Outdoor games, Rogers deal fuel surge in revenue for NHL clubs by David Shoalts
Aug 13, 2014
Source: Globe and Mail
NHL commissioner Gary Bettman made sure his owners would enjoy their summer this year.
Thanks to another run of prosperity after the NHL settled its labour problems 18 months ago, Bettman was able to tell the owners there will be a little extra in their piggy banks for the coming season. Each of the 30 teams will get an unexpected $5-million (all currency U.S.) thanks to the success of the league’s Stadium Series and the first payment by Rogers Communications Inc., on its $5.2-billion, 12-year broadcast deal. That is a total of $150-million in cheques mailed out this summer.
The Stadium Series was the four outdoor games played last season in addition to the existing Winter Classic and Heritage Classic. They were added for a revenue boost following the 2012-13 lockout and paid off nicely for the NHL despite fears the league was flirting with killing the golden goose.
Prosperity is always relative in the NHL, so for a club such as the Toronto Maple Leafs the $5-million is not going to set off any parties. But for clubs such as the Arizona Coyotes and Florida Panthers (who are still trying to talk Broward County into an annual subsidy of $5.7-million) it is a great bonus at a time of year when the cash flow is pretty thin.
Actually, bonus is probably not the best way to put this.
The collective agreement calls for the owners and players to split all hockey-related revenue (HRR) 50-50 so every penny has to be counted. Long gone are the days the league office could quietly slip some money under the table to an owner with a case of the shorts. This money will probably be considered an advance on the shared league revenue for the coming season. The NHL likes to stay on the conservative side when it is estimating league revenue (which was about $3.6-billion in 2013-14), so the $5-million represents a change in projection of the 2014-15 HRR.
By the time the bean counters from both the NHL and the NHL Players’ Association gather in the summer of 2015 to determine the final HRR count for the 2014-15 season, that $150-million paid out this summer will be accounted for. And it should also play into a nice jump in the salary cap from $69-million to something around $75-million for 2015-16.
The Coyotes made another nice little score this week when they signed a new arena naming-rights contract with Gila River Casinos, which is owned by the Gila River Indian Community. The deal is for nine years and will pay the Coyotes around $3.5-million per year, which is a significant hike from the previous contract with Jobing.com. Once the deal is approved by Glendale City council, the rink will be called Gila River Arena.
While the NHL is enjoying the benefits of the new Canadian television deal, the same cannot be said for the people writing those big cheques. The word out of Rogers Communications Inc., is that the board of directors has everyone below them sweating to wring every cent of revenue out of the NHL broadcast rights on every platform the company owns or controls.
There is much fear the company overpaid for the deal, as the Rogers-BCE Inc., consortium did several years ago for the Olympic rights and wasn’t able to turn a profit. Cost-cutting is the management mantra, which led to a steady stream of layoffs and firings.
The trouble for Rogers is that it only has two ways to earn revenue on the package – selling advertising and attracting new subscribers for its networks that will carry the games. It is possible the company could ask the Canadian Radio-television and Telecommunications Commission for permission to raise its cable fees but people in the industry do not believe the CRTC would agree.
So the heat is on Rogers’ advertising sales staff and viewers can expect to see all of the best games outside of Saturday night on the Sportsnet and City networks in order to entice people to sign up.