Jim Lites will admit it; he’s had this recurring nightmare of taking in the Dallas Stars’ first few home games and seeing nothing but vacant seats at the American Airlines Center. Rows and rows of emptiness. A bitter reminder of the 113-day lockout that stopped the NHL cold in its tracks.
As the Stars’ president, Lites has been working feverishly to win back hockey fans in Dallas who have either cancelled their tickets or simply lost interest in a once-mighty franchise. He’s called on some, sent others hand-written notes. The pursuit of the fan is critical to the NHL’s suspect U.S. markets since the new collective agreement is considered a move in the right direction but not a cure-all for what ails the league.
While the old CBA was chastised, in part, for not doing enough to help the NHL’s weak U.S. teams, hockey people are wondering if the new agreement will do any better addressing the financial disparities between the likes of the New York Rangers and Columbus Blue Jackets. Commissioner Gary Bettman believes it will and has pointed to the negotiated 50-50 hockey-related revenue split with the players and the now $200-million (all figures U.S.) in revenue sharing for needy teams as proof.
Others need convincing. They see a day when teams will be strained to the breaking point by having to pay the salary cap minimum – the floor will be $44-million for the next two years but could rise to $58-million by 2018. That would widen the gap between the rich and struggling franchises, even force relocation. When asked if the new CBA did enough to prevent that, one NHL owner responded flatly to The Globe and Mail, “No.”
Lites, who will only say the Stars lost “a bunch” of disgruntled season-ticket holders, offered his perspective.
“Every club looks at the CBA differently,” he explained.
“The richer teams, they’re upset they have to share at all.”
What you’re hoping for is a system that can be successful at the mid-point of the salary cap or below so it’s not how much you spend; it’s how you manage. Does this CBA get there? It’s a little better.
“In our case, we’re the fourth-largest market in the U.S. We have to sell tickets.”
Twice now in less than a decade, the NHL has risked alienating its fans to craft a better working arrangement with its Players’ Association. The latest CBA, according to noted U.S. sports economist Andrew Zimbalist, “mitigates the problem” between the league’s penthouse and townhouse franchises but doesn’t go far enough.
“You’re taking seven percentage points of hockey-related revenue [and adding them to the owners’ side] and that will help the low-revenue franchises,” said Zimbalist. “The increase in revenue sharing, from $150-million to $200-million, will help, too. … But instead of losing $15-million to $20-million, some teams will lose $10-million to $15-million. The situation is not resolved.”
The NHL and the NHLPA agreed to establish an industry growth fund starting at $20-million (from league revenues), which would allow teams to apply for assistance based on how they intend to grow their business. And growing business is indeed a necessity. Six teams – Phoenix Coyotes, New York Islanders, Columbus, Florida Panthers, Nashville Predators and Carolina Hurricanes – have posted the highest losses four years running and have become regular revenue-sharing recipients. Meanwhile, Canadian teams such as the Montreal Canadiens, Vancouver Canucks and even the Edmonton Oilers have paid into revenue sharing in recent years, as have the Toronto Maple Leafs, who last season turned in $20-million to help their less fortunate partners.
In one season, 2008-09, the Coyotes received more in revenue sharing ($13.5-million) than they generated in ticket sales ($13.3-million). The fact the league-operated Coyotes are coming off a trip to the Western Conference final offers hope. So does at least one element of the new CBA; a ruling that allows teams to move three players and eat as much as half their contracts, up to $10-million worth of salary, per year.
“Say the Rangers want to trade us a $5-million player. They send $2.5-million to us and have a cap charge of $2.5-million,” said Phoenix general manager Don Maloney. “It frees up cap space for them and it gives us a better player at a lesser cost. That, to me, is one of the biggest pluses of the new CBA.”
The consensus among NHL and team officials is that no CBA, even the NFL’s, can correct everything that troubles a sport. Given the NHL’s limited national television contracts, there isn’t enough money to wash clean a market where fan interest is soft and sponsorship revenue low. The onus then is being in the best possible markets and, in that regard, the NHL may one day have to face facts: if the new CBA proves as troublesome as the last, if teams such as Florida and Carolina can’t sell enough tickets, then it’s either time for contraction or franchise relocation.
“The NHL needs to be a little more creative and forward thinking,” Zimbalist said. “There’s only one sport that has succeeded in Europe, Canada and the U.S. and that’s hockey. Football and basketball haven’t been able to do it. Create a cross-Atlantic league. Have one in North America, one in Europe; maybe have a little inter-league play and then a playoff. If Gary Bettman stopped trying to keep a team in Phoenix and looked to Munich and Moscow, the NHL could be in a better situation.”
In the meantime, Panthers’ GM Dale Tallon and Carolina counterpart Jim Rutherford scan through the CBA’s fine print as much as they sift through their scorched markets looking for signs of life among the fans. Some U.S. teams have offered their faithful discounted merchandise, concession vouchers, even buy a ticket to one game and get a free ticket to another. It’s all part of filling in the cracks the new CBA didn’t fully address.
“There’s more money for revenue sharing and that’s probably a good thing for us,” said Tallon. “I don’t know how the lockout will affect us. It’s hard to judge everything right now.”
“You can’t rely on a CBA to fix the obvious things you have in a league,” added Rutherford. “You’ll never have a league with eight to 10 big market teams or just eight to 10 small market teams. There’s always going to be a cross-section and you have to work at it. Clearly, the new CBA gives everybody a better chance to do that.
“We just have to see how we recover from these unfortunate last six months.”
One paying customer at a time.