The NHL’s Revenue Model Is Destroying Its Television Product
The NHL unveiled a new revenue stream on Monday, and hoo boy, it’s sure to drive up sales.
It’s not the advertisers associated with the new practice that will benefit, however. Rather, Dramamine sales are likely to spike due to increased cases of motion sickness among NHL fans who try to watch hockey on TV.
Let’s take a look at what the league plans to do:
That’s right, the NHL is instituting moving advertisements on the dasherboards that surround the rink, despite the fact that the play in the NHL tends to pinball wildly back-and-forth, and as a result, the camera has to pan quickly from side-to-side in order to follow the action. There will likely exist scenarios during gameplay whereby the puck is moving in one direction while the advertising moves counter to the play, and the resulting discombobulation will distract from the product on the ice, not to mention the possibility for disorienting motion sickness.
The NHL flirted with this kind of in-game distraction last year (at least on a local Buffalo level) as the Sabres instituted in-game advertisements that would pop up from the bottom and side of the screen while shrinking the actual feed from the game. That tactic was incredibly distracting, and as it was often used during powerplays, it often happened during the most crucial parts of the game, making the effect even worse for the viewing audience.
Now, there are certainly real financial reasons why the NHL has landed on these intrusive and obnoxious tactics to generate revenue.
The NHL – like many industries – was hit hard by the pandemic. That effect was more pronounced for professional hockey rather than professional football, for example, because unlike other sports that generate a majority of their revenue through television deals, the NHL is particularly reliant on gate revenues to generate their income. The NHL generated 35.07% of their operating revenue from ticket sales in 2019-2020, according to Statista.com (sources included below the article), as opposed to the money-printing monster that is the NFL, where a paltry 1.25% of revenue was generated by ticket sales.
That’s an incredible discrepancy and it highlights the NHL’s comparative disadvantage compared to the largest competitors in their target viewership market. To offset this, Gary Bettman and company have recently given teams the opportunity to sell advertisement patches on the jerseys and helmets of the players. While some would call this sacrilege by tarnishing the brand of Original Six kits, there really isn’t a problem here from a viewership standpoint. The NHL can deck their players out like walking billboards as they do in Europe, and the game is still completely watchable.
Jersey advertisements aren’t ideal, obviously, but they were an inevitability for a smallish league that has to find unconventional revenue streams. Hockey games are mostly broadcast on a local level rather than a national level which severely hampers the league's ability to capture nationwide broadcasts and the resulting cash influx that comes from those deals. Sure, the league has a deal with ESPN/Hulu, but the average at home person with an antenna rather than cable (yes, we do exist), is not going to find a hockey game on an over-the-air broadcast. Conversely, the NFL is second only to God for owning the country’s collective attention on Sundays due to the omnipresent coverage available on no fewer than three over-the-air channels: CBS, FOX and NBC.
So the NHL naturally had to find some different ways to generate money, and they did so with the idea of jersey advertisements. Understood and accepted. It’s a little unsightly, sure, but it doesn’t actually interfere with watching the game.
The pop-up ads and digital billboards do distract from the game, though.
Imagine a world where the FOX NFL robot digitally pops out of the sideline during a crucial 3rd down play while winking at the camera and drinking a Pepsi. The NFL would never allow its product to be tarnished like that because they have faith that the product of football will sell itself, and they are therefore not reliant on gimmicks to make additional money.
The NHL has no such faith in their product and instead must rely on distracting advertising gimmickry to make up their monetary shortfall, and that policy comes at the expense of the at-home viewing public. This is a direct result of league's refusal to tailor its rules to suit the superstars and its continued policy to maintain its MMA-adjacent status as a bloodsport. To understand the league’s marketing thought process, one need look no further than their marquee event: the Stanley Cup Playoffs. Hockey’s greatest tournament is usually marketed as a truculent, blue-collar, war-of-attrition slog that only the toughest, roughest boys can win.
The superstar talent in the post-season usually plays second fiddle to this narrative when it comes to advertisement. That thought process and the resulting rule making and marketing campaigns are the real problem behind the NHL’s money problem and trying to off-set their cash issues by making the game more difficult to watch will not solve their problem. In fact, these tactics will only worsen the sport’s watchability among casual observers.
The major problem with these new technology-based “solutions” will result from the portion of the public that already finds hockey difficult to follow due to its byzantine rules, quick-moving action and small puck. Plenty of people who would appreciate the artistry and skill of NHL players are turned off by difficulty of picking up the nuances of the fast-paced game. Now the league is going to add an additional visual distraction that will make the game even more difficult to follow for a casual sports fan.
This is not the way to make more money.
It’s a short-sighted, Gatorade-branded, unsightly band-aid on a problem that begins and ends with league management and their inability to market the league’s best players as must-watch superstars.