The New WHA: How the KHL Could Change the Balance of Powers in the Hockey World - Fordham Intellectual Property, Media & Entertainment Law Journal
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The New WHA: How the KHL Could Change the Balance of Powers in the Hockey World

The New WHA: How the KHL Could Change the Balance of Powers in the Hockey World

The Sports Blawg with the Fordham Sports Law Forum

The National Hockey League is in the midst of its second major lockout in the last ten years. Prior to the NHL’s previous work stoppage, the players enjoyed an approximate 74/26 split of the league’s billion dollars generated in annual revenue. Team owners insisted that their slice of the pie be increased, and threated to cancel the season if the players’ union failed to adhere to their demands. True to their word, the owners wiped out the entire 2004-2005 schedule, forcing players to play in less prestigious hockey leagues for relatively little money. The following year, with their tails between their legs, the players came back to the negotiating table and sullenly agreed to a reduced 57/43 revenue split.

Now, eight years later, both parties find themselves in a similar position. The owners insist that the players once again reduce their share, this time to an even 50-50 division. Not surprisingly, the players have refused, and we are left with another lockout. However, one should not be quick to assume that the same result will occur this time around… the tables may have been turned.

The NHL’s monopoly power is in jeopardy. Up until recently, the NHL could be said to be the only dominant hockey league in the entire world, but that might change because of this lockout. The owners’ stubborn approach to collective bargaining has done more than just simply irritate the players; it has opened the door for the league’s first major competitor in the last 40 years, the Kontinental Hockey League.

Founded in 2008, the Russian-based KHL was created with visions of changing the world hockey landscape. For its first four years, it didn’t come close to accomplishing that. Instead, it was the butt of many jokes and perhaps more so known for its gun-toting/drug-planting owners than its on-ice product. Fast-forward to the present, with the NHL’s ongoing lockout, and the KHL finds itself at center stage in the hockey world.

With NHL paychecks going unfulfilled, and teams’ owners refusing to back down, the KHL opened up their wallets and amended its rules in order to accommodate NHL players. While traditionally, a strict salary cap bound KHL teams, an exception was made because of the lockout. Specifically, the league created three additional roster spots that could be filled exclusively by NHL players, and most importantly, not have their contracts count towards the teams’ cap.

The result? NHL players have flocked to Russia. These are not faceless benchwarmers making the move, we’ve already seen some of the NHL’s highest-profile players sign multi-million dollar contracts with KHL teams, including Alex Ovechkin (Dynamo Moscow), Ilya Kovalchuk (SKA St. Petersburg), Evgeni Malkin (Metallurg), Pavel Datsyuk (CSKA Moscow), and Ilya Bryzgalov (CSKA Moscow). It’s not only the money that makes the KHL an appealing option; all of the abovementioned players hail from Russia. In the NHL, in North America, they undoubtedly feel as if they are visitors culturally, yet the KHL affords them the chance to play in front of friends and family in their hometowns.

The most-recent 50/50 revenue split offered by the owners has angered these Russian-born players in particular. To the point where they have united together and are seriously entertaining staying in the KHL for the long term. Alex Ovechkin, a 6-time NHL All-Star and 2-time MVP, commented, “[i]f our salaries get slashed, I’ll have to think about whether to return to [the] NHL…[I] won’t rule out staying in Russia past this season.”

Ilya Kovalchuk, a two-time NHL All-Star, echoed this sentiment, “[w]hat we are offered now isn’t serious…Alex Ovechkin and I agree on this. I already discussed this matter with him as well as with Evgeni Malkin, Pavel Datsyuk, and Ilya Bryzgalov. We’ll wait for other proposals. In the meantime, we are all happy here (in the KHL). If the conditions in the NHL will be unclear, many guys will think twice whether to return there or not.”

Not since Bobby Hull was snatched away from the NHL by the upstart World Hockey Association forty years ago has the NHL faced a threat as serious as what the KHL presents now.

In the 1970’s the WHA lured Hull and other NHL stars away with million dollar contracts, which were completely unheard of in those days. The KHL is in a position to do just the same, with perhaps even deeper pockets backing them than what the WHA had during its heyday, and even what the NHL could offer at the present time.

Former head of the Russian Sport Committee, Viachelsav Fetisov, explains the great opportunity for Russia and the KHL. “We have the chance to change the modern hockey world; it’s a once-in-a-century opportunity. If we manage to support the hockey players’ union financially and emotionally, it may tip the scales. As a result, we may force the NHL to respect the international calendar and defer to the international federation. We could then build up an equal relationship between the KHL and NHL and, perhaps, set up a global league down the line.”

Fetisov’s prediction, while very optimistic, might not be too farfetched. In fact, the WHA’s pressure in the 1970’s did in fact lead to a partial merger between the two leagues, with the NHL taking on four WHA teams: the Edmonton Oilers, the New England Whalers (now the Carolina Hurricanes), the Winnipeg Jets (now the Phoenix Coyotes), and the Quebec Nordiques (now the Colorado Avalanche). Additionally, competition over talent with the WHA led to an increase in players’ salaries across all of hockey, especially in the NHL who feared more of its stars would be poached away.

The WHA’s effect of adding of teams and increasing salaries was of great benefit to hockey players around the world as there were now more jobs available and more money to go around. This was ultimately major factor in the players being able to secure a 74/26 revenue split as recently as 2003. However, once the WHA folded, NHL owners no longer felt the pressure from competitors, and enjoyed a monopoly over the best players in the world for some time. Without a big-pocket rival league, the NHL emerged as the one true dominant force in hockey, and thus, has been able to apply pressure over the players in recent years and attack their revenue share without repercussion.

Enter the KHL, add in the comments of huge talents like Ovechkin and Kovalchuk, and hockey’s overall landscape has clearly changed. The NHL might still be the de facto “world hockey power” for now, but it appears that their stranglehold over the best players has weakened. If the KHL remains a force by continuing to lure away top hockey talent, NHL owners will be at risk of losing control over their players for the first time since the WHA came onto the scene. One thing is clear though, the growth of the KHL is vital for NHL players, as it has the potential to alter the balance of powers in the hockey universe generally and consequently, shift the balance of powers at the negotiating table back in favor of the players.

Daniel Lust

Daniel E. Lust graduated from Union College, where he was co-host on a sports talk show for WRUC (89.7). He is currently a third year at Fordham Law, where he serves as Co-President of the Fordham Sports Law Forum. You can follow him and the rest of the gang on Twitter @SportsLawForum.