Blog Entry

State of the Game, NHL lockout and the future

Posted on: October 1, 2012 2:23 am
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It's October 1st and usually we are on the verge of a new NHL hockey regular season, normally starting this week. A time for me, when I wonder if the Calgary Flames have done enough in the offseason to warrant a playoff run. I am a long time hockey fan and player in my younger days, and a huge Flames fan ever since they came to town. But we won't be seeing any hockey anytime soon. I don't think we will have a single game this season. Maybe this will be the demise of the NHL? Maybe that's what this league needs,...a complete breakdown, and rebuild. 

Now don't think I am anti hockey, or someone who wishes what I just said to become the truth, but unfortunately the writing is on the wall. And if you read on, I will fill you in as to the reason why I feel this way.

First off, many readers don't have the time, or the patience to get to the real situation, but despite how busy a guy I am, I make it my business when I lose a 'hobby', I want to know why. It is not uncommon to see fans on websites and blogs that really don't have a clue to the real issues. So for those, a quick lesson on the big issue, and the only issue, as it will be the one that causes another lost season.

The major roadblock is the hockey related revenue. It is anything that makes money from anything NHL related, from the gate receipts, parking, beer sales on game day, to the jerseys, memorabilia, or video games with the NHL logo or it's teams sold outside the arena. And in 2011/12 it was 3.2 billion. That is, according to sources, a 50% increase since the 2004 lockout. So,... that's good right? It shows that people are watching, and Bettman is selling it. The players are using this a flag to say,.. "hey what's wrong here? We should get some of that pie". Not to take sides, but the league is not healthy, and that is why the owners are digging in for a fight. Some reports say that 60-70% of the leagues teams are losing money at a huge rate. In the NHL, each team is an independant entity, and are responsible for their own expenses, from local taxes, arena land fees, players and employees salaries. The league attempted to help stop the bleeding by putting in a salary cap in 2004, which was designed to give the league parity, and hopefully fill the seats as every team has the chance to win, by spreading the talent pool around. And it did help, as people were starting to take notice, it made the game competitive and non fans started to watch, which put people in the seats, and led too higher exposure and bigger revenues. But that's where it ended. It was a band-aid, but now the bleeding has become a full on hemorrhage, and it needs a doctor, but everyone is standing around with knives.

In the NFL, they have a socialist point of view, and the league and it's product is the epitome of how a league should be run, regardless of your political point of view. This is sports, not government. Their athletes are rich, well protected, the fans are happy, there is parity, every owner makes money, and all is well. The reason? They split revenues with the players, but the owners share is split evenly amongst all the other teams. Except gate receipts that are split 60% home team, 40% away team. Boxes and suites are excluded, and that is exclusive pocket cash for the teams owner. Guys like Jerry Jones, (owner Dallas Cowboys), hates this system, as he had to foot the bill for his new stadium, and still share his gate receipts. For those that follow the NFL, his bitching was endless while his cash flow was focused on finishing his new monstrosity. But now that he enjoys the revenue created from his new seating capacity, he has a little more patience. (Their is an escrow system account now for new stadium building in their CBA). He hates to have the worlds most recognizable NFL franchise, that he payed millions for, only to have to share his revenue. It's supposed to be 'America's team', and everyone at one point or another has owned a Cowboys jersey, so why should he be interested in helping the Green Bay Packers stay in Green Bay? Because they are great fans, and rabid for the game, and the teams management rarely puts a bad team on the field, which keeps the fans coming, and the revenue expands, and Jerry Jones and every other owner gets a larger slice.   

 That's why it works. I suppose from the fact that the NFL has been through all this before helps. They have had labour disputes through the decades that have laid the groundwork. Plus, perhaps a sense of unity that the system brings. The players and ownership honestly believe in the product, and realize that there is nothing bigger than keeping the game popular. I site 2 examples of this. One was the recent lockout of their own in 2011, which looked bad from the outset. They hammered out an agreement in four months, that saw a reduction in the players cut, but gave them insurances. Stronger rulings to protect them on the field, better free agency, and higher base salaries. These are things that are all for the future, and not the present, and it seems the NFLPA saw the bigger picture, knowing they can still make millions in salary. And that really is what the players of any pro sport should focus on. Secondly,..look at the recent referee lockout, and the realization from Roger Goodell that despite the fact he didn't want to pay the leagues regular referee's more money, he had to bow to the pressure of college and high school linemen and referees putting a bad spin on the game, and taking away from the image of the league. He quickly put and end to the impasse, and got the NFL referees back on the field. It took some dramatic examples of how good the real referees actually are, but at least he recognized the revenue the league creates, he had to get the calls on the field right, and I am sure the ownerhshp reminded him of that. If one aspect of the game falters, the whole is affected. 

The NHL is in trouble however, as the owners who are not making money, are spending it in an attempt to make themselves viable. They have a salary cap ceiling, which no team can spend over, but they also have a basement that they have to spend up to. They hire GM's who have the responsibility to make the team good enough to be competitive, yet they don't seem to be held to any ground rules, and as a result are spending beyond their teams means. This is giving the players and the fans the image that everything is alright, when teams that don't have the cash flow sign players long term outrageous contracts that they can't afford. This is not healthy for the league, and contracts like this should not be allowed for the good of the game. Revenue and finances are the modern key to succes and failure of an entire sports league, not just one franchise, as players are making more and more, as they expect more and more when their lives and livelyhood are coming into question. Concussions, suicides, and abhorrent behaviour is something both the NFL and NHL are currently dealing with. The NHL and it's salary cap was well meant, but it is ultimately making a bad situation worse. It did help the smaller market teams compete with the higher spending teams, but the rift still appears to be widening.   

So, what is the answer?  A combination of many things,.. I think. Move teams from non hockey markets despite Bettman's arrogance. He has always wanted hockey to succeed in the south, but these markets need to win, and that always can't be gauranteed. Tampa, Florida, Dallas, Phoneix, Carolina, Nashville and all the California teams have shown that success has brought the fans, but they are quick to leave again when it's not repeated. Why do the Toronto Maple Leafs always sell out when they are often, and recently the bottom 10 of the league or lower? History? The league needs to reorganize, or suffer through a contraction and lose a few franchises. Giving out all those expansion teams in the 80's and 90's was a huge mistake at the wrong time. 

A new sophisticated revenue model for the ownership that mirrors the NFL is needed. That way the healthy stay healthy and the lower teams can stay competitive while they get through some growing pains. Most current owners in larger markets will never agree to this. Why should they? They have a steady revenue flow. See Jerry Jones. Either this, and/or contraction.

And thirdly, exposure, exposure, exposure. Which is where most of this new found revenue is coming from, and can hopefully save some of these lesser teams who are suffering from a lack of fans in the stands. It's unfortunate that T.V. contracts have been getting larger, but these work stopages are conflicting with this growth, and it will be more difficult to get new agreements with the larger networks in the future unless things are put right with this CBA, or future ones. Not a good scenario, and ultimately means we are in for a long work stoppage. If the two sides manage to get something patch work CBA out in time to save some games, it will only be a scenario that will need major work in the future. 

In the end, it's not the players fault, but they are not seeing the big scene,.. they are players,.. not managers. Their union and it's leader should focus on his players, not how it's run, and realize that they have a take a smaller piece of pie, as it will help make the league healthy. It's not the owners fault, they are just trying to stay competitive, but they should be managing their teams better. Less ridiculous contracts please. Maybe a limit to length and price of future contracts in this CBA? It's not even Bettmans fault, however, he did create the problem. In his defence, he was only trying to make the game more popular and better by selling it too fast. It blew up in his face. 

Now, we as fans sit here with the game we love to watch, in shambles, thinking eight years ago was supposed to be the last time we would have to suffer this lockout BS, but here we are again. Waiting,...

It's a nasty and viscious circle, and of course, there will be casualties. Too bad, I think the NHL and the game of hockey has something to offer. At least we have the NFL to watch.

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Category: NHL
Tags: Lockout NHL
 
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