Cards, Caps, and Royalties Pushed Players to Strike
Fees from use of logos and player photos is a focus of hockey dispute. MONEY AND SPORTS
PITTSBURGH — ED WERNER doesn't own the biggest coin and sports-card shop in Pittsburgh. But when the city's professional hockey team won last year's Stanley Cup championship, he felt the surge in interest like everybody else.
Trading cards of the team's best young players tripled in value. "Hockey's become one of the nation's hottest sports as far as trading cards."
Now a strike - the first in the National Hockey League's 75-year history - threatens to dampen that business. On Tuesday, the owners gave the players until today to accept their final contract proposal. A major reason for the impasse? Trading cards.
Trading cards and other sports memorabilia have become a booming business in the past five years. For example: O-Pee-Chee Company Ltd. - Canada's largest maker of hockey and baseball cards - sold a $1.99 pack of hockey cards in 1990. Now, it's worth $120. The London, Ontario, company has six times as many steady customers as it did five years ago.
As the cash rolls in, makers of cards, T-shirts, and caps have paid higher and higher licensing fees to use a team's logo or an athlete's picture. Team owners, players, and unions are scrambling for their share of the bonanza.
The most bizarre battle is in professional football, where the NFL Players Association is fighting on two fronts. It is suing the National Football League for the right to the revenues from trading-card contracts. It is also suing several of its own players, who have signed licensing agreements with the league. Licensing fees fund the players' association.
The same arrangement exists in hockey. The National Hockey League Players' Association estimates it gets $10 million to $11 million a year from licensing players' pictures.
The licensing arrangement is part of the standard player's contract, not the collective bargaining agreement. Still, it's an issue. The owners, who won't release their licensing revenues, argue that both sides can make more money if they pool their efforts. The union is balking. The union wants the owners to drop language in the players' contracts that could give the teams the right to the union's licensing revenues.
If all this sounds convoluted, it is. Ostensibly, the strike is about the freedom of players to move from team to team and the league's forecast deficit of $157 million over the next two years.
The real issue, though, may be a test of resolve between a league long used to quiet labor relations and a new union leadership out to prove itself, sports-labor experts say.
"There's a level of respect that the hockey players are looking for," says Lisa Pike, a professor in the sport management program of the University of Massachusetts.
Hockey players are not as visible, have less freedom to switch teams, and make less money than other major league players (an average $379,000 compared with just over $1 million in baseball). "When you look at it from the perspective of the other leagues, they are a few steps behind," Ms. Pike says.
"It looks like the players are solidly behind their union," adds James Dworkin, associate dean of the Krannert Graduate School of Management at Purdue University. The players voted last Wednesday 560 to 4 to walk out - a stunning vote of confidence for the union's new executive director, Bob Goodenow.
For the moment, the pressure is on the owners to settle, these observers say. The players have already received all but their playoff bonuses, while the owners traditionally make their profits during post-season play. But if the talks drag on and the playoffs are canceled, then the owners will have little incentive to settle right away.
The composition of the league may also make a deal difficult. Unlike basketball, baseball, and football, professional hockey has no national TV contract. The teams have to rely on gate receipts for 70 percent of their revenue. The sport is more regional than national in the United States. Many fans are concentrated in small broadcast markets in Canada.
"There's definitely a Canadian, small-market dimension to the resistance of the owners," says William Walsh, professor of economics at the University of Victoria in British Columbia.
Because of high Canadian taxes, hockey players there have a built-in financial incentive to move to the US, he says. Without restrictions on players' freedom to move, such as the right to match a competing team's offer, Canadian teams may find it hard to hold on to their players.