An Ottawa-based economic think tank has a solution to the National Hockey League’s labour headaches that fans of small-market teams will love, but owners of the league’s cash cows will probably loathe — competitive balance through extensive revenue sharing.
With the league’s collective bargaining agreement set to expire Sept. 15, owners have proposed a new deal that includes trimming the players’ share of revenue from 57 per cent to 46 per cent. While that approach might ensure even money-losing franchises would break even, Glen Hodgson of the Conference Board of Canada says players would never accept it.
And neither would fans.
“The (average) fan says put some revenue sharing options on the table as a way to get this done,” says Hodgson, the Conference Board’s senior vice president and chief economist. “(But) that means rich teams are going to have to give up some money.”
The Conference Board has published several studies on the pro sports industry in North America, and earlier this year identified the NFL — where 80 per cent of revenues are shared among 32 teams — as the league offering the best balance of profitability and competitiveness.
But Hodgson acknowledges imposing NFL-style revenue sharing on the NHL is a difficult proposal.
He points out that the NFL is by far the most lucrative sports league on the continent, its teams sharing more than $ 9 billion in annual revenue including a broadcast contract that pays the league roughly $ 4 billion a year.
Meanwhile, the NHL’s U.S. broadcast deal is worth $ 200 million annually, meaning revenue sharing in hockey would consist of moneymakers like the Leafs, who netted $ 81.8 million in 2011 according to Forbes, would wind up subsidizing teams like the Phoenix Coyotes, whom Forbes says lost $ 24.4 million in 2011.
Hodgson says teams like the Leafs need to determine which is more costly: losing an entire season’s profits every few years to a strike or lockout, or losing a fat fraction of their income every year to maintain labour peace.”
“(NFL revenues) are pretty simple to share 32 ways. You carve it up and it’s a nice boost to your profits,” Hodgson says. “But (it’s more difficult) if you’re taking the money out of someone’s profits.”