NHL lockout: As work stoppage drags on, fans, and the league’s business partners, might not return
By Katie Carrera,
After the lockout that led to the cancellation of the entire 2004-05 season, the NHL set about re-branding itself. Apologies were offered to fans, along with assurances that the sport would be even better; marketing campaigns aimed to bring them back with their loyalty to the game as the message.
It was a large project to minimize damage done by the lost season. For the most part, fans and business partners came back and the league went on to record seven consecutive years of record revenues.
On Wednesday, the third NHL work stoppage in 20 years turns 74 days old, having already resulted in the cancellation of 422 regular season games through Dec. 14, the Winter Classic and the 2013 All-Star Game. The dispute centers on how to divide the league’s revenue, which reached $3.3 billion last season, while honoring existing contracts. Negotiations between the league and players’ union have been fruitless, and Monday the two sides agreed to meet with federal mediators.
Whether involving a neutral third party will help create traction remains to be seen, but as the lockout drags on, fans’ loyalty to their sport is becoming a frayed trust.
“The league has become known for lying to its fans, to its sponsors,” said Ed O’Hara, senior partner of New York-based SME Branding, which helped devise the strategy for the NHL eight years ago and still counts the league among its clients.
“I don’t know how you come back from a prolonged stoppage a second time because it is unprecedented,” O’Hara said. “Brands are built on promises. In this case, the promised experiences of seeing the greatest athletes in the world. That’s all gone now.”
Of the four major North American sports leagues, the NHL has lost more games to labor disputes in the past 20 years than any other at 2,120, including games axed from the current season. While hockey is known for having one of the most dedicated fan bases in all of professional sports, the frequency at which the NHL loses games to labor disputes is enough to dishearten even the diehards.
Justin Valentine, 27, grew up a Capitals fan in Prince George’s County but his family could only afford to attend one or two games a year. He made purchasing season tickets a priority as soon as he could accommodate the costs as an adult and has plenty of fond memories – including proposing to his wife in the penalty box at Verizon Center — but the repeated lockouts have soured his outlook. He is considering giving up his tickets if the NHL loses another season.
“Never make someone a priority if they’re only willing to make you an option,” said Valentine, a tattoo artist in Severn and five-year season-ticket holder. “I feel like [Capitals owner] Ted [Leonsis] has made me an option, like he’s taking fans for granted. Those thousands of dollars could easily go toward another expense for my family.”
For many fans, feeling undervalued or marginalized by the labor dispute weighs into their decision as much as being able to budget the costs of tickets. Capitals’ season ticket prices have increased each of the past five seasons; they were slated between $30-345 per game for 2012-13.
“I feel I spend a great deal of my hard-earned money to see hockey being played. However, if [Leonsis] raises his price on us after this year, I think many people around me will be leaving this team,” Travis Rechenbach, a seven-year season ticket holder, wrote in an e-mail. “No other sport has this much turmoil. It just doesn’t make any sense!”
Vince Piperni of Alexandria works for the Department of Homeland Security and has had season tickets since 1998.
“We sat through the last lockout and actually moved to the front row of [Section] 408 as a ‘reward’ for staying through the fire sale, the last lockout and the painful Caps rebuilding process that followed,” Piperni, 36, said. “But enough is enough.”
The Capitals have approximately 14,000 season ticket holders and a waiting list of roughly 3,000. So far, there have been “very few” cancellations during the lockout, according to Monumental Sports and Entertainment spokesman Kurt Kehl, and any canceled tickets have been made available to those on the waiting list.
Given the current economic climate, along with eroding attention spans and vanishing goodwill, O’Hara believes that any approach taken to win back fans this time around will require more than simply thanking them for sticking with the NHL.
“There will have to be financial incentive for fans to come back, whether free tickets, events, products,” O’Hara said. “However they do it, it’s got to be authentic, real, and hit the wallet of the ticket buyer.”
Fans aren’t alone in feeling betrayed; companies that hold sponsorships and corporate ticket packages look to maximize the return on their investments. Sponsorship deals include relief clauses for the work stoppage, but that hardly addresses the full concerns of business partners.
In early November, Molson Coors CEO Peter Swinburn told the Canadian Press that the lockout was one of the reasons the company’s beer sales fell in Canada, and that the NHL’s largest sponsor will seek financial compensation from the league once the dispute is resolved.
In 2011, the NHL signed a 10-year, $2 billion deal with NBC to broadcast games, marking the high-point for a league that was without a cable partner following the 2004-05 lockout. Even if this season is lost to the stoppage, NBC will pay the NHL the $200 million rights fee.
It seemed to be a positive fit for both the sport and network. NHL viewership increased 52 percent in the first year of that deal according to Nielsen, but that momentum along with the publicity provided by two consecutive years of HBO’s ‘24/7’ series documenting the run-up to the Winter Classic has been thwarted.
As companies look to trim costs, ticket and suite purchases for sporting events are under greater scrutiny. Spotlight TMS helps roughly 3,000 companies manage corporate ticket purchases. According to CEO Tony Knopp, a quarter of those businesses are seeking to reduce their budget. The lockout could make it an easy decision for companies to not re-up on a block of seats or luxury suites.
“Business continues, whether it does for the NHL or not. Competition among corporations continues, and so no company is sitting around, waiting to entertain customers until the NHL comes back,” said Knopp, whose company also works directly with eight NHL teams to help manage corporate sales.
“The overall amount being spent hasn’t changed, according to our data, they’re just spending it elsewhere,” Knopp said. “The league is playing Russian roulette with this, because who’s to say those companies will be there when hockey comes back?”