Gary Bettman: "Fundamentally we like the way the agreement is working"

xciThe Toronto Globe and Mail has a nice piece covering an interview they had with NHL Commissioner Gary Bettman. There are a wide range of topics covered like overely beatin TV ratings, European expansion but mostly focused on the new CBA from an economic standpoint - here are some highlights:

If U.S. TV isn't enough to get a rise from the commissioner, criticism of the collective bargaining agreement definitely does. Bettman's voice fills with emotion has he responds to criticism that the salary cap has risen too high at US$50.3 million and salaries are back to pre-lockout levels.

"I think the agreement has been misconstrued," Bettman said. "People are saying there's a $50-million cap and now we're back to where we were and higher. That statement, when it's made, indicates a fundamental lack of understanding of how the system works."

To wit, Bettman points out that in the pre-lockout season of 2003-04, the top payroll was in the $80-million range with other teams in the 70s and 60s. More importantly, he adds, it's the average payroll that really matters pertaining to dividing up the 55 per cent of the revenue pie to players.

"The average payroll with a $50.3-million cap is $42.3 million," said Bettman. "So that at the end of the year, on average, our teams will have spent $42.3 million — not $50 million."

Bettman continues by pointing back to the 2001-02 season, when the average team payroll was also $42.3 million.

"At the time our revenues were $1.875 billion," he said. "This year the average team payroll — with the $50.3-million cap — will be $42.3 million on revenues of about $2.4 billion. ...

"People tend to confuse the cap with the average salary of years ago."

The cap keeps going up because revenues continue to rise. The critics question how it possibly can be that revenues can continue to go up for a sport desperately hanging on to its Big Four status with the NFL, NBA and Major League Baseball.

"All of our revenues are increasing, local TV, national TV, advertising, sponsorship, licensed product sales," said Bettman. "And why? Because the game is healthier. Why? Because on the ice the game is healthy. Teams are more competitive and there's no focus on franchises going out of business and who can't afford to compete. Everyone can afford to compete because we've got a $16-million (payroll) range and we've got revenue sharing.

"There are probably a variety of issues, if we were given the opportunity in negotiations to re-address, we might focus on a little differently. But fundamentally we like the way the agreement is working."

Now there is some obvious spin there, especially in regards to the TV ratings. One thing I do agree with him is that the CBA is working and keeping more of a competitive balance in the league. The players are guaranteed 55% of revenues this when the cap rises the revenues are obviously there to support it. For those smaller markets, like Columbus, there is revenue sharing to help offset the disparity assuming some triggers are met.

There are also some cause for concern as there are still some smaller market franchises not performing well, even with winning teams, and some loopsholes are being exposed by the big market teams most notably front loaded contracts.

Towards the end of the article Betmann mentioned issues that if given the opportunity they'd like to re-address. Two that immediately come to mind are the aforementioned front loaded contracts we are seeing now and from a smaller market perspective I think teams would like to see a little more revenue sharing as well. I'm sure there are others.

Of course any re-addressing would have to be negotiated with the NHLPA and I'm quite sure they would have their own issues that they would like re-addressed as well.

Bottom line though is don't expect to see many changes to the CBA soon because if it is re-opened it may not close very quickly.

-LTL