The Canadian dollar has "sharply declined in value against the U.S. dollar" after the NHL's 12-year, C$5.2B TV contract with Rogers Media was announced in November '13, and the league as a result is "taking a large hit in the contract’s first season," according to David Shoalts of the GLOBE & MAIL. The deal is paid in Canadian dollars, and an NHL source said that the "currency hit" for the '14-15 season was pegged at about 17%, which, based on the annual average rights fee of C$433M, works out to a C$73.61M "loss for the league." This comes in "addition to the revenue declines that all seven Canadian-based NHL teams are experiencing." They generate about 35% of the league’s revenue, which "hit a record total" of $3.66B (U.S.) for the '13-14 season. League sources are "concerned the NHL’s brass failed to protect itself in the Rogers deal, either by hedging or requiring that it must be paid in Canadian dollars at or near the rate that was in effect on the day it was signed." NHL Commissioner Gary Bettman "declined to say if any hedging was done to minimize losses on the Rogers deal." A "major loss on the Canadian TV deal" for '14-'15 will "have an impact on the salary cap," which currently $69M (U.S.) per team (GLOBE & MAIL, 4/21).
ROGER THAT: In Toronto, Michael Lewis reports spending to "retain wireless customers along with timing of NHL programming and production costs contributed" to a 17% drop in Q1 income at Rogers. Rogers President & CEO Guy Laurence said that production costs "ramped up in advance of the NHL playoffs and will pay off in subsequent quarters, adding that viewership of NHL properties is ahead modestly while Rogers’ acquisition of NHL licensing rights" added C$106M in revenue. The gain was "partially offset by continued softness in conventional broadcast TV and print advertising" (TORONTO STAR, 4/21). Rogers said that its Q1 profits were impacted by "lacklustre broadcast revenues" from regular-season NHL games. The GLOBE & MAIL's Christine Dobby notes Rogers' media unit "was also under pressure" in Q1 with an operating loss of C$32M on revenue of C$464M. Execs pointed to the NHL's TV rights, noting that Rogers "spreads that expense equally across all games annually, regardless of how much advertising revenue they attract." During Q1 -- the middle of the hockey season -- there were a "high number of lower-earning games, particularly compared with the more lucrative playoff games now under way" (GLOBE & MAIL, 4/21).
