Throwback Thursday: The NHL Lockout So Bad Hoobastank Wrote A Song About It
The 2004-05 NHL Lockout, the only North American work stoppage to cancel an entire season, may be the last big labor fight we see.
Charles LeClaire-USA TODAY Sports
The 2004-05 NHL lockout, which began 12 years ago this week, was so traumatizing it inspired Hoobastank to write a song about it. "You see all these guys who have so much and don't appreciate it," Hoobastank's Doug Robb told MTV. "They seem to have forgotten where they came from." The song, apparently, was also about Velvet Revolver's Scott Weiland being a dick while they were on tour together, but the "NHL strike," as Robb called it, was an inspiration nonetheless.
The song remains definitely bad, but the legacy of the lockout—the first and only labor stoppage in North American sports to cancel an entire season—is more complicated. Like Robb, many fans blamed the lost season on the players for being greedy, but things aren't so black and white. You might even say "The Reason" goes beyond that.
At the turn of the century, the NHL could credibly claim it was hemorrhaging money. Citing $1.8 billion in losses the previous decade, commissioner Gary Bettman diagnosed the NHL as "sick" when he announced the 2004-05 lockout's official start.
No one can really know for sure whether the NHL's financial desperation was that dire since its books were never truly opened, but all signs pointed to the owners losing lots of money. An NHL-funded audit of the league's finances by former U.S. Securities and Exchange Commission chairman Arthur Levitt found $273 million in losses for 2002-03 (before accounting for interest and depreciation), with 19 of the league's 30 teams in the red.
To staunch the bleeding, Bettman and the owners demanded an economic restructuring in the new CBA that would implement what they called "cost certainty," otherwise known as a salary cap, like the ones in the NBA and NFL that kept player salaries a stable percentage of league revenue. The union countered with a five percent salary reduction and MLB-style revenue sharing and luxury taxes to disincentivize extravagant spending.
The union more or less accepted that the NHL was losing money; their focus was more on the reasons behind it. The league and the Levitt report both claimed player salaries accounted for 75 percent of league revenue prior to the lockout, a figure some 20 percentage points higher than leagues with a salary cap. The union didn't outright contest that figure, but it also didn't really think that was the players' problem. After all, the players don't run the teams, and they don't force the owners to offer them lots and lots of money.
On top of that, at least some of those $273 million in losses came from notoriously poorly run franchises; the Penguins, Senators, Sabres, and Kings had all filed for bankruptcy. As the league lost money, they kept expanding into new, speculative hockey markets that occasionally worked (Dallas) but often didn't (Carolina, Anaheim, Atlanta, Nashville, and Phoenix, to name a few). Why, the players asked, should current and future players be punished for the league's poor business decisions?
The NHL's reply, in essence, was because we can. From their perspective, once the few owners who were actually making money got on board, the lockout was an easy call. There was little incentive to give into the players' demands—why end it just to lose more money?
What followed was a lockout of epic proportions, setting records for length (310 days) and games lost (1,230). According to a Bureau of Labor Statistics report, it was so contentious and prolonged because of "each side's philosophical approach." In most lockouts, the sides are simply negotiating about how to divide the pie, and every cancelled game represents lost earnings for everyone involved. This wasn't the case in 2004-05. Then, the NHL and the players were arguing about whether there should be a pie at all.
Predictably, after the lockout began, 380 players went to play overseas, mostly in Europe and Russia, and earned a fraction of what they would have in North America. Less predictably, Hoobastank wrote that very awful song, and Detroit Red Wings player Darren McCarty performed in a rock band. In December, three months into the lockout, the players offered to take 24 percent salary cuts. Thanks, Bettman and the league replied, but no thanks. The standoff wouldn't end until that summer.
In July of 2005, the league and the union reached an agreement, preventing the dispute from spreading into a second season. Although the players won minor concessions regarding free agency, they gave in on the key issue: the new CBA implemented a salary cap of 54 percent of league revenues, and all existing contracts were cut in value by 24 percent.
They had little choice. Fans generally supported the owners throughout the lockout, buying into the narrative that the league was in danger due to economic forces and the players made too much money. This is a narrative we have seen time and time again in subsequent lockouts, as salary-capped leagues bickered over percentages of the pie.
"Every work stoppage we've had in the past 15 to 20 years has been a lockout," Gabe Feldman, professor of the Tulane University Sports Law program, summarized. "And the owners are now complaining that the players are making too much money and they have to claw back some of the salary. So we've seen a shift in the country to what is known as concessionary bargaining, where labor, the employees, are trying to hold on to what they had."
Because the owners got the thing they wanted and the players didn't, it's easy to conclude the owners won and the players lost. But collective bargaining agreements don't always operate on the same binary as sporting events themselves.
"It appears right now that the owners, the players, and the fans are better off because of these changes," Feldman said. Indeed, there's no question the league is in a financially healthier position. NHL revenues have grown from about $1.9 billion in 2004 to $3.3 billion before the 2012 lockout—one of those slice-of-the-pie lockouts—meaning that even with the salary cap, player salaries increased by several hundred million dollars thanks mostly to new TV deals.
"The players, you can question their strategy given that they ended up agreeing to a deal that they certainly could have gotten without missing an entire season," Feldman said. "But it comes down to leverage." The issue going forward, not just for the NHLPA but for every players' union in an age of salary caps and shared revenue and "rising tides lift all boats" rhetoric, is how to get more of it. Maybe they can write a song.