(disponible uniquement en anglais)
par: Brandon Beck
Contract negotiations in professional sports are often an intense balancing act between players seeking fair compensation for their past and future value and teams trying to maximize the organization’s profitability. This tension is even more evident in the National Hockey League (“NHL” or “League”) due to its current salary cap and free agency structure, which adds a third factor to negotiations: keeping team spending low to remain cap-compliant. A result of the current NHL structure is that failing to negotiate a contract may result in arbitration. A strategy teams use to keep contract awards low in the NHL’s arbitration process is to present arguments that can border on personal attacks against players. Although this tactic might work for a favourable outcome in arbitration in the short term, it leads to damaged relationships and can negatively affect player performance.
Examples of this tactic being used in NHL arbitrations are plentiful. One of the most infamous cases of an attack on a player’s character to win an arbitration is the one of Tommy Salo, a promising goalie prospect who entered the League in the late 90s. The tactic was used in such an extreme way in this case that the encounter left the player in tears and has been described as “the most horrific character assassination ever seen in an arbitration.”1
Despite the NHL’s existing arbitration system for contract dispute resolution, many methods are available in labour relations and contract negotiation. Each has pros and cons depending on the process’s goal. For example, one benefit of arbitration is a final and binding decision based on the evidence presented.2 Arbitrations are generally also private, which can help maintain confidentiality for the parties involved.3 On the other hand, arbitration can be described as an adversarial process where the binding decision often leaves one side dissatisfied. The adversarial nature of arbitration does not encourage voluntary agreement or settlement and leads parties to take more extreme positions in hopes that the arbitrator will find in their favour.4 Arbitration can be contrasted with mediation, which aims to assist parties in negotiating their dispute toward a mutually satisfactory settlement.5 Mediation provides flexibility for the parties and allows for an agreement which meets their individual needs. Most importantly for this discussion, mediation can preserve important relationships by promoting a collaborative approach, which is particularly beneficial in ongoing team/player relationships.
This paper takes the position that due to the unique nature of the NHL and how its salary cap and free agency model is structured, the current arbitration system is damaging to players and teams. A shift from arbitration to a principled approach using a one-text mandatory mediation model would preserve relationships between teams and players. It would achieve more favourable contract outcomes for both parties. The paper will describe the current NHL arbitration process and discuss its shortcomings, including its impact on player performance. It will then briefly discuss the importance of effective dispute systems design and, finally, the principles of mediation, mainly how a one-text-procedure structure could be implemented to help reduce damage to relationships caused by arbitrations as they currently exist in the League.
The NHL Arbitration Process: A History
The NHL arbitration process, as agreed to by the National Hockey League Players Association (“NHLPA”) and the NHL in 2005, is quite nuanced and does not serve the players’ best interests. One labour lawyer called the agreement “the largest setback for players that I’ve seen in collective bargaining.”6 The Collective Agreement (“CBA”) resulted from a season-long lockout from 2004 to 2005 (the “Lockout”), which created a less-than-desirable bargaining position for the NHLPA.7 The history of the Lockout and resulting CBA culminated in two factors: deterioration of the reserve clause and rising salaries throughout the League.
First, the NHL reserve clause, which existed before the implementation of arbitration, bound a player to a specific team for their entire career.8 This meant that when a player’s contract expired, the team maintained all rights to that player.9 As a result, the teams had nearly all the leverage in future salary negotiations. This type of system was standard in other sports leagues at the time, including in the MLB.10
The NHL’s reserve clause became problematic in the 1970s. Players realized they had no negotiation leverage, so some initiated litigation against the teams controlling their rights.11 Not only did they begin to sue teams, but they also began to win their lawsuits. For example, in Boston Professional Hockey Ass’n, Inc. v. Cheevers, the district court ruled that the NHL reserve clause was likely in violation of anti-trust laws that existed at the time. The Court denied the team’s request for an injunction that would have prevented Mr. Cheevers from signing a contract with another team. Subsequent litigation surrounding the reserve clause resulted in the breakdown of the reserve clause system. After all was said and done, “the events of the 1970s regarding the NHL’s reserve clause system shaped the adversarial nature of salary disputes between teams and players today because players no longer feel that owners have an aggressive upper hand when it comes to contract negotiations.”12
The second trend leading to the Lockout was a sharp rise in player salaries accompanied by newly implemented salary disclosure requirements, resulting from players arguing that team owners were dishonest about team salaries and profits.13 As a result of the disclosure requirements, players could see the salaries of comparable teammates and other players in the League. This caused players to demand more in order to be on the same level as or paid higher than their colleagues, which caused an increase in the cycle of salaries. A salary cap was introduced to combat this trend in the 2005 CBA8. It is important to note that since its creation, the salary cap has created a new hurdle to salary negotiations and restricted the general manager’s ability to offer higher contracts. The following section describes the process that resulted from the 2005 CBA.
Current System
Salary arbitration in the NHL applies to restricted free agents (“RFA”) whose rights belong to their current team even after their contract expires.14 There are multiple categories of free agency in the CBA, however, for this discussion, a player qualifies as a UFA when the either becomes 27 years old or has played in the League for a minimum of seven years.15 A player can elect arbitration during the final year of their contract. A team may elect to take a player to arbitration who earns more than $1,500,000 in the final year of their contract and who has not accepted the qualifying offer.16 After a player elects for arbitration, the team decides whether to be bound by the decision for one or two years. If a team fails to specify, the default term is one year.
At the arbitration, both parties present evidence that supports their position. One required piece of evidence that both parties must produce is a “Comparable Exhibit” document.17 This document lists players and their salaries, whose stats and other factors are similar to those of the player in question. Comparable Exhibits are not necessarily contentious since they are based on statistical facts. Each party will cherry-pick the statistics that work best in their favour. This process gives the arbitrator a complete picture of the player’s strengths and weaknesses.
Additional evidence is also permitted, such as the player’s performance in previous years, injury history, length of service in the League or for a specific team, overall contribution to the team’s competitive success, and qualities of leadership or public appeal.18 Both parties will submit an amount they feel is reasonable as their final positions for the arbitrator to rely on.
During the hearing, the arbitrator will hear arguments from both sides to justify their positions, and the arbitrator will ultimately decide on an award. The NHL’s arbitration format is unique because the arbitrator has complete discretion regarding the value of the player’s contract.19 This is contrary to other leagues, such as the MLB, where the arbitrator must choose one party’s submitted amount as their award.20 This “flexible offer arbitration system” allows for more reasonable awards and, theoretically, increases fairness in the decision. The arbitrator must provide a summary of their decision with reasons, the evidence relied upon, and the comparable contracts chosen from the Comparable Exhibits to apply to the decision.21
The arbitrator’s decision is binding, except for one circumstance that only benefits the team. A “walk-away” provision in section 12.1 of the CBA allows the team to withdraw from the arbitration decision if the player is awarded more than $3,500,000 annually.22 If a team elects to use that provision, the player becomes a UFA and can sign with any team that offers a contract. Described as “perhaps the most unsettling proposition found in the NHL salary arbitration system,”23 The walk-away provision protects the team in the arbitration process by creating a ceiling for the player’s award. If a player believes they should be paid more than the ceiling or knows that the arbitrator will award higher than that amount, they essentially lose their rights to arbitration since all the power then shifts back to the team. This may result in players opting out of arbitration and trying to negotiate their contracts independently, garnering less salary than they would otherwise be awarded.
The Effects of NHL Arbitration
Although the structure described above was collectively bargained and aims to provide an equal playing ground for the teams and the players, a clear power imbalance remains in the process, and it has not held up as having a positive impact on players, teams, or team owners over time. Evidence suggests that not only does the process create tensions between players and teams, but it also proves to be harmful to the player’s performances on the ice and creates job insecurity.
In an empirical study conducted in 2006 by Shirreffs and Sommers, the researchers examined the effect of salary arbitration on NHL player performance. They compared the statistics of 34 players in the year leading up to arbitration and the year following arbitration and divided the subjects into two groups: 27-year-olds and younger and 27-year-olds and older.24
The results showed that in the year following arbitration, older players had a significant reduction in points per game, and younger players showed no increase or reduction in points the year following arbitration. According to the researchers, “these results suggest that the arbitration process imparts strong work incentives among older NHL players who, because of their age, may not have the opportunity to repeat arbitration. However, the productivity of younger players, who may return to arbitration and have no incentive to curtail effort, did not decline in any category.”25
The study focused only on age, measured against performance before and after arbitration. It assumed that older players score fewer goals per game simply because they cannot repeat arbitration, whereas younger players can repeat arbitration, so they maintain their productivity. However, based on the data available on scoring, we know that players peak with age, and a point regression is expected. That is not true for younger players, though, and it typically does not occur until after age 27. We expect to see player production increase after the age of 27.
A study conducted by Ken Krzywicki in 2008 examined the career curves of NHL forwards. The study focused on NHL forwards with a minimum of ten years’ service through the end of the 2005-06 regular season. Several age brackets were tested, and overall, players beginning their NHL careers at an older age tended to peak in point production sooner than those who started earlier.26 The study concluded that “given the intuitive argument that a player slows down with age, we were able to put some math behind that assertion and, further, show that those players who started their NHL careers earlier in life generally produced and played more seasons.”27 The study successfully validated the common ideas regarding age and performance and provided numbers to confirm the assumption. Players who started their NHL careers at an older age were predicted to peak earlier.
Both of these studies, read together, ultimately reveal that where we would expect productivity to continue to increase in younger players and, at the very least, expect productivity to remain status quo for older players until they get late in their careers, what we actually see is a reduction or plateau in these players following arbitration. This is not surprising, given what we know about how NHL salary arbitrations are carried out in practice.
Behind Closed Doors
Although the arbitrations themselves are not open to the public and the transcripts are sealed, numerous accounts of arbitrations from players and managers have been shared over the years, and they tend to have an underlying theme of humiliating the players involved. As mentioned above, for example, the case of Tommy Salo and the New York Islanders ended with the player leaving the hearing in tears because of the horrible things being said about him in the hearing.28 It is not difficult to imagine how this type of treatment in a hearing could affect a player’s confidence going forward in their career, especially with a particular team. Despite the examples available, when asked about the nature of arbitrations, assistant general manager Don Fishman stated that the process is “a very truthful, open, honest dialogue. We try to treat it very professionally, we don’t make it personal and the player doesn’t hold back in terms of touting himself and we don’t hold back in terms of presenting a frank, complete picture of the player. I don’t think it’s hard. I think the players understand it’s business.”29
Another issue for the players that comes along with exercising their CBA rights to arbitration is what could arguably be a form of reprisal. In 2019, The Athletic, a sports arm of the New York Times, investigated the relationship between players who participated in arbitration and trades involving those players. The results were quite staggering. Based on the ten years of data examined, 27 players have been in arbitration hearings since 2009. Within three years of their hearing, 21 of those players were on different teams. Even more surprising, 16 of the 27 were on new teams within two years, and 14 were on new teams within one year.30 As the article points out, the teams defend this position by arguing that they lose control of their salary cap and roster management following an arbitration decision.31 Although that might be true to an extent, as described previously, the team highly controls the arbitration process, for example, the length of time they opt for, and is much more restrictive for the player than the team.
As these examples demonstrate, the current arbitration process damages the professional relationship between the player and the team, has a lasting impact on the player, and affects performance in the seasons following the process. If the player and team continue to be in a contractual relationship following the process, it would serve both parties better to avoid arbitration as described above. It could reach a deal without players having to “tout themselves” and teams having to provide a “complete, frank picture of the player.” Not only can avoiding character assassinations in arbitration be compelling in and of itself, but even the threat of arbitration can negatively affect the negotiating process leading up to the arbitration. Players engaged in NHL contract negotiations know that their inability to resolve the dispute could lead to an imposed resolution and unfavourable result.32 Because of this, there is an increased incentive to settle before an arbitration. A 1995 study found that parties are substantially better motivated to settle their dispute before arbitration because they knew that a third party could eventually arbitrate and wanted to avoid losing control over their “destiny.”33 The study found that mediation prior to arbitration “pays strict adherence to the axiom that the best agreement is an agreement which the parties themselves reach.”34
A Better Path Forward
In many disputes that require resolution, there can be important goals, such as the concept of justice in a situation where harm is done to one of the parties to the other. Typically, in these disputes, the relationship between the parties effectively ends once a settlement is reached or a judgment is made. As a result, the goals of the parties, or the negotiation strategies used, are driven based on individual interests. Alternatively, in many unionized workplaces, for example, collective bargaining agreements are negotiated with the understanding of a continuing relationship between the employer and employees. In these negotiations, union and employer representatives will deal on the parties’ behalf.35 In NHL contract negotiations, though, the player and their agent deal directly with the team’s general manager, who represents the team as a whole. Because of this, the relationship aspect of the process should be at the forefront of the negotiations.
It is clear that there is a fundamental issue within the NHL arbitration system, and it is also clear why. The players and the Teams have distinct and separate interests. The players want to earn as much money as possible, and the Teams want to pay as little salary as possible to remain under the salary cap and offer a competitive product to their fans. Perhaps, though, a common goal or interest can be found. The problems with the current system and the issues that arise from it can be assessed and addressed using the concept of dispute systems design. A brief description of dispute systems design is provided below.
In 1988, Ury, Brett, and Goldberg introduced the concept of dispute systems design, which initially focused on interest-based procedures to resolve industry-related disputes. Since then, systems have been created and applied in a growing number of areas.36 A dispute system may involve a single formal process, such as arbitration, or multiple processes that use internal or external dispute resolution services, such as mediators and arbitrators.37 A number of indicators can be used to determine if a system is operating successfully. For example, ensuring fairness, efficiency, stability, satisfaction with the outcome, and preserving relationships are among the factors that can be used to assess how a dispute system is functioning.38 The authors propose that, among others, “the best systems involve multiple process options and interest-based processes.”39
The shortcomings of the current NHL arbitration system can be easily pointed out using the indicators described above. For example, the current system does not ensure fairness, rarely results in both parties being satisfied with the outcome, and certainly does not preserve the relationships between the players and the teams. A new system is required.
According to Ury, Brett, and Goldberg, when deciding on a system, it is important to evaluate it by asking questions that focus on the indicators described above. For example, the questions relevant to this discussion are: “What are the goals that motivate the system? What is the system’s structure in terms of its process options and incentives for use?”40 The article also discusses the ADR program of the U.S. District Court for the Northern District of California. In that case, “mediation was chosen in order to offer an interest-based option with the potential of enabling parties to preserve their relationship, create a broader, more creative array of settlement options than the court could order, reach more durable solutions and reduce cost and delay.”41
The most important indicator questions that will be the focus of the system proposed in the following section are related to the goals that motivate the system and the system’s structure. The proposed system will describe a specific mediation structure that could be applied to the NHL system that, like the Northern District of California system, would offer an interest-based option with the goal of preserving relationships between the players and teams and would allow for creative ways to ensure both parties are satisfied with the result.
The following section will discuss mandatory mediation in general and how it would improve the NHL salary negotiation process for both players and Teams. It will then provide specific strategies that could be implemented in the proposed mandatory mediations that can be contrasted with those used in arbitrations.
Mandatory Mediation
In her article “Exploring the Role of Mandatory Mediation in Civil Justice”, Nayha Acharya explores the benefits of mediation. She points out that mediation has many benefits, including cost efficiency, a speedier resolution, and avoiding the adversarial nature of the adjudicative system.42 In the context of NHL negotiations, the most important of the benefits described by Acharya is to avoid the adversarial adjudicative system. A mandatory mediation built into the negotiation process seeks to improve or, at the very least, avoid damage to the relationships between teams and players.
Professor Acharya argues that mediation fosters relationships between parties by enabling them to arrive at their own deals rather than being at the mercy of an authoritative outcome.43 Mediation “values a humanization of the conflict resolution process by prioritizing mutual understanding and exploration of one another’s interests, perspectives, and needs.”44 Acharya points out that mediation’s central feature is “its capacity to reorient the parties toward each other, not by imposing rules on them, but by helping them to achieve a new and shared perception of their relationship, a perception that will redirect their attitudes and dispositions toward one another.”45 Because of these features, mediation has a remarkable ability to promote and enhance autonomy and dignity.46
While Professor Acharya recognizes the benefits of mediation, she is critical of a mandatory mediation system. She takes the position that requiring mandatory mediation before allowing access to the courts or other forms of adjudication “compromises the procedural rights of legal subjects, and the rule of law principle.”47 Acharya argues that mandatory mediation is an improper exercise of legal authority and that requiring a mediation process “constitutes a barrier to the rule of law for the Defendant and denies her the basic dignity and autonomy of choice of process.”48 Finally, Acharya argues that given the uncertainty that mediation will resolve a dispute, infringing on an individual’s important right to choose, requiring it as part of the legal process cannot be justified. She states, “The key point is that the benefits of mediation are potentialities, and these potentialities cannot outweigh the actuality of infringing a person’s procedural right to choose only adjudication where their legal right is at stake.”49
Although it is important to reflect on and consider Professor Acharya’s position on mandatory mediation and how the Defendant’s legal rights to choose are impacted, a mandatory mediation regime in NHL contract negotiations is not the same environment that Acharya focuses on. Unlike in a civil context where both parties might not be engaged in the process voluntarily, in the case of NHL contract negotiations, the entire process has already been agreed to by contract and CBA before the player enters the League. Further, as described above, the current arbitration structure shifts negotiating power into the hands of the teams. For those reasons, contrary to Acharya’s arguments, which are valid for a civil context, a mandatory mediation requirement built into the CBA would benefit the players and equal the playing field. With that note in mind and acknowledging Acharya’s thesis and concerns about mandatory mediation in the civil context, it will be beneficial for this section to extract her points about the benefits of mediation and apply them to a different legal landscape.
As discussed in the previous section, the adversarial nature of NHL arbitrations, together with the team’s cutthroat techniques and lack of compassion for their players during the hearing, correlate to what appears to be the opposite of prioritizing mutual understanding, exploring one another’s interest, perspectives, needs, and reorienting the parties toward each other. Where parties are empowered to self-determine an outcome that best suits both of them, everybody wins.
A Pragmatic Approach to Mandatory Mediation
A closer look at the mandatory mediation approach and its potential benefits shows how this structure could lead to more favourable outcomes for all parties involved in NHL contract negotiations. Given that the evidence shows that the adversarial and mean-spirited nature of the current arbitration process damages the parties’ personal relationships and causes a decline in performance, it is best to take an approach that focuses on maintaining those relationships throughout the negotiation process. In “Getting to Yes: Negotiating Agreement Without Giving In”, authors Roger Fisher, William Ury, and Bruce Patton highlight the importance of personal relationships in negotiation and state, “Any method of negotiation may be fairly judged by three criteria: It should produce a wise agreement if agreement is possible. It should be efficient. And it should improve or at least not damage the relationship between the parties.”50 The authors argue that “dealing with a substantive problem and maintaining a good working relationship need not be conflicting goals if the parties are committed and psychologically prepared to treat each separately on its own legitimate merits.”51 Both concepts will be crucial for both parties to remember during the proposed mediation approach, described in the following section.
In “Getting to Yes”, the authors introduce the method of principled negotiation. They argue that in a typical negotiation, the main problem is that the parties bargain over positions rather than interests. According to the authors, “the basic problem in a negotiation lies not in conflicting positions, but in the conflict between each side’s needs, desires, concerns, and fears.”52 The goal is to identify each party’s shared, compatible, and conflicting interests.53 By reconciling the interests rather than the positions, there is a better chance that both parties can walk away with a sense of a successful outcome.54
The authors focus on a four-part method. First, it is important to separate the people from the problem. It is important that both parties recognize they are dealing with human beings on the other side of the table, and in the case of NHL negotiations, they are dealing with their colleagues. Ensuring that relationship issues are addressed separately from substantive issues at hand can help prevent reaching mutually beneficial outcomes. As the authors write, “the participants should come to see themselves as working side by side, attacking the problem, not each other.”55
Second, as mentioned, the negotiation must focus on interests, not positions. Rather than focusing on each party’s desired outcomes, the principled negotiation method requires that the parties focus on the underlying reasons behind the desired outcomes. By understanding interests rather than positions, both parties can identify common ground and work together. To summarize the difference between position and interest, “Your position is something you have decided upon. Your interests are what caused you to so decide.”56
The third and fourth principles are inventing options for mutual gain and insist on using objective criteria. Encouraging collaboration to generate various solutions before reaching an agreement and basing any agreements on objective and fair standards ensures that the outcomes are based on principle rather than pressure or necessity. “How you negotiate may determine whether the pie is expanded or merely divided and whether you have a good relationship with the other side or a strained one.”57
Although principled negotiation is a great starting point, it would be naïve to believe that both parties will negotiate solely based on shared interests. Another concept that has emerged recently is negotiating based on entitlements. In a 2022 article, Alexios Arvanitis of the University of Crete challenges the conventional idea of interests being the driving force in negotiation.58 The author believes that negotiating around entitlements offers a more comprehensive and socially relevant framework.59 This approach criticizes negotiating solely based on interests and claims that interest-based negotiation is heavily influenced by economics and the need to “win” a negotiation.60 Interests, according to the Arvanitis, are primarily an individual concept that fail to take into consideration external social pressures that might influence the negotiation.61
In contrast to interests, entitlements are flexible claims defined throughout a negotiation.62 They require validation through the agreement of other negotiating parties and entail corresponding duties for both parties involved in the agreement.63 A key difference between entitlements and interests is that entitlements are constrained by social norms and the claims of others, whereas interests are often limitless since they are individualistically based.64 The author argues that negotiation should not primarily be about winning or maximizing individual interests but about regulating and establishing mutually agreed-upon rules and entitlements.65
For example, in the context of an NHL contract negotiation, an entitlement for the player is that since they have played a particular position for their entire career, they will play that position moving forward. On the other hand, the team might agree to that but with the understanding that the position the player wishes to remain in typically garners a lower annual salary. In theory, by agreement to those entitlements, the negotiation can move through each issue to be negotiated until a final agreement is reached. One way to frame the conceptual difference between interests and entitlements is to think of interests as something a party “wants” out of the negotiation, whereas an entitlement is framed as something a party “should” get out of the negotiation.66
Implementing a principled negotiation system that also considers entitlements can shift the discussion surrounding NHL negotiation to focus on how the player and the team can help each other rather than get what they want at the expense of their relationship and the player’s performance. A mediation method described in Getting to Yes that functions on the basis of principled negotiation, could include entitlements, and would integrate seamlessly into the NHL contract negotiation is called the One-Text Procedure. The following section will describe this method and how it would benefit negotiations in the NHL context.
One-Text Procedure
Various mediation structures can be effective in different types of negotiations. One method created by the authors of “Getting to Yes” and described in the book is called the “one-text procedure” or “single negotiating text method.” The one-text procedure involves a neutral third-party mediator who works with conflicting parties separately to develop a single, evolving document that incorporates both parties’ interests and goals.67 The mediator in this type of mediation acts as a contract drafter. They are someone who is “not fully a mediator or an arbiter but knows the interests and constraints of the parties intimately and can then aid them in seeking an efficient contract that both sides would prefer to the original draft of the SNT.”68 A one-text procedure mediation begins with information gathering. At this stage, the mediator discusses the facts with both parties to understand their interests, needs, and goals.69 After the information-gathering stage, the mediator will prepare the first draft of the document that will be used throughout the negotiation.70 During this stage, the mediator could take an additional step to identify any entitlements claimed by both parties. Gathering that information in advance would help guide the negotiations from the start. The mediator then presents the draft to each party separately and receives feedback. The mediator takes the feedback and revises the document to incorporate the required changes. The mediator then presents the document to both parties again, and this process continues until a final draft is produced that satisfies the interests of both parties.71
It is important that the mediator skillfully reframes the conflict by rewording the document or offering alternative options to succeed in this technique. “The one text is like a hammer, and you could have an unskilled regular person use the hammer or a carpenter. Depending on the situation you might prefer one over the other.”72 This technique allows the mediator to control the process and ensure that both parties’ interests and concerns are addressed. It also helps to eliminate any existing power dynamics that may be present at the negotiating table. Since this method does not require the parties to negotiate directly, confrontation is minimized, as is the risk of escalation or personal attacks.73 The one-text approach aims to focus on the interests of the parties, and a skilled mediator can work with the parties to ensure this happens. “Often regarded as an art, the one text method balances carefully between logically guiding parties toward a mutually beneficial solution and the art of finding the right words to lead the parties down that path.”74
Even if mediation fails, the exercise is not wasted. One concern with mandatory mediation is that it will reduce the parties’ willingness to settle negotiations on their own and lead to over-reliance on mediation to produce settlement.75 Although this may be true, a 2019 study examining the effects of mediation on arbitration outcomes showed that the use of mediation prior to arbitration significantly increased the likelihood of settlement by the parties during a subsequent arbitration before the arbitrator was required to make a decision.76 The results suggest that participating in a mediation, even if unsuccessful, sets the foundation for subsequent negotiated settlements. After going through a one-text procedure mediation, at the very least, both parties would know the issues and interests. This would allow for expedited arbitration, eliminate the need for character assassinations, and, in theory, create a smaller gap between both parties’ positions, allowing for a fairer outcome.
Tommy Salo and What Could Have Been
Now, consider the case of Tommy Salo mentioned earlier. How could a mandatory one-text procedure mediation have garnered a different result?
In the summer of 1997, goaltender Tommy Salo’s contract worth $300,000 annually had expired, and he elected for arbitration.77 At the end of his 1996-1997 season, Salo’s statistics were quite average relative to other goalies in the League. His save percentage ranked him 21st in the League, and he was 23rd for average goals against per game. Salo ranked 22nd for the most wins that season and faced the 12th most shots of any goalie in the League that year. Given his age and the quality of his peers who ranked higher than him in these statistics, Salo was a promising and talented goalie. Leading up to the arbitration, Salo submitted an offer of $1,100,000. The team’s general manager, Mike Milbury, said Salo should not earn more than $750,000.78 The difference in offers was relatively slim, accounting for only 1.3% of the salary cap, which was $26,900,000 at the time.79 The arbitrator in the case agreed with the Islanders and awarded Salo $750,000.80
Other goaltenders between that season’s 15th and 25th GAA ranking earned significantly more money following their initial RFA contracts. For example, Garth Snow ranked lower than Salo at 26th in 1997 and earned $1,400,000 in the first year of his new contract. Byron Dafoe, who ranked nearly the same as Salo in 1996-1997, got paid $2,900,000 in the first year of his contract. Finally, Olaf Kolzig, ranked 20th in 1996-1997, signed a deal that paid him $3,000,000 his first year following RFA.81 Given the contracts that his peers were offered based on similar statistics, the only reasonable deduction to make is that factors outside of Salo’s performance contributed to his perceived low value to the team and subsequent offer.
That did turn out to be the case. Salo’s team made a reasonable offer heading into arbitration based on his performance and the current goalie market. Milbury employed a systematic personal attack on Salo to bring down his value at arbitration. At the arbitration, Milbury questioned Salo’s conditioning, stating he was “one of the worst conditioned players on the team, which led to goals in the final six minutes 18 times during the season.”82 That was not all. Milbury went on to blame Salo’s average performance on his “suspect mental approach,” and he also indicated that Salo would be the third-string goalie the following year and would likely even end up being sent to the minor leagues.83 These intentional tactics proved successful in the arbitration however the damage that was caused was irreparable. After the hearing, Salo’s agent stated, “We’re very disappointed, but we’re glad it’s over. We’re going to try to work together to repair the damage done.”84 The outcome of this arbitration and Milbury’s approach to negotiations caused significant damage to the organization. It has been said that the Islanders franchise is “still working to repair the damage from the Mike Milbury Era.”85 It should also be noted that in the season following this arbitration, Salo was not sent to the minor leagues, and he played the most games of any goalie on the Islanders.
Salo was traded from the Islanders in March of 1999 following the expiration of his contract awarded in arbitration. He went on to play in the NHL until 2007 and was a two-time NHL All-Star. He earned roughly $20,000,000 throughout his career.
What went wrong here? How could this negotiation have turned out differently? How could the principled negotiation and one-text procedure approach have garnered a more positive outcome?
First, it is clear that Milbury did not separate Salo as the person vs. the salary cap “hit.” He used the opposite approach and waged personal attacks to achieve a better outcome for himself. Second, the current arbitration process does not consider the interests of each party but only the positions. As a result, Milbury was able to bolster his position by weaponizing personal attacks on Salo. Finally, the arguments made by Milbury about Salo during the hearing were subjective. The statistics pointed to one outcome, whereas the persuasion techniques employed by Milbury garnered a different result.
If approached using principled negotiation, the result could have been very different. When considering the interests of each party, perhaps Milbury was getting pressure from his superiors to ensure the salary remained low because they were currently experiencing financial issues. On the other hand, perhaps Salo would have been agreeable to a lower annual salary but was looking for a long-term contract because he wanted to plant roots for his children to attend school or because he loved the city of New York. Perhaps the parties could have reached a deal that was longer term with a salary increase each year to maintain the overall value of the contract, but it would have allowed the organization to resolve its financial issues while also allowing Salo to stay in New York.
This entire ordeal could have been avoided if the parties participated in a one-text procedure mediation as described above. The mediator could have drafted an initial agreement, and both parties could have gone back and forth, making changes to the document until both were satisfied. If Milbury had genuine concerns about Salo’s physical or mental conditioning, he could have added terms to the contract requiring maintaining specific fitness levels. In that instance, Salo would have a chance to agree or respond with reasons why that is impossible for him. By following this procedure, the relationship would have likely remained intact, and Salo would have remained in New York and been a long-term asset to the team. He could have even signed for the same amount of money without going through a personal attack if other concessions were offered.
The Tommy Salo case is just one example of many that highlight the damage the current arbitration can cause. The Salo case also highlights another important point that team managers who participate in arbitrations and contract negotiations often do not have legal backgrounds. Although some do, most are business people, which might alter their negotiation approach. One general manager who came from a legal background, Chris Gear, said, “When dealing with other NHL management and internal matters, having legal training and experience practicing law provides [me] with valuable negotiation skills and an ability to effectively deal with the management of ongoing commercial and personnel matters. Without [my] legal background, [I] would not be as effective in a management role.”86 This point is important to note because in order to successfully implement a mandatory one-text approach mediation structure that focuses on principled negotiation, the parties involved in the process must be trained in that area of negotiation.
Conclusion
Although, on paper, the NHL arbitration structure was implemented to provide a fair and objective resolution to contract disputes, the system does not work as intended. The system is outdated, actively harmful to the relationships between teams and players, and can damage player performance. A new approach is needed. A principled approach incorporating entitlements using a one-text mediation format offers a solution to the NHL arbitration problem that prioritizes fairness while at the same time works to preserve the valuable relationship between the team and player.
The NHL can create an environment where teams and players collaborate rather than compete by shifting from an adversarial arbitration process to a one-text mediation approach focusing on shared interests and outcomes. A one-text mediation approach can help eliminate the power imbalance between players and teams, reduce hostility and personal attacks, and ensure that the outcome of the negotiation is mutually beneficial. By taking this approach, the NHL can improve career outcomes for its players and, in the long run, improve the fan experience by allowing players to stay on teams for longer while, in theory, playing better hockey.
As the NHL and NHLPA look ahead to future CBAs, they have an opportunity to modernize their dispute resolution framework. If the goal of the League is to offer a system that allows both players and teams to thrive, then an alternative system, such as the one-text mediation, should be considered as an alternative to arbitration. Disputes, personal attacks, and fractured relationships should not define the future of NHL contract negotiations. Instead, it should be defined by fairness, respect, and shared success.