Sunday, February 13, 2005

The NHL Season is Over - A topical take on what's wrong with the NHL

Gary Bettman said the season was cancelled unless it was clear they were just ironing out the details for an agreement by sunday. Well, its Sunday and I haven't heard any rumblings about a deal to save the season nor have the papers been headlining "NHL Season Saved". Thus I feel reasonably confident that Gary Bettman will trot out tomorrow and announce the season cancelled.

The crux of this whole little Mexican standoff has been whether a salary cap should be imposed to to prevent salaries from balooning. The salary cap is basicaly a devise to save the owners collectively from their own stupidity. The fact that several owners are willing to pay lavish salaries for mediocre players and outrageous salaries for good players has distorted the economics of the game. A cap would constrain the big spenders *cough* New York Rangers *cough* from driving up the league's salaries and forcing everyone else to compete in a manner that's nearly bankrupted some of the small market teams, as well as many of the Sun belt teams.

The owners have come to the point where they've recognized they have a problem. This is good, recognizing you have a problem is always the first step to recovery. Their payroll expensives have become proportionately the highest among major sporting leagues.

The league's numbers indicate that 76 per cent of total revenues last season went to player costs. By comparison, the National Football League spent 64 per cent of its total revenues on player costs, Major League Baseball 63 per cent. About 58 per cent of the National Basketball Association's revenues went to play players.

This particular situation is a function of many other problems which I will outline below.

Television ratings in the US for hockey are also the lowest of the four big sports (baseball, football, basketball, hockey).

NHL: 1.1 rating on ABC, 0.47 on ESPN and 0.24 on ESPN2
MLB: 2.7 rating on FOX, 1.1 on ESPN and 0.6 on ESPN2
NBA: 2.4 rating on ABC, 1.3 on ESPN, 0.9 on ESPN2 and 1.4 on TNT
NFL: 9.0 rating on CBS, 9.9 on FOX, 7.1 on ESPN and 11.0 on ABC.

Consequently the tv rights for broadcasting NHL games in the US is the lowest.

NFL cashes in on per year: ABC (Monday night)- $550 million, FOX (NFC)- $550 million, CBS (AFC)- $500 million, and ESPN (Sunday night)- $600 million.

MLB has this: FOX- $417 million and ESPN- $141.8 million

The NBA cashes this: ABC/ESPN- $400 million and AOL Time Warner/Turner Sports- $366.5 million.

Now let’s turn our attention to the NHL: $120 million for their last contract with ESPN, ESPN 2 and ABC and this year, a whopping $60 million or half of what was made last year.

Tied in rather intimately with high percentages of revenue directed towards labour and low tv revenues is average player salaries.

NFL- $575,000 (although a lot of additional costs are tied up in signing bonuses)
MLB- $1,003,000
NBA- $2,366,000,
NHL- $1,795,000

Ticket prices are also comparable to other leagues, although the arenas are often not as large (at least not the size of either the NFL or MLB)
2002 figures in US$

NHL $49.86
NBA $50.10
NFL $53.64
MLB $18.86

Average attendance:

NHL - 16,533
MLB - 30,401
NBA - 17,050
NFL - 66,817

By way of a summary, what's wrong with the NHL? Too much money is being spent on players whom are not attracting people to the game. TV ratings are too low to support the level of salary that players are currently demanding. Hence the NHL's player costs have risen to an exorbitant 76% of total costs.

Solutions: The players who feel they would be underpaid under a salary cap could promise to make 3 more people for every one currently watching at home watch. (alright I can't even type that without bursting into laughter) Quite frankly players need to accept they are the poor relation in the major sports leagues and accept that they should be paid accordingly.

1) Salaries must be rolled back substantially. The number the players and NHL have been bandying about is 24%, personally I'd say 40% would likely be in order. Reducing player salaries by 24% would leave the average salary at $1,364,200 while 40% would leave player salaries at a much more reasonable $1,077,000.

2) A hard salary cap - cap the amount a team can spend at $30 million dollars US. Impose completely draconian penalties for violations.

3) Revenue sharing - baseball and football, both far more sucessful leagues than the NHL have revenue sharing systems as they recognize that the large market teams could not function without the small market temas to play against. Consequently I'd recomment at least 33% of the profit at the gate go to the opposition team.

4)Alter the rules of the game - get rid of the trap and obstruction. Its boring to watch, its bad for getting people into the stands and its horrible tv. Adjust the rules to make the game more fast tempo and high scoring.

5) Take a page out of Premier League Soccer's book and involve compensation for player development costs in both free agency and trades.

6) Salary arbitration should be eliminated as it would be incompatible for the most part witha salary cap, and has only done ill to the league.

7) Allow no signing bonuses and or performance bonuses save for winning and or making it to the Stanely Cup to be paid.

8) After doing 1,2,3 and 4 work at expanding the fan base in the US and building a television audience. Currently baseball is laying a beating on hockey in the ratings, there are twice as many baseball games as hockey games and baseball isn't an action packed thrill ride. Not to mention the fact that Football attracts 9 times as many viewers...

9) If the players refuse to recognize their current situation, bring in scabs from the AHL, Europe, and other minor leagues. The third and fourth line regular players will return to their teams almost immediately, while the first and second line players will not return immediately but faced with the decision of making next to nothing in the minor leagues and Europe they will accept the new reality of their situation.

10) Replace Gary Bettman with someone who actually is knowledgable about hockey, and for god's sake don't add any more expansion teams.


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