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Soup of This Day #282: I Think About The Implications

January 7, 2013

1942 Stanley Cup Final
A good hockey strike – A Toronto Maple Leafs player buries the puck during a 1942 Stanley Cup Final game. The Leafs would win the Cup Final 4 games to 3 after being down 0-3 early in the series – Photo: Conn Smythe Fonds, 1942. Conn Smythe Fonds is not affiliated with Longworth72. Image cropped by Longworth72.

I’m not generally in favour of strikes.

To be fair, there is some personal hypocrisy to this viewpoint – I live in a 1st World society with many fair industrial relations protections and benefits that were hard-fought and won by actions in the past, many of which involved strikes. The thing is though, that it seems like strikes can, and often are, also used for stuff that isn’t fair.

Like eking out an extra large piece of cake that is nutritionally unnecessary – Sure that bonus layer of ganache will taste nice but really did you not get what you needed from that delicious crumb? To fight for the ganache reads to me as wrong – Particularly when others are campaigning for just a little bit of flour – Not for cakes, but instead just for plain old bread to stay alive on.

Striking for bread is a good strike. There are other good strikes too, exceptions to my dislike.

Like the Gurindji strike that kicked off in 1966 in central Australia. You can read about far better accounts elsewhere, but essentially the Gurindji were the traditional owners of a particular piece of land that had been converted by non-Aboriginal folk into a station. The Gurindji were allowed to stay there, in abject conditions and for very little in the way of pay for the work that they did as station hands or domestic servants. Quite simply it was a flagrant violation of their human rights and there didn’t seem to be any external mechanism that they could rely on to make things right.

So, led by spokesman Vincent Lingiari, they went on strike.

And they stayed on strike, garnering public and government support, slowly at 1st but then with a sort of unstoppable momentum born of being right. That in turn led to a victory of sorts – In 1975 then Australian Prime Minister Gough Whitlam handed over a parcel of land to the Gurindji, the 1st return of land to traditional owners in Australia. It was a pivotal moment in a fight that continues today and it all started with a strike by around 200 people.

By contrast, there have recently been around 740 National Hockey League (NHL) players on a just-completed strike of their own.

Technically it has been a lock-out rather than a strike, with team owners refusing to let players in rather than players refusing to come in. Given that the players don’t want to come in then this can be seen as a sort of pre-emptive move by the owners, an attempt to seize the moral high-ground.

The high ground in a murky bog is slightly safer, that’s true. It’s still in the middle of a murky bog though and unless you’ve got a helicopter you’re not getting out without getting all muddy and covered in slime that is likely made up of frog @#$%.

The team owners in NHL surely have helicopters and they’ll be those sleek, well-appointed 1’s that resemble a cross between Airwolf and a hotel – but like all helicopters they are powered by fans. In this case the way to keep the fans working for you is to show them some hockey and, given that the hockey players are standing in the murky bog with the frog waste, that’s just not possible.

So nobody looks to be coming out of this clean. But what was all of this dirty arm-wrestling really about?

The NHL (The Owners) wanted to reduce the player’s share of revenue from 57% to 46%.

Which is a lot but the NHL were arguing that given the global financial crisis cliff thingy that they needed to keep more dough so as to keep the league afloat.

That is a lot of dough – Last season the NHL took in revenue of around $3.3b. 57% of that is roughly $1.88b. 46% of that would be $1.52b – So around $360m less. That is close to a $0.5m pay cut per player. Which is enough to make any decent hockey player spit out his mouth guard.

And some teeth.

In the end both sides settled on a 50-50 split and got to keep their teeth. That amounts to $1.65b each way on last season’s numbers and a reduction of $230m for the players. There is of course a corresponding benefit for the NHL and that benefit will get bigger in coming years as revenues increase.

Provided of course the fans get over the whole strike thing. The sponsors too, but they take their cues from fans.

So the NHL gets more ganache on their slice of cake and the players lose the cherry atop their slice. The guys doing the ice dancing though did get an agreement to ensure that the cake lasts longer – The NHL will bake more cake via a defined benefits pension plan.

Previously players got a relatively poor return post-career. Sure they could make some good money while playing – For the 740 of them in action last term the average was $2.45m per year. The mean though was just $1.4m and hockey careers don’t often go the distance – There’s the highly physical nature of the game that could see a player limp away with only a handful of millions.

For sure, it’s not the worst pay-to-danger ratio going around – There are jobs with higher risks.

Like those fishing folk on Deadliest Catch. For those plucky guys and girls, 1 slip on the icy rink they call a deck and they could be well and truly pucked.

But still, regardless of your career choice, you’ve got to think of the future and more cake in your dotage is a good thing when you don’t have to bake it yourself. Don’t be fooled though – That was no preservative the NHL was whacking into the cake to make it last longer – In fact they did the opposite by capping contract lengths to 7 years and putting in a measure to block off the exorbitant front-loading of contracts, i.e. The paying of a major chunk of the contract across the 1st few years so as to defray the damage to the salary cap. The measure chose to stop this loophole up was a limited variance from year to year – The players can have their cake but they can’t scoff it all at once to allow for a bigger serve.

So who won?

Well I’d like to introduce some numbers that will hopefully make that a little clearer. Since I am however: a. Crap at math; and b. Not a socioeconomist, then you might need to apply some beer goggles before following my flow.

For starters, let’s consider that, as of 2010, the median male wage in the US, where the NHL franchises are predominantly located, was around $32,137. Given that a study found that the average career-span of a hockey player in the NHL was 2.9 years then at the median wage that player would be looking at $4.06m.

To achieve parity with that, at the 2010 median wage for a male American, their career-span would need to be 126.33 years long. Given that the world’s oldest verified man is still on the ice at 115 years and 262 days that is possible, but he’d need to be earning the median wage from birth to make it happen.

Plus, not to put the mockers on him, but he’s still got 10 years to go and he’s skating on some very thin ice.

Of less relevance is that he’s Japanese and they are only ranked 22nd in the world for ice hockey. They have beaten Canada 3 times, although they took 40 attempts to get that far. They’ve never lost to Australia but never beaten the US.

Whose 2010 median wage is roughly comparable with the inflation-adjusted figure from 1968, which was 2 years into the Gurindji strike down here. The federally mandated minimum wage that the Gurindji were supposed to be paid was 5 shillings a day. They weren’t getting paid that and a fair amount of what they were getting paid was being sequestered for safe keeping – Sort of a defined benefit plan that never really pays out. But still, let’s suppose they were getting paid the right amount.

5 shillings converted in Australia in 1966 to 50c. Therefore a Gurindji stockman should have been clearing a minimum of $182.50 per year. That’s in Australian dollars and in 1968 1 of those was worth $1.12 US, so the Gurindji should have been on $204.4 US dollars.

Applying the US Bureau of Labor Statistics inflation calculator to this figure gives us a 2010 equivalent of $1,280 US.

A pre-strike Gurindji stockman would need to work for 3,171.88 years to match the accumulated median income for your average hockey career span.

Sure, some of my math might be a little fuzzy around the edges, but I think we can draw some reasonable conclusions here:

The NHL won. The players won. Everybody else lost.

This is exactly why I generally don’t like strikes.

I Think About The Implications

  1. Hockey is indeed a regional sport in the US but I happen to live in a region that cherishes it. As much excitement here about the Flyers starting up as there is interest in who the next Eagles coach will be. OK, that’s a stretch…but the bottom line is many folks in our area think this shortened season may be a classic. True importance for each outcome. The NHL regular season is simply too long, as I believe it is in most all sports. I also am glad regular folks who work around and in the arenas, the local business owners, etc. get to stave off further loss of incomes and revenues. I don’t care for strikes either…except in bowling.

    • I’m glad it’s back too – While I’m unhappy with the lockout I’m not 1 of those to advocate sitting out as a fan in retribution. And maybe you’re right – A shortened season may well turn up some unexpected results. Personally if it can be half as entertaining as the Flyers vs Penguins quarterfinal series from last year then I’ll be paying attention from down here.

      It’s a good point about the folk who rely on the NHL but aren’t in the limelight – The margins are pretty fine for a lot of people now in both the US and Australia, but more so in the former I think.

      I too like a good strike in bowling – Sadly I don’t see as much of them as I do the gutter.

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