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NHL Lockout will kill small markets


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“When half the room didn’t want it to begin with, and now they’re not playing…,” Knopp pauses.  “It’s going to kill the small markets.”

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So why are they doing it?

According to Grantland:

NHL revenues have grown from about $1.9 billion in 2004 to $3.3 billion last season. The league now has a healthy national television deal with NBC (more on that below), and the NHLPA has a dynamic, proven, and stable new leader in Don Fehr (with brother Steve Fehr at his side)... So what are they fighting about now? Money, of course. The good news is that they’re not fighting over the imposition (or removal) of a salary cap. The bad news is that they are fighting over how to split up the $3.3 billion pie.

Here's more detail:

From the league’s perspective, 18 teams lost money last season, the growth of league revenues was in large part fueled by the Canadian dollar, and the deal they struck in 2005 “turned out to be more fair than maybe it should have been,” which is a bit like Seahawks fans saying regular refs would have made that play more fair than it should have been. In other words, despite locking out the players for an entire season, the league believes they gave the players too much by guaranteeing them 57 percent of HRR. The league now wants to scale back the players’ share of revenue to about 49 percent next season — which is actually up from the 43 percent they offered earlier in the negotiations — and down to 47 percent by the end of their proposed new six-year deal.

From the players’ perspective, the league has experienced unprecedented financial growth — an average of 7.1 percent per year since the previous agreement — and they feel as if they got hosed during the last negotiations. The NHLPA is thus seeking (according to their latest proposal) "small, but fixed" increases over the course of their proposed five-year deal. In the first three years of the CBA, the players are seeking $1.91 billion, $1.98 billion, and $2.1 billion, which would amount to 54.3 percent, 52.5 percent, and 52 percent of projected revenue (that assumes that revenue will continue to grow 7.1 percent per year). In the final two years of the deal, the NHLPA has proposed that the players get $2.1 billion plus 54 percent of the growth in revenue in the fourth and fifth years of the new deal. According to the NHLPA’s projections, their proposal would save the owners nearly $900 million. And, rather than taking money exclusively from the players to pay the owners, the players believe that many of the owners’ financial woes can be resolved by sharing greater revenue among themselves. The PA has therefore proposed $260 million per year in revenue sharing, with $120 million earmarked to assist troubled teams.

At this point, according to the latest reports, the two sides are still about $1 billion apart.

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