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| Commissioner Gary Bettman, in his Manhattan office, discusses the NHL’s economic outlook. |
With the NHL's collective-bargaining agreement set to expire on Sept. 15, 2004, and many expecting a lengthy and bitter work stoppage, Commissioner Gary Bettman finds himself at the most crucial juncture of his 10-year leadership of the NHL.
While he successfully guided two clubs out of bankruptcy proceedings this season and boldly predicts that the league's next television deal will equal the dollar value of the current one, Bettman's legacy as commissioner will clearly be judged on whether he can deliver owners an economic system under which they can thrive.
Bettman recently discussed the health of the NHL with staff writer Andy Bernstein at the league headquarters on Avenue of the Americas in New York.
SBJ: What's your assessment of the state of the league?
Bettman: We had a very strong and successful season in some respects, and we had some challenges that we had to deal with in the course of that season which I think, on balance, helped to make it a successful season. On the ice the game was extremely competitive, both during the regular season for the playoff races and the playoffs themselves, culminating in a terrific seven-game Stanley Cup Final, which not coincidentally was the highest-rated game we've had in 30 years on U.S. television. The rule changes worked well. The hurry-up line change, which reduced games to about two hours and 18 minutes, which is about a 14-minute reduction over last year, at a time when most sports are going later and longer, was a real positive. It was the shortest our games have been in 40 years, and 40 years ago there weren't TV time-outs. But it wasn't just about the time of the game, it was also about the intensity of the game.
So on the ice, I think things were positive, and off the ice there were certainly challenges, but not the least of which were Buffalo and Ottawa. But both of which we've been able to successfully deal with.
SBJ: Do you think that the recent playoffs, where clubs with the high-priced star players were not as successful as the ones that really stressed "team," will have an impact on how clubs assemble their rosters going forward?
Bettman: It's hard to judge what has an impact on the psyche of teams and how they choose to spend. If you look back over the last few years, teams that have been high spenders have, in many instances, not had the success that they tried to spend for, and some of the lower-payroll teams have been consistently competitive. Having said that, over time, the teams with the higher payroll have been more consistent in their ability to win, with some notable exceptions. Our teams and our owners are so competitive that everybody's always looking for an edge and nobody ever wants to be left behind. The pressure of that, I think, has caused teams to spend more than some would think makes sense, in certain instances, but that has always been an individual club decision and I'm not sure that this year's playoffs will have an impact one way or another.
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| Some of the momentos lining Bettman’s office at NHL headquarters in New York City. |
SBJ: What about the prospect of a new system in a year? How much of an impact is that having on what teams are doing this off-season?
Bettman: I've seen a lot written about the uncertainty, of what lies ahead having an impact, and I suppose there may be something to that, but I think it's probably more that a number of clubs are having their resources and their abilities to generate ever-increasing revenues challenged, and as a result their willingness or ability to continue spending in an inflationary way is something they're re-evaluating.
SBJ: It's been reported that in the recent Board of Governors meeting you said to teams not to sign players to high-priced, long-term deals because change is coming.
Bettman: What I've said to teams consistently is that so long as the current collective-bargaining agreement is in effect, it remains business as usual. The fact is, we did talk about the future and what type of system we think we need in order to make this game healthy, make our franchises stable so that I had the appropriate direction from the board as we get ready for collective bargaining. But that characterization is not accurate.
SBJ: Have you told owners who are looking to sell their teams that you don't think it's a good time, that if they wait until after the CBA they'll probably do better?
Bettman: What I tell the owners isn't something that I'm comfortable repeating publicly, but I believe that franchises are currently undervalued, in my opinion.
SBJ: You referenced before the competitive nature and how sometimes teams spend beyond their means. What is it about the current system that lends itself to that?
Bettman: There are a variety of pressures that are on our clubs. Pressure from the fans, pressure from the media, pressure from the system itself, which is inherently inflationary. Arbitration, qualifying offers with 10 percent increases when the world economy isn't increasing at that rate. So, all of our teams try to be competitive. All of our owners want to win, and sometimes they make decisions they think, at least in the short term, will help them do that. But you have to remember that only one team can win the Stanley Cup, and if a dozen teams are engaging in practices and policies that are designed for them to win the Stanley Cup, the teams that don't win will all be disappointed.
SBJ: The top-grossing 
teams in the NHL gross about twice as much in terms of revenue as the bottom ones. For those teams, obviously a player has a certain value that may be greater than for other teams, but everybody has to compete in the same pool. To what extent does that dynamic, revenue disparity between clubs, play into the inflationary element of salary?
Bettman: The fact is, there are disparities and expenses on a macro level and at the team level without regard to what the teams gross. So your question presumes that all the top-grossing teams are spending commensurate with their revenues, when in fact there are probably some top-grossing teams that spend more than their revenues would justify. So, the point is, there are disparities between revenues and expenses at all levels.
SBJ: So in your view, the revenue disparity between clubs is not a major factor in terms of salary growth and in terms of the economic system not working?
Bettman: No, there's a disparity leaguewide between revenues and expenses, and if that were corrected, then your question would be one that I would have to address more specifically. But the fact is we, as a league, are not yet in a situation that makes economic sense.
SBJ: What then is your view on revenue sharing?
Bettman: My view is that if you have a system where the league as a whole is healthy, then to the extent you need to revenue share to help some of the weaker clubs, you do. But you don't do it in the absence of a system that links revenues and expenses, because that to me would be an inflationary system and wouldn't address the fundamental problem. The short answer to your question is, under the right system, revenue sharing would be appropriate.
SBJ: Do you feel that this is something that should be addressed in the collective-bargaining process, or is this more something the league would take up after the fact?
Bettman: I don't believe you have to gear your collective-bargaining system to your weakest franchises. You just have to make sure the league as a whole is healthy, and then the league can make those franchises healthy.
SBJ: You've said several times you'd like to sit down at the negotiating table now, and they've said, "Give us a proposal and we'll talk about it." Why not just make a proposal to get the ball rolling?
Bettman: I think that whole dialogue, as it's been reported, involves a whole lot of rhetoric that's neither accurate nor appropriate. The fact is, I think both sides are in a position where we fully understand each other, and until the union is comfortable that it's time to begin formal negotiations, there's no reason to.
SBJ: It's clear there are different visions. The phrase you've used a lot is "cost certainty." The phrase I've heard from the union a lot is "there should be a market for players." Is there a middle ground there?
Bettman: Actually, I think the union's term is a free market, and that is a little bit of rhetoric as well. First of all, what we have is not a free market — it involves qualifying offers, it involves mandatory increases, it involves arbitration. So there is a manipulated market, and the question is, how does that market get manipulated or controlled in the next collective-bargaining agreement? Because it's being manipulated now, very successfully by the players and their agents in the union. From our standpoint, we believe there has to be a direct correlation between revenues and expenses. I'm not sure that I am comfortable that we should be making a deal that doesn't include cost certainty and, frankly, while I'm open-minded, as you must be in collective bargaining, the fact is I'm fairly confident that the only way to keep the league healthy is to come up with a new system. This shouldn't come as a startling revelation to people, because unions, throughout their history, most unions, virtually all unions negotiate salaries for their members. So our desire to have a relationship between revenues and expenses is what unions do all the time.
SBJ: Knowing that the union seems set against the ideas you describe, is there a third concept? Is there a middle ground, perhaps something involving luxury taxes?
Bettman: I'm not going to get into the specifics of collective bargaining in a public forum. That won't be constructive and that won't help us make a deal. We know what our issues are, we believe that everyone, including the union, understands the economic problems that we have and they have to be fixed.
SBJ: What do you think would be the economic impact of a long-term work stoppage in the NHL?
Bettman: I think the economic impact of having one more day beyond our current collective-bargaining agreement, without the right economic system, would be a disaster. We have to fix our problems, and I've been quoted in the past as saying, "If the choice is short-term pain or bleeding to death over time, we'll take the short-term pain."
SBJ: The NHL has great strength in corporate ticket holders. Do you fear that a work stoppage would erode that base?
Bettman: Our fan base is very solid, very strong, and we're grateful for the fan support. One of the reasons that we have to fix our system, the primary reason that we have to make sure we have the right economic system, is for the fans. The current model in sports is inherently inflationary and has to be fixed, particularly when you look at the current economic climate not just in sports, but throughout the world.
SBJ: The other big issue facing the league right now is television. What is your expectation with regards to the next U.S. television contract?
Bettman: My expectation is that we'll continue to maximize the exposure that we're getting nationally, and that we'll be paid fairly for it. I am quite confident that we will have a continued presence on national television, not dissimilar to the way we have it now.
SBJ: Do you think you'll be able to get the same dollars that you've been getting from the current deal?
Bettman: Yes.
SBJ: A lot of prognosticators have been saying "no."
Bettman: A lot of prognosticators said more when Ottawa and Buffalo filed their bankruptcy petitions, that those franchises were done, and that this was the beginning of an avalanche, and that wasn't the case. We at the league take great pride in how hard we work, that we understand our fans, our game, our business, and it's easy to speculate about things you don't know about and I'm confident based on what I know that we will continue to have a bright future on network television.
SBJ: Is there a possible other partner if it's not ESPN? Do you expect it to be a competitive market?
Bettman: I think that having the NHL rights is attractive, but I've always been extremely loyal to our business partners, and ABC and ESPN have been very good to us.
SBJ: TV ratings obviously haven't been what you've hoped for and what ESPN hoped for. Any sense of why ratings have not grown in the NHL?
Bettman: I think they bounced around, and if you look at Game 7 of the Stanley Cup Finals, it was the highest-rated game in 30 years for us on national television in the United States. I think the shift from Wednesday night to Thursday night probably didn't help, and all sports seem to be down. Some by a lot more than we are. That doesn't mean that that makes us comfortable, but there's something going on out there and all distribution modes and all programmers are going to have to look at those trends and see what can be done about them. Ten years ago, half of our games weren't on television — I think now, 98 or 99 percent of our games are on television, so we have unprecedented exposure, and we have to just make sure we have the right mix.
SBJ: Do you think the defensive style that's been so common in the game the last five or six years has had a negative impact on ratings?
Bettman: No. It hasn't had a negative impact on attendance, and I don't think it has a negative impact on ratings. I think bouncing our schedule around has probably had a negative impact, and you can't minimize matchups in terms of ratings. Does it come as any great surprise that in Canada, with Toronto being eliminated from the playoffs in the first round, that our ratings were down compared to last year when Toronto had a much longer run? It doesn't surprise anybody. Detroit has been a very attractive team for fans in the United States and in Canada nationally, and I think their getting eliminated in the first round had an impact as well. If you look year to year, there are a lot of factors that give you ratings results, and the ratings system itself has to be looked at.
SBJ: The hockey press has been very vocal in questioning the entertainment value of the game compared to years before. You've said you don't think that's a fair criticism — I was wondering if you could elaborate on that. Why are people saying it if that's not the case?
Bettman: Your question is interesting, because you say the media has been criticizing it and then why are people saying it. The research we're doing is that the fans are not saying it. Overwhelmingly, our fans are giving us positive feedback on the game. That doesn't mean that we can't open things up, and we're working to do that and we'll continue to do that work next season. People tend to be passionate in their beliefs about the game, and that's something I respect, but it doesn't mean it's always right.
