Surprisingly, Kelly and Bettman don’t see eye-to-eye on how to generate revenue
BEST BUDS
Last Thursday, NHLPA executive director Paul Kelly had a pretty fascinating interview on Team 1040 radio in Vancouver.
Because something like 30 percent of the league’s revenues were coming from the six Canadian franchises, Kelly made the logical argument that perhaps the league should expand to Canada
“It will ultimately come down to the revenue-sharing system we have in the game,” Kelly told the Team 1040. “I mean the haves - the big market teams - are doing very, very well financially, and they could probably do more in the way of revenue sharing to help out those teams that are in the bottom five or six on the list to help make them more stable financially.
“But long-term, the players aren’t singling out any particular franchises and saying ‘that’s got to go’. They really would like to see all the existing franchises survive, if that’s possible.”
That last part was what caught my attention. Sure, a lot of it is probably union talk since Kelly obviously doesn’t want 1/30 of the professionals he represents being completely out of a job should retraction happen, but this is conceivably a problem given that some teams, according to Sports Business Daily (subscription required).
Not to get hyper-technical, but teams are penalized for not having their revenue growth rate meet the league’s average, and those teams that fail to meet said benchmark see their revenue-sharing money, which comes from the league’s top 10 earning teams, will be cut by 25 percent. Should the problems continue, the league cuts 40 percent for the second year and 50 for the third.
That would be disastrous to a team like Nashville, which received the most revenue sharing money this year ($12 million, about a third of the team’s 2007-08 payroll). Teams cannot get money if they are in a major market (i.e. New York, L.A., etc.). Obviously Nashville and Columbus don’t have to worry about that, but they’re barely above solvency as it is, and getting their money cut even 25 percent could prove disastrous.
Brian Burke offered the key point in the Columbus Dispatch a few weeks ago:
“The million-dollar question is whether revenue-sharing will be sufficient,” said Burke, a former NHL vice president. “If we believe these franchises are an asset to our league, does it make sense to cut their subsidies?”
It clearly does not, but you also can’t keep propping up doomed franchises for the sake of having them. Had Bettman not stepped in and nixed the sale and relocation of the Nashville Predators to the welcoming arms of Hamilton, Ontario, it would be one less thing to worry about.
The Preds could have been a very good franchise. They drafted well and made pretty decent moves where they didn’t draft well, and despite making the playoffs and finishing well above .500 each of the last four seasons, they still get more money than anyone else in the league from revenue sharing. Obviously, this is symptomatic of a franchise that, no matter how well-run it is, and no matter how often it makes the playoffs, it will never break even because it’s in a market that’s almost completely apathetic to the sport (having averaged below 15,000 per night over the last four years, always in the bottom fifth of the league).
The franchise’s inability to make money has predictably hindered its ability to retain star players. The Preds couldn’t afford to keep a top-5 goalie in Tomas Vokoun, Kimmo Timonen, Scott Hartnell, J.P. Dumont, Paul Kariya, or Marek Zidlicky over the past few years and either let them go by free agency or did the slightly more prudent thing and dealt them for what they could fetch. Without these players, Nashville has merely had a good hockey club, with them, it could have been great.
If we allow that Canadian franchises do indeed provide 30-plus percent of the league’s revenue, it’s difficult to imagine why Gary Bettman would be so vehemently opposed to expansion in Canada (obviously not in word, but clearly in policy and action). Hockey certainly doesn’t need to be sold to Canada, but the NHL’s hyperaggressive overexpansion to non-traditional hockey markets like Nashville without softening the beaches for 10 years with AHL franchises is likely a reason that hockey has failed or soon will in these markets.
The league’s Baghdad Bob impression (”All praise be to the thriving hockey community in Tennessee!”) notwithstanding, the only way for these franchises to conceivably make money is win — and that doesn’t even work sometimes — or play as close to the cap floor as humanly possible, ensuring that they will likely continue to not win, attract fewer fans, lose more money, get their revenue-sharing money cut to 60 and then 50 percent of what they once received, lose more money, and so forth. The end result would be more teams looking to sell (and good luck finding a buyer) or relocate.
Which is what Bettman was so against in the first place.
Bettman and Kelly both have a vested interest in the league succeeding, and ostensibly for the same reason: revenue means more money for everyone, doesn’t it? Therefore it’s easy to question how responsibly Bettman is handling the running of a league for a (let’s face it) regional sport.
This Nashville ownership crisis brings the whole thing into focus. Bettman could have allowed a self-made billionaire and huge hockey fan to bring the league to a thriving market (12,000+ season tickets sold at just the IDEA that a team would move there). This would have been a team that could have become one of the league’s best and most successful under the right guidance. Instead, it’s in a dying or already-dead market that likely never had any interest in the sport to begin with, and was bought by a group led by a man who is now under federal investigation.
Tampa, Dallas and Anaheim are certainly success stories as far as introducing the sport to an unfamiliar market, but those emboldened Bettman to make even more daring and dangerous swoops into other markets. Atlanta, it must be admitted, was an abject failure of the highest order. Nashville can’t be considered far behind. Columbus and Florida are in the same boat after early success due to several poor seasons.
The league has to look at Kelly’s suggestions that the Canadian fanbase is more willing to accept a franchise than say, a place that has almost never seen naturally-occuring ice.
And it seems to us a no-brainer that if you’re going to expand or you’re going to relocate, that you first and foremost have to consider some of the major hubs here in Canada. You know, Winnipeg, Hamilton, Quebec City, perhaps Halifax if they had an arena that could sustain an NHL team. But I think there are locations in Canada that would strongly support the NHL game.
Certainly more than the American South.
