Wednesday, May 02, 2007

The NHL, the sports league that sports fans can’t find on TV

The second round of the National Hockey League playoffs have reached the midway point. The good news for the NHL, the New York Rangers tied their series with the Buffalo Sabres at two games apiece Tuesday night. The not so good news both Detroit and New Jersey are having issues selling out games and for whatever reason the NHL believed scheduling games against Fox’s Baseball Game of the Week the last two Saturday’s directly against consecutive Game(s) of the Week that featured the New York Yankees meeting the Boston Red Sox proves once again how little the NHL and in this case their television partner NBC understand the marketplace. Of even greater concern the albatross that continues to hang around the NHL – their cable TV agreement with Versus the cable network that nobody can find.

One might assume when that old Indian Head test pattern produces better ratings than NHL games the fact that no one is watching NHL games in the United States wouldn’t be news worthy of the pages of Sports Business News. The hockey played during the early rounds of the Stanley Cup playoffs has been good to outstanding. If nothing else, the Stanley Cup playoffs are worthy of a great deal of attention, the challenge the NHL faces is that you have to have an audience to build a base from. And for the NHL, a so called major league with a terrible cable but well intentioned cable partner in the United States and a relationship with NBC that seems questionable at best try as they may the NHL seems to be their own worst enemy.

Sunday, the New York Rangers and the Buffalo Sabres offered a Stanley Cup classic on NBC, with the Rangers winning in the dying seconds of a second thrilling overtime period. Meanwhile on Fox a Nextel Cup race competed in the same time period and on CBS the final of the Byron Nelson Classic (without Tiger Woods for the first time in years) was offered. New York Newsday reported: Game Three of the Sabres-Rangers Eastern Conference semifinals drew a 1.8 Nielsen rating in the N.Y. market on WNBC, compared to a 2.1 for WNYW-Fox’ coverage of the NASCAR Nextel Cup Aaron’s 499 and a 1.9 for WCBS’ coverage of the PGA Tour Byron Nelson Classic. Consider NASCAR has no real presence in the New York area, the Byron Nelson Classic lacked most of the PGA’s top ten and the only major sports event that featured a local team was the Rangers/Sabres game on WNBC. The Yankees/Red Sox game was over. And the NHL game on NBC finishes third in a market the NHL mistakenly believes they need to succeed. Who is Gary Bettman trying to kid.

The NHL biggest problem remains what it has been since the league agreed to a three year contract with Versus after the NHL’s missed the entire 2004-05 season. As nonsensical as it may seem, NHL owners believed it made more sense to accept $1.2 million per team per year from a fledging cable network that no one had ever heard of. ESPN wanted the NHL but under the same terms and conditions the league agreed to with NBC, a no money down revenue sharing plan. In an era when NFL ($106 million), NBA ($26 million) and MLB ($25 million) are receiving from their national TV partners $1.2 million may not seem like much of anything, but in a gate driven league like the NHL $1.2 million could be the difference between being able to afford to keep the lights on or facing some serious power issues.

But the problem has exploded and embarrassed the NHL in the Stanley Cup playoffs. The NBA playoffs are on TNT and ESPN in 100 percent of the cable ready homes in America. NBA fans can follow their favorite NBA teams’ pursuit of the NBA title. And the NHL? According to a report in New York Newsday: Versus is in only 61 percent of homes in metro Detroit, the nation's foremost hockey hotbed. Versus is in only 59 percent of the cable ready homes in the Los Angeles market forcing Anaheim Ducks fans to search for ways to watch their teams’ second round series against the Vancouver Canucks. In New York games one and four of the Rangers/Buffalo series appeared on Cablevision’s digital basic service which is only in 80 percent of the cable ready homes in New York. That 20 percent may not seem like a great deal, but if you’re a major sports league you’re either in all the homes in each market or you’re not a major sports league.

And the problem in New York is about to get a whole lot worse if the Rangers beat the Sabres in their second round series. Other than the games NBC has committed too, Versus is the exclusive NHL cable rights holder for NHL games in the conference finals and for the first two games of the Stanley Cup Finals. And let’s not forget if the Ducks and Red Wings make it to the next round 40 percent of their fans will be on the outside unable to look in – that is not how you run a sports league in 2007.

Versus Executive Producer Mike Baker last week told The Palm Beach Post he "couldn't be happier" with how it's gone."

"The games have just been incredible," Baker said. "It's actually made our job tougher because the games are so fluid, with the increased intensity, we have to stay on top of it from a production standpoint. It's a fantastic sport. If we can get people out of that mind-set that, 'If the local team isn't playing, I'm not watching,' it doesn't get any better than right now."

Fair enough Mr. Baker we agree with you on how great the games have been, too bad the network that no one can find will be missing in action when the Conference Finals take place along with the first two games of the Stanley Cup Finals. The NHL’s CBA directly links hockey generated revenue (54 percent) to the league’s salary cap. How important is the three year $200 million Versus agreement to the leagues’ players?

"The players have a direct relationship to what's going on with revenue. There has to be a voice from the players' side to some extent," said former Carolina Hurricanes forward Kevyn Adams, a member of the NHL Players' Association's executive committee in a report in The Raleigh News & Observer.

"The ultimate question comes to, 'How can the game in the long run be the best?' When the deal was signed with Versus, there were a lot of things out there they were going to do to help promote and grow the game that ESPN wasn't willing to do. It became a situation where it was a natural fit.

"What I hope to see going forward is Versus being a channel that when you get into a hotel room, you turn it on. That's the way it is with ESPN in a hotel or bar."

Sources close to Versus told Multichannel News in early February the 71 million-subscriber network exercised a $72.5 million option for the 2007-08 campaign and then extended its pact for three more seasons at an undisclosed price.

“We're pleased to be partnered with Versus next season,” NHL deputy commissioner Bill Daly said in a prepared statement. “We look forward to working together on the promotion of our game, players and the telecasts as we focus on growing U.S. viewership.”

The problems with the Versus agreement are so far reaching NHL commissioner Gary Bettman should be fired for allowing the NHL to move forward with Versus. Versus had the option for the third year (this is year two), but its inexcusable why any sports executive would encourage his league to agree to a three year extension with a cable network no one has ever heard of.

The issue isn’t the original agreement the NHL signed with Comcast, Versus parent company but the nonsensical three year extension. Two years ago Comcast talked the talk in regard to Versus (then known as the Outdoor Life Network). Comcast talked about building a national cable sports network that would rival ESPN. The NHL would anchor Comcast’s ambitious plan that reportedly included securing the eight game late season NFL games the NFL awarded to their own NFL Network and the MLB regular and post season package TBS secured. It would have been reasonable for the NHL to have made it clear to Versus if at the end of our current agreement you haven’t moved forward and secured other major sports properties we will take our product elsewhere. Instead for some inexplicable reason known only to Gary Bettman the NHL remains the ‘fools on the hill’ stuck in what is now a six year agreement with a cable network that features bull-riding, the World Combat League, the National Lacrosse League, the Tour de France along with various fishing and outdoor life programming.

When the current NHL agreement with Versus began two years ago Versus was in 65 percent of the cable ready homes. Two years later that number has ‘improved’ to 71 percent of the cable ready homes, and try as they Versus has failed the NHL at every possible level.

If you ask Gary Bettman about the NHL’s partnership with Versus seemingly he couldn’t be any happier as he recently told Adweek.

“They have done remarkably well under difficult circumstances. We are their most important property, we are their priority, and we love the attention they're giving to us. What we did to get that special treatment, we give up some short-term distribution that we believe will grow over time. Would we like our ratings to be higher? Yes, but that's something we'll work on in a marketplace where everybody's ratings have gone down.”

Either Gary Bettman doesn’t understand how terrible the NHL’s ratings are, or he’s misread the marketplace. Yes, TV sports ratings have fallen, but those entrusted with managing leagues needing exposure (the Arena Football League, Major League Soccer and the Busch racing series) are all being proactive in understanding how they’re going to move their product forward. The NHL’s leadership shows time and time again a complete lack of understanding of current market conditions.

Its bad enough for the image of the National Hockey League to be the center-piece on a network built around fringe and niche sports fans don’t believe are sports, the problem goes to another level when you consider where ESPN “The Worldwide Sports Leader” is going with their partners.

In early February, ESPN announced phase two of their marketing efforts with NASCAR’s Busch Series. Not only is ESPN committing their marketing resources to NASCAR’s “B” series, ESPN and NASCAR officials are working together on securing a lead sponsor to replace Anheuser-Busch who will be ending their title sponsorship at the end of the year. ESPN who purchased a minority stake in the Arena Football League on December 19 now have a vested interest in moving the AFL forward. In early August, ESPN and Major League Soccer announced a comprehensive agreement that includes a minimum of 26 regular season games on ESPN2.

What’s essential in understanding the error in judgment the Gary Bettman led National Hockey League is the nature of the recent rights agreements ESPN has reached with Tier II sports like the National Hockey League. The National Football League, National Basketball, Major League Baseball, the Nextel Cup and the NCAA men’s basketball and football do not need ESPN, ESPN needs those sports properties as their partners. ESPN have taken the next level of sports properties (Tier II where the NHL resides) and created marketing and broadcast partnerships. That’s what the NHL needs, to realize it’s no longer a major sports in America and must follow the lead of other Tier II sports properties.

Though the first two weeks of the NHL playoffs of the 15 top cable sports programs offered there wasn’t an NHL game to be found anywhere on the list for either week. Included in the top fifteen – an ESPN SportsCenter, ESPN’s Pardon the Interruption and an NBA update. Of the top 15 network sports shows one NHL game made it to the top 15, a game on Saturday April 21 ended up 13th. Before Bettman and company start popping champagne bottles spots 14th and 15th also belonged to NBC and something called “Poker After Dark” a midweek show that is aired at 2 AM. Great the NHL somehow manages to better infomercials and inane poker programming offered in the middle of the night.

What it may be somewhat amusing in a perverse way how comically bad NHL ratings are both the New Jersey Devils and the Detroit Red Wings are having problems selling tickets to their teams’ first and second round home playoff games. In a gate driven league that depends so much on ticket sales, any ticket that goes unsold to a playoff game is an issue but when its in the New York area and in a market nicknamed “Hockey Town” the optics of empty seats in Detroit and in New Jersey optically sends a terrible message to the marketplace and in particular corporate America – the NHL can’t sell their tickets. Even with most of the leagues other playoff games selling out, empty seats at playoff games send the wrong message.

The Devils played their first four home playoff games before a total of nearly 7,300 empty seats before finally selling out game two of their second round series against the Ottawa Senators.

“We certainly want to sell out, but the crowds we’ve had there were fantastic,” said Lou Lamoriello, the Devils’ chief executive, president, general manager and interim coach. “You’d never know it wasn’t a sellout on the bench.”

According to a New York Times report: the Devils are, in effect, short-term tenants in a building in the middle of a dusty construction zone. As Xanadu expands, the parking lots around the arena seem to be shrinking. When the Devils host the Senators Saturday night the parking issues will be amplified by a day long concert taking place adjacent to the Continental Airlines Arena

“That’s why we’re moving,” Jeffrey Vanderbeek, the team’s principal owner, said Tuesday.

In Detroit either hockey fans have grown tired of the Red Wings making the playoffs every year (the Atlanta Braves syndrome) are concerned with high ticket prices or are more interested in the American League champions Detroit Tigers early season games. Whatever the reasons The Detroit Free Press reported there where “thousands” of empty seats at the Red Wings second round opener against the San Jose Sharks last Thursday night at the Joe Louis Arena. And the Red Wings had ticket selling issues in the first round with thousands of unsold tickets for the Red Wings three home games against the Calgary Flames.

For Sports Business News this is Howard Bloom. Sources cited and used in this Insider Report: The New York Times and the Detroit Free Press.

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