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League revenue lower than thought

November 28, 2020, 2:23 PM ET [26 Comments]
Jeremy Laura
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in the last post, I thought there was a chasm of misunderstanding between players and owners. Based on new projected revenues, it seems more like a galaxy (far, far away).

Sports Illustrated takes a look at “the look” of NHLPA/NHL bickering. Getting around the “owners have terrible timing”, take a look at the numbers. 18-19 posted more than 5 billion in revenue. That is the number that salary cap and expenses were based on. There is recognition that projected revenues WITH fans in attendance is about 3.65 billion (1.4 billion shortfall). Without fans, estimates are around 1.8 - 2 billion. That’s less than half. My hope is that some of the readers who think the NHL should have known this would happen can understand how much has been lost.

A huge thanks to StargateSG1 for sending over the Forbes link. The gap of understanding between players and owners is immense. Player salaries under the current deal would eat up about 1.6 billion (of 1.8 or 2 billion). Players seem to be insisting that “some” fans will be allowed to attend and that should bring an extra billion. It would take 588 sold out NHL games at an average revenue of 1.7 million dollars to find that billion. Roughly 19-20 games per 31 teams. Sounds reasonable? Not really. There are already provinces and states projecting that they won’t allow full attendance until Fall of 2021. The shutdown north of the border is more universal, so a reduced January to June (have to get in the season and the entire cup final before the Olympics) where the US is looking at a 6 week shutdown at the end of January makes this nearly impossible.

Apart from that, players are looking at that extra billion just to break even on the current escrow (20%) and post escrow deferment (8% in total). It does nothing to address the more than billion dollar shortfall from last year (looking a lot like 1.5 billion). Owners are asking for 25% escrow and 20% deferment this year plus 26% escrow next year. None of these scenarios take into account the expense of building a bubble plus testing (easily add 200 million).

It’s not an accident that these numbers are all hitting with next week’s deadline. Back to the mortgage scenario, this is like getting a second mortgage that doesn’t pay for the first one. Even at the bare bones 1.8 billion dollar estimate with full concessions, this may not be a break even season.

It’s honestly time for in room dialogue with player reps and owner reps. These dollar amounts have real value. “Finding” a billion dollars is a dangerous hoped for scenario. At this point, the purpose of having a season is to try and retain fans and keep the sport relevant. For the players, ask for a clause. If anything above the projected 1.8 billion comes in, have it applied to an immediate refund of deferred dollars. If we’re honestly looking at an all-Canadian division, some teams are going to hurt even more. Toronto and Montreal in particular sell tickets and bring viewership to a lot of teams. In its heyday, Detroit was similar. Teams like Nashville, Florida, Arizona and others made bank on destination games like that. Even without tickets, you’ll have more eyes on screens.

We’ll see what transpires. Something will have to move in a big way to get players and owners on the same page.

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