SBJ/Sept. 9-15, 2013/Leagues and Governing Bodies

NHL fleshes out three-year plan

Memo: Major reorganization part of plan to generate $1 billion more in revenue

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One billion dollars in additional national revenue. A sharper international focus with more events. A major broadcast rights deal. Another “24/7”-style show.

All within three seasons.

These are the goals of a comprehensive NHL staff reorganization announced by the league internally late last week.

In a memo dated Sept. 5 and obtained by SportsBusiness Journal, NHL Chief Operating Officer John Collins notified all league employees of the goals, initiatives and staff changes that start with the 2013-14 season. Collins also writes in the memo, “By the end of this three-year period, we expect annual gross national revenue will approach [an increase of] $1 billion, accounting for nearly 20 percent of league-wide hockey-related revenue (HRR).”

The statement serves to confirm what team and league sources were saying during the Stanley Cup Final in June, regarding the NHL’s projected revenue growth (SportsBusiness Journal, June 24-30 issue). It also is a reflection of how the league, buoyed by the 10-year collective-bargaining agreement it executed with the NHL Players’ Association in January, sees the next decade as an opportunity for unprecedented financial growth. It previously has taken the league six seasons (from 2005-06 to 2011-12) to add $1 billion in national revenue; the NHL now is declaring it will match that total in the next three seasons.

The NHL posted $3.2 billion in total revenue for the 2011-12 season, the last full season before the lockout-shortened 2012-13 campaign. In 2012-13, when each team played 48 regular-season games instead of the usual 82, the league has projected $2.4 billion in total revenue.

Having gross national revenue — derived from national deals including sponsorship, media and licensing — at 20 percent of HRR, which includes all revenue, is notable growth, as well. In 2005-06, Collins’ first with the NHL and a year after the lockout that canceled the entire 2004-05 season, the league’s gross national revenue accounted for 7 percent of HRR.

Such gains would be welcomed by individual club owners. Many teams — including the Chicago Blackhawks, Pittsburgh Penguins, Boston Bruins and New York Rangers — are close to being maxed out on key revenue streams. In what is still regarded as a gate-driven league, these clubs are sold out of season tickets and have long waiting lists. Sponsorship sales are also strong, so revenue driven by the league office is essential for the clubs.

And because the NHLPA negotiated a 50 percent share of HRR in each year of the new CBA, the players would benefit from the national revenue increase as well.

The memo cites four touchstones as key to developing increased revenue for the NHL:
Expansion of the league’s core businesses: media, licensing and sponsorship.
The NHL’s big-event strategy, which in 2014 includes the Winter Classic and Heritage Classic and four additional outdoor games in major markets branded as the Coors Light Stadium Series: two games at Yankee Stadium and one each at Dodger Stadium and Soldier Field.
An increased presence in Europe, with more regular-season NHL games overseas, the return of the World Cup of Hockey — which, in 1996 and 2004, featured eight top national teams in a tournament in August — and plans for a Champions Cup competition between top European and NHL clubs.
Securing new Canadian media rights deals, which would begin in 2014-15.

Those Canadian rights deals are expected to be a financial boon to the NHL. The exclusive negotiating window for public broadcaster CBC, which has had the iconic “Hockey Night in Canada” franchise for more than 60 years, closed at the end of August. According to a league source, negotiations will continue with CBC but also will start later this month with competitors Bell Media, which owns TSN and CTV, and Rogers Sportsnet.

Currently, the NHL is bringing in close to $200 million a year in rights fees from its Canadian partners. It expects a healthy increase considering the marketplace for live sports rights.

The league is determined to enhance its storytelling and programming, as well. While HBO will produce and broadcast another “24/7” series this year — built around the Winter Classic between the Red Wings and Maple Leafs at Michigan Stadium — the NHL has its own plans for a documentary centered on the Heritage Classic, the stadium series and next year’s Winter Olympics in Sochi, Russia. The league will produce an eight-part, all-access documentary that will take viewers behind the scenes with the teams and players from before those five outdoor games to the aftermath of the Olympics. The series will be shown on CBC and Sportsnet in Canada and on NBC Sports Network in the United States.

As for the staffing changes designed to spur these gains, among the moves implemented and announced internally late last week were the promotion of six executives:
Brian Jennings, executive vice president of marketing, who started at the NHL in 1990, has been given the added title of chief marketing officer. That title had been open at the league, with the president of NHL Enterprises in recent years acting as the de facto CMO.
David Proper, executive vice president of media strategies and distribution, has been elevated to the newly created position of executive vice president, business affairs.
Gary Meagher, executive vice president, is adding responsibilities in communications and editorial areas.
Additionally, three staffers have been promoted from senior vice president to executive vice president positions:
Keith Wachtel (global partnerships);
Don Renzulli (events);
Stephen McArdle (digital media and strategic planning).

Longtime NFL executive Jim Steeg has been added to assist Renzulli’s events staff on a project basis, focusing at the outset on games at Dodger Stadium and Soldier Field.

The reorganization in total includes the promotion or reassignment of more than two dozen executives.

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