In a tactic employed by the NFL, and NBA players unions, a vote is scheduled Sunday that would have the players grant the executive board the authority to “disclaim interest” in the NHL Players Association. The move would ostensibly dissolve the union and make it a quasi-trade association. In doing so, no labor agreement can be reached with the NHL and its owners. The NHL, sensing the move, filed a class-action lawsuit seeking to block the NHLPA from doing so on the grounds that the move is a scam designed only to be periodic.
"The union has threatened to pursue this course not because it is defunct or otherwise incapable of representing NHL players for purposes of collective bargaining, nor because NHL players are dissatisfied with the representation they have been provided by the NHLPA," the NHL complaint read in part.
“The NHLPA's threatened decertification or disclaimer is nothing more than an impermissable negotiating tactic, which the union incorrectly believes would enable it to commence an antitrust challenge to the NHL's lockout.”
The NHLPA responded by saying, “The NHLPA has just received a copy of the National Labor Relations Board charge and has not yet been served with the lawsuit. However, based on what we’ve learned so far, the NHL appears to be arguing that Players should be stopped from even considering their right to decide whether or not to be represented by a union. We believe that their position is completely without merit.”
If the court determines that the players’ union is allowed to dissolve, they can then sue to say that the lockout is illegal. Only within the management/union framework are the lockouts of employees deemed permissible under law.
Try to imagine this: The New Jersey Devils nearly won the Stanley Cup Finals, and in that aftermath, banks could have seized the club and sell it. Think about that: In New Jersey… the Stanley Cup Champion…. seized and sold.
This is the NHL’s biggest issue off the rink. While the league itself sees in-roads with sponsorships, broadcast deals, and advertisers, the fact is, you’re only as strong as your weakest link. In that, all but a handful of clubs are struggling in the NHL.
The Devils are just one of many floundering in red ink. They missed an $80 million debt-service payment and have had to have the league loan them $10 million. In the meantime, the Glendale City Council recently has agreed to pay the Phoenix Coyotes an additional $25 million to keep them afloat.
All told, just 11 clubs were shown making an operating profit, according to the most recent valuations of the NHL. The “haves” fall into clear categories that make the challenges all the more daunting for the league: the Canadian clubs, and those with long, storied histories in large markets such as the Bruins, Red Wins, and Blackhawks.
In the meantime, the average value of a club in the NHL grew 5 percent to $240 million. But, concerns about the league salary cap which is 57 percent of league revenue, is creating problems across the league in places like Columbus, Tampa Bay, and Phoenix.
All of this sits against the backdrop of lockout.
What should be a concern is the model upon which the NHL is standing. Serious consideration into contraction needs to be discussed, which doesn’t bode well in labor talks (after all, you’re discussing eliminating jobs), and beyond that, the NHL needs to consider how revenue-sharing is functioning. Some clubs, namely the Maple Leafs, are pulling in big profits.
So, much like the NBA, the NHL will be where two aspects are colliding that could spell doom: the salary cap and revenue-sharing.
Hockey has arguably has the most hardcore fans, but a league does not live by them alone. Gary Bettman and Donald Fehr have to remember the recent labor history with the sport. They need to be reminded that they are just now climbing out from the darkness that was the loss of the 2004-05 season. Some clubs will surely say that they will actually lose less money, or possibly save money, if games are lost and corrections are made. None of these are easy answers. But, it comes back to that sense of disbelief that the Devils could have been seized by the banks. That black eye that would have the league sitting in the penalty box could be the beginning of the end (again) for the NHL.
Welcome to another NHL edition of Bizball Radio with Seth Everett and Maury Brown!
In what may be the best podcast that Seth and Maury have done to date, the two breakdown realignment in the NHL to address the relocation of the Atlanta Thrashers to Winnipeg, and the ripple effect that that has. They also talk about whether renaming the divisons to more modern players is a good thing. The Gretzky division? Lemieux division? Then, the conversation gets really interesting as Seth and Maury talk concussions and what, if anything, the NHL can do to address them.
According to their annual report of the 30 clubs in the NHL (see www.forbes.com/nhl), the average value for a club in the league now is at $240 million, up 5% from last year, ranging as high as over a half-a-billion dollars for the Maple Leafs ($521 million) to $134 million for the beleaguered Phoenix Coyotes. Based upon totals from Forbes, total franchise value for all 30 clubs is $7.198 billion with revenues that came to $3.09 billion for the 2009-10 season.
More than half the league reportedly saw revenues over $100 million with the Maple Leafs nearing the $200 million mark ($193 million). The Rangers, now playing in a refurbished MSG, saw $41.4 million last year and are the NHL’s second-most valuable team, worth $507 million The Islanders, who continue to struggle in their efforts to construct a new arena, had the league’s lowest revenues at $63 million.
In terms of profits and losses, according to Forbes, the league saw a decline operating income, a form of profit (Operating Income is earnings before interest, taxes, depreciation and amortization - EBITA). Collectively, the league saw a 21% decline in operating income from the 2008-09 season. All told, 18 of the 30 clubs are shown to be running in the red compared to 16 in the Forbes report last year. But, the 21% declined is skewed primarily by two clubs: Coyotes and Blue Jackets. The Coyotes, who continue to struggle in Phoenix and have been relocation fodder is shown to have lost $24.4 million while Columbus shows a $13.7 million loss. They are the only two clubs with losses in double-digits with the Lightening coming in a very distant third in the loss department at losses of $8.5 million.
In a matter that is sure to come to the bargaining table for a new CBA in the NHL, Forbes attributes losses to player payroll. From Ozanian and Badenhausen:
The league’s salary cap, set at 57% of revenue, is too high for some teams to be profitable . As a result, expect the National Hockey League to undergo a cantankerous labor negotiations when the owners and players union begin to hammer our a new collective bargaining agreement to replace the current six-year deal that expires in September . The NHL must move much closer to the 48% model the NFL agreed to before this season or the 50-50 revenue split National Basketball Association owners and players recently agreed to.
In terms of massive profits, the Maple Leafs (once again) top the Forbes valuations in profit. The club pulled in $81.8 million in operating income for the 2009-10 season. To place that in perspective, that’s $34.1 million more than the second ranked by operating income, the Montreal Canadians. The average for operating income for the NHL is shown at $4 million, but that’s deceptive. Clubs running at a profit averaged $21.1 million while the average for those running at a loss was -$7.1 million. The six clubs with double-digit operating income (Maple Leafs, Rangers, Canadians, Red Wings, Canucks, and Oilers) totaled $228 million.
Of deep concern has to be Devils and to a lesser extent, the Stars. While Dallas is in the throes of a bankruptcy sale, the Devils are drowning in debt. According to Forbes, New Jersey has a monstrous Debt to Value of 144%. They see a one-year valuation change of -17%. The Stars come in at 126%. The Rangers, Red Wings, and Blackhawks are the only clubs not carrying debt.
In terms of increases and decreases in value, overall the league saw a 5% increase in club value. Seven clubs see declines (Devils, Blues, Flyers, Panthers, Ducks, Blue Jackets, and Islanders), two clubs (Coyotes and Avalanche) remained flat, while the rest of the league all saw gains with the largest being the recently relocated Jets at 21% (NOTE: Forbes informs that while the rest of the valuation numbers are based off of the 2009-10 season, the valuations are based on current data. Therefore, the Jets increase in value is due in large part from the relocation from Atlanta to Winnipeg and therefore, is reflected in the large increase in one-year value increase). Coming in second is the Tampa Bay Lightening at 20%. Seven clubs saw double-digit percentage increases in their values (Jets/Thrashers, Lightening, Canucks, Penguins, Oilers, Capitals, and Predators).
Overall, the NHL continues to make inroads at the league level in terms of sponsorships and fan growth through the popular Bridgestone Winter Classic.
Welcome to another NHL edition of Bizball Radio with Seth Everett and Maury Brown!
In this edition, Seth and Maury talk about the strength of NHL's core fan base, how realignment factors in with the Thrashers relocating to Winnepeg and becoming the Jets, the state of the Coyotes, Islanders, and Devils, and what may be in store for the new CBA expected in 2012, and more