The National Hockey League’s regular season starts Wednesday, and despite the perennial appeals for more Canadian teams, there will be no new NHL franchise any time soon, if ever. Quebec City badly wants one, but it’s still waiting. And while massive fan bases in Montreal and the Greater Toronto Area can each support another team, it will be a cold day in the month of Never before the NHL voluntarily shakes up a profitable status quo.
But with this fall’s World Cup of Hockey, the NHL leaned on Canadian fans, on their love of the game, to pull off a financial coup. The league figured out how to play more games in Canada, thereby earning a lot more revenue from Canadians – without having to put any more franchises up here.
The tournament is estimated to have brought in $100-million to $120-million in revenue, with a profit of around $60-million. Nearly every dollar came from Canada. But thanks to revenue-sharing, those Made in Canada profits are largely destined to wind up in the United States.
Canada is home to the world’s largest, most passionate and most financially committed population of hockey fans. The NHL has less than a quarter of its teams in Canada, but is believed to make more than a third of its revenues here, and a far higher percentage of its profits. Nevertheless, the NHL is based in the U.S., and 23 out of 30 teams are American. And thanks to the way the league divides up revenues, much of the money it earns in Canada ends up supporting struggling franchises south of the border.
Canadian national TV money, for example, is shared equally among all of the league’s 30 teams. That means Hockey Night in Canada revenues are almost entirely dedicated to subsidizing hockey nights in America.
Of the $5.2-billion that Rogers paid for a dozen years of Canadian NHL broadcast rights, about $4-billion will end up in the pockets of U.S. team owners. (The owners, as part of their collective agreement with the NHL Players Association, pay half of their revenues to the players).
In addition, the league also has a kind of equalization system under which the most profitable teams must share some of their cash with the most unprofitable. With a few exceptions like the New York Rangers, the money-spinning machines are Canadian, and the money-suckers are American.
The World Cup of Hockey, with all of its round-robin and playoff games played in Toronto, was run on a revenue-sharing basis. Half of profits were split among the league’s largely American owners, the other half went to the players.
According to the Globe and Mail’s David Shoalts, Rogers paid $30-million for Canadian TV rights to the World Cup, compared to the $5-million (U.S.) paid by ESPN for the American TV rights, and another $2-million or so paid for European rights. The prices are no surprise, given the Canadian TV audience was many times larger than the American.
Another $30-million or so in World Cup revenue came from corporate sponsorships; again, the primary audience was the Canadian fan.
Ticket sales are believed to have brought in a further $30-million. All of the World Cup’s round-robin and playoff games were played at a venue where demand for hockey consistently and overwhelmingly exceeds supply: Toronto’s Air Canada Centre.
Critics are upset that the league appears intent on skipping the 2018 Winter Olympics in South Korea. They think this is short-sighted, and they’re probably right. And for Canadians, who since 1972 have been obsessed with best-on-best, nation vs. nation showdowns, the idea that the NHL can’t interrupt its interminable season once every four years to give us a Paul Henderson moment is infuriating.
But from the NHL’s perspective, replacing the Winter Olympics with the World Cup has a compelling financial logic. The former costs the league money up front, and the payoff, if there is one, is distant and uncertain. The World Cup, in contrast, earns real cash, the kind you can count. And as long as the games are played in Canada, that cash is guaranteed.
The bottom line is this: In a little over two weeks, the World Cup took in more revenue than the Phoenix Coyotes or Florida Panthers generate in an entire season. The league put the equivalent of a new franchise in Toronto for a few days in September. And then, having fleeced the locals, it packed up its carnival tent, counting its winnings as it headed south for the winter.Report Typo/Error
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