Friday, August 10, 2012
NHL seeks revenue-sharing a la NBA, NFL
By Kristi Dosh
The NHL isn’t claiming it needs a financial overhaul as it did during the last collective bargaining negotiations that resulted in the 2004-05 lockout, but some owners are still asking players for sizable concessions during the latest contract talks. Thursday’s negotiation session, which lasted less than two hours, seemed an ominous sign. But spirits were higher Friday, though a big gap remains.
Among the measures owners included in their proposal to the players weeks ago was limiting contracts to five years, eliminating bonuses and reducing players’ share of league revenue from 57 percent to 46 percent. In addition, owners are seeking to reduce the basis of Hockey Related Revenue, the revenue used to determine the players’ share, which the NHLPA says would effectively reduce the players’ share to 43 percent. If the owners’ proposal had been in place last season, the NHLPA says total player compensation would have been lower than the pre-lockout season of 2003-04.
Players and player advocates have been most vocal in their displeasure with the reduction in player’s share of league revenue. After the 2004-05 lockout, NHL players saw their salaries rolled back 24 percent across the board.
“On average about $485 million a year has been saved as far as player costs versus the last system,” said former NHL player, labor lawyer and current player agent Kurt Overhardt. “The system is working. I can’t tell you how many comments I get from GMs that their owners are happy with this system.”
By some measures, there’s certainly an argument to be made that the NHL is as healthy as it’s ever been. In the past two years, the league has seen a plethora of new deals. In 2010, the league signed a 10-year, $2 billion television deal with NBC and Versus (now NBC Sports). Last year brought a seven-year, $375 million deal with MillerCoors. Just a couple of months ago, the league signed a five-year extension with PepsiCo for an undisclosed amount.
According to a recent study, there’s a good reason for the increased sponsorships and reason to believe there will be more. Turnkey Sports & Entertainment conducted a national consumer survey and found official partners in all nine categories studied over the past three years saw an increase in awareness among NHL fans. Five of the brands -- Geico, Verizon, Coors, Honda and Discover -- saw double-digit increases.
The NHL has seen its revenue grow substantially since the last lockout. For the 2006-07 season, the NHL had $2.2 billion in revenue. Last year that number was $3.3 billion. Attendance was up 1.8 percent in 2011-12, although TV ratings remained flat.
Yet the reduction the league is asking the players to take in the form of a reduced share of league revenue is in line with the new agreements from the NFL and NBA over the past year. NFL players agreed to reduce their share of league revenue from 50 percent to 47 percent, and NBA players agreed to reduce from 57 percent to a 49 to 51 percent range. MLB has no salary cap, but players have historically received a percentage similar to what NFL and NBA players are now receiving.
After Thursday’s session, NHL Players association executive director Donald Fehr made it clear the players feel as though they’re being asked to shoulder the entire burden of making the league healthier.
Commissioner Gary Bettman disagreed, saying: “Our initial proposal relates to the fact that we need to be paying out less in player costs. And, that is something that while revenue sharing has been an important part of the existing Collective Bargaining Agreement and we intend to have it going forward in an enhanced way, revenue sharing isn't the key element. It's an element that has to be dealt with, but the fundamental economics need to be dealt with first."