NHL commissioner Gary Bettman & Detroit Red Wings owner Mike Illitch (center) are among the group of owners that need to spread the wealth in order for NHL wide success. Mandatory Credit: Rick Osentoski-US PRESSWIRE

CBA Issues - Revenue Sharing Among the Teams

Over the next few months I will be looking at different issues surrounding the Labour negotiations between the NHL and the NHLPA.  Not exactly everyone’s favorite topic, but the discussion might clear the air or lift the fog of understanding as to where the sides sit and what concessions must be made by either side in order to come to an agreement.

If you have read my previous posts over the past year, you know that I think the owners will have to get their stuff together amongst themselves before they can step up and take on the players association.  The biggest issue in this area is revenue sharing.

The current (about to expire) CBA does have some revenue sharing, but it is incredibly restrictive and very difficult to qualify for, and in the grand scheme of things is a drop in the bucket. As the salary cap number has raised from the original $39Million in 2005-06 to the projected $70.3M next season, the low revenue teams have been put back into the situation they were in pre-lockout.  Except now, they are forced to spend to a certain level ($52.3 M salary floor) rather than base their budget on what they can afford.

Meanwhile, the high revenue clubs like Toronto, New York Rangers and Philadelphia are laughing all the way to the bank, because their salaries are capped and the amount they have to share with the lower revenue teams is next to nothing.

Some would question why large market teams should share their money with the have-nots?  Well, the last time I checked, there were 30 teams in the league and all of them are required in order to operate.  The big market clubs make money off the backs of the small market teams as much as the other big market teams.  The benefits of ensuring the smaller market teams have equal access to star players are many, but the biggest benefit would be the draw of fans to see them.  Nobody in New York or Toronto will line up to see the Winnipeg Jets or Phoenix Coyotes because of lack of star power.  There is no rivalry and therefore they wouldn’t be a huge draw.

Giving those small market teams a chance to reap the benefits of revenue sharing would help the overall product and the overall revenues, because these teams, that are often in non-traditional hockey markets, would have some breathing room.  Instead of losing money because they have to spend it all on salaries due to the salary floor, they could in turn spend some extra money marketing the product and the players to get more butts in the seats.

I know that there is a risk that some teams could take their revenue share and pocket it, but it would fall upon the owners themselves to police that.  All the salary cap has done is protect the big spenders like Toronto, Detroit and the Rangers from themselves by capping what they can spend.  And even then it is an artificial cap, since they have been able to hide bad decisions in the minors (Wade Redden, Jeff Finger), which is what the cap was intended to avoid.  Also what it has accomplished is to raise the floor from $23M in 2005-06 to $54M heading into next year.  In the eight seasons (counting next season) since the lockout, the salary floor is $15M higher now than the salary CAP was in its inception.  This shows that revenues have obviously increased and the rich, high revenue teams benefit while the lower revenue teams spin their wheels hoping for a long playoff run just to break even.

Until the owners get on the same page in this regard, there will never be equal footing and there will always be teams dragging the rest down.  And despite the league’s wishes to have the players as “equal partners” in the operation of the league, this can never happen while there is such a disparity among the owners themselves.  Ask the NFL, where revenue sharing has evened the playing field and made the league the most successful in North America, if not the world.

 

 

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