Two weeks ago, Justice Frank Newbould of the Ontario Superior Court (Canada) tossed out the National Hockey League’s $375 million North America sponsorship agreement with Molson-Coors Brewing Company.  The exclusive seven-year beer sponsorship “monster” deal would have been the largest sponsorship agreement in the league’s history.  However, with Judge Newbould’s recent ruling, the deal becomes just another questionable decision made by the NHL.

Judge Newbould nullified the agreement after determining that the NHL already had a sponsorship deal in place with one of Molson’s largest rivals, Labatt Brewing Company.  Specifically, Newbould found that the NHL had previously sold the exclusive beer sponsorship rights to the Canadian region to Labatt for the next three years.

The NHL and Molson-Coors plan to appeal Newbould’s ruling.

If Judge Newbould’s finding is correct, you really have to doubt the league’s leadership.  As Damien Cox of thestar.com reported, one industry analyst described the situation as “very embarrassing,” noting that the NHL basically “tr[ied] to sell the same property twice and got caught.”

Moreover, this news comes only a few weeks after another questionable decision by the league to allow the Atlanta Thrashers to move out of the fourth largest TV market in the United States after only a six-month search for a local buyer.

On a positive note, thanks to the Boston Bruins and the Vancouver Canucks for an exciting, hard-fought seven game Stanley Cup Finals.  Thankfully, the excitement from the games has overshadowed the NHL’s recent decision-making.

As a diehard fan of the National Hockey League (“NHL”), the thought of another lockout occurring is incredibly frightening.  Moreover, with former executive director of the Major League Baseball Players Association (“MLBPA”), Donald Fehr, recently taking over the reigns as executive director of the National Hockey League Players Association (“NHLPA”), I find myself downright anxious.[1]  After falling into a deep hole as a result of the lost 2004-05 season, in recent years, the NHL has slowly climbed its way back into the hearts of the everyday American-sports fans.  The NHL’s TV ratings have reached all-time highs,[2] a long-term TV broadcasting deal has been secured,[3] and the games have perhaps never been as close or as exciting.[4]  Another lockout would be absolutely devastating to the NHL’s progress.

I.  The NHL’s Current Collective Bargaining Agreement

The NHL’s current collective bargaining agreement is set to expire on Sept. 15, 2012, only a few months after the completion of the 2011-12 season.[5]

The agreement, which was formally reached between the NHL and NHLPA after several months of negotiations on July 22, 2010, was originally set to expire following the current season (2010-11), however, on June 22, 2010, the NHLPA exercised its right to extend the agreement for a seventh year.[6]

The NHL’s current collective bargaining agreement is a significant departure from the pre-lockout agreement.  Specifically, “the [current] agreement has three distinct changes” from the prior agreement: a hard salary cap, a revenue sharing system, and an immediate twenty-four percent rollback on all player salaries (which occurred only once at the time of the agreement).[7]  Unquestionably, the most considerable provision of the current collective bargaining agreement is the hard salary cap.  The hard salary cap proscribes a maximum and minimum dollar amount, dependent upon the league’s revenue, that each team can spend on its payroll ($39 million and $21.5 million, respectively, in 2005-6).[8]  As a consequence, for teams to remain within the maximum and minimum salary cap limits, individual player salaries can not exceed a particular amount, nor can they fall below a certain amount ($7.8 million and $450,000, respectively, in 2005-06).[9]

As the amount of money available for the players to earn was significantly reduced, the current collective bargaining agreement was, and still is by many, considered to be a significant loss for the NHLPA.  To put both the team and individual salary caps into perspective, sixteen teams spent over $39 million on their payrolls in 2003-04 (the highest being the Detroit Red Wings at $77,856,109)[10] and eighteen players made over $7.8 million (the highest being Peter Forsberg and Jaromir Jagr at $11 million).[11]  The amount of money left on the table resulted in a lot of blame placed on the then executive director of the NHLPA, Bob Goodenow.  As a result, on July 28, 2005, Goodenow was asked to step down as the NHLPA’s executive director, and he eventually resigned less than two weeks after the current collective bargaining agreement was reached.[12]

II.  The ‘Fehr” Factor

Enter, Donald Fehr.  After “go[ing] through three different executive directors and los[ing] several key management people since the . . . lockout,” the scrambling NHLPA reached out to Fehr, who had initially offered only limited advisement to the NHLPA, to be their new executive director and saving grace.[13] The players desperately sought Fehr because, as he demonstrated throughout his thirteen years as the executive director of the MLBPA, he certainly knows a thing or two about representing players.

Particularly, Fehr has earned a reputation for being a combative negotiator on behalf of his players.[14]  For example, in the 1980s, he secured $280 million in damages for the MLB players by legally challenging the MLB owners’ collusion.  Furthermore, perhaps more famously, he led the MLB players through a couple of work stoppages, including the 1994-95 strike, which resulted in the cancellation of the entire 1994 World Series.[15]

Essentially, Fehr’s experience “prove[s] that he’s [more than] willing to sit his players out,” and with the NHLPA in need of precisely that kind of a strong, combative leader, his hiring could serve as a “clear warning sign that there’s a difficult road ahead.”[16]

III.  What Lies Ahead

As the NHL’s current collective bargaining agreement does not expire for nearly a year-and-a-half, I can only speculate as to what lies ahead.  However, one thing is for certain, by having an executive director with “CBA combat experience” in their corner, the NHLPA is likely going to see more favorable results this time around.[17]  What will those results be?  Adrian Dater of the Denver Post reported last year that “there [were] whispers that, under Fehr, the players might try to abolish the current hard salary cap and get a soft-cap, luxury-tax, revenue-sharing style system [like] baseball has had for the last seven years.”[18]  This rumor makes sense, given that Fehr’s experience comes from the MLB, and he’s familiar with that type of system.

However, let’s not forget about the leader on the NHL’s side, Gary Bettman.  He’s also a feisty negotiator who has successful collective bargaining agreement experience under his belt.  In fact, given the results of the 2004-05 lockout, I think it’s safe to say that he has secured his position of NHL Commission for life.  If presented with the rumored proposal above, “Bettman would [likely] say ‘over [my] dead bod[y]’ to a giveback of the hard salary cap.”[19]

The early indications from Fehr are that he will not pursue a lockout.  When hired, he said that: “[w]e treat a work stoppage as a last resort.  It’s something you consider only when you perceive all other alternatives have failed.  Do I anticipate a stoppage?  The answer is no.”[20]  If an agreement can not be reached, perhaps both sides may even let the current collective bargaining agreement be grandfathered in for the 2012-13 season until a new agreement is reached.  Ultimately, given Fehr’s history, and knowing that the players will want to push back, until Sept. 15, 2012, I’ll personally be ‘Fehr’ing another lockout.

As many artists are reluctant to pursue legal action, it is not uncommon for an individual or organization to get away with using an artist’s copyrighted work without obtaining a license to do so.  “It’s often assumed, rightly, by the powerful, that the little guy won’t spend the money to take it to court.”

David Byrne isn’t one of those litigation-shy little guys.

As you may remember, Byrne, the founding member and principle songwriter of the popular music group Talking Heads, filed a lawsuit approximately one year ago against former Florida Gov. Charlie Crist for Crist’s unlawful use of Talking Head’s “Road to Nowhere” in an advertisement promoting his senatorial campaign.  Concerned that the use of “Road to Nowhere” in Crist’s campaign ad might have suggested that “[Byrne] endorse[d] [Crist] and/or the Republican Party,” Byrne filed the lawsuit seeking to obtain $1 million in damages, which was the standard asking price of previous Talking Heads’ licensing requests (Astonishingly, Byrne has never accepted any licensing request).

Comparable to the result of the somewhat recent Jackson Browne/John McCain legal dispute regarding McCain’s unlicensed use of Browne’s “Running on Empty,” Byrne and Crist reached a confidential settlement agreement a few weeks ago following extensive negotiations in Tampa, FL.  As most of the terms of the agreement are, well, confidential, I’m only speculating when I say that I’m sure Byrne received an ample sum of money.  Additionally, Byrne successfully negotiated for the following contractually-required public apology:

Said Byrne of the settlement, “I’m feeling very manly after my trip to Tampa.  Other artists may actually have the anger but may not want to take the time and risk the legal bills.  I am lucky that I can do that.  Anyway, my hope is that by standing up to this practice maybe it can be made to be a less common option, or better yet and option that is never taken in the future.”

Well said, Mr. Byrne.  As the musical landscape continues to change and traditional revenue sources for artists are increasingly diminishing, I encourage all artists, whether little or well known, to patrol the unlicensed use of their work and to enforce their rights whenever necessary.