Wednesday, October 18, 2006

Just another day at the office for Gary Bettman and the National Hockey League

Tuesday was just another day at the office for the National Hockey League. First the bad news, the Colorado Avalanche remarkable string of sellouts is over. Second, last Thursday the Los Angeles Kings announced a five year single game attendance low. Third, on the very same evening the Chicago Blackhawks announced a crowd of 8,008. Fourth the NHL’s much ballyhooed cable partner Versus once again failed in their attempts to take the Comcast owned network a step forward, putting the NHL behind the eight ball in terms of leveraging and building their brand with their cable partner. Fifth, TSN is reporting the Russian Hockey League has filed a lawsuit against the NHL in New York Superior Court.

The good news, the NHL is set to announce a two-year extension to their current revenue sharing agreement with NBC, two more years where the NHL isn’t guaranteed any revenue from the NHL’s over-the-air television partner. If you’re the theory that any reasonably good news has to be spun as great news when it comes to the National Hockey League, the NHL remains the only so called major sports league whose national TV rights are worthless.

For his part, the master of NHL spin, Gary Bettman made it clear to The Los Angeles Times NHL attendance issues were much to do about nothing.

"It's a couple weeks into the season and any speculation would be premature," Bettman said at the Kings' game against the Detroit Red Wings that had an announced crowd of 17,417, the smallest to see the Red Wings play at Staples Center.

Bettman said that the Kings' situation — they had consecutive crowds of less than 15,000 last week for the first time since the 2001-02 season — was caused by the "schedule being a little different. It's a little premature two to three weeks into the season to be writing attendance stories."

Bettman is right about one point – its all of two weeks into the NHL regular season, to suggest attendance trends are developing when teams have played as few at two home games is a misnomer. However there are several distributing and ongoing issues Bettman and company will have to address in the near future.

The Chicago Stadium was the long time home of the Chicago Blackhawks. Night after night, the Blackhawks announced attendance 16,666 – years and years of sellouts. Before the arrival of Michael Jordan in the Windy City, the Bulls where the easiest ticket in the NBA, the Blackhawks one of the toughest tickets in the NHL.

If the United Center is the house that Michael Jordan built, the United Center is the house Blackhawks owner Bill Wirtz drove hockey fans away from. A once proud NHL franchise, located in America’s heartland in America’s third biggest city has been laid to waste by inept ownership. In the last two complete NHL seasons the Blackhawks have sold 65 percent of their ticket inventory, well below the league average of 90 percent. In the three previous seasons, the Blackhawks barely sold more than 70 percent of their ticket inventory.

The problem with falling attendance in the two Southern California markets (Los Angeles Kings and the Anaheim Ducks) is The Los Angeles Times. America’s second largest paper announced over the summer they wouldn’t be sending reporters to the Ducks and Kings road games. A cost cutting move on the part of the paper, the move served as yet as cannon fodder to pundits who choose to insult the NHL. Its understandable The Los Angeles Times would report on early season attendance issues in Southern California. A legitimate question – does it make sense for Los Angeles to remain home to two NHL franchises?

Through four home games, the Atlanta Thrashers are averaging 14,298 tickets per game or 77.1 percent capacity. The NHL remains a gate driven league. Thrashers attendance averaged just over 80 percent capacity last year and during the 2003-04 season. However in the two pervious 2001-02 and 220-03 seasons the Thrashers barely topped 70 percent over a two year period. NHL has failed once in Atlanta, its well on its way to failing once again.

"We've still got to be realistic that the buzz [about the Thrashers] is predominantly in the hockey community," Thrashers president Bernie Mullin told The Atlanta Journal Constitution before the teams’ home opener. “Clearly, our challenge is to broaden the base to people who are not traditional hockey fans. We think winning and becoming more competitive and getting in the playoffs is the way to do that.”

"We need help from the team this year."

The Colorado Avalanche ended one of the most remarkable attendance streaks in sports history Monday night. The sellout streak began in the Avalanche's eighth regular-season home game, just after the franchise was moved from Quebec to Denver, when a crowd of 16,061 watched Colorado tie the Dallas Stars 1-1 in McNichols Sports Arena on Nov. 9, 1995.

Kroenke Sports Enterprises executive vice president Paul Andrews told The Denver Post "there are probably 27, 28 teams that would have been thrilled with a near-sellout on a Monday night in October, so we're very fortunate to have had the support we've had over the years."

"The thing that we battle most in this market is that we're always sold out, and nobody tries to buy tickets," Andrews said. "That perception being lifted by tonight's game, I think, will drive a lot of sellouts here in the future."

It remains to be seen what the future holds for the Avs. Its well worth noting the Cleveland Indians sellout streak at Jacobs Field ended after 455 games. The Indians streak ended early in the 2001 baseball season. The Indians managed to sellout most of their home games that year, but since the 2002 seasons five full seasons of baseball, the Indians have only sold-out a handful of games.

Once the ‘law of supply and demand’ was broken in Cleveland, consumers in Cleveland stopped buying tickets in advance, dramatically affecting the Indians ability to sellout any games. Once the Genie is out of the bottle, its tough to put the Genie back in.

Tuesday afternoon Major League Baseball announced an eight-year agreement with Turner Broadcasting's TBS, giving additional TV rights agreement with Major League Baseball that will enable it to televise the 2007, 2009, 2011 and 20013 National League Championship Series and the 2008, 2010 and 2012 American League Championship Series.

No dollar amount was announced but Mediaweek is reporting TBS paid between $45 million-$50 million for the latest rights. MLB reportedly had opened negotiations seeking $70 million.

Once again Versus, (the network formerly known as the Outdoor Life Network) lost an important opportunity to take their network to the next level. The NHL is into the second year of a two-year $130 million agreement with the Comcast network. A year ago after the NHL had lost a season to the year long player lockout, ESPN the NHL’s long time cable partner was only interested in a profit-sharing agreement along the lines of what the league offered NBC, who secured over-the-air rights after ABC wasn’t interested in continuing their five-year relationship with the NHL.

Versus reached 65 million homes a year ago. A year later, according to a Los Angeles Times report the fledging cable network reaches 70 million homes. Meanwhile ESPN and ESPN2 each reach more than 100 million homes. ESPN had planned on placing NHL games on ESPN2. ESPN has taken cable television to another level averaging more than 10 million viewers weekly through the first six weeks of ESPN’s Monday Night Football coverage. While ESPN and their family of networks report on NHL games, without NHL hockey ESPN canceled their nightly NHL magazine show “NHL Tonight” last year.

"ESPN provides the sort of Good Housekeeping stamp of approval," said Paul Swangard, managing director of the Warsaw Sports Marketing Center at the University of Oregon and a hockey fan in a Los Angeles Times report. The NHL, he said, "would be better off finding a working partnership between themselves and ESPN. If it were my decision, and not knowing the reason, this league needs as many symbolic attachments to maintain their position as a major professional sport."

A year ago, there was a belief Comcast was going to attempt to build a second national sports network to compete directly against Disney owned ESPN. Versus had talked about securing the last available NFL TV package the eight late season Thursday/Saturday night games the NFL kept for themselves to build the NFL Network. Whatever reasonable opportunity Comcast had to create a major national sports cable network all but ended in January when the NFL made the best move they could for their cable network, putting actual live NFL games (sports most valuable property) on their own network. Cable operators are balking at paying the NFL the carrier rights the NFL is demanding to carry the NFL Network. Versus may be much cheaper but with a menu of NHL games and little else, Versus is doomed to failure.

"If we were going to grow, we needed to do something different," NHL Commissioner Gary Bettman said in defending the deal in a Los Angeles Times report. "While we gave up some distribution, the coverage was phenomenal. They will continue to grow over time and we think as a result, people will see better coverage of hockey."

Good intentions aside – if Comcast was really committed to creating a cable sports network they would have secured either the limited cable NFL rights the NFL Network has, and the regular season, and now LCS rights Turner Broadcasting secured Tuesday. The NHL can talk about being the ‘prince of Versus’ but when you’re the master of a domain that is empty – you still have nothing.

The Globe and Mail’s William Houston reported Tuesday, NBC and the National Hockey League are set to announce a two-year extension to the NHL’s profit sharing agreement. NBC doesn’t pay the NHL for the league’s rights; the two share any profits after NBC expenses are paid. Houston reported NBC and the NHL’s agreement did generate a profit last year. However, at the end of the day the revenue generated likely wasn’t very much. If it was considerable rest assured the NHL and the NBC would have shouted to the hills how much money their profit-sharing agreement had generated. That’s not to say the NHL’s over-the-air agreement with NBC doesn’t make sense, just that it represents the only North American over-the-air sports agreement that doesn’t include a guaranteed rights fee paid by the network.

For Sports Business News this is Howard Bloom. Sources cited in this Insider report: The Los Angeles Times

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