Fantasy Hockey Coach - Hockey Pool and Keeper Hockey Advice - One Small Clause for the NHL, One Giant Leap for Hockey

  • One Small Clause for the NHL, One Giant Leap for Hockey

    by Matt Perry

    There has been very little positive to report from the NHL lockout this season. In my opinion one very important inclusion in the last offer made to the players could be the most important aspect of the negotiations. Sadly it may not achieve a resolution much sooner, but it paves the way for hockey to grow leaps and bounds.


    To start off we need to set the stage. One thing that the average hockey fan forgets about until these negotiations come around is that every NHL team is simply a franchise of the same entity in different cities across North America. The NHL is no different from McDonald's or Walmart. Sure you may feel a little different in a McDonald`s in Montreal than in Edmonton or a Walmart in New York as opposed to Phoenix. However, they strive for similarities and are all bound by a set of rules and standards that makes them part of a chain.

    This analogy does have its holes and I will cover at least one of them later on, but for the time being it is important to remember that for the most part Walmart stores are build far enough apart to not compete with each other. Their competition comes in the form of Target and for McDonald`s it is Burger King or Subway. The NHL is built on the same premise. While the teams compete on the ice the owners are meant to work as a collective in order to help put the best product out to customers in hopes of making more money for everyone.

    Keep in mind this blog will not try and pick sides in the NHL lockout debate. That is an argument for a different day. However, we can certainly agree that off the ice teams don`t care about competing with each other, but rather other professional sports leagues (in markets outside Canada) and other entertainment options such as movies, video games, playing sports themselves or anything that a potential NHL fan could be spending money on rather than NHL. This is a hard concept for the average hockey fan to understand. In Canada most fans of the NHL show little more than a passing interest in other sports. In larger markets and in the United States there are actual sports fans that have a genuine interest in all sports and will choose what they will spend their money on according to value. Exciting product, affordability, competing events and a myriad of other factors will come into play in when making a decision about where to spend their limited income.

    For example in Detroit right now, if the lockout was over, a sports fan would have the choice of Tigers playoff baseball, Lions football, Wings hockey, Pistons basketball, Wolverines college football and baseball, Titans college football and baseball, a myriad of concerts, all the movies at theatres, some of the best high school sports in the country and on and on and on. Now the Wings never have trouble drawing fans, but places like St. Louis, Colorado and almost 20 of the 30 NHL teams have customers with the same options.

    So what does that have to do with the lockout? One simple sentence from the last offer speaks volumes about a potential change in the owner's vision for the NHL.

    "At least one-half of the total Revenue Sharing Pool (50%) will be raised from the Top 10 Revenue Grossing Clubs in a manner to be determined by the NHL"

    This type of thinking tends to upset a large portion of hockey fans. People in Toronto, Montreal and Vancouver don't understand why they have to foot the bill for teams that can't make a profit. The key thing to remember is teams are franchises of a larger organization. Having strong franchises across the Continent is the only way to have higher value and make more money. For example, lets say 1.5 million Leaf jerseys were sold last year at $100 and the rink never had an empty seat for under $30. Nothing is going to change that. However, the rink isn't getting bigger and there is really no way to sell THAT many more jerseys. So based on these two revenue streams lets say $490,000 million was netted. That would be the ceiling for earning revenue off those items.

    Last year the NHL signed a deal with NBC that is arguably the worst television deal in current professional sports. That means teams can't rely on that "cash cow" to run their teams as owners in the NFL and MLB can. So if you are a rebuilding team with little chance of making the playoffs in a non-traditional hockey market you have a harder time selling your product (tickets, jerseys etc) to your fans and sponsors. You need to pay more in marketing (relative to income), perhaps more in staffing (if you can afford it) and across the board have less chance of turning a profit. If you can't turn a profit you can't invest in scouting, signing more players or the other things you need to do to be competitive in today's NHL. So your rich teams stay rich, your poor teams are in a lottery system hoping to land a star and there are a few teams in the middle who never get much better or much worse . . . on or off the ice.

    Suddenly, this one sentence the NHL had its own Wellington Mara (http://en.wikipedia.org/wiki/Wellington_Mara) moment. Understanding that your large market team can make more money by investing in other markets is the first step to understanding that the more money the team you support makes the better it could be for you as a fan. Suddenly the Leafs don't need to increase their jersey sales from $1.5 to $1.6 million to make more money. They can simply share some revenue and hope to see merchandise sales increase in markets like Columbus, Florida, Carolina, Colorado and the like by 5 to 10%. It is about parity, not charity. The one caveat that exists is within this question, "Do you believe in hockey?"


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