Since 1967, the National Labor Relation Board (NLRB), an independent government agency that governs labor issues and unfair practices, has demanded the professional athletes forming their player union to negotiate with team owners concerning all labor issues under the collective bargaining agreements (CBAs). Under the CBAs, players and owners must faithfully negotiate mandatory issues such as length of contract, work hours, wages and working conditions. Despite the great intent of the establishment of CBAs, players and owners can fail to reach agreement and eventually lead their dispute to either a strike or lockout.
When the CBA expired in 2004 between the National Hockey League (NHL) team owners and player union, it caused a lockout lasting for a whole season. The NHL 2004-2005 lockout is the first time that a major professional sport in North America lost an entire season due to a labor dispute. The focus of the dispute was about the limit of the new salary cap. Once again, The NHL is going through a similar scenario this year when the current lockout has forced the league to cancel games throughout November, 2012 (more than 26.5 % of the entire schedule so far). The salary cap is still the biggest dispute during the negotiations for a new bargaining agreement. The league owners are trying to bring the percentage of revenue sharing down to below 501. This is the third lockout the league has suffered under Gary Bettman’s reign as the commissioner. Until Bettman and the Players Association reach a deal, the lockout will continue2.
The impact of current NHL lockout is hard to predict. Many economists argue that lockouts have a negative economic impact on the teams’ hosting city. It is logical to conclude that city-owned arenas and parking lots will generate less revenue. However, John Palmer, a sport economist, challenged the aforementioned notion3. If people are not attending hockey games, what do they spend their money on? For the most part, whatever people are doing, they are diverting their spending to other sectors of the economy. The US Treasury and states may lose about $354 million and$57 million respectively in players’ income tax. However, the business owners who receive the proceeds from the diverted spending will pay more income taxes to cover the tax loss paid by the players3. According to the impact report concerning the 2005 NHL lockout, there seems to be no reason to fear about the economic loss. The NHL had its best season in total attendance and overall revenues in 2005-6. Twenty-five of the 30 teams had an increase in attendance. The Penguins led the percentage of attendance increase with 33% from the 2003-20044.
During the lockout in 2004-2005, many hockey fans found other ways to enjoy sports. Sport fans turned to the Canadian Football League. In the US cities that host both of a hockey and basketball franchise, the National Basketball Association team received an attendance increase as well1,4. In authors’ opinion, professional hockey is already a distant fourth on the popularity scale among the major professional sports in America. Taking a year of work stoppage will only drag the league further behind the other competitive leagues. There is no guarantee that fans will return to the hockey arenas as they have done in 2005-6, when the lockout was over. It took nearly a decade for the Major League Baseball to recover the losing attendance after its 1994-5 work stoppage (strike)5. The players and owners should understand that NHL is not a highly demanded commodity like the National Football League, the prolong work stoppage and potential increase of ticket prices will certainly alienate the hockey fans further more.
Sophia Pattersson is a student-athlete on the women’s golf team of Morehead State University. She is a senior majoring in Sport Management. Steve Chen is Associate Professor of Management and Marketing at Morehead State.
1. Associated Press (2012). NHL cancels games through November. Retrieved November 1, 2012, from http://www.npr.org/templates/story/story.php?storyId=163686679
2. Silverman, S. (2012). NHL lockout: Could this be Garry Bettman’s swan song as NHL Commissioner. Retrieved November 1, 2012 from http://bleacherreport.com/articles/1392879-nhl-lockout-could-this-be-gary-bettmans-swan-song-as-nhl-commissioner
3. Palmer, J. (2005). More on the economic effects of the NHL lockout. Retrieved November 1, 2012, from http://thesportseconomist.com/2005/01/28/more-on-the-economic-effects-of-the-nhl-lockout/
4. Anderson, S. (2006). The NHL bounced back last season after a year long lockout, but what’s next? Retrieved Nov 1, 2012, from http://www.post-gazette.com/stories/sports/penguins/the-nhl-bounced-back-last-season-after-a-yearlong-lockout-but-whats-next-453176/#ixzz2B17z27EJ
5. Associated Press (2004). 1994 strike was a low point for baseball. Retrieved November 19, 2012 from http://sports.espn.go.com/mlb/news/story?id=1856626