SBD/June 16, 2014/Leagues and Governing Bodies

Despite NHL Seeing Revenue Growth, Large Earnings Disparity Remains Among Teams

HRR for the Maple Leafs was over $200M, but the Coyotes made less than $40M
NHL Commissioner Gary Bettman "may have overseen a dramatic rise in league revenue this season, but the gap between the haves and have-nots remains wide,” according to David Shoalts of the GLOBE & MAIL. The NHL “expects to set another record for per-season hockey-related revenue (HRR)” at $3.7B (all figures U.S.) in ‘13-14, but there is an “earnings disparity” of about $160M between the top and bottom teams on a per-franchise basis. The Maple Leafs “hold the No. 1 spot” with a little more than $200M in HRR for the season, but the Coyotes “pulled in a little less” than $40M. However, those numbers "do not include revenue” from the ‘14 Stanley Cup Playoffs, so the Leafs “could be knocked out of the top spot.” Revenue at Jobing.com Arena “failed to hit the targets set out in the 15-year arena lease” with the city of Glendale, Ariz. Sources close to Coyotes co-Owners George Gosbee and Anthony LeBlanc insist the team remains “on plan” despite another year of multimillion-dollar losses. The owners “budgeted for losses in the first two years and are hoping to get into the black in year three.” The “biggest shortfall in expected arena revenue came in parking.” Fans were “charged for parking for the first time, and this new income was expected to earn the team” $2.2M. But only $900,000 was “pulled in, mainly because the number of non-hockey events at Jobing.com fell below expectations.” The Glendale arena "faces stiff competition” from nearby Univ. of Phoenix Stadium and U.S. Airways Center in downtown Phoenix. LeBlanc in an e-mail wrote, “We didn’t appreciate the runway needed to build up the non-hockey-event roster” (GLOBE & MAIL, 6/14).

CAP IMPLICATIONS: The GLOBE & MAIL's James Mirtle notes based “purely on the NHL’s projected revenues” of $3.7B this season, the salary cap will rise to "roughly" $69.5M next season -- "a noteworthy 8 per cent increase that is in line with what we’ve seen in the past.” Sources said that there is a “distinct possibility” that the NHLPA will “negotiate to include the new Canadian television deal in the cap formula right away.” A decision on this front could have “major implications for the cap.” The Rogers deal is “so substantial it could mean an increase of a few million dollars, which would result in the NHL’s biggest single-season jump ever.” The final cap number "has to be in place by late June so negotiations need to happen on this fairly soon” (GLOBE & MAIL, 6/16). In California, Mark Whicker writes the NHL’s revival is “caused by a financial, artistic and cultural convergence.” Whicker: “Hockey was always cool. Now it’s cool to admit it.” The NHL salary cap has “rewarded the strategic and punished the undisciplined” (ORANGE COUNTY REGISTER, 6/16).
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