Episode Transcript
[00:00:00] Speaker A: Foreign.
[00:00:19] Speaker B: Welcome to the second half of week seven's worth of material. Today we are going to be joined by Ryan pike of the Nation Network. And Ryan's here to talk to us today about an issue that is extremely important to understand when you are trying to understand virtually every issue in the professional sports industry, and certainly in the professional hockey industry as well, and that is the collective bargaining agreement. Now, you may be familiar with the cba, you might be familiar with the notion of what a collective bargaining agreement is. In fact, at this very time, you yourself might be part of a union that has collectively bargained for specific rights and freedoms with your employer. You might have been part of a union and are no longer. It is important to understand the CBA and the way it relates to the industry as a whole. But I think before we get started with Ryan, it is important to note what the function of a collective bargaining agreement is within the larger context of labor in North America, and also just within the sport industry as well. Now, this works a little bit better when we're in person, and I often do this when we are in person. So you have to just indulge me as I perform a thought exercise with you. As you're listening to this right now, perhaps you're walking around or sitting down or somewhere, or just imagine that we are all gathered together in a large room. All of us are here together. All of your classmates are sitting next to you. You've been in many classes. So as you enter fourth year, imagine this is no different from that situation. But instead of me in front of you, it's a Keith Pelly of mlse. And he walks in the door and he says, I need one of you to become the new assistant general manager of the Toronto Maple Leafs. I believe that Brock has a track record of producing elite talent in this regard, and I'd like you to be the next in line to become the.
[00:02:03] Speaker C: General manager of the Leafs.
[00:02:04] Speaker B: So the starting salary here, we are going to start our salary at, say, $75,000 to do this job, which is not a great amount of money, but okay, so you're sitting there and you're thinking to yourself, I probably would like such a job one day. Maybe. Perhaps I don't feel like I'm terribly qualified for it, but if it has to go to someone in this room, I mean, how many of you would put up your hands and say, I'd like to do it right. Okay, great. So they would say, fantastic, awesome. I've changed my mind. The starting salary is now 65,000 and you say, okay, well, that's not so different from 70. It's not a great.
Not a great starting salary, certainly to begin with, but okay, 65, I'd still do it. It's my dream job. Absolutely. And several hands, I would imagine, are going up here, though I'm imagining also that you yourself may have already put up your hands and said that there's probably a number quite a bit lower than this that you'd keep your hand up for. And this process repeats itself. And he says 50, he says 45, he says 30, and he says 20. And think to yourself really carefully here. Would you put your hand up for a job like that at $10,000 or less? Now, he's not allowed to. But just imagine that for the purposes of. Of this thought experiment, how this sort of works. This is called a reverse auction, and it has a very important resonance for many of you as you enter into the sport industry. And something that I've talked to you, if you've been in one of my classes previously.
It's a process that doesn't explicitly happen, but it does happen to a lot of people as they enter the sports industry.
[00:03:29] Speaker C: Because the idea is that Brendan Shanahan.
[00:03:31] Speaker B: Or Brendan Shanahan's types or MLSC or any of the various organizations that hire in the sports industry know the fact that what is the number that you'd be willing to do it this. This particular role? And is that number zero? Would you do it for free? Many of you might, right? That might be the idea. The idea is that you might perform this duty for actually no compensation at all, because it's your dream job. Maybe you have the financial situation that would allow you to do it. Maybe you do not, right? But imagine I'm asking you to perform this thought experiment for the role of assistant general manager. And many people perform roles farther down the food chain, way farther down the food chain, for the same rates of compensation. Now, the reverse auction, as it occurs to many people who are entering into the sporting industry, occurs because of the overwhelming number of people that are interested in working in sports. It's just a comment on the industry. It's not a castigation of it. It's just simple facts. It's why these types of things exist. It doesn't mean that I have to enjoy it or doesn't mean that I should not look out for opportunities for students to make sure that they are compensated as fairly as possible, but it does happen, right?
So one of the issues here is if all of you knew for beforehand that Brendan Shanahan was going to come into class and you all agreed that none of you would accept a job for less than $70,000, your ability to negotiate with Shanahan becomes much stronger. And in fact, then if all of you agree that no one will work for less than 70,000, then it becomes an open competition for those of you in that room who are most qualified and not simply a race to see who will fill the position for the less, for the least amount of money.
So you see here that is a crude example, a very small example of how collective bargaining works. If I can negotiate with each of you individually, if I can make you work for your lowest possible dollar amount, if I can use you individually against each other, the group itself, then I can often pay you far less than your, than I would often want to have paid you or in fact even have budgeted to pay you. Collective bargaining is a process that didn't just arrive in pro sports. Certainly by fourth year you've learned about it. I know that in first year Craig Hyatt's class, you go through Marvin Miller and the unions and all that good stuff. And it's important to know a couple things about the collective bargaining agreement. Certainly Ryan is going to fill you in in greater detail as well. One of the most important things is the collective bargaining agreement is a living document. It lives and breathes and changes and it is, yes, it's a set of rules, absolutely. But it's a declaration that you and an organization, and you're the people that represent the labor of that organization, are here to work together under a certain framework of rules, regulations and safety. And throughout the history of North America, the collective workers rights have collected, been collectively bargained and brought innovations like the six day work week and then the five day work week and the eight hour working day.
These used to be. There used to be no restrictions on how much an employee could work. There used to be no, no such thing really as the idea of an ocean of a weekend. There was maybe the one day off in a week for religious grounds, but There certainly was 12 hour shifts. Absolutely.
Workers rights have developed in many cases throughout the 20th century into the 21st, based on the premise that in many industries certain frameworks and protections need to be collectively bargained for the reverse auction reasons that I described earlier on here. Right.
It's a nasty business out there when you're having to fend for yourself without the protection of a group of people. And in most industries in sport, they are not unionized that are not on the side of the sort of playing of sport itself. And again, as you've known from going through this program, that unionized sporting labor is not universal. Certainly we're seeing one of the effects of that has been the live golf, Saudi takeover of sport. It's of the sport of golf here, or the merger with the pga. It's sort of the PGA Tour, I should say, and that's something that's important to note here, is that it is impossible to have pulled off what the Saudi sovereign wealth fund, the PEIF public investment fund was able to do. What they did in large part because each individual golfer on the PGA Tour is in fact an independent contractor. That is not possible to do if each individual golfer was a part of a larger union. You see the idea here, right? So it's important as we talk about the hockey industry to note that this collective bargaining agreement has wide ranging effects and it governs lots of things, not just the rules of the game itself and how it's going to be played and the rules of overtime and the lengths of sticks and then what kinds of equipment can be used and all that good stuff that comes as a part of it as well. But the idea is, okay, there are certain frameworks, how many days off, how long the season can be, participation in certain tournaments, participation in some sorts of all star games, all that kind of stuff that has to be collectively bargained.
[00:08:10] Speaker C: Right?
[00:08:10] Speaker B: And it is incredibly important to understand how this relates to everything because again, the collective bargaining agreement that saw the end of the 2004.05 or 40405, sorry for that lockout stipulated the creation of something else that's very important to the way that professional hockey is understood as an industry, and that is the creation of a salary cap.
Salary caps exist obviously in many sports and also famously don't exist in other sports. But the creation of a salary cap in 2005 was collectively bargained. And the idea is it serves the interests of players in some facets and it serves the interests of owners in others. And I will also have you think to yourself sometimes about what certain parts of the CBA whose interests are being served most acutely. We're going to learn about something today called escrow. Maybe you know about it, maybe you do not. That's okay. And I think Ryan does a great job explaining what escrow is and it's its implications. And he's come into our class a few times and this is a more recent version of our conversation and certainly we've geared it more towards escrow because escrow is something that brings up a lot of questions. And Ryan has spent a great deal of time studying the collective bargaining agreement. Anyone can watch it, watch it. Anyone can read it, I should say. And I do encourage you to look up the NHL collective bargaining agreement and have a look and see what it's like and the language contained within it and see if you can parse it yourself. But throughout this conversation with Ryan, when you're hearing things about the collective bargaining agreement or even if about escrow itself, think to yourself whose interests are being served here. Okay, so I will, I will not take up any more of this time. We'll go to our discussion with Ryan. Ryan pike is a member of the Professional Hockey Writers association, which means he's a credentialed member of the media. He goes to practices, he's in the locker rooms, he is credentialed on game day, he sits in the press box. He has a show, he hosts, he co hosts a show on Sportsnet Radio network out in Calgary. And he has been involved in the game for, for a decade plus now and is a great contact as well for any of you interested in hockey media, but also any of you interested in the CBA in, in stadium arena financing negotiations. He's also a whiz at how those things have worked out as well. And I trust his work is only just beginning there with really as it relates to the negotiations in Alberta. So no further ado. Here's Ryan and I'll be back with your audio response question at the conclusion of our conversation.
[00:10:36] Speaker C: We are joined by Ryan pike of the Nation Network. Ryan, thanks so much for joining us.
[00:10:40] Speaker A: Thanks for having me.
[00:10:41] Speaker C: Ryan is here. He is an expert on all things hockey. We are here to ask him questions today about a topic that he is extremely knowledgeable about and that is the NHL and the cba. Ryan, have when did you start developing an interest in the CBA and the salary cap and all this sort of minutiae of NHL bargaining?
[00:10:58] Speaker A: Well, I grew up in Calgary as a hockey fan and up until 2005 there was no salary cap in the NHL. So I think a lot of fans, even a lot of media were somewhat ignorant to sort of the behind the scenes minutiae of the league because it wasn't really relevant to covering the NHL. But really once the salary cap came in in 2005, coming out of that lockout, I think a lot of fans like I was back then really tried to sort of try to develop an understanding of the rules of the game because, you know, even just Knowing, you know, I think the big, the big thing that a lot of folks got interested in with the cap of the CBA specifically was, you know, what the rules of the game are, because, you know, the beforehand before the collective bargain agreement changed and they entered into a salary cap, the 30 NHL teams, it was 20 something. For a while when I was growing up, you could basically spend wherever you wanted. There was no rules or limitations. So it basically meant that there were rich teams that could spend where they wanted and there were poor teams that could spend where they wanted. And if you were a poor team, especially in the 90s when the Canadian dollar took a hit, some of the smaller market Canadian teams really struggled.
Calgary is one of them. Winnipeg, Edmonton, Vancouver, to a certain extent. And it was tough sledding.
One of the reasons why the CBA is the way it is now is because a lot smaller market owners were really pushing for some sort of equity in terms of how the game was administered. And part of that was a salary cap. And a lot of the rest of that was figuring out a lot of ways to codify some of the unwritten rules of how hockey is managed and put them into a living document.
[00:12:38] Speaker C: That's a great description there. First of all, on that topic of being a living document, if you're a hockey fan and maybe you understand basically what the CBA is, but maybe you're still kind of trying to figure it out and you're maybe still learning, like what factors influence the creation of the cba when you first look at the cba? What's the sort of first impression you have when you, when you're gazing upon or when you go to look to find a specific part of it?
[00:13:01] Speaker A: Thank God. There's an index. It's the index of the table, kind of. The CBA is itself many pages. The CBA file. I usually have it open if I have a question about things like the CBA document itself. The PDF is over 540 pages, including all of the addendums and independent indices. And they recently, during the first pandemic stoppage, they extended the CBA through I believe, September 2026. So the four year extension on its own is 71 pages. So between the two documents there is 680 or 620 some pages of stuff. And there's a lot of the stuff is, to be honest, kind of legal boilerplate. But there's a bunch of the sections are really useful, sort of understanding how the game is administered and sort of what limiting factors there are in a lot of player movement. And contract salaries, those kind of things.
So thank God there's a table of contents because there's just. There's too much without one.
[00:14:03] Speaker C: Yeah, absolutely.
[00:14:04] Speaker B: And when you are, when you are.
[00:14:06] Speaker C: Gazing upon, when you're trying to use that index, when you're trying to answer a specific question, are you ever struck by how much of the game is governed by the cba? Like, if you don't understand the cba, if you don't understand maybe how the CBA works with regards to player movement, how much of the game do you feel like you're missing? Is it a substantial part of hockey fandom is related to the cba?
[00:14:26] Speaker A: I think, I think the CBA touches on the game a lot more than folks would think. Because even just the idea of, you know, you know, during the last couple of years we've had more and more teams play, you know, during the COVID first Covid outbreaks earlier this season, we had teams play short by players because of specific rules that administer the salary cap and to the point where the league actually had to, you know, work with the players association and come up with sort of a one year modifier to change, you know, something as simple as the dollar amount that a player could be making to be brought up under an emergency recall with no, no cap impact. So things like that, there's a bunch of so many little things that, you know, when they happen in, you know, as a fan, if you didn't know about the cba, there'd be little things that sort of make you furrow your brow and go, why did that happen? That makes no sense. But the more you dig into it, the answer to most of the questions of that makes no sense is, well, actually in such and such and such, the cba, they have a rule about that. So it's like going to a foreign country where, you know, I'd say it's a lot like going to Quebec as an Anglophone where, you know, you can't buy without French. I mean, all respect to the French speakers in your class nationwide, I think generally speaking in Quebec you can get around without much French, but I think you miss out on a lot of stuff that you'd be picking up otherwise. So I think it's, you know, I think you get a richer experience speaking both languages than you would by speaking only one and just muddling your way through.
[00:15:56] Speaker C: A richer experience very well described there. Absolutely. So in your position, and you are a, you're managing out of a website, you have your credentialed media, you're at these games you're at practices, what do you think that the knowledge or the familiarity or the facility with the CBA exists among NHL players?
[00:16:14] Speaker A: I think the players probably are aware of the stuff that really impacts them. So I mean, players probably know who, who can and cannot have a no move or no trade clause.
I think they're pretty well aware of how close they are to free agency, how close they are to arbitration, things like that. But I think for the most part, I think unless you're getting close to the cut line, I don't think they really know much about the waivers process or waiver exemptions or expiries, things like that. If it involves you. I think if we're all very self centered individuals on a daily basis, you know, we usually, we experience the universe as it relates to us in general. And I think especially for legal documents, I mean, you don't give a hoot about waivers until you have to worry about either getting, you know, waived and sent down to the minor leagues or claimed and had to pick up your pickup stakes, move to Arizona on a whim. And you know, I think if you have a family, those things matter to you a lot more than if you're just a single person moving, moving around the continent, chasing a dream. So I think, I would say most of them probably are pretty well aware of the stuff regarding specific contracts. I'd say restrictions on movement like waivers and what kind of clauses they can get to avoid moving. But I think beyond that, I think they're all, you know, they're aware of it to the extent that they feel they need to. And I think the nice thing is for them almost, you know, everyone has a player agent that is much more, much more versed in the CBA and the minutia than they are. So I think most of them probably know as much as they feel they need to, to get by. And then if they have questions, they can just call their agents and ask them any questions they have.
[00:17:52] Speaker C: Excellent. And you mentioned a topic here where.
[00:17:54] Speaker B: It really only is something that is.
[00:17:56] Speaker C: Brought up when it affects players. That makes sense, as you mentioned, that's familiar to all of us, where it's like, I don't know the minutiae of my employee handbook until there's something I need to actually look up. And then it's like, oh yeah, I should know this stuff.
There are some issues though, that seem to keep cropping up and are of, I would say, direct importance to all NHL players. And I think it's very little understood in the wider Fandom, and that is that of escrow.
And could you give your best attempt to describe the issue of escrow for our students here?
[00:18:25] Speaker A: Oh, my goodness. Players hate escrow.
So let's see.
When the 2005 CBA, the salary cap CBA got put in, the split of revenues was 43% for the players and 57% for the owners.
And at that point, the players, they lost the season, they got a salary cap put in. The big thing for the owners in 2005 was getting cost certainty. And the context of that was with the market I'm in, I cover the Flames. The Flames almost relocated a couple of times in the 90s. There was the Save the Plains campaign to basically drum up season ticket holders over the summer because they were having some cash flow issues. Most of it was due to the American dollar being so much higher than the Canadian dollar. And so when Gary Bepin came in initially as NHL president, his big contribution working with the small market NHL teams was something known as the currency Equalization program, where basically there was a formula, a kind of soft revenue sharing, where the small American Canadian teams basically got a top up based on where the currency was evaluated during the previous year.
It was the first time they really got involved in revenue sharing. And then as they started getting into the CBA negotiations 2005, I think they liked how that worked and so they adopted the model a bit. But the revenue sharing model really only worked if you knew how much money you were spending, which really led to the NHL really playing a hard line in the 2004, 2005 negotiations about having cost certainty. So that led to the NHL didn't like using the term salary cap because of the, at the time, there's negative connotations to it. Now. I think it's much more accepted practice. So at the time they used cost certainty was Gary Bettman's big buzzword. And so they ended up getting the cost certainty that cost everyone a year of revenues, which people just love back then.
But so, yeah, they end up getting cost certainty ended up being like a 57, 43 split skew towards the owners. In the 2013 negotiation and lockout, it became more of a 50, 50 split. And I think, you know, I think for the players, that felt more equitable because, you know, the players getting 50% meant means that, you know, they're equal partners. And I think for the owners, I think it's a recognition of the contributions, like, you know, as much as the owners putting up capital to build arenas and, you know, facilitate all the things that are going on. It's really not. You don't have a leak without the player. So I think the NHLPA was pretty happy with how that worked.
What else? But where escrow comes in is. So here's basically how the salary cap comes about every year. So usually it usually starts about now. Usually right about now, in the legal offices in the nhlpa, the NHL accountants will sit down, look at the books for the previous year and say, here is more or less how much revenue we expect to make this year. And then based on numerous factors, they look at year over year growth, demographics, marketing, all kinds of different factors. They come up projections for revenue for the following year and then they send those to the nhlpa. The NHLPA has their accountants look at it.
And you know, right now the NHL's revenues are about $5 billion.
The hockey related revenue is basically any, you know, direct revenue based on NHL activities and NHL team activities.
There's a lot of things that go into it. You don't need to read that part of the cba. It's very dry and it's about exactly what you'd expect.
But so the, under the current CBA, the NHL, the NHL is projected 5, $5 billion in revenue and the NHLPA gets half. So that means that the player share is forecasted to be 2.5 billion. You divide it by 32 teams and that's your cap for the season.
Here's the issue. What if your forecasts are wrong?
And that's where escrow comes in. Escrow is basically a percentage of player salaries held back on every paycheck that will be given back to the extent that the NHL's forecasts were correct. So if you're, if you're, you know, Johnny Goodreau or you know, Mark Giordano or whoever, and you sign a contract that plays, pays you a certain number a year, that's not the real number you get. You actually get that less escrow percentage. So it makes your paychecks a little bit tinier. And the problem with escrow is, you know, if you're a player, you know, you want to get the contract that you signed up for, not that less 20%. And the other challenge is NHL revenues are really complicated. And so, you know, I believe we're two years behind right now on escrow paybacks. Escrow checks to two players. And imagine if you're a player and you know, you're playing, you know, you're very physically and mentally demanding sport. It's, you know, physically unforgiving. There's A lot of players who get career ending injuries and stuff. And so a lot of them just, you know, they understand that, you know, the money is one of the reasons why they sort of protect from risk. And if you're, if you're, you have 20% of your paid held pack and then you get, usually, usually they get a chunk of it back.
I don't think there's ever been a case where they don't get any escrow back at all. But it's something that it's kind of a bitter pill for the players to swallow. And so one of the big things they put in in the, I mean, granted the last CBA negotiations took place during a worldwide pandemic where no one was playing games. And I think there was a certain amount of risk mitigation being done on both the owners and the players stand points. But one of the things the player, the players side really wanted was a cap on escrow, a cap on the percentage of their paychecks to be held back. And so as a result of that, I mean, based on the 1920 season losing, I think the Calgary team lost about the last dozen games and then played in a bubble with no playoff revenue and then played in a bubble in Canada with no revenue whatsoever for another year.
The players were estimated to owe about a billion doll heading into the season in escrow. Basically money that they would need to pay back the owners to make the share for each given season 5050. And they'll be paying that back with their escrow probably for another two seasons. So escrow, it's something that they really don't love. I think the players sort of get the point of it. But like the answer to the previous question, you can understand escrow conceptually and go, well, yeah, that makes sense. I'm okay, you know, I guess it makes sense if everyone's paycheck is held back a little bit to make sure that the shares are equitable. But when it's happening to you and you're like, my wife wants me to take the kids on vacation or put a down payment on a house or whatever, adult stuff, and then all of a sudden you're looking at your paycheck and there's 15% missing, when you thought you signed up for a certain amount of money and then there's 15% missing, even if you get it back in two years, you're not going to be terribly happy about not getting the full piece of the pie you to want.
[00:25:33] Speaker B: Well, that's a great description.
[00:25:34] Speaker C: Holy moly. And this is why this issue is extremely important. Players. You talk to players all the time. Every single day you do your job. You're talking to players, you're talking to managers. I think it will take some time to pause on what you just said there. It's not 0.7%.
It's, I think, 15, 17, 18%.
That's an enormous amount of money. Like, that's 180 grand on a million bucks.
And that's a big deal, right? So I totally understand what you're saying. And part of the thing that we're talking about in this class about the structures of collective bargaining agreements is that stuff that you fight over at the table, because from the player's perspective, you could totally say, look, your projections being incorrect is none of my business, none of my fault. And also, why would you be incentivized to provide accurate forecasts if you have a mechanism in place to make you whole no matter what?
So you can see why when the collective bargaining framework in the NHL is calculus, I don't see what is in it from the player's side. And you can see why players get furious about escrow because again, everyone learns salary details. Everyone does the, you know, the cap trading in their heads, but nobody realizes the fact that, not to mention tax on top of that, there's essentially a bad accounting tax or, you know, a bad thing happening, insurance tax on you.
[00:26:50] Speaker B: The.
[00:26:51] Speaker A: And the weirdest thing is like in. In theory, if the NHL underestimated the revenue growth, then there would be a swing the other way where every player would get. They have a formula. I don't think they've ever had to use it, but there is a formula where if the NHL. If the NHL underestimates their. Their growth, then the players get a. Basically a check. You know, everyone gets a little bit of a bonus. But I don't think the NHLs ever underestimated their.
[00:27:16] Speaker C: Their.
[00:27:16] Speaker A: Their revenues. They. They basically overestimate their revenues. And the point where if I'm the players, if I'm negotiating, I go, why is this the mechanism we've chosen to use for this?
[00:27:26] Speaker C: What a strange coincidence, Ryan, that the NHL has never.
[00:27:30] Speaker B: Oh, man, their accounting must be just.
[00:27:32] Speaker C: They must fire their accountants every single year. Because that is literally the exact inverse of the accounting practices in the private industry. In business, if you did that every single quarter, you would be out of business. Your shares would plummet. I mean, let's.
[00:27:48] Speaker A: Let's. In all due respect to the NHL accountants, we always know that they have ears everywhere, you know, forecasting Revenues for, you know, it's 32 different markets with 32 different peculiarities. You know, you know, it's. If you're, you basically have to talk to 32 different teams and then any number of other revenue streams the NHL has to figure out and then you have to sort of pull it into something that looks semi coherent and not just semi coherent. Something you can present to the NHLPA's accountants and say, here is the underlying principles of what I want to do. And so the best of my knowledge, the NHLPA's accountants more or less come to the same conclusions that the NHL accountants do. So, I mean, I think it's basically a case where they build their. To be able to forecasting with certain assumptions in them. And a lot of times the assumptions are just a little bit, you know, a little bit optimistic. I think that's the phrase the NHL, the NHL and the NHLPA would choose to use because, you know, they would love. If revenue grew 20% year over year, they'd be ecstatic. I mean, the nice thing for the NHL is in a few years when the escrow debt is paid off from the pandemic.
I'm sure everyone in the class has heard at some point on cable news, the NHL signed two really big TV deals in the United States with ESPN and Turner Broadcasting. And they haven't seen any of that money hit the salary cap yet because they're still, they're getting that money, but because of the escrow payments are still paying, paying off the other one. So they're operating basically under the old salary cap formula. In a couple of years, teams are going to be like if the. I've noticed that they. And the nice thing is they actually have because of the, the pandemic was the reason because the pandemic they changed somewhat. The formula that they, they're using to calculate the salary cap it based on the escrow payments. I don't think it'll be something that they really need to use until the very, very end of the cba, if not the next one. But they're using more. The new formula is what they're calling the lag formula, where they basically look at cumulative revenues from the previous couple years and then average them out and then go, okay, the are, I think with the formula from what I remember is they, they take the last couple years, average it out, look at the growth over that period, and then apply that to the current year's formula. So they're trying to be. They're trying to build a little more conservatism. Into it, but it's still, it's never going to be an exact process. And I think that's the, if I, if I'm the players, that's the thing that sort of I'm grumpy about. But if I'm also the players, if I'm advising the players, my, my answer is probably also I don't know if they can come up with a perfect way of doing it because I don't think one exists.
[00:30:27] Speaker C: Well, I mean, again, far be it from me from challenging NHL accounts, in fact, quite the opposite. They do an amazing job. Fact, they do exactly what they, their job is and that is to provide the best statistics that they have available.
The long standing concern this goes back to antitrust negotiations with baseball in the United States has always been open up your books and we can help you figure out what's fair. If you're from whether you're Marvin Miller or whether you are Donald fair, that's always going to be a contention because you mentioned right away that the CBA is a living document. And you're right. But you're dealing with like three or four different kinds of businesses here. And when one of them that's running up against this is unionized labor, and this is something that's very, very, very important to CBA negotiations. We just saw this happen in baseball. We're going to be seeing in every sport always is, you have a unionized labor force, which means you should be always advocating for the health of your union. The question is, of course, in most unionized bargaining situations, you don't have very public negotiations for advertising deals where at one side Gary Bettman can be claiming growth. To Turner and to ESPN say, hey, hockey's growing, we have healthy revenue streams. And at the same time go back to your union negotiation and say, actually revenues flat. So you see how it's very, very, very complex about this situation for hockey fans is to sort of understand what the actual health of the sport is. Because on one side they see, oh, a huge 10 TV dollar has been sold. And if you read the press release from abc, they are happy to trumpet the growth of hockey. But then they go to the negotiating table and they say, hey, things suck and that's why we're taking parts of your paycheck. So how do you think that hockey is able to negotiate this tricky landscape with a unionized workforce and also dealing with the private industry built on top of it, when the private industry deals are driving revenue?
[00:32:16] Speaker A: The short answer is that's complicated because I mean Even something as simple as example, they're selling helmet ads now, the first time in league's history. They started doing it during the pandemic for disclosure folks, pretty much every arena, actually I think it literally is every arena because I was going to say except Madison Square Garden. But Madison Square Garden is literally owned and sponsored by the Madison Square Garden company. So nominally speaking they advertise themselves. But every arena has a corporate sponsor. And typically during broadcast during any number of things, you'd have the name of your business that sponsors the arena prominently featured on the ice. And in all the advertisement for at the end because the 1920 season ended early and they end up completing the playoffs in a bubble.
What ended up happening was if you're Scotiabank, for example, in Calgary, instead of having your arena name mentioned a certain number of times on television, you don't. And so the make good that they came up with was helmet decals. It used to be that the advertising on the helmets didn't exist. It was just a sticker on the side of the helmet that said the team name. And now it's corporate sponsorships. But the challenge is, you know, the first year was just done get basically given to these arena sponsors primarily as a make good for prior money. They gave the teams for this advertising this season they sold it as just it's a regular ad, it's a new ad, it's new revenue. Now the challenge is not every market selling them. I think more than half of the league has not sold their whole docket. A handful of teams haven't sold either.
And they're beginning to offer in the 22, 23 season, this coming fall advertising much like they have in European leagues on the jerseys. It's sort of going to be a little patch on the chest of the jersey depending on the design.
And there's some concerns amongst a lot of people in hockey business that money they're going to make off it because in some markets you have advertisers like the Toronto Maple Leafs are not going to have a problem selling the advertising on that. Now there are a lot of big market US teams. You know, a lot of the Canadian teams might have issues with it, A lot of the smaller American teams might have issues with it. And I think that's one of the things that they're trying to navigate because you know, on one hand, you know, you would say, you know, viewership is up, they're making, you know, pretty good ad revenue. One of the things that's really driving, you know, revenue for a lot of Sports leagues. UFC released recently, saw a big wrestling jump in their TV deal. Actual viewership has been downward and getting older every year.
The demographic that really matters to advertisers on television is the 18 to 49 age group.
The average WWE reviewer is 53 years old. Their average viewer is older than that key demo.
But because those fans watch consistently live and they don't PBR it, you can't PBR live sports. That's the thing that's really driving revenues for live sports. The other challenge is now we've had a two year pandemic where a lot of, in a lot of markets couldn't watch their sports live for various reasons. Some of them didn't feel comfortable, some of them weren't allowed to by local health officials, and some of them just would rather stay home. And a lot of markets now in Canada especially, you've had a fan base that's been at home for two years watching your TV coverage and they kind of like it. They don't have to put pants on to go watch games anymore. And so they're fighting a lot of different trends and a lot of different markets. And I think if you're Gary Bettman, you're trying to, you know, when you talk to these high level groups, you try to provide a high level summary. And the high level summary, if you're Gary Bettman as the representative and emissary for the NHL 32 teams, revenues have never been higher in hockey history, which is great. I mean, it's good for the health of the overall sport and its ability to grow and continue to provide jobs and livelihoods and in a lot of cases, entertainment for a lot of people.
On the other hand, if you look at the individual constituent elements of revenue, there's a lot of noise there. And I think depending on who you're talking to, depending on the audience you're chatting with, that's the degree to which you factor the noise. Because I think they're looking for as many ways to drive revenue as possible. But some of the revenue areas, even just like the hella decals, some markets, boom, they're sold like that, sold like hotcakes. They barely had to try some markets, they've been trying really, really hard to sell those and they haven't had any traction.
[00:36:56] Speaker C: Well put. Ryan, last question, because you've taken up so much of your time, if a student, like a student in this class for instance, wished to learn more about the cba, what would be the advice that you'd give them?
[00:37:08] Speaker A: Best advice I can give you is read it.
It's available for free on the NH on the NHLPA website. Just Google NHL CBA. The two documents it'll give you is the 2013 CBA, which is technically expired in 20, and the the MOU, the memorandum of Understanding for the new CBA is there. There's no new CBA. The the extra 70 pages are merely an addendum to the existing CBA and tell you what's changed.
Which is lovely because I wish they would just reprint the whole thing and just change a bit more.
If you're anything you could read with contracts, I mean, as absolutely nerdy as it sounds, if you read things like the Canadian Charter of Rights and Freedoms, the British North America act, like anyone with a political science background, just, you know, those documents are fairly reasonably accessible documents and the way they're structured sort of teaches you sort of how the legalese folks built the CBA document and why they phrase things a certain way and why clauses are built the way they are.
[00:38:19] Speaker C: So.
[00:38:20] Speaker A: But yeah, the easiest way to get your feet wet is just dive in and read it. Because there's a lot of things that as you read it, the way I learned about it was reading and taking notes and then anything you don't understand, Google it. Because the nice thing is there's plenty of people in the public sphere right now who are doing just really cool analytical work and analysis work examining different aspects of the CBA and how it's changed and evolved over time and the things they like and the things they absolutely loathe about the the document.
[00:38:49] Speaker C: Ryan, thank you so much. You are one of those people doing that great work.
[00:38:52] Speaker B: You're a credentialed meeting member. You're also a capologist and a CBA expert. Follow Ryan on Twitter.
[00:38:57] Speaker C: Thank you so so much for joining us, Ryan.
[00:39:00] Speaker A: Thanks Abby.
[00:39:12] Speaker B: Okay, so that's another week full of auto discussions with some really interesting people. And again, if you have any questions for Ryan, pass them along to me. I'm happy to put you in touch with them. If you have questions about how to to to join his career path, let.
[00:39:22] Speaker C: Me know as well.
[00:39:23] Speaker B: He's a wonderful person to get into contact with and really generous with his time. And, and we also had a visit from Byron earlier in the week. So remember, this is your audio response question and you are going to be asked to specifically reference something from the guest lectures at a specific time during the guest lecture. I think we've had a little bit of slippage in terms of this regard. In terms of students, not quite Remembering to do that. I need you to do that so I can go and check and listen. I really do enjoy those of you who are, who are doing this correctly. I think it's been a really fruitful process, frankly, and I think it's one I'm going to continue. I'm really impressed with some of the things that I'm hearing. And truly, I mean, I'm. I'm noticing such growth in so many of you, and to the point where I'm like, wow, I hope one of you, or a few of you at least, are interested in maybe delving a little more into the audio realm, maybe create your own podcast. I think that. I know that it's intimidating at times when you think to yourself, wow, well, everyone has a podcast, that's true. But honestly, at the end of the day, it's about getting yourself out there and making mistakes and trying on your own as well. So if you're interested in it and you're finding it fun to sort of talk about these issues, then, yeah, why don't you try it? Get a friend together, do it yourself. Find someone who has maybe a different perspective than you do and just start. It'll make your analysis sharper, makes you a better writer, I find it. But that's a different topic for a different day. If you have any questions about that as well, feel free to reach out to me in that regard. But today's audio response question is if we were to collectively bargain the NHL draft out of existence, which means we are going to collectively bargain a replacement for the NHL draft, what would it be? How would it work?
Use the information you've got from the articles, use the information from the guest speakers, and specifically tell us how your new solution would work. But again, consider the collective bargaining agreement how it works. Consider what we learned today about how things work on the side of the players, on the side of the owners. Make sure that your new arrangement satisfies both sides adequately. Detail how it would work. But if you were to collectively bargain out the NHL draft, how would it work? What were the mechanisms in place? And why would it be collectively bargained on both sides?
Looking forward to hearing these responses. I encourage you to be creative in this regard. I hope you all have a wonderful weekend.
[00:41:49] Speaker A: Sat.
