Should the NHL be thinking about contraction?

[mfw13]

Sotnos...I am new to HF, but have posted on FanHome for years....that site has been going downhill, so I switched to this site, which seems a lot more active.

Maybe it's because I come from a business background, but it's pretty clear to me that the NHL is not in good shape financially, even with the salary cap and new labor agreement, mainly because it earns so little money from TV, radio, and merchandising. That's why attendance is so important. Teams in the other major sports earn only 30-40% of their total revenue from ticket sales. The rest comes from TV rights, radio right, and merchandising. If you want an illustration of how bad things are financially for the NHL, consider that although the total season-long league attendance for the NFL and NHL are within 10% of each other, the NFL can afford a salary cap more than double ($102 million vs. $44 million) that of the NHL. That's how much more money the NFL makes! Because the NHL has such a small TV and radio presence, teams are highly dependent on attendance to generate revenue. In fact, for NHL teams, 70-80% of their revenue comes from ticket sales. That means that even with the cost certainty created by the salary cap, teams are going to be hard pressed to make a profit drawing only 13,000-14,000 fans a game.

Gary Bettman (and I'm sure this is going to be a controversial statement) has been probably the worst commissioner of a major US sport in quite some time. He is the only commissioner to preside over the cancellation of a complete season. He is the only commissioner to manage to get his league dumped off ESPN, to the point that it is now stuck on a network that nobody has ever heard of, that nobody knows where to find on the dial, and that reaches far fewer households than ESPN. During his tenure four teams went bankrupt (Buffalo, Pittsburgh, Ottawa, and Los Angeles), and he presided over the aggresive entry of the league into many highly questionable non traditional hockey markets (Anaheim, Miami, Nashville, Columbus, Atlanta, Phoenix, Dallas, Raleigh, and Denver).

And if you don't believe me, consider that in 2005BusinessWeek magazine, the bible of the business world, named him as the worst manager of a professional sport in the last ten years. He has turned the NHL into a joke of a business enterprise, which is really a shame considering how exciting the product actually is. Ten years ago there was talk of the NHL becoming more popular than major league baseball. Now the NHL can't even keep up with Arena Football, the XGames, and Professional Lacrosse (all of which are televised by ESPN).

 

[Ted Hoffman]

During his tenure four teams went bankrupt (Buffalo, Pittsburgh, Ottawa, and Los Angeles)

I don't have time to pick through all of this, but you should investigate a little more thoroughly why three of the four teams went into bankruptcy. (Hint: it had NOTHING to do with Gary Bettman.)

 

[Bear of Bad News]

he presided over the aggresive entry of the league into many highly questionable non traditional hockey markets (Anaheim, Miami, Nashville, Columbus, Atlanta, Phoenix, Dallas, Raleigh, and Denver).

This part's not entirely true, either, which can be confirmed by actually looking at the dates of Bettman's tenure and the dates the franchises were admitted.

But why would someone actually do that, when it's easier to blame Bettman?

 

[Bear of Bad News]

He is the only commissioner to manage to get his league dumped off ESPN, to the point that it is now stuck on a network that nobody has ever heard of, that nobody knows where to find on the dial, and that reaches far fewer households than ESPN.

And this is largely hyperbole, as well as being false.

 

[ColoradoHockeyFan]

and he presided over the aggresive entry of the league into many highly questionable non traditional hockey markets (Anaheim, Miami, Nashville, Columbus, Atlanta, Phoenix, Dallas, Raleigh, and Denver)

You are crazy to associate those two phrases together.

 

[Motown Beatdown]

Remember the golden rule. If your gonna suggest some team deserve to be contracted, make sure to list your team in the list too.

Right now no team should be contracted, especially when you have markets waiting for teams. Ok City, Winnipeg and Kansas City would all love a team not to mention several other cities in North America.

 

[Ted Hoffman]

And this is largely hyperbole, as well as being false.

I'm glad someone else has heard of us.

Sincerely,

SportsChannel (that non-major network that had the NHL TV rights from 1989-1991 when John Zeigler was the president of the NHL)

 

[Bear of Bad News]

SportsChannel (that non-major network that had the NHL TV rights from 1989-1991 when John Zeigler was the president of the NHL)

Was the Malarchuk injury game on SportsChannel? I remember watching it when it happened, but I don't remember if it was on SportsChannel or on whatever preceded it.

 

[ColoradoHockeyFan]

Was the Malarchuk injury game on SportsChannel? I remember watching it when it happened, but I don't remember if it was on SportsChannel or on whatever preceded it.

I not only watched it, but also taped the highlights (which were being played over and over at the time) and brought it in to one of my high school classes where a TV/VCR was set up.

 

[mfw13]

You guys can nitpick my posts to death if that's what turns you on, but anybody who thinks that the NHL as a whole is better off right now than it was when Bettman took office in 1993 has their head stuck in the sand.

The number of households that can watch the NHL is down, TV ratings are down, and the league's profile among non-hardcore hockey fans is nonexistent.

And IrishBlue and Dr. No....if Bettman is not responsible for the league getting dumped off ESPN then who is? Yes, ESPN offered a mediocre contract to the NHL, but that was only because Bettman had devalued the product so much that to ESPN it wasn't worth paying money for since the TV ratings were so low.

What does it tell you when the NHL is the only major sport not on ESPN? That the NHL is doing well????

 

[Bear of Bad News]

You guys can nitpick my posts to death if that's what turns you on,

Actually, attacking logical fallacies is what "turns me on".

 

[saskganesh]

the reason why the NHL is in "nontraditional" markets is twofold

1) short term: expansion fees helped many bottom lines before the cap
2) long term: seeking a national TV contract. the NHL expanded into "nontraditional" markets so as to be represented in MORE TV markets, and so make the game more appealing to networks and advertisers. contracting -- moving into fewer markets -- will not make a national contract MORE likely. its dumb advice.

now, as the NHL does not have a national TV contract, can you say the league is in trouble? the league never had a decent national US TV deal, its always been gate driven. and the gates, even in nontraditional markets is healthy. hell, before the NFL figured out how to max out corporate sponsorships and its own TV deal, it was also gate driven. ironically, no one said the NFL was in trouble in the 70's. but anyway, its silly: other pro sports are only marginal competiton for hockey. I mean, its not like people will stop eating apples, when there is a sale on oranges.

as long as the game is good (and I think it is) the NHL will have fans and teams will make money if they have a winning season on the ice.

winning is the most important thing any franchise can do for its financial well being.
... New Jersey included.

 

[saskganesh]

You guys can nitpick my posts to death if that's what turns you on, but anybody who thinks that the NHL as a whole is better off right now than it was when Bettman took office in 1993 has their head stuck in the sand.

The number of households that can watch the NHL is down, TV ratings are down, and the league's profile among non-hardcore hockey fans is nonexistent.

What does it tell you when the NHL is the only major sport not on ESPN? That the NHL is doing well????

did the ESPN deal contribute in a significant way $ to the league's well being? I don't think it did, so one can argue that Bettman made the right call by walking.

 

[Nalyd Psycho]

The thing about it is, the NHL has always been weaker than other major sports in the U.S. And while the rapid expansion to non-traditional markets may not have worked as well as hoped, it is a logical gamble. Hockey's biggest problem is that it has less traditional markets than other sports. The TV deals in Canada are strong, as are radio, merchandising and other sources of revenue. (I shutter to think how much ad space at the ACC costs.) The same is also true for New York, Detroit, Boston, Minnesota, Philadelphia and other traditional US markets. Problem is, they don't have a strong national deal in the US, this is largely because Great lakes and North east are not enough of a market to interest nationwide coverage. So, the question becomes, how do you grow the base support for a sport to the point where it is a media viability in most of the country. (Particularly California which has always been a stumbling block for the NHL as broadcasters want Californian viewers.) Putting teams in those markets is a logical way to attempt to do that. Texas may be a non-traditional market, but building support for the NHL in Texas will go a long way to building the league as a whole.

Has Bettman done a great job? No. But picking on him is an easy target. Sure, losing ESPN may seem bad, but they always treated hockey as "that other sport" anyway. So may be striking out on there own will help. Heck, if they can have success without ESPN they'll be a model for every other sport. ESPN isn't a good deal if ESPN isn't helping the league.

The simple fact of the matter is, compairing the NHL to the NFL is not a fair comparison as the two leagues have totally different business strengths. They may both be sporting leagues, but that's where the similarities end.

The simple fact of the matter is, NHL teams make money now, those that don't are either restructuring or will be moved. There is no reason for an NHL team to not make money. That means the NHL is on stable financial footing. Business may not be booming like the NFL's, but it is stable. And that means they are not in bad shape.

 

[Bear of Bad News]

And IrishBlue and Dr. No....if Bettman is not responsible for the league getting dumped off ESPN then who is? Yes, ESPN offered a mediocre contract to the NHL, but that was only because Bettman had devalued the product so much that to ESPN it wasn't worth paying money for since the TV ratings were so low.

What does it tell you when the NHL is the only major sport not on ESPN? That the NHL is doing well????

In whose world does "appearances on ESPN" automatically equal "leaguewide success"?

Because the NHL was so successful those last few years on ESPN.

 

[saskganesh]

old ESPN deal : $60 million
new OLN deal : $65/$70/($72.5 option) million plus upto $30 million in "nonperformance by OLN" compensation

in comparison:
current CBC deal : $65 million
proposed deal from CTV: $140 million

 

[mfw13]

My main quibble is that while I think expansion in princple is a good idea, because as you said it expands the number of people who are able to watch the game live and in person, I don't think it has been done well. That is why I am a proponent of either contracting or moving teams to better markets.

For example, while Dallas, Denver, San Jose, Atlanta, Columbus, Minnesota, and Phoenix were good choices, and Tampa Bay may turn out to be if the franchise is able to successfully build on the momentum from winning the Stanley Cup, I think Miami, Raleigh, Nashville, and Anaheim were very poor choices.

I would have put a second team in Philly (where the Flyers sell out and the AHL Phantoms draw 8,000-9,000 a year) or Chicago (where the AHL Wolves draw 7,000-8,000 a year) long before I put a second team in LA.

And Miami??? Where the soccer team folded due to lack of support despite the huge Latino population and the baseball team has horrible attendance despite a huge Cuban emigre population, a huge Latino population, and winning two World Series in its first ten years?

And will someone please explain why there are teams in Nashville (39th largest city in the US) and Raleigh (59th), but not in Houston (8th), Seattle (15th), San Diego (17th), Cleveland (23rd), Cincinnati (24th), Portland (25th), Kansas City (26th), Sacramento (27th), San Antonio (29th), or Indianaplois (34th)?

And will someone please explain why three of the leagues proudest franchises (the Blackhawks, Bruins, and Islanders) have been allowed to disintegrate under horrible ownership? A better commissioner than Bettman would have put together new ownership groups that actually had a clue about how to run a hockey franchise to buy out Wirtz, Jacobs, and Wang. Or do you think the NHL can afford to have flagship franchises in three of its biggest markets continue to be mismanaged?

 

[nomorekids]

wow, you really just...don't "get it."

 

[Nalyd Psycho]

My main quibble is that while I think expansion in princple is a good idea, because as you said it expands the number of people who are able to watch the game live and in person, I don't think it has been done well. That is why I am a proponent of either contracting or moving teams to better markets.

For example, while Dallas, Denver, San Jose, Atlanta, Columbus, Minnesota, and Phoenix were good choices, and Tampa Bay may turn out to be if the franchise is able to successfully build on the momentum from winning the Stanley Cup, I think Miami, Raleigh, Nashville, and Anaheim were very poor choices.

I would have put a second team in Philly (where the Flyers sell out and the AHL Phantoms draw 8,000-9,000 a year) or Chicago (where the AHL Wolves draw 7,000-8,000 a year) long before I put a second team in LA.

And Miami??? Where the soccer team folded due to lack of support despite the huge Latino population and the baseball team has horrible attendance despite a huge Cuban emigre population, a huge Latino population, and winning two World Series in its first ten years?

And will someone please explain why there are teams in Nashville (39th largest city in the US) and Raleigh (59th), but not in Houston (8th), Seattle (15th), San Diego (17th), Cleveland (23rd), Cincinnati (24th), Portland (25th), Kansas City (26th), Sacramento (27th), San Antonio (29th), or Indianaplois (34th)?

And will someone please explain why three of the leagues proudest franchises (the Blackhawks, Bruins, and Islanders) have been allowed to disintegrate under horrible ownership? A better commissioner than Bettman would have put together new ownership groups that actually had a clue about how to run a hockey franchise to buy out Wirtz, Jacobs, and Wang. Or do you think the NHL can afford to have flagship franchises in three of its biggest markets continue to be mismanaged?

Some thoughts:

Anaheim-Because, like I said, California is a real battleground state. Would another Illinois or Pennsylvania team have a greater chance of success? Probably. Would their success strengthen the leagues nationwide strength and increase leverage with nationwide coverage? No.

Miami-Yeah, that one may not have been so hot. Probably would have been best to let the one Florida team be firmly entrenched before adding a 2nd.

Nashville and Raleigh-Non-competition. While smaller markets, the ability to make a power play for untapped markets may yield better results and have a higher success rate than trying to go head to head with The Spurs or The Colts or any other NFL/NBA team. A gamble? Yes, but not a bad one. This is why I think Austen might be a good place for a 2nd Texas team. But, it will be Houston.

I'm not sure if Bettman can force owners out for poor performance. If he can, then yeah, he should have interveened in Chicago, at least forced them onto local TV.

Overall, yeah, Bettman has made bad choices, gone about things the wrong way ands I wouldn't shed a tear if he was replaced. But, he does have the hardest job of all major sport commisioners because of the huge support disparity. It isn't like MLS where support is light everywhere, instead, hockey has light support in 2/3 to 3/4 of America and very strong support in Canada and 1/3 to 1/4 of America.

 

[txpd]

Two interesting quotes...

#1. he presided over the aggresive entry of the league into many highly questionable non traditional hockey markets (Anaheim, Miami, Nashville, Columbus, Atlanta, Phoenix, Dallas, Raleigh, and Denver).

#2. "During his tenure four teams went bankrupt (Buffalo, Pittsburgh, Ottawa, and Los Angeles"

On one hand he degrades the non-traditional hockey market on the next points out that three traditional hockey markets had teams go belly up. Sure is safety in that traditional hockey market..eh? Shall we also see how far down the league rankings attendance in Boston and Chicago are and how far up Dallas and Denver are?

I think there are two realities that the anti-non traditional hockey market poster fail to comprehend.

1. Population base in the United States has seen a distinct trend in the last 25 years. People are moving from the North(traditional hockey markets) to the South(non-traditional hockey markets). You may have noticed that Atlanta is a BOOMING market that advertisers require. Raleigh-Durham-Chapel Hill is not only the fastest growing media market in the country, but the most affluent as well.

2. In order to make TV happy, they must be able to draw audience where their advertisers customers are. Why do you think Southwest Airlines has been a major sponsor of the NHL for years??? Its not for the NY to Chicago run.

3. Hockey teams that win sell tickets(Dallas and Colorado). Teams that lose don't (Chicago and Pittsburgh). Buffalo is a full house now and was an empty house up til last last season.

Give the non-traditional hockey market teams time to build a winning team and you will see support. The old CBA that rewarded the big spending budget worked against building winners in those markets. The new CBA encourages that. Watch Atlanta this season. IF they have finally hit it, then their attendance will explode.

Tampa Bay sells tickets and so now does Raleigh.

Next....
"will someone please explain why there are teams in Nashville (39th largest city in the US) and Raleigh (59th), but not in Houston (8th), Seattle (15th), San Diego (17th), Cleveland (23rd), Cincinnati (24th), Portland (25th), Kansas City (26th), Sacramento (27th), San Antonio (29th), or Indianaplois (34th)?"

Sure...those numbers are city sizes, not media market sizes.
Raleigh-Durham is 43 and up 10 spots in the last 10 years. They have no major league sports. Houston has done a poor job of supporting sports. They lost the NFL team and was going to lose the MLB team. They have not made a serious proposal for a hockey team.

Nashville at 44 has only a newly arrived NFL team and they are blowing down revenue marks. Thats why there is a team there. There is a market for it.

Indianapolis is about racing and basketball. Their NFL attendance has been very spoty.

Kansas City had an NHL team. Cleveland had an NHL team. I think Seattle falls into Vancouver's market zone.

And will someone please explain why three of the leagues proudest franchises (the Blackhawks, Bruins, and Islanders) have been allowed to disintegrate under horrible ownership? A better commissioner than Bettman would have put together new ownership groups that actually had a clue about how to run a hockey franchise to buy out Wirtz, Jacobs, and Wang. Or do you think the NHL can afford to have flagship franchises in three of its biggest markets continue to be mismanaged?

For the same reasons that The Baltimore Orioles have been trashed by bad ownership in Baseball. You can't guarantee competitive owners.

 

[One Day A Lion]

Contraction? No.

Overexpanding isn't the problem, it's that all of the expansion teams are being put in nonsensical places. Carolina, Florida, Tampa Bay, and Nashville should, in my opinion, move to different places. Why not put a team in Houston, Winnipeg, Cincinatti, Cleveland, Quebec City, Hartford, Las Vegas, or add a second team to Montreal and/or Ontario (more specifically, Toronto)?

 

[nomorekids]

Contraction? No.

Overexpanding isn't the problem, it's that all of the expansion teams are being put in nonsensical places. Carolina, Florida, Tampa Bay, and Nashville should, in my opinion, move to different places. Why not put a team in Houston, Winnipeg, Cincinatti, Cleveland, Quebec City, Hartford, Las Vegas, or add a second team to Montreal and/or Ontario (more specifically, Toronto)?

Because hockey was an utter failure in Winnipeg and Hartford, making them the top of the list of "Nonsensical places?"

 

[mfw13]

Dr. No and saskganesh: ESPN does not equal leaguewide success, but it does equal a heck of a lot more potential eyeballs than OLN/Versus. If things could not be worked out with ESPN, then I would have expected Bettman to try to work something out with FOX Sports, since not only do they have a strong regional network (which holds the local TV rights to many NHL teams) but also have experience televising the NHL.

NoMoreKids: Very productive argument there....if you are going to tell me I just don't get it, then tell me how. And BTW, I went to my first NHL game in 1980 when it was still a sixteen team league, so don't write me off as someone who doesn't know hockey.

txpd: Buffalo, Pittsburgh, and Ottawa are not by any stretch of the imagination traditional hockey markets. Those would be the original six teams, Philadelphia, New York, Vancouver, Calgary, and Edmonton. Your point about Chicago and Boston vs. Dallas and Denver is well taken, but I address the ownership issues in Chicago and Boston in my post. Also keep in mind that the Stars and Avs have been consistent Stanley Cup contenders since their arrival in Dallas and Denver. I am very curious to see if attendance stays strong once Modano and Sakic retire and those teams stop being Stanley Cup contenders for a few years. You can see what has happened in St. Louis (a similar market) now that the Blues missed the playoffs for the first time. You are right in that the population of the US has been moving to the south and west, but that doesn't absolve the league of its responsibility to make good choices about where to locate franchises in the south and west.

 

[Timmy]

Miami-Yeah, that one may not have been so hot.

However, it's supposed to get up to 82F by Thursday, which seems pretty warm, at least...

 

[One Day A Lion]

Because hockey was an utter failure in Winnipeg and Hartford, making them the top of the list of "Nonsensical places?"

In the Whalers' last season in Hartford, they sold 11,000 season tickets despite the fact that the ownership had eliminated the mini-season ticket packages. Also, with a new arena and with the rejuvination that Hartford has been undergoing I think that an NHL team could be successful there.

Winnipeg has a pretty sexy new arena that could generate some more interest. Winnipeg also had a very strong grassroots effort to keep the Jets there. The problem was that the Jets couldn't keep their star players and the operating costs became too much, something that the salary cap would probably alleviate if the NHL returned there.

Also, look at Minnesota and Atlants. The Flames in Atlanta and the North Stars in Minn. both failed miserably financially and moved but those markets have both gotten NHL teams back who have both done fine. I mean, I wouldn't say the Thrashers break attendance or revenue records but they do just fine where they are. To tell the truth, a team in Hartford or Winnipeg could at least match what the Thrashers have done, maybe surpass it.