The 2004–05 NHL lockout was a labor lockout that resulted in the cancellation of the National Hockey League's 2004–2005 season, which would have been its 88th season of play.
The main dispute was the league's desire to implement a salary cap to limit expenditure on player salaries, which was opposed by the NHL Players Association (NHLPA), the players' labor union, who proposed an alternative system of revenue sharing.
Attempts at collective bargaining before the season began were unsuccessful. The lockout was initiated on September 16, 2004, one day after the expiration of the existing collective bargaining agreement (CBA), which itself had been the result of the 1994–95 lockout. During the lockout, further attempts to negotiate a new CBA floundered; with neither side willing to back down, the entire season was canceled on February 16, 2005. The NHL and NHLPA negotiating teams finally reached an agreement on July 13, 2005, with the lockout officially ending nine days later on July 22, after ratification by the NHL team owners and NHLPA members. The resulting CBA included both a salary cap and revenue sharing.
The lockout had lasted 10 months and 6 days, covering 1,230 unplayed games. As a result, the Stanley Cup was not awarded for the first time since 1919. Among the major professional sports leagues in North America, this was the first (and so far only) time a whole season was canceled because of a labor dispute, and the second time a postseason was canceled (after the 1994–95 MLB strike). Large numbers of NHL players elected to play in European leagues during the lockout.
Issues The NHL, led by Commissioner Gary Bettman, attempted to convince the players to accept a salary structure linking player salaries to league revenues, guaranteeing the clubs what the league called cost certainty. According to an NHL-commissioned report prepared by former U.S. Securities and Exchange Commission chairman Arthur Levitt, prior to 2004–05, NHL clubs spent about 76 percent of their gross revenues on players' salaries – a figure far higher than those in other North American sports – and collectively lost US$273 million during the 2002–03 season.
On July 20, 2004, the league presented the NHLPA with six concepts to achieve cost certainty. These concepts are believed to have included a hard, or inflexible, salary cap similar to the one used in the National Football League, a soft salary cap with some capped exceptions similar to the one used in the National Basketball Association, and a centralized salary negotiation system similar to that used in the Arena Football League and Major League Soccer: Bettman had earlier concluded that a luxury tax similar to the one used in Major League Baseball would not have satisfied the league's cost certainty objectives. While most sports commentators saw Bettman's plan as reasonable, some critics pointed out that a hard salary cap without any revenue sharing was an attempt to gain the support of the big market teams (such as Toronto, Montreal, Detroit, the New York Rangers, Vancouver, and Philadelphia) that did not support Bettman during the 1994–95 lockout.
The NHLPA, under executive director Bob Goodenow, disputed the league's financial claims. According to the union, "cost certainty" is little more than a euphemism for a salary cap, which it had vowed never to accept. The union rejected each of the six concepts presented by the NHL, claiming they all contained some form of salary cap. The NHLPA preferred to retain the existing "marketplace" system where players individually negotiate contracts with teams, and teams have complete control of how much they want to spend on players. Goodenow's mistrust of the league was supported by a November 2004 Forbes report that estimated the NHL's losses were less than half the amounts claimed by the league.
Several players also criticized the contracts that overpaid unproven players: one example was the 2002 Bobby Holik contract, in which the New York Rangers signed him to five years for $45 million. After two years, his contract was bought out by the Rangers: according to Glen Sather, the Rangers' president, "In the new world we live in, Bobby was just paid too much".
Although the NHL's numbers regarding financial losses were disputed, there was no question that several franchises were losing money: some had already declared bankruptcy, and others had held "fire sales" of franchise players, such as the Washington Capitals. Some small-market teams, such as the Pittsburgh Penguins and the remaining small-market Canadian teams, were actually hoping for a lockout, since those teams would make more money by losing a season.
The league did not have large television revenues in the United States, so the NHL was reliant on attendance revenues far more than other leagues: after the lockout of the 2004–05 season, NHL teams made on average only $3 million from television revenues. In addition, in May of the 2004–05 lockout, ESPN formally denied the option to show NHL games on the network due to low ratings in previous seasons. Many NHL teams had low attendance totals in seasons preceding the lockout.
Negotiations
Prior to the lockout, the NHLPA had proposed a system in late 2003 that included revenue sharing, a luxury tax, a one-time 5% rollback in player salaries, and reforms to the league's entry level system. The league rejected this proposal point-blank, saying it essentially maintained the status quo in favor of the players.
Shortly before the lockout commenced on September 16, 2004, the NHLPA offered another proposal to the league, one that was believed to be similar to their earlier proposal. The league rejected the union's new offer, claiming the new proposal was worse than the one they rejected in 2003. At this point, negotiations stalled until early December, when the NHLPA made a highly anticipated proposal based on a luxury tax, increasing the proposed one-time rollback in players' salaries to 24%. The NHL rejected this offer, and put forward a counter-proposal that the union flatly rejected.
In late January 2005 - near what the hockey media believed to be the point of no return for the 2004–05 season - discussions were held by the negotiators from both sides, with Bettman and Goodenow not being invited.
The NHL was represented by Executive Vice President Bill Daly, outside counsel Bob Batterman, and NHL Board of Governors Chairman Harley Hotchkiss, who also co-owned the Calgary Flames. The NHLPA was represented by President Trevor Linden, Senior Director Ted Saskin, and associate counsel Ian Pulver. After four meetings, the sides remained deadlocked because of, according to Saskin, "significant philosophical differences."
Shortly after this series of meetings, Daly presented Saskin a proposal that the league believed made a number of concessions to the players, but was still based on a salary cap linked to revenues. The players' association rejected that proposal, saying that it was "not the basis for an agreement."
After these negotiations failed, Bettman declared on February 9 that if the lockout was not resolved by that weekend, there would be no hope of saving the season. When talks broke off between the NHL and the NHLPA the next morning, there had been no progress in negotiations.
On February 14, the union offered to accept a $52 million salary cap under the condition that it was not linked to league revenues, to which the league proposed a counteroffer of a $40 million cap plus $2.2 million in benefits, which the players association rejected. The next day, Bettman sent Goodenow a letter with a final proposal of a $42.5 million cap plus $2.2 million in benefits, setting a deadline of 11:00 the next morning to accept or refuse the offer. The NHLPA presented a counter-offer involving a $49 million cap, which the league rejected.
With no resolution by the 11:00 deadline, Bettman announced the cancellation of the 2004–05 season on February 16, 2005, making the NHL the first major professional sports league in North America to cancel an entire season because of a labor dispute: the announcement was to have come on February 14, but it was delayed because of the death of the patriarch of the Sutter hockey family four days prior, whose funeral was held on February 15. Two days after the cancellation announcement, The Hockey News reported that a deal with a $45 million cap had been reached "in principle" (meaning the sides have agreed, but nothing is signed) with the help of owners and former players Wayne Gretzky and Mario Lemieux; both camps immediately denied this report. An emergency 6½-hour meeting took place the next day, but no agreement was reached, formalizing the season's cancellation.
Bolstered by the thought of losing a second season to a labor dispute, the sides began meeting again in earnest in June, holding what sources to media would describe as "marathon sessions" in hopes of coming to an agreement. Ending June without a deal in place, the two sides reconvened early the following month, holding meetings on consecutive days from July 4 until July 13, when the parties finally agreed in principle to the terms of a new deal. According to reports, the July 12 session lasted through the night and until 6:00 on the morning of July 13, at which point the talks broke off for five hours, and resumed in time to complete the deal.
On July 21, the players association ratified the agreement with 87% of its members voting in favor; the 30 team owners unanimously approved it the next day, officially ending the 310-day lockout.
The salary cap would be adjusted each year to guarantee players 54% of total NHL revenues, and there would also be a salary floor. Player contracts are also guaranteed. The players' share will increase if revenues rise to specific benchmarks, while revenue sharing will split a pool of money from the 10 highest-grossing teams among the bottom 15. There was a $39 million cap in place for the first year of the CBA.
Effects of the lockout
A Canadian public opinion poll conducted by Ipsos-Reid near the start of the lockout found that 52 percent of those polled blamed NHL players for the lockout, whereas 21 percent blamed the owners of NHL teams. Also hurting the NHLPA was that its players had very visibly high salaries, which removed much sympathy from lower-to-middle class fans, with the NHLPA's cause being further harmed by Jeremy Roenick and several NHLPA executives making controversial statements that showed their disdain for owners and fans alike.
During the lockout, a movement arose to free the Stanley Cup from the NHL. By the original deed of Lord Stanley, the cup was a challenge cup open to the best amateur hockey team in Canada. Only since 1926 has it been exclusively competed for by NHL teams, and with the 2004–05 NHL season being cancelled, the group felt that the NHL had forfeited its right to award the Cup for the year. On February 7, 2006, a settlement was reached in which the trophy could be awarded to non-NHL teams should the league not operate for a season, although the NHL by that point was playing again.
Resolution