The NHL took in revenue of $2.1 billion last season, Commissioner Gary Bettman said last week, one of several figures he threw out at a press conference announcing that players would be locked out until a new collective-bargaining agreement is reached.
More than $1 billion of that figure comes from gate receipts, one of the few areas where the NHL actually stacks up well against other pro sports leagues.
With the prospect of a long work stoppage now facing hockey, experts say there is a serious risk that a significant chunk of that revenue won’t be there when the league resumes play.
While the league has said many times that it believes fans will support the league during its time of labor strife — a league-commissioned study found that 65 percent of fans said they would return to the game, with only 16 percent saying they would not — Bettman made a tacit admission that the NHL could take a serious hit.
“I said to Bob,” Bettman said, recalling a conversation with NHLPA Executive Director Bob Goodenow, “‘If we’re out for a long time, instead of getting 50 percent of $2 billion, you might be getting 50 percent of $1 billion.’”
Bettman noted that would be fine with the league, because it would still be economically healthy.
“I believe our game has a great future,” Bettman said later in the press conference. “The only question is whether we’re going to grow it from where we are or whether we’re going to have to dig out of a hole.”
Experts say the risk the NHL faces is that ticket buyers will discover they can live without NHL hockey.
“If they’re out a whole year, people will start looking at where they’re spending money and ask, ‘Did anyone miss the fact we didn’t have tickets?’” said Kevin Lovitt, an executive vice president at Octagon who specializes in consulting for pro sports franchises. “Hard-core fans will come back. But having said that, I think it’s more of an entertainment-type of thing for a lot of companies, and I wouldn’t classify those guys as hard core. I think a lot of those companies, especially in non-traditional hockey markets, will start to look at how much demand there actually was for those tickets.”
Corporate America has embraced NHL hockey largely as a medium for employee incentives or spending quality time with clients. Most clubs charge $100 or more for the best seats, and it’s largely corporate clientele that have supported that pricing.
“If the NHL becomes stagnant, which in a lockout situation they could become, I think they’re going to face a real uphill battle to reclaim that audience,” said Rob Cornilles, president of Game Face Inc., a team consulting firm whose NHL clients include the Wild, Panthers and Stars.
By almost any measure, the NHL shines when it comes to ticket sales and gate receipts. Commanding an average ticket price of about $43.50 and playing to 90 percent capacity, the league totaled ticket revenues of over $1 billion in 2002-03, according to its own financial report.
Those totals are comparable to that of the NBA (see "Stacking up the Big Four"), and only a tad behind MLB’s estimated $1.4 billion in gate receipts. When considering that both the NBA and MLB generate television ratings for their championship series that are five times that of the Stanley Cup Finals, attendance and ticket sales represent the NHL’s strongest business pillar.
In all, gate receipts and other in-arena revenues represent about 70 percent of the money coming through the doors of the NHL. And it’s these mostly non-fixed revenue sources that could be most affected by a prolonged work stoppage, experts say.
Jon Spoelstra, president of the teams division of Mandalay Baseball Properties and for many years one of the leading voices on team marketing, offered the hypothetical example of a family that takes the money it would have spent on hockey tickets for the year and goes to Hawaii instead.
“What if they have the time of their lives and decide to do that every year?” he asked. “Maybe they’ll put a new roof on. Whatever it is, they’ll find a way to spend that six to eight thousand dollars.”
Spoelstra said he expects a big dip in ticket sales for NHL teams once play resumes. The main reason, he said, is that clubs are laying off lower-level ticket sales personnel who stand on the front lines.
“When the baseball strike happened,” he said, “the teams had pretty much stripped their staffs of sales people. Then they had to try to replicate five or six months of offseason selling in about a week.”
Attendance dipped 20 percent for MLB in 1995, the season after the World Series was canceled because of a strike. Crowds still have not returned to pre-strike levels. This year’s average of 30,550 a game is baseball’s highest since the strike but falls short of the 31,256 mark the league set in 1994.
Many observers say MLB was left moribund after the strike and was saved only by extraordinary happenings on the field, such as the 1998 record-setting home run race.
“What saved baseball was they had Mark McGwire and Sammy Sosa,” said Spoelstra.
