the strong Canadian dollar, but it should remain strong for the near future.

Second, relocating a few weak, low-revenue franchises to stronger markets would increase the league’s gross revenues. One only has to look at the Atlanta to Winnipeg move, which saw Winnipeg improve on Atlanta’s revenue by $60 million, to recognize the potential for relocation. Teams playing in Southern Ontario, Quebec and Seattle could increase revenue by $300 million or more. The players’ share would be half that. Salaries go up.

Finally, the most important reason the players will eventually be winners is the same group of owners and GMs who have driven the current salary levels will still be around to drive the new salary levels. Salaries go way up.

Now, I know this sounds simple, but in reality it is not this simple. There are too many smart lawyers on both sides to keep it simple. But my advice to the players is to take your seven percent cut, bargain to do it in three steps, four, five-and-a-half and seven percent, and do what you are good at: playing hockey. You will get your money back.