The LeadUp to the NHL Cancellation of the 2004-2005 Season

 

Setting the Record Straight

NHLCBANews.com presents a series of articles designed to clarify and correct the misinformation coming from the NHLPA's leadership with regard to the collective bargaining process.

 

Bill Daly on Bargaining in Good Faith

Union claim: The League rejected the Union's proposal "out of hand," and is refusing to negotiate in good faith.

We thoroughly reviewed and discussed with the Union its only real bargaining proposal when it was first presented on June 4, 2003, and although we did not agree with the Union's overly optimistic financial projections, we nevertheless told the Union twice (first on June 4, 2003 and then again on October 1, 2003), that we would be, at that point, prepared to negotiate over the elements of their proposal, provided the NHLPA was prepared to "stand behind it," and provide adequate assurances that the projections they were making would, in fact, materialize. The Union was completely unwilling to consider that approach. Moreover, under the Union's latest variation of its proposal, presented on September 9, even they project that 16 teams will continue to lose money, and nearly one-third of our franchises will continue to lose approximately $10 million annually.

 

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Union claim: The NHL is not interested in negotiating in good faith with the Union, its sole interest is in "breaking the Union" by refusing to bargain, declaring an impasse, unilaterally implementing a salary cap, and using replacement players.

Our actions over the years prove overwhelmingly to the contrary. We approached the Union in March of 1999 (more than five and one half years ago) in an effort to jump-start the collective bargaining process. We made a collective bargaining proposal in January/February 2001 which would have allowed all players to keep what they had. And we requested an aggressive meeting schedule in the Winter, Spring, and Summer of 2004 in an effort to negotiate a new CBA prior to September 15 (first requesting regular bi-weekly meetings, then weekly meetings, and finally, asking the Union to devote fully the last two weeks before contract expiration to collective bargaining). The Union resisted our efforts at every turn. We have been the proactive party in this collective bargaining negotiation since Day One, and have done everything within reason to avoid the current work stoppage. In addition, we have never discussed a plan for unilateral implementation, either at a meeting of the Board of Governors or privately, and the "Replacement Player Scenario" is one we have repeatedly refused to consider at this point in time.

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Week in review

The NHL met with the NHLPA twice this past week. Wednesday, the NHL made a compromise offer in an effort to save the season. Thursday, the sides met again, but failed to make any headway. 

Compromise offer

In a final effort to commence the hockey season, the NHL made a compromise proposal Feb. 9, 2005.

NHL MAKES COMPROMISE OFFER

TORONTO (Feb. 9, 2005) - In a final effort to achieve a compromise between the NHL and the NHLPA, and commence playing hockey this season, the National Hockey League today made a CBA proposal to the NHL Players' Association.

"We believe this proposal should form the basis for a fair agreement among the Players and the Clubs," said NHL Commissioner Gary Bettman.

Under the terms of this proposal, the NHL is prepared to accept the NHLPA's December 9, 2004 Payroll Tax proposal, with certain exceptions, provided that the terms of the CBA will automatically and immediately convert to those contemplated in the League's February 2, 2005 proposal, in the event certain economic and competitive conditions referred to below occur during the term of the proposed CBA.

Any one of four economic and competitive conditions would "trigger" conversion to the terms outlined in the NHL's February 2, 2005 proposal:

  1. League-wide Player Compensation exceeds 55 percent of League-wide hockey revenues; or
  2. The average of Club Payroll for highest three Payroll Clubs in the League is more than 33 percent higher than the average of Club Payroll for the lowest three Payroll Clubs in the League; or
  3. Any three Clubs each have Club Player Compensation in excess of $42 million; or
  4. League-wide average Player Compensation per Club exceeds $36.5 million.

Upon conversion, the terms of the NHL's February 2, 2005 proposal would become effective, and would be the governing terms of the CBA -- replacing the terms of the NHLPA's December 9, 2004 proposal -- and any "excess" payments made by the Clubs to the Players would be recouped.

NHL Cancels 2004-05 Season

NHL Commissioner Gary Bettman announced today that, because a new CBA has not been realized, it no longer is practical to conduct an abbreviated 2004-05 season.

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Collective Bargaining Basics


As we approach the expiration of the collective bargaining agreement between the NHL and the NHLPA, you may have questions about how the collective bargaining process works. The following is a guide to some basic elements of collective bargaining. 

How does the collective bargaining process work generally? How does it work in the NHL? 

Collective bargaining negotiations are required once employees select a union to be their bargaining representative. Decades ago, the NHL players selected the NHLPA to be their bargaining representative. The NHLPA is a labor union, just like the United Auto Workers or the Steelworkers Union. Under the law, an employer is required to negotiate with a union that represents its employees to determine what the "terms and conditions of employment" will be, and then to sign a contract that includes those agreed-upon items. "Terms and conditions of employment" include wages and benefits and other economic items, as well as many non-economic issues (such as drug testing and the hours of work). During the life of the contract an employer is not allowed to make changes to these terms without the union's agreement. 

Under the contract between the NHL and the NHLPA, either party can request, in writing, formal negotiations on the terms of a new collective bargaining agreement to begin 120 days before the contract expires (i.e., May 18, 2004). The parties may choose to begin negotiating before that, but they don't have to do so. At the start of negotiations, either side may give the other party a set of proposals. It is expected that there will be give-and-take, and that each side will compromise to try to reach an agreement. However, neither party is required to agree to any particular proposal. 

The NHL is the "multi-employer bargaining agent" for the Clubs, which means that it has the authority on behalf of the Clubs (who are the players' employers) to negotiate with the NHLPA. Once the NHL and the NHLPA reach a complete agreement and the agreement has been duly ratified by their respective constituencies, all Clubs and players will be bound by that agreement. That agreement may be evidenced through a "Term Sheet" or "Memorandum of Agreement" or a fully drafted collective bargaining agreement.

If a Club has a good relationship with its players, can it directly negotiate with its own players? 

No. An employer is prohibited from negotiating or otherwise dealing directly with employees represented by a union about matters that are subjects for collective bargaining. All negotiations must occur between the NHL and the NHLPA. Clubs, however, are free to engage in informational communications directly with players about the League's positions with the Union. 

What happens when the contract expires? Can the NHL and the Clubs do whatever they want? 

A labor contract, unlike other contracts with which you may be familiar, does not automatically disappear at its expiration date. Under federal labor law, the "status quo" must be maintained - the provisions of the agreement remain in effect - unless and until certain events occur, as described below. That means that the employer cannot change what its employees are paid, or how much they work, etc., just because the contract has expired. One important exception, however, is that a contract provision which prohibits strikes and lockouts during the term of the contract does not survive the expiration of the contract. After a collective bargaining agreement expires, employees are allowed to strike and an employer is allowed to impose a lockout. 

What if the parties can't reach an agreement, no matter how hard they try? 

There are times when, even after extensive negotiations, an employer and a union are unable to reach an agreement because there are significant issues separating them. This is called an "impasse." It is complicated to define, but has sometimes been called the point at which no more productive negotiations are possible, even though both parties are still approaching negotiations with a good-faith intent to reach an agreement. An impasse is usually not a permanent situation (and can be reached or broken any number of times). Pressure from a strike or a lockout, or just the passage of time, can break an impasse and make further progress in negotiations possible. 

At the point an impasse is reached, there is an exception to the rule stated above that an employer cannot change employment terms without the union's agreement. If an impasse has been reached, and the contract has expired, an employer is allowed to "unilaterally implement," that is, impose on the employees without the Union's agreement, its proposals which were bargained to in good faith. 

What is a strike? How is that different from a lockout? 

A strike is when employees collectively decide not to work, to put pressure on their employer to grant their economic demands or other bargaining proposals. A strike is a union's primary economic weapon. A threat of a strike may be used to try to pressure an employer to agree to certain proposals by the union. Like most collective bargaining agreements, the contract between the NHL and the NHLPA prohibits strikes and lockouts during its term. Therefore, the players are not allowed to strike until after the contract expires. 

A lockout is the mirror-image of a strike. It is when an employer decides not to allow its employees to work (or to get paid). A lockout may be imposed to put pressure on the union to accept the employer's bargaining proposals or because in the absence of a new contract the employer does not want to allow the union to pick the time it wishes to start a strike or because the employer determines it would be less costly not to operate then to operate. As with a strike, a lockout cannot be imposed until after the contract expires. 

Is a strike or lockout the end of the bargaining process? 

No. Strikes and lockouts are part of the bargaining process. They are economic weapons that have been recognized and accepted under federal labor law for over 50 years. Strikes and lockouts are designed to encourage the other party to change its position at the bargaining table. 

What happens to Standard Player's Contracts ("SPCs") during a strike or lockout? 

With certain very limited exceptions, players are not entitled to be paid under their SPCs during a strike or lockout. 

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