Into the Penalty Box -- Permanently!

By Jay Greene Before Feb. 16, 2005, the darkest day for hockey was probably Ap. 1, 1919. The Montreal Canadians and the Seattle Metropolitans had each won two games in the National Hockey League's Stanley Cup finals. But the puck never dropped in a deciding game on that day. Six players, mostly from the Montreal squad, were suffering from Spanish flu, an epidemic that ultimately claimed more than 20 million lives worldwide. The series was canceled, and four days later, Canadian defenseman Joe Hall died in a Seattle hospital.

It would be wrong to suggest that the cancelation of the NHL season surpasses the loss of life nearly 86 years ago. But the death of a season is no small thing. In fact, never before has a season of any major sport been called off.

The toughest part of it all is that the owners and the NHL Players Assn. were so tantalizingly close to an agreement, only to come up short. In a secret Valentine's Day meeting in Niagara Falls, N.Y., the league agreed to back off its demand that salaries had to be a percentage of overall league revenue. When the owners moved away from so-called linkage, the players finally decided that they could live with a salary cap.

FLAWED STRATEGY. But in the two subsequent days, the two sides couldn't bridge a $6.5 million difference, with the owners willing to pay a maximum of $42.5 million for each of the league's 30 teams and the players seeking as much as $49 million per team.

So who's to blame? It's easy to start with the owners. They pursued a business strategy over the last decade that failed miserably. They overexpanded into markets that couldn't sustain the sport in the foolish hope that a footprint across the U.S. would win a lucrative TV contract from American networks. It didn't happen.

Now instead of accepting the folly of that strategy and cutting the financially weak teams that are such as drain on the league's economics, NHL Commissioner Gary Bettman is trying to create a new financial model that will support his flawed expansion strategy.

TOUGH TALK. None of which should exonerate the players, however. It's true they gave much more than the owners, agreeing, for example, to an across-the-board 24% pay cut in December. But union Executive Director Bob Goodenow held out far too long for a system that would have let payrolls spiral well beyond the league's means. And when the players finally accepted the reality of a cap, they were willing to squander the season over the misplaced notion that somehow a $49 million cap is significantly more palatable than one just a few million dollars less.

That's why it's time for Bettman and Goodenow to step aside. It seems unfathomable that the two can ever negotiate a deal with one another.

In his press conference canceling the season on Feb. 16, Bettman insisted that personality conflicts didn't play a role in derailing the talks. But reading his correspondence with the union and listening to his words suggests otherwise. Instead of negotiating until the last minute, Bettman issued a take-it-or-leave-it ultimatum to the union on Feb. 15. The league's $42.5 million cap offer came with this warning from Bettman: "We have no more flexibility, and there is no time for further negotiation."

TACTICAL BLUNDERS. Yet, they had time enough to strike a deal, according to none other than Bettman himself. During his press conference, he said he would have considered an offer from the union that would have put the cap closer to $45 million.

Goodenow was above compromise, too. When the union boss was asked if he would consider offering the owners a deal closer to a $45 million cap in a press conference after the season was called off, he declined.

The cost of both men's tactical blunders couldn't be greater. By most accounts, it took Major League Baseball two years to recover from the strike that led to the cancellation of the 1994 World Series. And baseball had a huge fan base from the start. Hockey was already losing fans to better marketed sports such as golf, NASCAR, and even extreme sports such as the X Games. Now it'll have fewer fans still, particularly in those weak markets where hockey has floundered.

LOSING BETS. There's some speculation that owners may try to skate replacement players next season. But even if the league can maneuver around conflicting labor laws regarding replacement workers in the U.S. and Canada, it won't help the sport. And it certainly won't fill arenas. The owners will find themselves facing a future with less revenue and less valuable franchises. And players will have less opportunity to capitalize on their immense skills. Both sides gambled, and both sides lost.

Back in 1919, the Stanley Cup went to the winner of a series between the National Hockey League and the Pacific Coast Hockey Assn. With the NHL's Canadians so sick and unable to skate a full squad, the PCHA's Metropolitans could have claimed the Cup. However, PCHA President Frank Patrick declined, not wanting to win in such an undignified way.

This year, no team will hoist the Cup for only the second time in pro hockey history. But now the void has no dignity. Greene is BusinessWeek's Seattle bureau chief

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