Negotiating on Thin Ice

The National Hockey League (NHL), established in 1917, had not experienced a power struggle like it did when negotiating a new collective bargaining agreement (CBA) for the 2004-2005 season. Gary Bettman, Commissioner of the NHL, announced on February 16, 2005 that due to the inability to negotiate a new CBA with the National Hockey League Players' Association (NHLPA), the 2004-2005 NHL season would be cancelled (Malhotra & Hout, 2006). The consequences of a lockout would be significant, including lost revenue for cities and the teams (an estimated two billion from ticket sales, media, sponsorship, concessions, and stadium bookings), employee layoffs, loss of fans who redirected their attention and spending to other avenues, and lost player salaries estimated at one billion. Regardless of the consequences, the reason to reach an agreement should have been for the fans who so faithfully followed the game and supported the players and the owners (Staudohar, 2005).

The fans were out of luck; there were too many barriers to reaching a negotiated agreement prior to the start of the season. The main barrier to the negotiations was not having the wrong people negotiating, but the agenda of issues (Watkins, 2000). The powerhouses were power struggling, each unwilling to listen to or concede to the others views. For example, one barrier was NHL's desire to address operating losses and what they viewed as an unstable financial condition by establishing a cap in salaries and linking salaries to revenues; the union countered saying, "the free market should determine player salaries", and they felt a relationship between revenue and player costs already existed (Malhotra & Hout, 2006). A psychological barrier was the player's lack of trust with the league; they felt owners were concealing revenue and underreporting the game's profitability so Ted Saskin, Senior Director of NHLPA and Goodenow's top aide in the negations, questioned how players could link their salaries to revenue numbers they did not trust. A final barrier was the opposition between Bettman and Goodenow. Bettman had already made a veiled threat in 1999 when a proposed voluntary renegotiation of the then CBA was rejected; Bettman had warned then that major concessions would be expected in the 2004-2005 season. Bettman held true to his threat (Malhotra & Hout, 2006). Bettman and Goodenow should have found mutually beneficial agreements to overcome these barriers since they were the ones leading the negotiations; both parties prepared for the approaching negotiation, neither tried to halt it.

Goodenow knew he was in for a fight and he did not care; he told his players they would be in for a long lockout because he would not concede to a salary cap (Malhotra & Hout, 2006). Resistance like Goodenow was demonstrating is a natural part of the negotiation process but no gains were being made. In an attempt to enlist support and address the mistrust the players union felt about the leagues financial reporting, Arthur Levitt Jr., a former Chairman of the Securities and Exchange Commission, performed an independent audit of the Unified Report of Operations (URO). Unfortunately, Goodenow did not see the report as supportive; instead, his mistrust of the league continued as did the stall in negotiations. Bettman attempted a pressure move toward the NHLPA by writing a letter highlighting nineteen additional aspects for the CBA that the league wanted to amend, but this also angered the union. The final power move noted occurred a week before the agreement expired. Goodenow made a proposal that attempted