Negotiating on Thin Ice: The 2004-2005 NHL Dispute case (Harvard Business School Case Study No. 9-906-038 Copyright 2006) A blog annotation

Background:

The National Hockey League is becoming a lucrative business in the aspect of sports business.  As more business investors are inclining to invest in some teams, star players on the contrary are clamoring their professional status in terms of uniform salary pay and benefits.  The case further amplify the negotiation between the Labor Union and the NHL board from the past negotiation to the present.  The NHL Commissioner Gary Bettman prevented the players to play in their respective teams granting the result of the recent negotiation is negative in outcome.  Some 150 NHL players tend to apply the European Hockey Club by having the knowledge that the league is in a labor dilemma.  

Furthermore, NHLPA is not only suffering from its financial problem but also with the actual ground rules and regulations of the game were by players, official encharge, and the spectators noticeably observe the awkwardness of the rules of the game.  With these observations, NHL rules of the game both in and off court must be ratified.  Likewise, the player population of the league generally comprise from the players of Canada with 383 players out of 450 in overall population.  But as the league grows the problem worsen that the case writer use the metaphor of “More Money, More Problems”. 

Indeed, players and sport agents are catching up the maturity stage of the business were by each player and their agent can maximize profit not only from the leagues income but also from the product endorsements.  By 1998-1999 renegotiation request was again suggested by the two parties. But the CBA party is still unstable with their negotiation proposal by the same year both parties prepared a “face-off” stage of negotiation to end the longtime CBA dilemma.  By 2004-2005 new rules was implemented in hope to solve the dispute.  But as a result, giving power to the commissioner worsen the case problem when the commissioner ordered a “lockdown” to all players in lieu to the NHL session.  All 30 team owners withdraw their CBA proposal against the league and the dormant conflict between both parties is still unresolved.

Problem:

The problem contradicts to the notion either to consider the salaries of the players which means that the profit making of the whole league will be sacrificed and eventually the whole league will come up to a bankruptcy.  On the other hand, if the league council will decide to consider more on their profit making and revenue the salary and benefits of the players will be sacrificed creating comparative standard of pay with other sports business.  Even the league proposes a salary cap from $31 million to $40 million still the clouded emotions of the players and the agents were being fired up when the community itself sided with the players when the affected businesses around the arena are being closed relative to the lockdown.

Business Negotiation Theory:

With many theories of negotiation that can be applied uniquely to the case, as to my professional empirical observation to the case data framing the negotiation alternatives will best give both parties choices to emphatically priorities both business negotiation proposal.  The Endowment Effect strategy will allow both parties to have referent point to consider and allowing both parties to priorities their respective proposal prior to the creation to the next negotiation agenda.  Legal experts on the other hand are needed to weigh the right proposal alternatives giving knowledge to both parties.  With this theoretical application both parties can also visualize the other party’s notions and grievances.  (Ref. Lewicki et al. pp. 115-124, 2010)  

Conclusion:

As to the actual business negotiation dilemma, both parties must form their respective negotiation proposal the soonest to avoid the worsen effect of the case dilemma.  Depicting from the background of the case and the effect from the community, people are starting to side their opinions towards the case and slowly ruining the reputation of the whole league.  The league council must stealthly consider that the public is their main customer affecting their direct company sponsors.  If the morale of the whole league is affected then company sponsors will also relatively repel their longterm contracts knowing that the whole league reputation will not give any PR benefit to their respective companies.

REFERENCE: “Negotiating on Thin Ice:  The 2004-2005 NHL Dispute (A),” by Deepak Malhotra and Maly Hout, Harvard Business School. Case 9-906-038, revised March 4, 2006. Boston, MA: Harvard Business School Publishing. http://www.hbsp.harvard.edu copyright 2006 president and fellows of Harvard College.