SBJ/20100628/This Week's News

NHL expects total revenue to top $2.7B

The NHL is projected to collect more than $2.7 billion in leaguewide revenue for the 2009-10 season, setting a record and extending a five-year streak of annual revenue increases.

The total is a 3.1 percent increase from last year, and a 28.6 percent increase in the five years since the 2004-05 lockout. The projections were shared with NHL owners at last week’s board of governors’ meeting in Los Angeles.

The increases this year were driven primarily by an increase in league revenue. Increased sponsorship sales, Winter Classic revenue, international growth, and online and NHL Network revenue increased the league’s earnings by 6 percent to 7 percent in 2009-10. Meanwhile, gate receipts across the league were relatively flat as paid attendance decreased but average ticket prices increased.

The projected figure would extend a
winning streak of revenue increases
for the league.

“Virtually all the elements of the league’s business continue to grow, which is a good thing,” said Deputy Commissioner Bill Daly. “The fact that that is happening in a difficult economy is a good sign for the future.”

Hitting the $2.7 billion mark is significant for the league because of the way its collective-bargaining agreement is structured. The CBA, which was signed in 2005, was written so that the percentage of total revenue players were entitled to would increase from 54 percent to 57 percent as revenue rose until it hit $2.7 billion. The player share is capped at 57 percent for any revenue beyond $2.7 billion, so the NHL will keep more of what it earns if revenue rises in the future.

The revenue increases won’t change the amount of player escrow withholdings that NHL teams will keep at the end of the season. NHL teams remain on track to receive at least $3.5 million in escrow this season, a slight decrease from the $4.4 million that most clubs received last year but still a boost to teams’ bottom lines.

The NHL Players’ Association last week announced it would extend the collective-bargaining agreement through the 2011-12 season, ensuring that the league will have two more seasons under the existing agreement. It also approved a 5 percent “growth factor” in contemplating salary caps, a move that pushes the average cap from about $57 million to $59 million a team.

As the NHL looks to continue to increase revenue next year, the focus will remain on expanding its special event and its media business — two areas Chief Operating Officer John Collins has emphasized. Next year, it will add a second outdoor game in Calgary and international exhibitions in Northern Ireland and Russia.

The focus for the 2010-11 season will be on generating additional money from its television rights. Both its domestic and international TV rights expire at the end of next season, and it will begin negotiations on new contracts next season.

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