The Self Destructing NHL Part II

A couple months ago I wrote about how the NHL was on the path to self destruction. Well, a couple of news items have come out this past week to reconfirm that thought.

1. TSN is reporting that the sale of the Nashville Predators is on the verge of collapsing because the owners have requested more ‘subsidies’ from local and state governments and it appears unlikely they will get them. This comes on the heels of a story from James Mirtle that the team is well below the ticket sale level required (14,000) to receive revenue sharing from the league and also the level for which they can get out of a lease. It is time that Gary Bettman realize that Nashville is a failure and the team has to be moved but will he let Balsillie buy the team or is he going to block that sale once again?

2. More importantly might be a growing divide between ownership groups. Over the weekend The Puck Stops Here had a story about the NY Rangers suing the NHL over rights to market their own team. The basis of the lawsuit is that the Rangers believe they should have the right to operate their own website and not be forced to use the style and format that the league wants to impose on them. This is an interesting lawsuit because it pits a large market team challenging Gary Bettman’s control over all things NHL. An article by Larry Brooks on the subject presents a very interesting letter the NY Rangers wrote to the league governors and in the letter they did not only discuss the website issue, but explicitly questioned the competence of Bettman and the central NHL offices for generating league revenue.

“After sacrificing a season to set our player cost economics on a proper footing, we believe that the League continues to squander opportunities to improve our business and solidify and grow our fan base,” Dolan wrote. “The proper focus for the league is the growth of interest in the game as a whole, both in North America and internationally – and we support that focus.

“The League cannot be permitted, however, to accumulate team assets in the League office, growing centralized revenues at the expense of the clubs. Hockey is a distinctly regional game – unlike other leagues, most of hockey’s revenue is generated locally – 93 percent of our revenues as a league are local.

“The League’s continued efforts to take over club rights hurt each of us by taking away our ability to be responsive to our fans and react to changing business opportunities or events.”

Those are some pretty strong statements against Bettman’s view of a powerful NHL head office controled by himself as well as a questioning of Bettman’s competence. All this becomes interesting because the next CBA negotiations are potentially only a couple of seasons away and the players union is in the midst of rebuilding into possibly a more militant group. The basis for the NHL winning the last round of CBA negotiations was keeping the big market teams on board but this lawsuit by the Rangers might be the first step in the big market teams attempt to wrestle back power and control of the NHL.

And what really irks me in all of this is that Gary Bettman is starting to float around the idea of European expansion. I really wonder what is going on in that man’s head when he starts floating ideas like this around. My guess is he views European expansion (as well as more North American expansion) as yet another tool to appease existing owners. The current state of the NHL is a joke with several teams struggling to make money and even established teams like the Red Wings have seen fan support wane in recent years. In the 1990’s Bettman kept teams alive through the promise of expansion money and a new big TV contract to follow. Now it seems his attempt to keep teams alive is through expansion both here and abroad but the reality is expansion revenues are one time revenues and expansion itself won’t solve the problems of the NHL. Having a team in Prague, London, Stockholm and other European cities is not going to generate more fan interest in Miami or Atlanta or Phoenix or anywhere else. But this is Bettman’s only tool to keep owners around while he hopes and prays that fan interest and revenues will grow.

The reality is that outside of Canada the NHL is a mess in both traditional American hockey markets and non-traditional ones. It is a mess that is on the verge of imploding. Mark my words, within the next 2-4 years dramatic changes will be coming in the NHL and my bet is it will be prompted by a pseudo-alliance between the newly rebuilt players union and the large market teams trying to wrestle power away from Bettman and his group of small market teams. How it all turns out is anyone’s guess but if the NHL is ever to thrive it will have to rid itself of the dead weight known as Bettman and the fringe franchises. The future of the NHL is reigniting interest in Boston, Detroit, Chicago, New York, St. Louis, etc. and it is high time that franchises in those cities rebel against Bettman’s expand, rebrand (with new jersey’s) and hope for the best philosophy.

Posted in NHL

This article has 6 Comments

  1. Excellent analysis.

    Another kink in the “small market” armor is the fact that the USD and CDN are now at parity. That makes, I’m pretty sure, NONE of the Canadian teams “small market” in any meaningful sense of the word, other than just low population, but the per capita interest is higher there.

    Being American does not bias my views on the health of the league, I don’t think, even if that means we lose quite a few teams.

    The blocking of the sale of the Preds to Ballsilie was a huge, huge mistake.

  2. Your analysis is bang on. So is Rick’s point that the continuing fall of the US dollar makes the Canadian teams “big money” rather than “small market”. Canada contributes 33% of NHL revenues with only 20% of the teams.

    A sport’s popularity doesn’t depend on how exciting the sport is — it depends on how entrenched it is in the national psyche. The NHL is at long odds trying to get a piece of a U.S. pie dominated by the NFL, NBA, MLB, NASCAR, and (due to millions of Latino immigrants) Soccer.

    The NHL is losing what critical mass it had in the U.S.. You’re right that they need to concentrate on the more established markets, because they could lose them. Forget the fringe markets — the next recession will decimate them.

    As far for European expansion, it reminds me of Canadian Football League expansion. It’ll be dead before they start.

    What could work, though, is an alliance with a European SuperLeague. Europe could easily support 15-20 major pro teams in Russia, Scandanavia, the Baltics, and East/Central Europe. If the Europeans ran it, this would thrive. The top European team could meet the top NHL team for the Stanley Cup.

    Without such an alliance, the economic power of Europe & Russia (particularly oil-rich Russia with its billionaire tycoons) will eventually enable those teams to pay bigger salaries than what’s left of the NHL. The next generation’s Sidney Crosby could very well spend his career with Moscow Dynamo.

    Don’t believe me? Keep watching that US dollar fall….

  3. One more thing … the NHL franchise market is like the housing market. Rich owners are willing to “borrow” against the value of their franchise to fund operations, while the price of the franchise is rising.

    If the value of the franchises start to fall, owners will start to bail…

  4. Probably not because it is too difficult to define the betting parameters? What are the win/lose situations?

  5. David:

    If the big market teams do so, the NHL will have more of a difficult time staying together.

    The players union have already shown themselves to be fools. They would be even greater fools to enact another work stoppage for the sake of the big market teams – not every player can be employed as a New York Ranger, Toronto Maple Leaf, or Philadelphia Flyer. Once again, it would be the union acting on behalf of the interest of a small minority, rather than the entire league. The league cannot afford another work stoppage – but it will not do whatever it takes to avoid one. The deal they have right now is fair – there is no benefit to the players demanding more. Are you seriously suggesting that after this season’s UFA bonanza that the players might be dissatisfied with the previous CBA?

    Oh, and the Red Wings don’t draw because their city is in recession, they’ve been winning for forever, their fans are apathetic (where else do fans not stand up for a goal?), and their building is terrible.

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