***For reference in these statistics I have used only US cities and considered the following cities as traditional markets: Boston, Buffalo, Chicago, Colorado, Detroit, Los Angeles, Long Island, New York Rangers, Philadelphia, Pittsburgh, St. Louis and Washington. When adding in the Canadian markets this statistics favour high revenue markets even further. The reason they are exempt is aside from Ottawa and perhaps Edmonton the Canadian franchises are not in financial trouble, currently. ***
With arguably the greatest rupture in the NHL in the past 6 years happening this past May 31st when it was announced that the Atlanta Thrashers would be relocated to Winnipeg where do the 30 franchises in the NHL stand when lookin at the upcoming CBA?
Clearly all was not well within the echelon of the 30 chosen cities to host NHL franchises this year or several years back. One could argue the true damage came from the 1994-95 labour dispute and the resulting negotiated agreement. It was this agreement, which was extended by the Board of Governors and led to the cancelled season of 2004-2005. Are the lingering effects of ’94-’95 still being felt now?
Hockey has one key aspect, which is no secret to anyone, other major league sports do not have- a windfall television deal. A deal which puts so much money in each franchises hands year after year that a salary cap becomes a means of protecting profit not limiting expense. This last concept should be the one that resonates with the interested parties.
With the introduction of the NHL salary cap in 2005-06 the NHL and it’s major union partner the NHLPA, moved to share an agreed upon revenue stream based upon a 39 million salary cap. The NHLPA members would receive a slight majority of all league earned revenue- at the time a $2 billion industry. As it turns out the sharing system did little to distribute talent or wealth.
The top 20 paid players in the NHL this season have salaries ranging from $12 million to $7.5 million per season. Within the top 20 the diversity of locations is as follows: 13 of the players played in traditional markets all in existence since the 1980 expansion/merge of 4 WHL teams.
When the cap hit is the base measurement criteria the salaries go from a high of $9.5 million to $6.8 million. The top cap hit salary shows a decrease of 26.5% in ‘booked’ salary and the bottom cap hit is a decrease of 10.5% compared to actually salary paid. In this top 20 the traditional markets still hold a small majority of 11 players.
The next 20 players in salaries start at $7.5 million and go to $6.5 million. The cap hits for the next 20 players go from $6.75 million to $6.1 million. In the group of players 21-40 in salaries 14 are from traditional markets. With the next 20 players in cap hit there are 17 players from the traditional markets.
While far from scientific and comprehensive, I readily admit I do not have access to many of the infinite amount of statistics available to others, there are some possible conclusions to draw from this data.
First, that non-traditional markets have not had the same length of time to build their business models and local revenue streams as their much more established counterparts. A hockey franchise is a business and businesses take time to grow, they need competent management, they need a good product, and most importantly they need excellent branding and marketing. The latter requirement is no more important than ever in today’s brandalized consumer environment.
Second, the non-traditional markets are only capable of having one or two players as a star/franchise player due to salary.
Third, the traditional markets (in the US) are also based in the largest urban areas. The top 4 US cities by population according to Wikipedia, which have NHL franchises, are also cities with 10, or 25% of the top 40 players by salary. When using cap hit as the criteria it is 9 of the top 40 just below 25 %.
When looking at the top 40 salaries in comparison to the top 40 cities in population (Only US cities used) 16 players are based in traditional markets 40%. When cap hit is the measurement, 18 of the top 40 players are located in the top 40 US cities by population.
The fourth possible conclusion is the salary cap does not work as an agent of favour for the non-traditional markets. This mythical ‘cost certainty’ has not made the playing field any more level for franchises across the league.
Fifth, the success of a franchise may not be related to the geographic and demographic factors but more to the establishment of the franchise and the fan base.
The easiest conclusion is the NHL labour agreement with the NHLPA has not yielded the kind of results many had planned and many more had hoped for when it was created.
While I will be the first to say that my statistics about contracts, dollar value and locations are rudimentary at best and would hardly be considered definitive in any way, they do outline if not begin to fill in a picture. This picture is that the league is growing but not evenly. If one were to take a map of North America as a lawn and mark all the cities where the NHL exists with an open patch of dirt and then add seed and water what would the results look like after 20 years growing?
Would we see tall think lush grass in 7 spots above the 49th parallel? Would there be huge clumps of Kentucky blue grass rough in the 12 traditional US markets? Probably not to my statistics based on contract value
Some contracts were not signed in the locations they now exist. Some teams do not have the same management let alone ownership they did when certain contracts were signed. Furthermore, the ‘window of opportunity’ for certain franchises meant taking certain financial risks where neither geography nor age of franchise had any effect. By the same token some contracts were moved to markets that could afford them because of the size and financial stability of those particular markets.
I still stand by my ever-increasing belief that the CBA from 2005 is not performing to the intent and spirit in which it was created. The reason may not be to do with the health, size of market, or the age of the franchise either. General Managers are often their own worst enemies in regards to offering money to players, and that’s before ownership wants a stake in the process. When competition between businesses, which are bound to the same labour/talent pool, exist it will always be difficult to achieve some sort equitable harmony where one party does not benefit more than the other.
The NHL is not about to go through another lost season but the Board of Governors certainly knows it cannot continue in it’s current fashion through another six year term. The problems are as divisive as they are diverse but the first step to a solution might be to have what every other league has: a national TV deal. By ensuring franchises will no longer lose money may be the best way for them to start investing in other methods to increase revenue. A guaranteed amount of shared money, a type of ‘revenue certainty’ may do a lot more than resurrecting a never-ending battle over cost certainty.
Enjoy the last week of summer!
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