Tuesday, December 12, 2006

Memo to the NHL – time to wave the white towel

Try as they may – there is no one watching National Hockey League games in the United States, and the sooner those entrusted with the responsibility of operating the league understand why this has taken place, the sooner the NHL can responsibly deal with the crisis. How bad are NHL American NHL TV ratings – the last time those interested in watching the NHL on American television held a get together, they went home in the same cab. The National Hockey League – the sport that television forgot.

When you consider the total number of hours people watching sports on television continues to grow at unprecedented levels, a report in The Vancouver Province should force Gary Bettman and company to finally wave the white flag and admit they’ve failed at building a television audience for hockey in the United States.

According to The Vancouver Province’s Tony Gallagher during last week’s NHL Board of Governors meetings held at the Breakers Hotel in West Palm Beach, those who either have hundreds of millions of dollars invested in the NHL or those representing their team owners, were appraised of the local cable ratings (regional sports networks) that suggests hockey is losing viewers at a remarkable rate, with the likely end result of the National Hockey League being perceived as a Tier II minor league sport along the same lines as Major League Soccer, the WNBA and the Arena Football League.

The area of concern isn’t the ill-conceived Versus national cable contract or the no-money down NBC agreement, but the various local television contracts. The impact won’t necessarily be on the rights fees the various regional sports networks are paying local NHL franchises in their markets but the resulting fallout from other revenue sources; like sponsorship and arena signage rights fees. If no one is watching, those rights become worthless.

The good news (always makes sense to put your best foot forward), Evgeni Malkin and Sidney Crosby are lifting the Fox Sports News Pittsburgh ratings 40 per cent higher than expectations and the highest they've been since 2000-01. That with the team possibly heading to another city if the Isle of Wright’s casino bid isn’t selected by the Pennsylvania Gaming Association next Wednesday.

It has been suggested in the pages of Sports Business News that the NHL hockey is never going to work in South Florida. Before the Miami Heat arrived in South Florida at the start of the 1987-88 NBA season, the Miami Dolphins where the only game in town. Within six years the NHL and Major League Baseball came to Miami; far too many teams in far too short a period of time. According to the report, FSN Florida officials promised advertisers before the start of the season ratings for Panthers games would average 1.0. One problem as terrible as that number is to begin with, ratings are 77 percent below what was expected. In a region where grocery stores rarely carry green bananas, no one will admit they’re watching NHL hockey.

In Atlanta the Thrashers are an exciting and completive team led by Marina Hossa one of the NHL most electrifying players. The Ottawa Senators traded Hossa to the Thrashers for Dany Heatley two years ago. The NHL has already failed once in Atlanta and appears destined for the same fate once again. The television numbers are down a 10th of a rating point and fully 70 per cent below expectations.

The New York market remains home to three NHL franchises, at least one franchise too many for that geographical region. According to the published report, numbers are so low on Fox New York for Islanders games; the ratings numbers are not made available for distribution, something that didn’t seem possible.

One of the few American markets the bright thinkers the NHL employs (an Oxymoron if there ever was one) tries to sell media pundits on is Detroit’s label as “Hockey Town USA”. Indeed Detroit may like to believe its Hockey Town USA, but the current television ratings numbers are down almost 50 per cent over last year's figures. And last year's figures were a far cry from when the sport was going strongest in 2001. There are those who’d like to suggest the Wings are dealing with the aftermath from the Detroit Tigers winning the American League pennant but let’s remember the World Series ended six weeks ago.

Last week The New York Post’s Larry Brooks reported that ESPN refused to accept paid advertising from the National Hockey League. Was it because ESPN’s available commercial inventory is sold out? Ask any ESPN sales representative – there’s always room at the inn for anyone willing to buy advertising, except the pariah better known to ESPN officials as the National Hockey League. NHL deputy commissioner Bill Daly and NHL Enterprises president Ed Horne each told Brooks that ESPN wasn’t interested in doing business with the National Hockey League.

It’s almost as if ESPN is mocking the National Hockey League. When was the first time any advertising driven media (ESPN or any media outlet) suggested an organization’s money wasn’t good enough. Its inconceivable that ESPN had the gall to refuse to accept the NHL’s money and advertising content. ESPN sent a message in no uncertain terms to the National Hockey League – ESPN doesn’t want anything more to do with the National Hockey League. If ever there was an indictment that represented how little ESPN respects the NHL, its sending a message to NHL officials there money and their commercials aren’t good enough for ESPN to accept.

Which brings the NHL back to where they are with American cable television current agreements, the one that locked out ESPN and the one that saw ABC end their long-standing agreement with the NHL. Versus, owned by Comcast, are expected to extend their current agreement for one year. All that will serve to accomplish is illustrating how terrible the decision was to leave ESPN.

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 ten 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 they are 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.

How terrible is the NHL’s agreement with Versus? Earlier this month NHL fans rejoiced when something called The Hotel Network announced hotels and motels affiliated with The Hotel Network will carry Versus in more than 300,000 hotel rooms. Far too little and far too late, the NHL mistake of leaving ESPN for what amounted to pennies on the dollar will serve to haunt whatever legacy Gary Bettman leaves behind when he’s finally retired or fired.

And let’s not dismiss the value American networks place on NHL hockey – its worthless. With the NHL poised to sign a long-term extension with NBC, one that doesn’t guarantee the NHL any revenue, NHL rights are worth zero dollars. In an era when networks are throwing billions of dollars at any sports properties, the fact that the NHL can’t get anyone to pay the league anything for the leagues rights remains an embarrassment and blight on whatever’s left of the NHL’s reputation.

According to a recent report in The Toronto Star, Hockey Night in Canada ratings are off 19 per cent for the early game, and a whopping 33 per cent for the late one compared to last year. TSN's ratings have dropped 18 per cent.

In fairness as the Toronto Star mentioned, coming off a year without NHL hockey Canadian NHL fans couldn’t get enough NHL hockey. CBC had their highest hockey ratings in ten years, and TSN set an all-time seasonal ratings record.

"We all thought the numbers would come down, but this is more than we thought," admitted Joel Darling, CBC senior executive producer in The Toronto Star report. "It's a bit puzzling.

"It's like a lot of things; sometimes the honeymoon isn't as long as we'd like it to be."

Bottom line – the bloom has worn off the NHL’s Canadian rose and it couldn’t come at a worse time. Its current Canadian TV contracts will expire at the end of the 2007-08 season. The CBC is paying the NHL $65 million-a-year and according to The Globe and Mail, and generates an annual profit of between $25-million and $30-million.

Bell Globemedia (CTV and TSN) is poised to reportedly make a bid for Canadian English and French language TV rights in the area of $140 million a year. The CBC is expected to bid at least $100 million to retain the lock they have as Canada’s over-the-air television rights. The NHL is well into their negotiations with both sides. Given there isn’t an over-the-air carrier prepared to spend a dime on American rights, its incumbent on the NHL to sell Canadian rights for as much as they possibility can. The good news, the offers are on the table. The bad news, with the bottom having fallen out of the NHL ratings in Canada, Bettman and the NHL better get a deal done sooner rather than later.

"Canadians aren't flocking back to hockey the way they did last year," says TSN president Phil King. "There was that giant `We missed you and welcome back' that's not there this season.

"It wasn't just the lockout. Half the players changed teams, Gretzky was coaching, rules had changed. There was a lot of interest in everything."

Enough is enough, there is no one watching NHL hockey in the United States, Canadian numbers are falling at a scary pace, and ESPN has sent a message to the NHL – we want little if anything more to do with the NHL.

The NHL has reached the point where there is no simple solution, but it’s time the NHL Board of Governors acted. It’s time the NHL Board of Governors stopped being spectators and started asking the questions of those they’ve hired, and ask what they see solutions to the crisis that soon enough will grip the NHL and devalue the product.

Clearly the National Hockey League is suffering from a terrible lack of leadership at its highest levels, its most important people are no longer leaders capable of moving the National Hockey League forward. Its time the NHL Board of Governors cleaned house and hired new and focused leadership capable of moving the NHL forward. The alternative is even scarier – the collapse of the NHL.

For Sports Business News this is Howard Bloom. Sources cited in this Insider Report: The Vancouver Province.

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