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*just before posting this, I ran an errand to a local CVS. The manager told me they were closing that store in 45 days. The letter that was sent has the chain closing 300 stores per year for 3 years (total 900). The point is that multiple sectors are having setbacks.
In my last post, I asked readers about the All Star game and the weekend in general. There wasn’t a lot of response, but none of it was positive. The weekend seems to have lost its appeal for many of you. Take a look at the tweet up top and it’s not just the All Star game/weekend that is taking a hit. An average viewership of 373K down from 478 last year (22%) is a bit unnerving.
I don’t want to get too deep into it, but prices on many things are up and have been up since lock down. For the first time in many people’s lives, some things were just unavailable. The shut down made “binge watching” a very profitable model for some companies. Then, as things opened up, people had changed their priorities along with their spending. The NBA and NHL both had serious drop off during the lockdown (74% and 68% during playoffs respectively) and at that time the NHL app was letting you watch for free for playoff games.
For whatever reason, these two sports didn’t get a “bump” even when people could watch for little or no cost. As the doors have opened, nearly every “major” streaming company has shown signs of trouble. Some even added a second, less expensive tier that included commercials. Disney announced a 1.5 billion dollar loss in the 3rd quarter. Netflix actually had to refund advertising money due to the drop in membership. Solid performers like Amazon, Youtube, Facebook, Twitter and Google all had multiple rounds of layoffs. More than 200k jobs lost in Silicon Valley in 2022.
For the stock market, there’s the “consumer confidence” index which is basically a metric of how people feel about the economy now and going forward. For the NHL, there’s just viewership and subscription numbers. We know that 2021 was a tough year.
Operating Income for NHL teams in 2021 was a loss across the board. Montreal lost the least at 18M and Nashville lost the most at 56 million.
In January 2021 CBS sports published that the NHL borrowed 1 billion, giving each team access to 30 M to help with the shortfall that had already started. That’s something worth noting. A billion dollars gives each team 30 million. For cap teams, that’s not even half of the salary AAV (let alone actual). Remember that owners and players are at a 50/50 split under the CBA, with an MOU that controlled escrow to keep it at 20% with an eventual drop to 6%.
So, who cares that Disney (mentioned earlier) reported losses on the streaming side? Well, the NHL. Disney owns ESPN. The final overall losses for Disney last year could break 120m. “Teasers” are being sent out, which is usually to brace investors so that the official call isn’t such a shock. If, and this is a big if, Disney decides to drop ESPN, things get very murky. Bally has quietly cancelled a couple of non NHL deals. The viewership numbers also affect ad revenue. I don’t know that anyone would demand a refund (as with Netflix), but if 100k fewer people are watching the advertisers will certainly want a discount.
All I want to know is, what is really happening? We get an optimistic view that the cap could go up 5 million, then months later 1 million, then at the beginning of the year 3 to 5 million is on the table again. Gary Bettman and the NHL do a very controlled release of information. In cases like this, you’ll hear about the best performing teams or highest value franchises (MSG sports is worth 2.1 billion so the spin is “The Rangers are the first franchise to break 2 billion”. MSG sports is a whole lot more than the hockey team).
Do any of you have thoughts on why people are tuning out? Did the change of format and increase in platforms affect you personally? Somewhere behind all the numbers is reasoning. Keep in mind, this is an average. That takes it away from being related to a single event and more into a trend.
Is there an answer to get this fixed? I hate to even broach this, but are 32 teams too many for this league? By the time the playoffs end, final numbers for 2022 will be well known and companies like Disney, Paramount plus, Hulu and other streaming properties will announce any changes. The hope is for continuity, the concern is cancellation of certain platforms. Let me know your thoughts.
Detroit Red Wings Blogger • 
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