Avoiding an Own Goal in Labour Negotiations


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In the U.S., National Hockey League players are under negotiations for a new labour agreement to take them beyond September 15, when the current collective bargaining settlement expires.  The original agreement, reached in 2004-2005 between the National Hockey League and the NHL Players’ Association (NHLPA), is now felt to be outdated.  It has been indicated by the NHLPA Executive Director and the lead negotiator however, that next season’s games could take place even if an agreement has not been reached.  This will be good news for fans, players and owners who were hoping not to see a repeat of the 2004-05 season which was cancelled due to the failure to reach agreement.

A key, and contentious, issue is the players’ share of league revenue.  Players currently receive 57 per cent of League revenue compared to roughly a 50 per cent share in the N.B.A. and N.F.L.  Owners are likely to begin their negotiation by demanding that players take a smaller cut by several percentage points.  A growth of 2 per cent in attendance at games and a growing television audience provides the union with the argument for more money to be awarded to the players instead of club owners.

A second issue is pay.  Although there have been incremental rises in the average salary of players since 2005, the unions say that the increase has not been significant enough to reflect the current status of the game.  On the 28 June, the NHL increased the salary cap from $64.3 to $70.2 million, automatically triggering the lower limit on what teams must spend to rise from $48.3 to $54.2 million.  Incidentally, NHLPA Executive Director Donald Fehr is thought to be in favour of slicing or removing salary caps even though this may be seen as detrimental to smaller clubs who are also important members of the union. The cap system, arguably, promotes fairness in the sport by preventing larger, richer clubs from buying their way out of poor decisions, and gives smaller teams to compete on a more even field.

While the goal posts in this negotiation have undoubtedly moved since 2004-2005 some immediate thoughts come to mind about the dynamics of the negotiation itself.  The size of the negotiating team for the NHLPA seems large, with the Executive Committee and 30 team representatives scheduled to take part.  Of course there is great value in reaching consensus from the teams before the union enters into negotiations, but unduly large teams can change a negotiation dynamic and not always for the better.

Before entering into a negotiation it is always worth exploring what the zone of potential agreement (ZOPA) would look like as well as bearing in mind how both parties can reach a win-win outcome, taking into account non-financial based incentives.  For example, there might be more exceptions to the current cap or potential to loosen limits on contract lengths.  Discussions may lean towards the adaptation of the League’s pay policy, in which a third party holds a certain amount of pay in their control until the total sum of revenues can be determined at the end of the season.  For fans and players I wonder if both parties have considered a ‘best’ alternative to a negotiated agreement.  The union has already indicated the intention to continue playing even if no agreement is signed by September 15.  Some are speculating however that this could merely be a divisive negotiating strategy leading to the gloves being taken off into the new season and one that I fear may be utilised if a deal is put on ice.

Although Nadler, Thomspson and Van Boven (2003) state that ‘less than 4 per cent of managers reach ‘win-win’ outcomes’, let us hope that principled negotiation strategies are used to their full potential to allow the 2012-13 season to continue uninterrupted.  Let the games begin…

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Andrew Fiddy
Andrew Fiddy is CEDR’s Programme Manager responsible for the management of international aid-funded dispute resolution and change projects. He has managed projects in the Middle East, North and East Africa, and Central and Eastern Europe for clients that include the International Finance Corporation, World Bank and the European Bank of Reconstruction and Development. He is a CEDR accredited mediator and is a conciliator with the Funeral Arbitration Service and the Renewable Energy Association.

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