"Waiting Another Year" - A discussion regarding the NHL Lockout resulting in the cancellation of the 2004-2005 season.

Essay by gasman1986University, Bachelor'sA+, September 2007

download word file, 3 pages 5.0 1 reviews

The expiration of the 1993-1994 collective bargaining agreement between the NHL player's union and the owners combined with the inability to negotiate a new deal resulted in the lockout of NHL athletes and the cancellation of the entire 2004-2005 season. A major problem for the league at the time was the revenue side of the income statement, which led to owners pushing for a salary cap. Other problems in negotiations (that were finally settled on July 13, 2005) included a payroll tax, revenue sharing, arbitration, and free agency (Fitzpatrick). To examine the lockout, we can discuss the issue of revenue and the disagreements stemming from it. Finally, we can see how the results of the lockout show that the owners obtained a major victory from the lockout.

Since revenue loss was such a huge part of the disagreements, the NHL hired Arthur Levitt to analyze the league's finances. Levitt (who was paid by the owners to do the study) concluded that the league lost $273 million in 2002-03 while spending 76% of its revenues on player salaries.

Forbes examined the same study and determined the loss was $123 million and that the league spent 66% of revenue on salaries (Staudohar). This convinced the players that they could not trust the owner's method of reporting revenue. However, the owners were convinced they were spending too much money on salaries. The tables show how the salaries were increasing every year and that the NHL was spending the most revenue (compared to the other three major sports) on salaries.

Because of the evidence mentioned above, the owners wanted "cost certainty," or a "rational and enforceable relationship between revenues and player salaries" (Fitzpatrick). This can be translated to a salary cap-the main argument that caused the cancellation of the season. The players thought the...