Jun
22

Analysis of “The National Hockey League and Salary Arbitration: Time for a Line Change”

Thanks to Sports Law Blog, I came across a very interesting article in the Ohio State Journal on Dispute Resolution titled The National Hockey League and Salary Arbitration: Time for a Line Change [Entire Note in LexisNexis]. Even if you have a LexisNexis subscription, reading the entire note produced by Stephen M. Yoost may require more time than you have available. That’s where this blog comes in and attempts to take away the parts that I find to be very interesting and informative in the Sports Business.

NHL

  • The average NHL salary has gone from $560,000 in 1994 to $1,800,000 in 2004 (good for agents…bad for the stability of the league).
  • Under the NHL’s new salary arbitration system (according to the new CBA), a player is eligible for arbitration after 4 years in the league.
  • In the NHL, teams have the right to use salary arbitration for players that earned more than $1,500,000 in the prior year.

MLB

  • As discussed in the post on Alfonso Soriano’s arbitration case, Major League Baseball uses a “Final-offer” arbitration system. This means that each side of a salary argument (player and team) propose what they feel is the correct salary figure. A panel of three abitrators must select either offer. They cannot choose a number that was not submitted by either side. Such a system is designed to fuel compromise and to cut down the actual number of cases that make it to a hearing.
  • In the MLB, arbitrators can only award single-year contracts if the argument goes to a hearing.
  • In the MLB, players often see their salaries rise even if they lose their arbitration hearings. Studies claim that those who lose hearings still average 150% higher salaries the next year. Players consistently double their salaries just by filing for arbitration.

General

  • Arbitration to settle salary disputes began in 1970. The NHL was the first league to put the practice to use. In 1973, Major League Baseball used it for the first time in a salary argument. Both leagues continue to use salary arbitration. The NFL (the most successful major sports business) and NBA do not.

Overall, it is a great article that examines the history of arbitration in the MLB and NHL, with its primary focus on the old system in the NHL compared to the new system created by the new Collective Bargaining Agreement. It claims that the NHL’s new arbitration system levels the playing field because the owners are able to file for arbitration if they feel that players are overpaid.  In the MLB, it really only works one way…a player files if he feels that he is undervalued.  If you have the opportunity to read the article in its entirety, I would recommend it.

[tags]arbitration, nhl, mlb, baseball, hockey, cba, collective bargaining[/tags]