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Volume 20 No. 45

Leagues and Governing Bodies

Gary Bettman is not one for nostalgia. For him, it’s always about the next steps forward.

But in looking back, few could have envisioned the changes that have been made to the NHL since Bettman became NHL commissioner in February 1993. In the last decade alone, the league has implemented a salary cap after a lockout that lasted a complete season; staged regular-season games in historic baseball venues Wrigley Field and Fenway Park; and has taken the game to Europe.

And to tell much of its story, the NHL, like other leagues, has taken media into its own hands.

Bettman has won support from sponsors and owners for how he has positioned the league.
“There was no, no NHL Network, no NHL Radio, Center Ice packages [or] GameCenter Live,” Bettman said, looking back. “[Today] we have a Facebook page, and people are tweeting.”

The months ahead are sure to have people tweeting even more.

Bettman, who turned 60 on June 2, is approaching his 20th anniversary as NHL commissioner. While his supporters note his power and influence, observers watch as Bettman leads the league through one of the more important junctures in its history. The need this summer for a new collective-bargaining agreement tops the list of the issues facing the league.

Bettman doesn’t shy away from the challenges as he sits in his New York office. On a week in which he would participate in the NHL awards and a board of governors meeting in Las Vegas followed by the draft over the weekend in Pittsburgh, he took time to discuss areas where the league can continue to grow, how the postseason ratings decline was not a surprise to him — and the most imminent matter of the league’s CBA.

During the Stanley Cup Final, Bettman reported league revenue of $3.3 billion this season. In the 2006-07 season, the league generated $2.2 billion in revenue. Among the primary reasons for the leap have been increased attendance (the NHL brought in $1.2 billion from ticket sales in 2010-11); the 10-year, $2 billion deal signed with NBC last year; and a seven-year, $375 million deal with MillerCoors that is the most lucrative such deal in league history.

Bettman on …

NHLPA Executive Director Don Fehr:

“We talk on a regular basis. We get together on a regular basis. We’re having no trouble communicating and getting along.”

World Cup of Hockey:

“Doing World Cups on a regular basis is both important and a great opportunity for the continued growth of the game.”

Asked about the growth, Bettman pointed back to the league’s prior labor negotiations, when a deal resulted only after the cancellation of the 2004-05 season. “[We] knew during the year off that [the fans] understood our problems and wanted us to fix them,” he said. “So I wasn’t surprised that with a healthier foundation, we could grow the game in ways the game had never seen.”

The NHL now has locked up many of its major sponsors to long-term deals despite the labor uncertainty that could jeopardize the coming season. Last month, PepsiCo renewed for five years. Last week, the NHL signed York as its first HVAC partner, marking a new business category for the league.

Partners point to the development of a larger footprint around the league.

“For Coors Light,” said MillerCoors CMO Andy England, “it is about tent poles like the Winter Classic, All-Star Game and Stanley Cup playoffs.”

So while the league turns its attention to new business in the packaged goods, financial services, consumer electronics and airline categories, Bettman is satisfied by the votes of confidence the league has received from partners heading into the potential labor difficulties. The current CBA with the NHL Players’ Association expires Sept. 15.

Bettman also has the clear backing of the league’s owners.

“Gary has brought us into the 21st century with a great deal of vigor,” said Boston Bruins Chairman Jeremy Jacobs, chairman of the board of the NHL’s executive committee since 2007. “He has built the business of our league from the ground up. Look at what he has done in retail, in media. He excels because he is evolutionary in his approach — he doesn’t just shoot from anywhere.”

Said Bettman, “It starts with the game on the ice and our great players. When you look at the competitive balance, when you look at the excitement and the entertainment the game has provided, there are people who believe that the game has never been better. In terms of marketing and promoting the game, particularly with this healthier foundation, we’ve been able to do more things.”

As examples, he cited the season-opening Premiere Games in Europe, both the Winter Classic and Canada’s Heritage Classic, the NHL awards, and, in the commissioner’s words, “giving our fans and sponsors platforms to activate against,” a strategy espoused by NHL Chief Operating Officer John Collins.

“From our first cup of coffee together, where Gary spoke about his vision for the league, he has been an incredible leader and huge supporter,” said Collins, who was hired in 2006. “At times, he has pushed hard. At other times, he has asked for patience. But this has been a phenomenal period of growth for the league, and the building blocks are in place for more.”

Although the Winter Classic has been a hit with fans, television viewers and partners such as title sponsor Bridgestone, Bettman dismissed the notion that the event was in the “If It’s Not Broken, Don’t Fix It” category.

“If you follow the history of the Winter Classic, we’ve always done more and more,” he said. “We started in Buffalo, then went to iconic venues. We had open practices. We built the alumni game into a stand-alone event that sold out last year in Philadelphia. In Detroit [for 2013], we’re using two stadiums for a host of events. We’re constantly looking for ways to grow our events and engage more fans.”

Bettman also is confident the Premiere Games will continue after taking a one-year hiatus this coming fall. The NHL has played games in Europe to start the regular season since 2007.

“We’ll be back,” he said. “With all of the uncertainty, and the way we do those games with the players association, everyone thought it was best — especially with the potential of financial risk — to put it on the back burner. But international development is a great opportunity and remains a priority for us.”

Broadcast views

One of the larger areas of focus over the last year for Bettman and league officials was on its media business. Ever since the NHL’s partnership with ESPN ended in 2004, there have been calls for the league to reconnect with Bristol in hopes that a more prominent presence on “SportsCenter” and the network’s other news and talk shows would follow. Bettman, however, is steadfast in having the league grow without that affiliation.

The NHL’s current broadcast rights holder deal with NBC gives the league $2 billion over the

The Winter Classic’s alumni game (top) and Premiere Games have given sponsors more events to activate against.
next 10 years compared with its prior NBC deal that provided no up-front rights fee on the broadcast side. It also, on the cable side, now has an added level of TV consistency under the newly branded NBC Sports Network.

“I say this partially tongue-in-cheek, but we may be the single biggest beneficiaries of the NBC Universal[-Comcast] merger,” Bettman said. “We get the production, the promotion, the scheduling, the star treatment that NBC gives us. It’s phenomenal. We are an absolute priority for them. Putting aside the increase in the rights fee, the most important element of this deal was the continuous coverage.”

Of course, one area for the league where things could have been better was with the ratings for this year’s Los Angeles-New Jersey Stanley Cup Final. The average mark dropped 33 percent from the Boston-Vancouver series of a year ago.

Bettman saw the numbers, and while he didn’t like them, he’s not spinning. “It’s not surprising,” he said of the Cup Final ratings. “We’re still looking to engage nationally, and we’re probably still a little more matchup-sensitive than others. As compelling and as exciting as it was for Kings and Devils fans, the local ratings were very strong, it doesn’t catch on nationally at the same level as an Original Six matchup that’s so much a part of the history and tradition of the game.”

He also was not alarmed at the 14 percent drop in the ratings overall from last year’s playoffs.

“This was the first year in our history that every game in the Stanley Cup playoffs was televised in the United States,” Bettman said, noting the coverage that extended from NBC and NBC Sports Network to CNBC and NHL Network. “As we continue to grow, and based on everything NBC is doing for us, you will see our ratings grow.”

Added England of MillerCoors, “Building the playoffs into a two-month version of March Madness is something we bought into. The NBC deal is going to make the NHL a lot bigger.”

Market considerations

In cases from Long Island to Phoenix, and in Atlanta in between, Bettman has been determined — many would say stubbornly so — about not wanting to see franchises relocated.

“Fans of a team make an investment,” he said. “It’s emotional, it’s financial, it’s their time. That’s not something we treat lightly. We only consider moving franchises as a matter of last resort when there are no alternatives. What we’re doing in Phoenix is no different than what we’ve done in other places. … Hopefully, the Phoenix situation will play out successfully.”

While the future of the Coyotes is his most immediate franchise concern, Bettman’s attention is also commanded by the plight of two franchises within driving distance of his Manhattan office: the New York Islanders and the New Jersey Devils. The Islanders have been playing in outdated Nassau Coliseum for more than a decade and need a new home. Their arena lease ends in 2015, and a move to Brooklyn is a possibility. Devils owner Jeff Vanderbeek is expected to introduce a new investor in the coming weeks. Without one, his team faces bankruptcy.

Because of his strong will to see franchises stick, the relocation of the Atlanta Thrashers to Winnipeg last summer was viewed as one of Bettman’s biggest disappointments.

“We didn’t make the decision that we’d rather be in Winnipeg than Atlanta,” he said. “The fact is, no one was prepared to own the Thrashers anymore in Atlanta. Circumstances dictated that we had no choice to move.”

His process

Uncomfortable talking about himself, Bettman is hesitant to discuss what makes him tick. But he shed some light on his process when asked if he would take even a brief moment between presenting the Stanley Cup to the Kings and the start of CBA negotiations to savor the league’s successes.

“This isn’t an organization that sits around, looking backwards, to see where the pats are coming from,” Bettman said with a grin. “This is an organization that is committed to continuing to grow the game, to work hard, to move forward. We don’t sit around, trying to enjoy the moment. We sit around and discuss what we can try to do next.”

Collins laughed in recognition when told of his boss’s comment.

“We’re really happy with where we are, but we see the opportunities before us as significantly larger,” Collins said. “As [Washington Capitals owner] Ted Leonsis recently said to us, ‘The lights are all green.’”

“I wouldn’t say he has mellowed,” said Octagon CEO Rick Dudley, who knows Bettman well having been president of NHL Enterprises from 1997 to 2002, “but he is more relaxed.”

Next on Bettman’s agenda are negotiations with the NHLPA for a new CBA. No matter what transpires, few will question the level of trust and faith NHL owners have in the commissioner.

“The key to any commissioner is ownership support,” said Dudley, “and Gary definitely has that.”

Said Jacobs, “When you have 30 people together who can afford to own a hockey team, there are going to be a lot of strong opinions. But I can tell you, Gary has the support of all 30 clubs. We all believe in his direction.”

Bettman smiled slightly when hearing the praise and explained what motivated him.

“I’ve just always believed that you have to work hard, you have to communicate well, you have to understand what franchises are thinking, what they need and what’s important to them,” he said. “Most of all, you have to have a passion to do it. None of this works if you’re not passionate about the game or about the people in the game.”

The evolution of the NHL’s big-event strategy could include the return of a fan favorite: the World Cup of Hockey.
“It’s fair to say both the league and the [NHL] Players’ Association believe doing World Cups on a regular basis is both important and a great opportunity for the continued growth of the game,” said NHL Commissioner Gary Bettman. “Our players grow up loving the opportunity to represent their country, and the hockey in the World Cup is particularly compelling.”

Team Russia and Team Canada compete in the 2004 World Cup of Hockey.
The World Cup, played in August in 1996 and 2004, is sanctioned by the NHL and the NHLPA and would fit into the league’s platform of major events driving national scale. League partners would be able to utilize the event for late-summer activation and could do so more directly than they can in the restricted setting of the Olympics.

Unlike the Olympics, for the World Cup, the NHL would not have to shut down for three weeks in the middle of its season. And unlike the IIHF World Championships, which are played in April and May at the same time as the Stanley Cup playoffs, all of the best players in the world would be available for the World Cup.

NHL Chief Operating Officer John Collins confirmed last week that World Cup discussion has been put on the front burner with the league’s board of governors, including at its most recent meeting last Tuesday in Las Vegas.

“For years now, we have been essentially licensing our players to the Olympics and to the World Championships,” Collins said. “Why not continue to build up an event like the World Cup, where the NHL and union can be partners, our sponsors can activate, and [that] our fans will embrace?”

The NHL failed to capitalize on the momentum of the last World Cup eight years ago. The 2004-05 season was canceled when a new collective-bargaining agreement could not be reached. The league’s commitment to having its players in the 2006 and 2010 Olympics made scheduling a future World Cup difficult, as did upheaval at the union, with changes at the executive director level from Bob Goodenow to Ted Saskin to Paul Kelly to current leader Don Fehr between 2005 and 2010.

The NHL’s participation in the Olympics has brought mixed results. When the Games have been in North America (Salt Lake City in 2002 and Vancouver in 2010), the media and fan focus has been high. When the Games have been overseas (Nagano in 1998 and Turin in 2006 — and as they will be in Sochi for 2014), the time difference has negatively affected TV ratings and press coverage.

In addition, in the Winter Olympics, ice hockey can be outshined by other events, such as figure skating and skiing. As a result, there has been much debate over the benefits of the NHL closing its business midseason to be involved in the Games. Team owners much prefer the World Cup because the August-September schedule serves as a kick-start to the regular season.

While some players would be disappointed about not playing in the Olympics — amateur athletes from the college and junior ranks would make up most of the rosters for the U.S. and Canadian Olympic squads instead — the World Cup could satisfy players’ desire to play for their country.

Said Collins, “The big questions with the World Cup are, how often do you do it? How does it fit in with the Olympics? Do the Olympics fit at all? There is a lot to discuss.”

Participation in the Olympics in Sochi in 2014 — and, it appears likely, the creation of a regular schedule of World Cup events — will be part of collective-bargaining talks this summer between the league and union.

“I don’t view it as a bargaining chip but more as problem-solving we have to do with the players,” Bettman said of the Olympics. “It’s a complicated issue. There’s no clear right or wrong answer. It’s something we’ll have to wrestle with in the context of everything we’re doing internationally — whether it’s the [season-opening] Premiere Games or the World Cup or anything else.”

The NFL is seeking to borrow roughly $600 million to double the size of a league-backed loan pool that lends to teams, sources said, the latest signal that America’s top sport is loosening debt restrictions that were tightened after the 2008 financial crisis.

The league hosted banks June 13 at NFL headquarters in New York for a session led by Bank of America to gauge the interest in lending the league more money, the sources said.

The NFL recently raised the amount of cash teams can borrow by 33 percent, to $200 million each. The league’s action in looking to increase the size of its own loan pool suggests that the NFL expects clubs will take advantage of their increased debt limits by borrowing through a league credit facility and not individual banks.

The NFL declined to comment. Bank of America did not reply for comment.

“Based on the new [collective-bargaining agreement], strength of the NFL’s media contracts and recent franchise values, it is understandable that the league would increase the debt cap and go to market to raise additional funds,” said Rob Tilliss, a sports financial adviser with Inner Circle Sports. “By having a conservative debt policy in place, the NFL has been able to handle down periods such as 2008-09 and is still on sound financial footing.”

Sources familiar with the meeting said teams would have to pay an interest rate of only 100 points over the London Interbank Offered Rate, a floating-rate index that currently stands at 0.47 percent. That means teams today would pay less than a 1.5 percent interest rate.

Historically, most league-backed borrowing has been floating-rated debt, but leagues got squeezed during the financial crisis and moved many of their borrowings into fixed-rate vehicles. One source familiar with the meeting pegged the NFL loan pool, or credit facility, that is fixed rated at $2 billion.

The NFL has a variety of credit facilities for fixed and short-term debt, as well as a separate one for stadium financing. Many teams prefer to borrow through these mechanisms rather than on their own because the NFL-run credit facilities pool collateral, thereby lowering rates.

After the 2008 financial crisis and in the buildup to the 2011 lockout, the NFL studiously avoided taking on more debt and aggressively pushed teams to pay down their own. Other leagues have taken similar measures.

But the NFL CBA, which over its 10 years will shift billions of dollars to the owners from what players would have received under the old labor deal, is cited by financial experts as a big reason why the NFL can relax somewhat on the debt front. The only question is whether the low rate could dissuade some banks from lending, said one financial source familiar with the meeting. However, any such hesitations could be allayed by the overall strength of the NFL’s balance sheet and the allure of doing business with the league.

Eight years ago, much of the labor talks that led to the cancellation of the 2004-05 NHL season played out in public, with frequent media reports only adding to the friction of the negotiations. Gary Bettman insists this summer’s talks with the NHL Players’ Association won’t play out similarly despite the instant news cycles that exist with social media today.

“We don’t intend to negotiate publicly,” the NHL commissioner said last week. “I’m hoping these negotiations are quick, quiet and painless. I’m not looking to go on the campaign trail on this. Frankly, there was a lot made very public about everything related to collective bargaining last time. As you see this time, we’ve been extraordinarily quiet — intentionally so.”

Sure enough, when asked when negotiations will begin with NHLPA Executive Director Donald Fehr and the union, all Bettman would say is, “We’re working on it.” And when it was suggested to Bettman that perhaps he owed it to his league’s loyal fans to provide some insight into what aspects of the league’s $3.3 billion business need to be fixed, the commissioner disagreed. “The best thing we can present to our fans,” he said, “is them not having to deal with this at all.”

Bettman continues to be perplexed by the high level of pessimism on the labor front in the hockey media. Many columnists have written that the likelihood of starting the regular season on time in early October is slim.

“Since we haven’t even formally exchanged proposals, how does anybody even know what’s on the table?” Bettman said. “I understand that with a new executive director at the union, there’s a lot of uncertainty, and my guess is Don understands that as well. But anything written on the subject is sheer speculation. We’ll have this conversation again in 60 days and we’ll have a better idea on how things stand. For somebody to have a strong opinion clothed as fact at this stage is not real.”

What appears to be real is the development of a solid working relationship with Fehr, who was named NHLPA executive director in December 2010.

“We talk on a regular basis,” Bettman said, in rare remarks on the subject. “We get together on a regular basis. We’re having no trouble communicating and getting along.”

Bettman, however, warned not to read too much into those communications.

“The media, in all sports, tends to personalize these things,” he said. “[Former NHLPA Executive Director] Bob Goodenow and I used to go to games and dinner and play golf. Don and I have been to dinner and lunch and games together. I think people need to take a deep breath and calm down. The only thing that means much is the end result.”

As for reopening discussions on the CBA, despite the peril to the 2012-13 season, Bettman will not apologize. The league served notice to the union last month that it intends to change the current CBA, which expires on Sept. 15.

“The game has grown dramatically, and that’s a plus for all of us,” he said. “It doesn’t mean there isn’t some work to be done.”

The PGA Championship’s logo typically has done more to highlight the host golf course than the event itself, officials say, so they’ve decided to make a change.

The PGA of America this week will unveil a new logo for its marquee event, the final major championship each year. The new logo will provide a more standardized look for the PGA year to year, beginning in 2013 with the event at Oak Hill in Rochester, N.Y.

“When you look at the previous logos, the primary focus was the course mark with the PGA Championship in the outer band and smaller print,” said Kevin Carter, the PGA of America’s senior director of business development. “The new logo design puts the event front and center, and makes the PGA the story. … It will do more to establish the identity of the tournament and give it more of a lasting impression.”

The new mark was designed by PS212, New York, a new agency founded by David Gaglione.

Gaglione has an extensive history with the PGA of America, dating to 2008 when he worked for San Francisco-based Landor and redesigned the PGA of America’s primary logo.

His work on a new PGA Championship mark began six months ago. David Charles, the PGA’s senior director of championships, said the collaborative process included input from the golf courses that will host upcoming tournaments, as well as a team inside the PGA of America led by Carter and Charles.

What Gaglione came away with is a mark that can be used three ways. The main PGA Championship mark stands alone to represent the tournament itself. Two other marks incorporate the host club’s name and the club’s logo.

“The goal was to create something that would be flexible for use in the market,” Charles said.

Gaglione created marks that will serve the PGA Championship from 2013 through the 2018 centennial event at Bellerive in St. Louis. The 100th playing of the PGA Championship will have its own distinctive logo.

Merchandise will use both the PGA Championship mark and the logo that carries the name of the golf course. Those marks also will be used extensively throughout the tournaments’ branding efforts, especially the early stages of communication and public relations initiatives that often start a year or two in advance of the tournament.