SPORTSNET MAGAZINE

The NHL crisis in Canada

Our national game is besieged on all sides. Can all six Canadian NHL teams hang on until the expiration of the current collective bargaining agreement and beyond?

SCOTT MORRISON,SCOTT BURNSIDE February 3 2003
SPORTSNET MAGAZINE

The NHL crisis in Canada

Our national game is besieged on all sides. Can all six Canadian NHL teams hang on until the expiration of the current collective bargaining agreement and beyond?

SCOTT MORRISON,SCOTT BURNSIDE February 3 2003

The NHL crisis in Canada

SPORTSNET MAGAZINE

Our national game is besieged on all sides. Can all six Canadian NHL teams hang on until the expiration of the current collective bargaining agreement and beyond?

SCOTT MORRISON

SCOTT BURNSIDE

It was January of 1995 and the future appeared brighter than ever for Canada's eight National Hockey League teams. The owners and players had agreed on a new collective bargaining agreement after butting heads for 103 days.

But five months later, one of those Canadian teams died. The next year, another one passed away, heading not for some great hockey rink in the sky, but greener

pastures and greenback dollars south of the border.

Eight years later, the unthinkable happened.

A desperate bid by Ottawa Senators owner Rod Bryden to refinance some US $350 million in debt fell to pieces on New Year's Eve. A day later, the Senators missed their payroll and the second week of January ended with the team in an Ottawa court filing for bankruptcy protection. All of a sudden the crisis over the future of Canadian teams following the expiration of the current collective bargaining agreement had a much sharper focus. "There is more than a chance

this team won't play in Ottawa," Bryden warned.

The immediate future of the Senators nothwithstanding, hockey experts are split as to whether the fall of 2004 represents labour Armageddon or hockey's salvation. In a rosy-skied world, all six Canadian teams would not only survive until September 15, 2004, but would thrive thereafter with a bold new partnership between the players and owners.

In a world covered with ominous clouds, however, the future of professional hockey in Canada is extremely bleak. Half of our teams may not exist after that fateful day.

A cynic—perhaps more accurately described as a realist in this case—would suggest some of the Canadian teams are already on life support and, to be frank, the changes that must take place to breathe life back into them are dramatic, perhaps too dramatic to achieve.

What makes the situation so dire for most Canadian

franchises is that it's not just the escalation of salaries, it's not just the wildly devalued dollar against the official U.S. currency of the NHL, it's not just a suggested lack of government support—it's all of these factors that are exerting a titanic pressure on the teams.

So, even if the Canadian dollar gained strength, would it be enough? Even if the Canadian government ponied up as they do for other entertainment and industrial entities, would that guarantee a better future?

Roy Mlakar, president of the Senators, whose current financial problems are unique to Ottawa, points out that although the Canadian franchises are in the entertainment business, they pay additional taxes that other entertainers, such as Celine Dion and Shania Twain, do not. The federal government happily hands out tax breaks and associated perks to movie companies and car makers, but not professional hockey clubs.

"They go out of their way to damage Canadian sports," Mlakar says. "Major-league sports should be treated no differently."

And then, of course, there is the matter of that oncelauded CBA, now deemed unworkable by the NHL and its member clubs, which has nevertheless been

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WHAT IS THE BIGGEST ISSUE WHO IS THE GREATEST AFFECTING CANADIAN GOALTENDER OF

NHL TEAMS? ALL-TIME?

1. Size of market 1. Patrick Roy

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3. Rising salaries 3. Jacques Plante

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5. Taxes

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extended twice, once for expansion, and again to guarantee international involvement. Make no mistake:The CBA and the unique Canadian concerns do run a parallel course.

Some informed observers believe 2004 will bring not only a lengthy work stoppage, but also contraction— planned or otherwise.The strong will survive, the weak will disappear. One sports business analyst has put forth the idea of two cities sharing a franchise, either

cross border (for example, say Calgary and Portland), or potentially even cross province with the two Alberta teams.

"I think there is clearly a flawed system in place," George Gillett, the American owner of the storied Canadiens, said. " I think it's flawed on both sides." Support among the owners is "absolutely unanimous" that the CBA needs to be fixed, he says, adding that until it is, the Canadian teams cannot hope to begin to overcome the other problems facing them. "Our goal around here is to shoot for break-even," Gillett says. " It's not to shoot for crazy profits."

So strong is the belief that the next CBA is critical to assuring financial stability throughout the league, because teams are also struggling on the other side of the border, that NHL commissioner Gary Bettman has warned they are prepared to close their doors to achieve it. Indeed, each team has a US $10-million war chest already banked, while the players have been told by their association to brace for as much as 18 months of inactivity.

"Despite how strong the league has gotten, there are problems that are going to have to be addressed so that our fans in Edmonton and Calgary and Ottawa and Montreal and Vancouver don't have to worry about their

franchises," Bettman said. "We have had phenomenal revenue growth. But not withstanding that growth, salaries have increased at an even faster rate. So we now have a disparity between revenues and expenses. And there are disparities about what teams are allowed to spend. And that's a terribly inflationary process, which makes it difficult for teams to retain talent. It makes teams spend more than they can afford to, and it drives up ticket prices and the cost of doing business."

Of course, it is the opinion of the NFHL Players' Association that the problem is not the existing system, but how the owners put it to use. They decide what salaries to pay.

As for ticket prices, they have risen and, in some

Canadian and perhaps even U.S. cities, are far beyond the reach of most fans. But critics argue that if Bettman and the owners achieve the hard salary cap they reportedly will seek in the next CBA, essentially protecting them from their hard-spending selves, there will be no cap on ticket prices. Similarly, they say that if salaries go down, there are no guarantees ticket prices will follow.

Also, there has been no mention of combining a cap with revenue sharing, something not all teams, not even all the Canadian teams, would favour. But it is a tack that Major League Baseball has adopted with varying degrees of success, which was combined with a luxury tax to forestall what many believed would be a cataclysmic work stoppage last summer.

It is widely believed the players will never accept a cap without either the membership splintering or without some form of revenue sharing. It is also widely believed that for small-market teams (not just Canadian teams), a cap alone will not solve their problems, that some form of revenue sharing is essential, because even with payrolls that are routinely in the

bottom third of the league, teams such as Edmonton, Calgary, Ottawa and even Vancouver struggle to get into the black. There has to be another piece to the puzzle.

Bettman insists, though, that the survival of the Canadian franchises is critical to the league's survival and he is determined to level the playing field. But at what cost? And it may still take outside forces to achieve that expectation. There have been reports the government expects the dollar to rise to the 70cent range this year. For some of the Canadian teams, a stronger dollar right now would mean the difference between red and black on the balance sheet and keeping talent or losing it.

One Canadian team official suggested they are

optimistic more provinces will offer support through lotteries or visiting team taxes. Mlakar points to a new CBA as the catalyst for change for the better, one that, like the National Football League, equalizes the small markets with the big ones.

"That is our hope, our salvation," Mlakar said. "Then it won't be a story again." The question, asked rhetorically as Bryden outlined his hopes that the Senators might remain in Ottawa, was whether Senators fans might finally see a Stanley Cup championship the way Quebec Nordiques fans did—far removed from the team they once called their own.

"Now, more than ever, support of the community will determine the future of the franchise," Bryden said. "The challenge for Ottawa is, will it benefit from those 10 years of effort and investment? Or will it build a marvelous asset, only to watch the Stanley Cup final on television (with the team in a new home)?"

The Senators troubles may be unique, but their uncertain future is not. 1%