SPECTOR ON NHL: BETTMAN BAD FOR BUSINESS

[Irishjim]

Mark Spector | September 13, 2012, 5:14 pm

Sometimes, it is good to step outside your comfort zone to confirm something you already thought you knew.

So we asked economist and author Andrew Zimbalist, a favourite voice from lockouts past, what it means, exactly, when a professional sports league is facing its third lockout in as many collective bargaining agreements?

"It means it is poorly managed," said our frank, 64-year-old professor of economics at Smith College in Massachusetts, and author of 20 books, including May The Best Team Win: Baseball Economics and Public Policy.

"Mr. Bettman, although he has some qualities that are admirable, has made a lot of bad decisions," Zimbalist said this week, before Thursday's confirmation that we are heading towards Bettman's third lockout since becoming the commissioner of the National Hockey League in 1993. "He has not promoted effective management at the team level, and he is unwilling to admit his mistakes and walk away from them."

Zimbalist is not a hockey man. He doesn't even purport to watch the game.

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He has, however, studied the various sports economies over his years. Ironically, all of that studying has left Zimbalist in a position to draw the exact same conclusions as anyone reading this column.

"The teams below the Mason Dixon line in the United States are not profitable. Some of them are bleeding tens of millions of dollars a year," he said, as if one needs a PHD to figure that out.

So, how would our renowned economist from an esteemed school of economics in Massachusetts begin to solve the NHL's economic problems? Exactly the way a couple of roughnecks would, over a beer at the Paddy McSwiggins in Fort McMurray.

o Allow relocation in Canada, the northern U.S., or "further internationalize the league."

o Encourage sound management practices. (Read: quit signing stupid contracts.)

o Extend revenue sharing

"Unless you do some of those things it's inevitable that you're going to bang heads with the players' association. To come to the table and say we want you guys to drop your share in revenues from 57 per cent of revenues to 42 per cent is a declaration of unreasonableness and irrationality."

For the record, our solution to the constant labour strife in the NHL is simple: phase the NHLPA back to a 50-50 split of the revenues, say, one per cent a year over a seven year CBA. In the meantime, continue to grow revenues, so the pain would barely be felt.

Once you're done, it's a 50-50 split. From that moment on, both sides can keep their damned hands out of everyone else's pockets.

That alone isn't enough, Zimbalist says.

"The bottom line is this: the league is not well managed, it's not well structured, and that has to change. Ownership and Bettman can't expect the players to assume the whole burden of those problems.

"Gary Bettman doesn't want to admit that his southern strategy was a bad strategy, back in the 1990s," Zimbalist said. "It is his intransigence around this issue that's created this problem."

It's hard to argue that, other than to add, those poor markets are worth 25 jobs per team to the NHLPA. Contraction does not help the players one bit, so if it is to be avoided, then the PA must share some of the pain in other areas to preserve those jobs.

History tells us, however, that Bettman ventured into the four corners of the USA for one reason: that mega-bucks U.S. TV contract that forms the economic pillar of all major North American sports. In the end, the NHL secured all the markets -- many of them weak -- but the league never did get that giant TV deal.

"That's the main difference," Zimbalist agrees. "In hockey, the U.S. contract is worth somewhere in the neighborhood of $5-6 million a team. In football, it's $150 million per team. In basketball and baseball it's closer to $35 million a team."

Bettman's NHL has to prop up all those money-losers in Florida, Nashville, Phoenix, Carolina and the second teams in New York and Los Angeles. But their presence has never provided the TV revenues that would make those markets self-sustaining.

Now, with the second lockout in seven years upon us, the damage on those already wonky markets will be the most severe.

"If you have another work stoppage, hockey will bounce back in Canada. I don't think there is any question about that," Zimbalist said. "What happens in the United States is another question.

"Hockey is on a very thin string of popularity in the United States," he concludes. "Whether it can bounce back in the presence of all the competition that is springing up around it is another question. Soccer, for instance, is an ascendant sport here.

"Whether it loses its status as the fourth most popular sport and begins to sink, is an open question at this point."

It looks as if we're going to find out.

Mark Spector is the senior columnist on sportsnet.ca

[radoran]

As he said, so many of the points are simply self-evident.

The Southern Strategy - without a concurrent, effective plan to support and grow the sport in these new markets - has been a failure. If Tampe, Anaheim and Carolina can't break even if not make money after winning the Championship, when will they?

Forget Phoenix. And the Islanders are one of the legendary franchises that has been badly mismanaged (and plays in a substandard arena).

I don't know that I'd lump Nashville in that group - but while they seem to have developed a fanbase, their longevity is also at issue.

As for Canada, there's room for one - maybe (but not really) two - franchise(s), in Quebec (where NHL hockey has already failed once). Hamilton will. not. happen. as long as there is breath in Tronno and Buffalo. No other metro could conceivably support a team. (as a side note, in this environment the Oilers' owner is tacitly threatening to move the franchise to.... where???)

There will always be American hockey fans, but you don't "sell" yourself to new fans by cancelling a season and having a lockout at the end of the next CBA.

[Polaris922]

The problem with an article like this is this guy is purely economics. He can't put a value on the expansion of youth hockey and the additional fans the sport gains branching into these areas. Again if the teams continue to be money pits, relocate them, but the fans you've created will often adopt new teams and you have fans for life. Youth hockey flourishes, and the impact is immeasurable by an economist or anybody else looking strictly at dollar signs. A lot of posters here have accurately stated Bettman is a businessman and doesn't care about the game. I would suggest to you that a pure economist judging the league would be even worse. Put him in charge and we're back to a league half the size in no time, with good teams going by the wayside.

[flyerrod]

"He has not promoted effective management at the team level, and he is unwilling to admit his mistakes and walk away from them."

Head of nail, meet hammer.......I can agree to a certain extent with Polaris922 also. The real question is just how long do you continue to prop up a failing team? At some point in time, you need to acknowledge that it is not working and move on be it contraction or relocation.

[Irishjim]

contraction or relocation.

there's those 2 words again. 2 words that make to much sense

[radoran]

there's those 2 words again. 2 words that make to much sense

Question number one is: are there 30 North American hockey markets that can support an NHL team...

I would say "no"

Question number two: if the league insists on having 30 teams anyway, what does the leavue need to do to ensure the continued growth of the game in unfamiliar markets

And I think the owners fail to answer either question adequately.

[Irishjim]

Question number one is: are there 30 North American hockey markets that can support an NHL team...

I would say "no"

Question number two: if the league insists on having 30 teams anyway, what does the leavue need to do to ensure the continued growth of the game in unfamiliar markets

And I think the owners fail to answer either question adequately.

agree. they all got giddy with the franchise fees paid to the league when buttman expanded and expanded again (greedy should be the word) contraction and relocation are the only thing that can save the sport we love so well

[radoran]

agree. they all got giddy with the franchise fees paid to the league when buttman expanded and expanded again (greedy should be the word) contraction and relocation are the only thing that can save the sport we love so well

Not the *only* thing, only the most obvious.

If owners in Philadelphia, Tronno, New York, etc. can believe that the year-over-year revenue increases generated since the previous CBA are an ongoing possibility, things may change.

If they continue to be greedy frakkin' basterds, they may very well make pate out of the goose laying golden eggs.

[flyerrod]

If they continue to be greedy frakkin' basterds, they may very well make pate out of the goose laying golden eggs.

BEST.ANALOGY.EVER. :unsure:

[PuckMeister]

Rad,

I'm still here alive and well. You have struck on the "golden thread." Money, greed, and power. I think the successful owners are tired of propping up the failing expansion franchises, but are reluctant to press Bettman to relocate/contraction. As businessmen, I fail to fathom how they cannot see the folly of their ways as they stubbornly cling to failed strategy. Perhaps relocate a team to Alaska and another to Seattle and there may be one or two other northern cities that could support a team. Contraction and a 50 -50 split of revenue seems like the obvious plan of attack, but it's not my money. I'm just a fan so what do I know?

[radoran]

Rad,

I'm still here alive and well. You have struck on the "golden thread." Money, greed, and power. I think the successful owners are tired of propping up the failing expansion franchises, but are reluctant to press Bettman to relocate/contraction. As businessmen, I fail to fathom how they cannot see the folly of their ways as they stubbornly cling to failed strategy. Perhaps relocate a team to Alaska and another to Seattle and there may be one or two other northern cities that could support a team. Contraction and a 50 -50 split of revenue seems like the obvious plan of attack, but it's not my money. I'm just a fan so what do I know?

I honestly also believe that one of the major problems is that it is one of the owners that is now providing the "national television deal" - lessening the need to be in places like Phoenix to be "attractive" to a national broadcaster.

Comcast (we can continue with the fiction that it's Snider for a few more years, I suppose...) didn't benefit at all from the expansion fees and is likely to keep the NHL on NBC and their NBCSports channel regardless of whether there's hockey in Arizona.

As a result, they feel less compulsion to prop up places like Phoenix.

There is NO WAY the players were EVER going to accept a 12 point drop in revenue split. I think a 50/50 split by the end of the next CBA should be the goal.

[jammer2]

@flyerrod Is Spector reading this site....that comumn looks *really* close to our previous conversation...right down to the soccer analogy.....

[flyerrod]

@flyerrod Is Spector reading this site....that comumn looks *really* close to our previous conversation...right down to the soccer analogy.....

Well we must be onto something. I guess all of the spitballing we do here really does matter.

[Irishjim]

@flyerrod Is Spector reading this site....that comumn looks *really* close to our previous conversation...right down to the soccer analogy.....

i know we have lurkers here. i see to many topics and or quotes verbatim on the national media. just wish the would give us credit

[Polaris922]

Just remember, Comcast / NBC doesn't care if the Coyotes are profitable or not, whether they win or lose, or whether they sell out or bust. It's the number 12 tv market in the country. Sports sell advertising, and advertisers pay tv channels to run their ads. Comcast is making money whether franchises thrive or fail.

Edited September 16, 2012 by Polaris922

[jammer2]

@Irishjim Here is the quote by me in the tootsie CBA thread....looks pretty close to the jist of the Spector write up...probably just coincidence.

"Well, the point I was trying to make is the NHL can not afford to lose the support of the American citizens they already have in their back pocket, or...like I said, the league will be in real danger...I agree, the future of the NHL's prosperity lies with the USA. I just don't think the NHL will ever be accepted as mainstream in the USA. It will never be part of the fabric of socieity like football and baseball are, and the TV ratings bear this out

. In the late sixties, early seventies, the NHL found out that there was undiscoved gold in areas like Philadelphia, St.Louis etc....I think that is bacially maxed out now. I'm very skeptical that areas like Vegas or Seattle could support a sucessful NHL team (*maybe Seattle, certainly not Vegas) and those are the American cities being floated for expansion. The real key is making the current US markets (and surrounding areas) stronger and more viable....and tossing the crap to the wayside in a timely manner. They need to stop trying to fit a square peg in a round hole based on market size and grow the sport in areas where there is actually interest.

Also agree, maybe niche sport is to strong in describing the NHL in the US, that would really fit into soccer, which sucks and will never ever be big in the US, despite the expets who think it will grow. It's boring...dreadfully boring and there is no way to fix it (unless the insert topless female goaltending...that *might* give it a shot "

[radoran]

The NHL, right now, is a league that - when a local team reaches the playoffs - the "bandwagon" fans still give the hind quarters of a rodent if they win and will tune in to watch and follow along in the playoffs.

People in Philadelphia don't give a rat's ass if the Union or the Wings or the Phantoms are/were "competing for a championship."

The question is: do fans in Tampa, Miami, Anaheim, Phoenix, Dallas, etc. give a rat's ass about the game IF THEIR NHL TEAMS ARE COMPETITNG FOR A CHAMPIONSHIP?

Because, quite frankly, if the Flyers hadn't won Cups in their early years and were muddling about like, say, the Nashville Predators - people in Philadelphia wouldn't give a rat's ass about hockey.

Fact.

[idahophilly]

But we did win. I get the point but that's not really going to help going foward.

Hamilton

Quebec

Hartford

Kansas City

Seattle

Salt Lake City

Portland

all could be viable options for relocating existing teams.

Get rid of:

Phoenix

Columbus (or maybe their GM/Ownership)

Either Florida or Tampa

Dallas

Anahiem

Either Devils or Islanders

Thin the herd or move them to a new pasture to graze on new grass.

So far it's kinda working in the Twin Cities and Winnepeg... two places that once had NHL teams. Sometimes you have to move the cow to a new pasture to allow the grass to grow again... (I must be hungry for a steak with my cow analogies)

And a 50%/50% split is a must IMHO.

and can someone explain how the owners want to violate the player contracts? I thought a contract was a contract.... Anywhere else you can sue someone for a written contract violation....

[radoran]

and can someone explain how the owners want to violate the player contracts? I thought a contract was a contract.... Anywhere else you can sue someone for a written contract violation....

The contracts are written under the terms of the Collective Bargaining Agreement. If that agreement stipulates changes to the contract - such as the escrow provisions - then they are enacted.

The owners have taken it too far, IMO.

Hamilton

Quebec

Hartford

Kansas City

Seattle

Salt Lake City

Portland

all could be viable options for relocating existing teams.

Hamilton simply Will Not Happen as long as Tronno opposes it (to say nothing of Buffalo). The NHL said as much to Ballsile (sp?)

Hartford is simply creating another Islanders. Even worse, since the fanbase is already split between the New York metro and Bruins. The AHL team draws an average of 5,700.

I'm also not convinced that Utah and Kansas are burgeoning hockey markets just waiting to be tapped. What makes them any different than Phoenix or Columbus?

Columbus at least had a solid AHL experience and the Ohio State team that has something of a hockey tradition. IMO that team has been so badly mismanaged as to be an embarassment to the league.

Quebec and Seattle I see as viable options immediately (with the new arena in Seattle).

I predict: the Vestes Bleu will be in Quebec soon enough and Shane Doan will be the first guy to play homes games in three cities without changing franchises...

Phoenix

Columbus (or maybe their GM/Ownership)

Either Florida or Tampa

Dallas

Anahiem

Either Devils or Islanders

Interesting that there are three recent Cup winners* on that list and two real dynasties in the Devils and Islanders. If teams that have had significant success in recent years STILL can't make a go of it in existing markets, I have more serious doubts about Utah, Kansas City, etc. if that's the case.

The real question, again, is are there 30 North American markets that can support an NHL franchise? If we're moving two dynastic franchises because they can't make a go of it (granted the Isles were 30 years ago, but hockey fans have long memories...) I would say "no".

And now we also have Edmonton's owner tacitly threatening to move the Oilers...??

For the record, IMO, the Islanders have the ability to compete, they just need a new building (which looks slightly more likely than a team in Hamilton). The Devils likewise. I don't see the three NY Metro teams as a "problem."

Further, any owner who's in this league "to make money" off the strictly *hockey operations* of his club is fooling himself from the start.

* for the sake of discussion, I'm including the Stars (under protest)