December 05, 2006
Even though the NHL's revenue predictions are up, the league not attracting many new fans should create some concern.
Funny how good everything looks this time of year. Fresh snow looks good on the otherwise bleak landscape here in the northern climes.
Fresh hope looks good as the holiday decorations light up. Even the fresh faces of kids brighten more with the expectations of windfall presents on Christmas morn.
Judging from comments coming out of the National Hockey League Board of Governors meeting in Florida Monday and today, this era of good feeling extends to hockey's bottom line as well.
Revenue predictions are up, in the words of some, as much as five percent.
That of course means that the salary cap figure for next season will rise as well, and we've all taken that to be an indication that all is well in the NHL. Factor in that the value of franchises appear to be on the rise (at least given the reported price paid for the Pittsburgh Penguins) and it's hard to see any problems on the horizon for the "new" NHL.
I don't want to be Sportsnet's version of the Grinch that Stole Sean Avery's broadcast career, but colour me unconvinced.
Hidden beneath the glow of what appears to be a slight increase in fortune, are reports of a slight drop in attendance. Now on the heels of what the league maintains was a record turnout coming back from the lockout season of 2004-05, this is nothing to lose tonight's sleep over, but this is supposed to be the "new" NHL, the reinvention of the game if you will.
By any business measure the "new" and "improved" version of a product is supposed to not just hold on to regular customers, but attract new ones. That the NHL may not be doing that should create some concern.
The NHL's "new" product was supposed to be bigger and better and brighter and hipper and, rolling out in partnership with the Players Association, there was to be a new era of hockey both in-house and, and this is most important, on television.
But the game appears to be struggling slightly at the gate and early returns indicate a massive falloff in television viewing in both Canada and the United States.
To be sure, the NHL tends to rebound at the gate as the season rolls along and there is always hope regards new media; but if the game is to see substantial revenue growth, television is still the vehicle that delivers the goods.
Without good television viewership it's difficult to maintain and especially grow the ad revenue side of the business. Without large or even moderate television numbers it's difficult to attract new fans and thereby attract new advertisers and sponsorships.
Want proof? Just look at the constant downward spiral of the Canadian Open Golf Championship, pro tennis or your choice, or just about any women's professional sports league.
Projections for the end of this NHL season are not bad, but in the cycle of sports business, things eventually catch up. A perceived drop in attendance or in viewership now generally leads to a falloff in advertising dollars and sponsorship dollars later. Once that wheel starts turning it can be difficult to stop.
That can be problematic for hockey, a sport that doesn't have a whole lot of room for growth in any other area but television.
It won't take long for advertisers and sponsors to pick up on the fact the game is projecting its latest revenue increase not because of ticket sales but because it's nicked its fans for ticket sales that come with higher prices attached. Lest we forget, according to statements made by Commissioner Bettman, the new CBA was supposed to slow or even reverse that never-ending spiral. That it hasn't may not surprise owners, but it has to be worrisome because fans, especially those who have stayed with the game, like to be rewarded for their loyalty and ticket price hikes aren't the best way to go about that.
Opening new markets doesn't seem to be a way to grow the game either. Bettman is on record as saying no to any expansion plans for the immediate future. That doesn't mean a team might not move (Pittsburgh without a new building or some failing franchise perhaps setting up shop in Las Vegas or some other growth market) but moving doesn't create any new revenue, not like the vicious expansions of more recent memory. Selling new product helps, but you can only reinvent a uniform so many times before that loses its marketing appeal and even when it's successful, it doesn't amount to any major source of fresh cash.
That leaves television, the No. 1 vehicle proven to be able to create new fans. New fans are the mother lode of sports marketing, the group that will become new ticket buyers and new merchandise buyers. Yet in that area, prospects appear dim indeed.