Trouble Ahead - contract time at the National Hockey League

With players getting record contracts and teams setting attendance records, things in the NHL might look rosy, but there's a storm coming--and it could get ugly

DAVE TAYLOR WAS QUIET ON the other end of the telephone as he contemplated where the latest step in hockey's monetary future might lead.

A moment earlier, a reporter who had just come from the news conference at which Alexei Yashin signed a 10-year, $87-plus million contract with the previously penurious New York Islanders had told the Los Angeles Kings' general manager that the deal was indeed now a reality.

A few more seconds ticked by before Taylor, one of the game's better right wings during a career that ended in the early '90s, said quietly, "Wow! That's a lot of money."

That's an understatement. Yashin's contract set new parameters for the length and size of player deals, surpassing a deal signed just two months earlier in which the Colorado Avalanche inked Joe Sakic to a contract that could be worth as much as $57 million over six years. It also marked a turnaround for the Islanders, who under new owners Charles Wong and Sanjay Kumar also committed $20 million over the next five seasons to sign Michael Peca--a stunning turnaround for a team that just two years ago had a total payroll of just $15 million.

The average NHL salary this season is about $1.4 million. But as salaries continue to climb--they now consume upwards of 60% of league revenue--the question is whether owners are willing to continue to foot the bills.

The problem for NHL management is that while hockey's followers may be the most fanatic in sports--no team sport plays to a higher percentage of occupied seats--they're not the most plentiful. While American television networks fall all over themselves to give ever-increasing sums of money to Major League Baseball, the NFL, and the NBA, the NHL's five-year, $600 million deal with ABC and ESPN looks almost like chump change. Think $600 million is a lot? It breaks down to about $4 million per team per year--or less than what the Boston Bruins will shell out annually to Martin Lapointe, a free agent who signed a four-year, $20 million dollar deal with Boston this summer.

Lapointe is a nice player to have on your team. He works very hard, will give up the body, and even had a career-best 27 goals with the Detroit Red Wings last season. But the idea of giving a player like Lapointe that kind of money has Vancouver Canucks general manager Brian Burke's head spinning.

"I've never been more embarrassed to work in the NHL as I was on July 1 and July 2," Burke says about the initial summer rush to sign free agents. "I know we can't support the salaries. I know some of the teams that have spent the money are doing it without the financial capability to pay.

"I'm running my business like a business. I'm going head-to-head with people who are crazy, as far as I'm concerned."

Of course, owners have cried poverty since the day team sports were born. The odd part about NHL management complaining about money woes is that the business of hockey--the revenue-generating portion--has never been better. More than half of the NHL's teams have opened new arenas--complete with luxury suites and higher ticket and concession prices--in the last 10 years. Under Commissioner Gary Bettman's aegis, merchandising revenue, both leaguewide and for individual teams, has soared. There's more money coming in than ever before.

But as any first-year accounting student can tell you, it's not how much you make, it's how much you keep. And with salaries spiraling upward, a growing number of management people think ownership isn't getting to keep enough.

Burke's comments may be the opening salvos in the showdown of 2004.

The NHL has had labor peace following the lockout that cut the 1994-95 season from 82 to 48 games. The deal that ended the lockout has been extended a couple of times and is now set to run out after the 2003-04 season. And like the sound of a thunderclap in the distance on a hot summer day, the storm clouds are already visible.

On one side, the players have never had it so good. Under the leadership of National Hockey League Players' Association head Bob Goodenow, salaries have soared over the past decade. But with that growth has come a baseball-like divide between the big-money teams (Philadelphia, New York, Detroit, Dallas, Toronto, and Colorado) and almost everyone else--one that's exacerbated by the weakness of the Canadian dollar.

Before this summer, salaries had been rising at only 5 to 6% over the past couple of seasons. Revenues had actually been rising at a faster pace than salaries.

On the other side are GMs like Burke, who maintain that only a handful of teams are responsible for this summer's salary surge.

"It's only six teams spending out of control," Burke says, "Maybe some of them can afford it, but the ones who can't are taking a business that already has serious problems and making it worse."

But there's spending, and then there's spending. The Avalanche paid big bucks to keep Sakic, goaltender Patrick Roy, and defenseman Rob Blake--nearly $30 million in salary this season just for these three players. (Peter Forsberg was in line for $11 million before deciding to sit out the season for personal reasons.) All three were keys to Colorado's Stanley Cup victory last spring before becoming free agents. With a well-heeled owner and a sold-out arena every night, it's hard for a team like Colorado to tell fans that it can't pay to keep a championship team together.

"When you're talking 85 million-plus [salaries], you're talking about ownership," Burke says. "We [general managers] don't sign checks like that"

But at least Colorado is getting proven Cup-winners for its money. At the other end are teams like Boston, which committed $20 million over four years to Lapointe, who's averaged 18 goals during his last five NHL seasons, and $7.5 million over three years to free-agent defenseman Sean O'Donnell, who was bumped from a regular berth in the New Jersey Devils' rotation during the Stanley Cup Finals.

Lapointe wasn't necessarily planning to leave Detroit, but when the Bruins upped the ante, he couldn't say no.

"When you go out on the market, you have kind of an idea where you stand moneywise, but when an offer comes in like that, you have to think about it," he says. "I've got a family and kids. Detroit was in the picture. They had a budget I respect that And they decided to go out in another direction."

Money was the major factor in Pittsburgh's decision to trade NHL scoring leader Jaromir Jagr to Washington. The Penguins got three prospects; they also got Jagr's $20.7 million salary for the next two seasons off the books.

"This is the only deal that made sense to us," Penguins GM Craig Patrick said after landing three players who have played a combined total of four games in the NHL.

Notice that Patrick didn't call it a good deal--it was a deal "that made sense to us." The money Patrick saved allowed the Penguins, led by owner-superstar Mario Lemieux, to keep the nucleus of the team--players like Alexei Kovalev, Martin Straka, and Robert Lang--together a bit longer. All three were free agents who got hefty raises after career seasons.

The only reason Lemieux is a Penguin is that he has a stake in the team. Put Lemieux on the open market and he'd be as good a bet to lead the league in salary as he is to lead it in scoring--and to get that kind of money, he'd be somewhere else.

Instead, Lemieux waited to see how the team's salary structure worked itself out before setting his own pay at a relatively paltry $4.75 million this season.

During the summer, Lemieux suggested the NHL and the players might need to agree on a salary cap--a notion that's anathema to the players. If the owners insist on anything resembling a cap, watch for the showdown to begin early.

And what happens if there is another action, either a strike by the players or a lockout by the owners?

On the surface, hockey survived the 1994 lockout without major damage. Unlike the baseball strike that summer, playoffs were held and a champion was crowned. Hockey fans in most cities didn't appear to be nearly as angry as their baseball counterparts.

But what that lockout cost hockey was a missed opportunity.

The New York Rangers' Stanley Cup triumph that June gave the NHL unprecedented media exposure--and a chance to spread the gospel of hockey beyond its core fan base. People who rarely paid attention to the sport had become engrossed in the Rangers' successful drive to end a 54-year championship drought. National magazines paid more attention to hockey than they had in years. Hockey was a sport perceived to be on the upswing.

Then the lockout came, and with it went the chance for the NHL to get out of the box it had been painted in--a distant fourth among the four team sports.

The NHL and the sport have grown a lot since then. Salaries and revenues have soared, new arenas dot the continent, NHL players now populate the Olympics, and the league has a real TV contract with a major U.S. network.

The Players' Association reportedly has been telling its members to put away some money, just in case there is a stoppage. The league has had little to say. But at least one major player agent wants the two sides to start talking before emotions get too high.

"I'm sick of people talking about Armageddon," Rich Winter, whose stable includes Dominik Hasek, among others, told USA Today. "The game will be destroyed and no one's doing anything about it."

The 1994 lockout cost the NHL the chance to take a step forward. The stakes in the Brawl of 2004--if it occurs--could be much higher.

COPYRIGHT 2001 Century Publishing
COPYRIGHT 2001 Gale Group