Try to imagine this: The New Jersey Devils nearly won the Stanley Cup Finals, and in that aftermath, banks could have seized the club and sell it. Think about that: In New Jersey… the Stanley Cup Champion…. seized and sold.
This is the NHL’s biggest issue off the rink. While the league itself sees in-roads with sponsorships, broadcast deals, and advertisers, the fact is, you’re only as strong as your weakest link. In that, all but a handful of clubs are struggling in the NHL.
The Devils are just one of many floundering in red ink. They missed an $80 million debt-service payment and have had to have the league loan them $10 million. In the meantime, the Glendale City Council recently has agreed to pay the Phoenix Coyotes an additional $25 million to keep them afloat.
All told, just 11 clubs were shown making an operating profit, according to the most recent valuations of the NHL. The “haves” fall into clear categories that make the challenges all the more daunting for the league: the Canadian clubs, and those with long, storied histories in large markets such as the Bruins, Red Wins, and Blackhawks.
In the meantime, the average value of a club in the NHL grew 5 percent to $240 million. But, concerns about the league salary cap which is 57 percent of league revenue, is creating problems across the league in places like Columbus, Tampa Bay, and Phoenix.
All of this sits against the backdrop of lockout.
What should be a concern is the model upon which the NHL is standing. Serious consideration into contraction needs to be discussed, which doesn’t bode well in labor talks (after all, you’re discussing eliminating jobs), and beyond that, the NHL needs to consider how revenue-sharing is functioning. Some clubs, namely the Maple Leafs, are pulling in big profits.
So, much like the NBA, the NHL will be where two aspects are colliding that could spell doom: the salary cap and revenue-sharing.
Hockey has arguably has the most hardcore fans, but a league does not live by them alone. Gary Bettman and Donald Fehr have to remember the recent labor history with the sport. They need to be reminded that they are just now climbing out from the darkness that was the loss of the 2004-05 season. Some clubs will surely say that they will actually lose less money, or possibly save money, if games are lost and corrections are made. None of these are easy answers. But, it comes back to that sense of disbelief that the Devils could have been seized by the banks. That black eye that would have the league sitting in the penalty box could be the beginning of the end (again) for the NHL.
Maury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey, and is a contributor to Forbes via his Bizball blog.. He is available as a freelance writer. Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network (select his name in the dropdown provided).
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