Off-Ice Problems for the NHL

Since the lockout that erased the 2004-2005 season, the National Hockey League (NHL) has experienced its ups and downs. On the ice, the game has never been faster or more exciting. Off the ice, however, is a different story. Many of the NHL franchises are currently plagued with financial difficulties.

The collective bargaining agreement (CBA) between the NHL and the National Hockey League Players’ Association (NHLPA) has not worked out as well had a salary cap of $39 million. This cap was based on a percentage of the league revenues and was intended to provide cost-certainty for every franchise, especially those located in smaller markets and with greater financial constraints.

However, the CBA also included a salary floor. As a result, many of the smaller market and Sunbelt continue to face financial difficulties. Some have even flirted with or filed for bankruptcy. Unless there is a radical increase in revenue in these markets or the NHL can negotiate a more favorable agreement with the NHLPA, these teams appear destined to either relocate or be contracted out of the NHL. The NHL also faces problems with its media coverage.

While other professional sports leagues (such as the National Football League and the National Basketball Association) have lucrative television contracts for nationally televised games, the NHL has been unable to establish a similar contract of its own. As a result, NHL games are no longer shown on ESPN, the dominant sports station in the United States.

Nor are games shown on its sister station ESPN2. Instead, viewers wanting to watch NHL hockey must either rely on regionalized home team coverage (provided by Fox Sports in many markets), subscribe to Versus, or wait for the occasional game on NBC.

With the recent success of the outdoor Winter Classic game and with stronger Nielsen ratings for televised games, the NHL has negotiated a ten-year $2 billion television deal that will last through the 2020-2021 season. While that may seem like a significant amount, it pales in comparison to the NFL, NBA, and MLB.

Plus, while the new deal for the NHL is higher than the one prior to the lockout, it should be noted that it includes more games, takes some playoff games away from local broadcasts, and includes digital rights. It could be argued that this deal is actually a step backward. On the positive side, the quality of coverage on both NBC and Versus has increased dramatically over the past five years.

With an annual day-after-Thanksgiving game joining the Winter Classic in the broadcast schedule, the NHL should continue to grow in popularity. That would place the NHL in a much better position when the time comes to negotiate its next television deal. Another area of concern involves the NHL’s Stanley Cup Playoffs, which can stretch into late June.

With summer approaching and the weather warming throughout much of the North American NHL television market, many potential viewers are more interested in outdoor activities than watching the Stanley Cup Finals on television. As a result, television viewership can actually decrease at the most exciting time of the year for the NHL.

To fix this problem, the NHL could compress the season so that all the games are played over a shorter span of time. Compressing the season may be difficult, though, since most of the NHL venues have other commitments that would complicate the scheduling process. Plus, playing the same number of games in a shorter span of time may lead to an increased risk of injury for the players.

Another possible solution would be to reduce the number of games played, though this is unlikely since the NHL is a “gate-driven” league. A third solution would be to decrease the number of preseason games, thus allowing the regular season to begin earlier. These problem areas will require the NHL to make some difficult decisions. But by attacking these issues head on, the NHL can work toward solutions that will bolster the league and its franchises.