The NHL owners’ proposal, which will draw a response from the NHL Players’ Association when they meet Thursday afternoon, offers bouquets to more than just the players.
There is a promise of more money for some owners by raising the revenue-sharing pot to about $200-million from $140-million (all currency U.S.). Not only that, the league is taking out a couple of restrictions from the previous labour agreement to allow some clubs to collect for the first time.
This would indicate NHL commissioner Gary Bettman has been getting pressure from some of his owners about more than just ending the lockout. Then again, some of them have not been thrilled about the restrictions on revenue sharing since it was introduced in the 2005-06 season following the last lockout.
The key move is dropping the rule that did not allow teams playing in markets with 2.5 million or more television households, which in the United States represents the top six markets, to participate in revenue-sharing. Also dropped is the ban on clubs in the top half of league revenue.
There is a reward for the bottom-feeders as well. Bettman will no longer require clubs to meet targets for ticket sales and revenue growth to see a full share from the revenue pool.
Dropping the market restriction means clubs such as the New York Islanders, New Jersey Devils, Dallas Stars, and Anaheim Ducks, which all lose money, can now get a revenue boost of more than $20-million a year assuming the league’s annual revenue stays at or above the $3.3-billion it earned in 2011-12. This will greatly reduce the complaining of owners such as the Islanders’ Charles Wang, for example, who routinely has to cover annual losses of $20-million without any revenue sharing because his club is in the largest market in North America.
For the Devils, this is a significant move, as team owner Jeffrey Vanderbeek remains in control of the club only at the pleasure of his lenders. With the prospect of millions coming in via revenue-sharing, Vanderbeek has a better chance of finding the investors he needs to bail him out with the banks.
There are those who say the Devils actually make money on their operations, although I’m dubious because their attendance is consistently in the bottom seven clubs, but are in trouble only because Vanderbeek ran the franchise debt to more than $200-million. The Devils may be too far gone for Vanderbeek to hang on as owner but the prospect of revenue-sharing will be an incentive to the groups, and there are at least two of them, waiting in the weeds to snare the team after Vanderbeek is forced out.
The targets for the small-revenue clubs were also the cause of some friction among the governors. For example, if a club’s revenue did not grow at an annual rate greater than the league’s revenue growth its share could be clipped as much as 50 per cent if it were a repeat offender.
However, after the NHL took over ownership of the league’s worst financial sinkhole, the Phoenix Coyotes, Bettman said at the December board of governors meetings they no longer had to hit the revenue and ticket-sales targets to qualify for a full share. This caused some hard feelings among the revenue recipients, although Bettman`s control of the owners is strong enough that the grumbling never got too loud.
Another new wrinkle is that at least half of the $200-million for revenue-sharing will be taken from the top 10 clubs in gross revenue. This may or may not mean some savings for the likes of the Toronto Maple Leafs, who have coughed up as much as $18-million in the past. If the league can manage to get at least 15 clubs solidly into the black, which is not unreasonable to assume, then the burden on the top 10 is less.
There is some player involvement in the new offer as well. The owners proposed the revenue-sharing money will be distributed by a committee, which will decide who gets what. The NHLPA would be represented on the committee, which should lead to some interesting arguments.