Monday, January 28, 2008

The State of the National Hockey League

The National Hockey League held its All-Star Weekend in as much of a non-traditional hockey market as one can imagine – Atlanta. The NHL was a miserable failure in Atlanta in the 1970’s and the Thrashers could be on life support in the not too distant future. Through 41 home games the Thrashers are averaging 15,500 at the Philips Arena or 83.1 percent capacity. Last year the team averaged 16,229 or 87.5 capacity. While on the surface the numbers may not that bad, if one looks below the surface the truth may be a very different story.

A March 2007 Globe and Mail report suggested the Thrashers led the NHL's 30 clubs in the dubious honor of most ticket giveaways each game. The league's numbers show the Thrashers gave away an average of 2,827 tickets a game in their first 25 home games. This appears to be part of a promotional effort this season, as it is a whopping jump of about 840 per cent from last season, when the team's average was 336 a game.

"Our comp tickets are high and need to come down, no doubt," Thrashers president Don Waddell told the Globe and Mail. "But our gate receipts are up this year. That's the important thing." He also argues that the tickets for seats in the luxury suites, which are rented annually, are included in the giveaways because the league has no other category for them.

There are two thoughts in placing the NHL’s in-season showcase event in a market like Atlanta. One it offers a franchise an opportunity to showcase the sport in a market that needs to create greater brand awareness for the NHL. The other, the NHL’s All-Star Game gets lost in a market where hockey doesn’t matter. It would be easy to place the NHL’s All-Star Weekend in a market where fans live for and love hockey (the 2009 game is in Montreal). But it does make a lot of sense to bring the event to a non traditional hockey markets like Atlanta along with cities like Montreal.

Gary Bettman held his semi-annual “state of the NHL” Saturday. Overall, two and a half seasons after losing the 2004-05 season to a protracted labor dispute, the health of the NHL isn’t great but at least the NHL has a heartbeat – and that’s something the Lords of the Rink might not have believed they’d be able to say after the lockout ended.

“We’ve come a long way since the loss of 2004-2005. Franchises are much more stable from a business standpoint. Our competitive balance is nothing short of outstanding. 28 of 30 teams, if the regular season ended today, would be either in the playoffs or within six points of making the playoffs. It's probably an inarticulate way of saying just about everybody's in it and we should have exciting races, and we think that's terrific for the game and for our fans.

“Our fans continue to support us in record numbers. The partnership between the League and the Players' Association is showing the most constructive signs that I can recall, and this now enables us to move forward on ambitious, cooperative initiatives such as the Winter Classic and overseas games. And I think that's good for everybody, most importantly our fans.

“Of course, I would like our League to improve on our 92% of capacity for attendance league-wide, and all clubs, I know as do we, work towards that objective every minute of every day. I would love to increase TV viewership in the United States, even more than it's been increasing. But we're finding new and additional ways to touch our fans using digital media and the like and we view it as our number one priority to find the best ways to connect with our fans.” Bettman said.

It’s interesting to note in his opening remarks Bettman chose to suggest “The partnership between the League and the Players' Association is showing the most constructive signs that I can recall, and this now enables us to move forward on ambitious, cooperative initiatives such as overseas games.”

That may not be true Commissioner Bettman. Soon after Bettman remarks and the NHL’s announcement the Ottawa Senators, Pittsburgh Penguins, New York Rangers and Tampa Bay Lightening would open their 2008-09 seasons in Europe, Paul Kelly the NHL Players Association Executive Director sent a clear message to Bettman and the Lords of the Rink – all is not well and the NHL had better slow down and talk to the NHLPA before making decisions about teams going to Europe.

According to the Globe and Mail’s David Shoalts (in Atlanta for the All-Star festivities) the union leader was especially excited about the Victoria Cup (an exhibiton game linked to the NHL’s European initiative). With the NHL still trying to make a new player transfer deal with the International Ice Hockey Federation, Kelly thinks agreeing to exhibition games should be used to help get a new deal.

"The Victoria Cup was very much in the air just days ago," Kelly said. "Until I read about it in their press release, I was unaware of the fact they had done a 180 as to the Victoria Cup and frankly, given the open transfer issues that are still pending with the IIHF and the Russians, I'm not so sure why we would so readily agree to the Victoria Cup.

"Because I think quite frankly the two of them are linked. Bill [Daly, the NHL's deputy commissioner] said just that last week. If I sound a little bit more miffed about that one, it's because I am."

"This kind of falls into the general category of: If they want the players' association to be a true business partner, then they have to include us in discussions about these matters at the earliest stages. We shouldn't read about it in the press and we shouldn't find about it after the fact," he said.

"We keep saying 'Guys, get us the details' because the devil is in the details. It's not good enough for [Rangers president and GM] Glen Sather to say that my guys are onboard. That doesn't cut it," Kelly said.

Now Kelly isn’t suggesting the NHLPA won’t support the leagues plans – he’s just saying ‘look if this is going to be a partnership than the right hand has to know what the left hand is doing.’

One the more positive marketing concepts the league successfully tried this year – the Winter Classic held at Buffalo’s Ralph Wilson Stadium on January 1. One report from Atlanta – NHL governors are less than enamored about the idea after learning that despite more than 72,000 attending the Penguins – Sabres game, they game lost money.

“We learned a lot about the logistics of doing it. And while it was a great event, I think there are things we can do even better. I also think I don't want to tempt fate as much as we did in terms of the amount of time we left ourselves to build the rink. Some of that was determined by when Ralph Wilson Stadium was accessible and they couldn't have been better. But they had a football game scheduled that impacted when we could get in.

“This is a terrific event for us. The elements cooperated, a little bit of snow was nice and created an aura about the game. It's not something we want to overdo. If we're going to do it in the future, we want it to remain special. Lots and lots of clubs and places and stadiums have approached us and we have not yet made any decisions. That's probably something we'll do over the next couple of months, taking into account a whole variety of factors. My anticipation is we will do another one. I can't tell you where or when. But I assure you we're not going to do too many. We want to keep them special because it was a very special day.” Bettman related.

One interesting suggestion the NHLPA has offered the NHL – the players will consider adding two more games to the regular season schedule as long as the owners drop two games from the NHL’s pre-season schedule. Remember players aren’t paid for pre-season games. If the NHL’s regular season schedule did grow by two games it likely would impact player salaries. Bettman did his best to downplay the rumors.

“I had seen reports saying that this was something that was going to be voted on. And the issue is way too embryonic for it to be considered by the Board yet. The Players' Association has suggested that they might be interested in providing two more regular season games that would give us more scheduling flexibility in turn for reducing the number of exhibition games. It's a proposal that we found interesting, but has a lot of moving pieces to it -- the number of preseason games that have been committed to for next season, what the right number of preseason games would be; how long training camp would be, which we just shortened in collective bargaining by a week already.

“So we have lots and lots of issues to talk about. How we would use the games in the scheduling matrix is also another factor. We may have one idea, the players may have another. So with all of that to be resolved, with the fact that clubs have commitments for next season, we have commitments to start the regular season at a certain point in time. It's not ready for primetime consideration. But it's something that we will continue to talk to the Players' Association about.

“I'm delighted that Paul Kelly suggested this as something that we should consider. It's another indication of the open exchange of ideas and dialogue between us. Whether or not it's right, whether or not it works, way too premature.”

One interesting issue raised during Bettman’s State of the NHL: would the NHL consider follow the NBA’s lead and think about holding an NHL All-Star Weekend in Las Vegas, and is the NHL looking at expanding to Sin City?

“I'm not sure that doing a neutral site All-Star Game at this point makes any sense. Because lots and lots of our teams want the All-Star Game you know, we could probably award it off the top of my head for the next six years for NHL teams that are anxious to have it. From our standpoint, we'd only go to a neutral site, if, for whatever reasons, clubs decided that it was too much of an imposition to have the All-Star Game. Therefore, we needed to explore other options, but that's not something that we're thinking about doing right now.

“I can't other than to tell you that there continues to be expressions of interest from Las Vegas and other places such as Seattle and Winnipeg. We, the board, haven't decided to move forward and do anything yet, so there is no time line. I suppose at some point in time that could change. But as we sit here today, there is no formal process. There is no time line. But we are talking to people about their interests but nothing more formal than that.”

One franchise related business issue Bettman did note during his remarks – how pleased he is the issues associated with the Vancouver Canucks ownership have been settled allowing the team to move forward.

“I'm delighted that it's resolved because it's one less distraction. I'm equally if not more delighted for the Aquilini family, and Francesco Aquilini. They've been terrific owners and guardians of that franchise. And I know that they're pleased and relieved to have this behind them. I only knew what was going on in the lawsuit from afar, because we weren't a party to it. But I was constantly scratching my head about why the city of Vancouver and the Canucks as an organization were being put through this. The lawsuit didn't make a whole lot of sense to me, and based on the judge's decision, I guess, the ultimate conclusion was that there was no wrong doing, and Francesco Aquilini and his family are the rightful owners of the Canucks. I think that's great news for their fans.”

As one would expect when Gary Bettman talks about the health of the National Hockey League, his glass is always going to be half full. Ratings for NHL games on Versus, the NHL’s cable TV partner, remain somewhat of a mystery (at least when it comes to determining if anyone is watching the NHL on Versus). According to report in last Wednesday’s New York Times: through 29 games during the 2007-08 NHL season thus far, Versus’s 0.3 rating is modest, but it is 50 percent higher than the 0.2 average at the same time last season. In that period, viewership swelled to an average of 261,760 a game from an average of 195,666 a game last season. The NHL’s over-the-air TV deal is with NBC. Last weekend’s opening weekend of NHL coverage on NBC produced the same lackluster national numbers from last year.

During the 2006-07 season, Versus’s NHL rating stayed flat at a 0.2, but because of the overall growth of subscribers, viewership rose 31 percent to 212,366.

“I think we have lots of casual fans. And it's really a question about getting our fans, casual hockey fans and casual sports fans to activate. We came back from a year off stronger than any business could ever have assumed it would. And for us the first priority was to get our fans back and get our business back, and we've done that in record numbers.

“What we've now done in terms of the relationships we have on television, how we're using digital technology, the access we're giving our fans to the game is all unprecedented and a lot of it is a testament to the cooperation that we now get from the players and the Players' Association which we never had before, by telling our stories of the game and of our players we can do a better job of connecting people to the game. Whether or not they're avid hockey fans or casual sports fans or they've never seen it.

“So it's our job to market and promote the game, which we're doing better than ever before. Providing more access and more opportunities for us to tell the stories. That was not possible in an era where we didn't have cooperation from the players like we're getting now.”

For Sports Business News this is Howard Bloom. Sources cited and used in this Insider Report: The Globe and Mail

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