December 05, 2012   |1 Comment

It’s Time for Mandatory Arbitration to End the NHL Lockout

By John Hatton

If you’re a hockey fan like me, you’re no doubt frustrated by the current NHL lockout.  As a New York Islanders fan, it’s frustrating enough that we haven’t won a playoff series since 1993 (the average fan may not remember it, though I’m sure Mario Lemieux does, but I digress).

You’re probably also hoping that somebody (anybody!) could just force the two sides to come to agreement so the players can start playing and earning their salaries and bonuses, the owners can start raking in the revenue, businesses that rely on the sport can start making money again, and fans – remember those all-too-soon-forgotten consumers that allow everyone else to make their money – could go back to drinking Molson, ignoring their girlfriends, and generally being their awesome, outrageous selves.

What you may not know is that there’s a phrase for forcing the two sides to agree – mandatory arbitration.  And Congress could require it, not just for the NHL, but for other pro sports leagues.

The concept is simple.  If the two sides cannot agree on a collective bargaining agreement, instead of a lockout or a strike, each side makes its case before a neutral arbitrator.  The law requiring arbitration would set forth the standards the arbitrator must use to reach his decision.  For example, the law could require any agreement to ensure a reasonable profit for the league and a fair share of revenues for the players based on a pro sports industry standard.  The details of the laws would be more complicated than that, but that’s the general gist of it.

Unlike mediation, which the NHL and NHLPA tried for a couple of days, the arbitrator would have the authority to craft a final collective bargaining agreement, subject to court review.  Because the two sides might not want to risk a third party deciding their fate, the simple threat of uncertainty inherit in arbitration is likely to force a settlement before it even gets that far.

For those particularly wary of government involvement in the free market, consider that pro sports leagues do not operate in anything resembling a normal free market.  The leagues themselves are trusts between the owners of the various franchises, creating a controlled competition between each other, but excluding other potential market entrants from competition.  Each league (NFL, MLB, NBA, and NHL) has a monopoly on the highest level of competition in their sport.  For the NHL, while some players have the option to play in the KHL, there’s no threat that the KHL or any other league could come close to replicating the NHL in terms of bringing together almost all of the world’s best players.

Finally, mandatory arbitration in labor disputes is not without precedent.  It occurs often in an analogous scenario – public sector collective bargaining.  There, you have a monopoly – the government, and consumers – citizens – that are not unlike fans in their inability to force a resolution to the labor dispute and their ability to be victimized by any work stoppage.  But rather than allow work stoppages, public sector labor law often requires arbitration, and even creates substantial penalties if workers strike.

We are now past Day 80 of the NHL lockout, with 422 regular season games cancelled.  According to Gary Bettman, the league is losing between $18 million and $20 million per day, with the players losing between $8 million and $10 million per day.  Much of that is revenue that simply will not be recouped by either side.  While each side may be rationally pursuing their own interests (sacrificing $100 million to gain $150 million makes sense if that actually occurs), the lockout is resulting in a collective loss for the two sides, and a very heartfelt pain for the public, the league’s loyal fans.

If only we could just force an agreement to be made . . .

John Hatton was born a New York Islander fan in 1982, amidst the happiness of the reign of one of pro sports’ greatest dynasties.  He is a graduate of Cornell University’s School of Industrial and Labor Relations and New York University School of Law, but his similarities with Gary Bettman thankfully end there.  In addition to being a sports fan, he co-owns a small wine label and sells delicious pinot noir (with chardonnay coming soon) when he is not engaged in his regular job as a political professional.

Your Comments

1 comment

  1. Scott Weiss says:

    Anything, including mandatory arbitration that would stop future work stoppages is a good idea in my book.


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