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Sunday, September 16, 2012

the No Hockey League

It's no surprise that the NHL locked out its players yesterday. Few owners of NHL franchises, if any, depend on operating profits from their clubs. For some owners an NHL franchise is merely a hobby; for other owners, an investment to be managed dispassionately; and for a few owners, a true passion -- but for no owner does hockey mean food on the table or shoes on the children's feet.

Therefore, owners aren't particularly upset by a lockout. They care about long-term valuations of their franchises, not year-by-year profit. Some people argue that even a brief lockout drives down the long-term value of franchises, but I disagree. Experience in prior lockouts shows that loss of revenue from fans is short-lived. The keenest hockey fans have already factored the possibility of labor strife into their decisions to be hockey fans. My guess is that in the first full season after a new contract is reached, the clubs will see about a 15% loss in revenue compared to what they would have received in continuity. But in the second full season, the loss will be only about 7.5%. In the third full season and beyond, the effect will not be noticeable.

The only tactic with which the players can possibly prevail is a multi-season lockout that would truly threaten the owners' investments -- but that's a variant of mutual assured destruction, to borrow a phrase from nuclear warfare. Players will always flinch before that point is reached. Why? Because players want their money from hockey more than the owners do, and players can't earn the same money in another league. There's a truism in nearly all pro sports: owners have the power, notwithstanding the rights of the players to shop their talents individually or to bargain collectively.

The inevitable outcome of this lockout is that the players will accept a deal that's only somewhat better than what the owners have already put on the table. I'm not suggesting that the players should accede to any offer that the owners make, no matter how unfair. But unlike many commentators, I blame the players more than the owners for this lockout. It's difficult if not impossible to identify with an athlete who argues he should make $5 million per season instead of $4 million. Yes, I know that not every NHL player makes millions per year (although every one of them makes at least several times what I do); I know that many players are in the league for only a few seasons; I know that some players have no other employable skill and will face medical hardships as a consequence of their play. Nevertheless there is a fine line between fairness and greed.

Owners are not immune to greed, I concede. But although owners of the top-market teams like Toronto are doing well, I doubt that Peter Karmanos (principal owner of the Carolina Hurricanes) has made as much money on his club as he could have made by investing the same amount in Warren Buffett's Berkshire Hathaway -- or even by buying government bonds.

Would I prefer to see the Hurricanes play in October? Yes, but I'm not bitter about not seeing them -- anymore than I'd be bitter about a hurricane hitting Raleigh again. Stuff happens. In the meantime I will find other enjoyable pursuits with my time and money that the NHL owners have returned to me. Go Canes.