By Tarik El-Bashir and Thomas Heath
Washington Post Staff Writers
Monday, June 5, 2006
NHL Commissioner Gary Bettman stood before a sea of cameras in New York last July and promised the league would emerge from its canceled 2004-05 season with more excitement and an economic system that would give all 30 teams a shot at profitability.
As the Stanley Cup finals begin tonight, Bettman appears to have achieved most of his goals: scoring and attendance are up and revenues are healthy, rule changes have made the game faster and more thrilling, and any team -- even those from small markets -- can win, as the finals between the Carolina Hurricanes and Edmonton Oilers proves.
The big exception is television ratings -- a key revenue driver and measure of a sport's mass appeal -- which have gone from bad to worse. The NHL playoffs, mostly relegated to the Outdoor Life Network (OLN), a second-tier cable channel known for hunting and fishing programs and its Tour de France coverage, have barely registered with the American public. NBC's ratings aren't great, either.
"You look at the playoff [ratings] numbers, and they have been beaten pretty soundly by poker and bowling," said Paul Swangard, managing director of the Warsaw Sports Marketing Center at the University of Oregon. "But I don't think this year was ever about robust TV numbers. It was about the gate and about competitive balance. With an economic model that doesn't rely on television, they can make this league work long-term."
Bettman said the league continues to aspire to a national television audience, despite years of evidence that shows the NHL is a regional sport whose economics are attendance-driven. Bettman attaches his aspirations to those of OLN, which has jumped from 65 million to 70 million subscribers since it began broadcasting the NHL this season.
"In the short term, we gave up some TV subscribers," Bettman said in a telephone interview, referring to the league's move from the high-visibility of ESPN to the lesser-known OLN. "And in return, with patience, we will have better coverage, better production. And over time, both we and OLN will grow our presence."
He said OLN's coverage, involving six hours of hockey each night, will help bring back old fans and introduce the game to potential new ones. The coverage includes feature stories, hockey-themed movies, as well as highlight and wrap-up shows. Next season, the Comcast-owned OLN will switch its name to Versus as it expands its sports programming, using the NHL as its centerpiece.
"That is the type of treatment we have always coveted," Bettman said.
The NHL parted ways with ESPN when the network declined to offer the NHL any type of upfront rights fees for airing its games. Instead, ESPN proposed splitting profits after the network recouped its costs, terms virtually unheard of among the major professional sports leagues.
The NFL earns nearly $4 billion each year in national television rights fees, which earns each team well in excess of $100 million a year. And Major League Baseball and the NBA earn more than $700 million a year from national television rights, of which teams receive more than $20 million apiece. By contrast, the NHL national rights fee contract with OLN amounts to about $2 million per team.
Measured another way, the NHL will earn about 3 percent of its revenue from national television this year. The NBA's and MLB's share of national television revenue is well into the double digits, and the NFL's television revenue is about 66 percent of the total league-wide earnings.
Faced with little television revenue and rising costs, Bettman forced a player lockout last year and canceled the season rather than continuing to incur losses he said totaled nearly $500 million from 2002 through 2004.
But this season, thanks to higher than expected revenues and a new collective bargaining agreement with the NHL players' association that caps the amount the league pays its players at 54 percent of earnings, the NHL expects most of its teams will be profitable.
The salary cap has also created more parity on the ice, because the big media market teams like New York, Chicago, Detroit and Toronto can't beat the small-market clubs by simply outspending them. As a result, teams that lack the appeal the big clubs generate, like Edmonton and Carolina, are in the finals -- and television exposure continues to suffer.
During the playoffs, OLN is averaging 0.4 rating, which is well below the 0.7 ESPN had at the same time in 2004. NBC's telecasts have averaged a 1.1 rating, off from the 1.5 ABC pulled two years ago. There's a sliver of good television news: the Eastern Conference finals between Carolina and Buffalo last week was one of the most watched OLN programs ever. But that's a far cry from the big national television presence that Bettman and NHL owners hoped to achieve when they expanded in the 1990s.
Television ratings in Canada, where hockey has a huge following, figure to be strong for the finals, especially because Edmonton is playing for its first championship since 1990. But ratings in the U.S. could be among the lowest ever sans a large market team. Raleigh-Durham, where college basketball is king and where the Hurricanes are located, is the 29th-largest media market in the nation.
"The two objectives of parity and creating a national television contract are not necessarily consistent with each other," said Jeff Citron, a Toronto-based attorney who once worked for the players' union. Then again, said Citron, "hockey, in all fairness, is just not a sport with national appeal to Americans."
Some experts say modern professional sports, which have moved away from dynasties and more toward a system of financial parity that give even the smallest team a shot at winning championships, has caused ratings to suffer across the board. Most league executives privately pray for major market teams to make it to their finals.
"You want the larger market teams to be in there," said Capitals owner Ted Leonsis. "It's not New York and L.A."
However, the NHL has rebounded better than expected from the longest labor dispute in professional sports history. Fans returned in force -- according to league figures, attendance was up 2.4 percent to 16,955 fans per game during the regular season, a record. Revenues will likely exceed $2.1 billion, some $300 million more than projected.
And the new rules helped scoring rise to an average of 6.17 goals per game, up from 5.14 the previous season.
What remains to be seen, however, is whether the improved on-ice product will ever translate into better ratings. Some supporters say the NHL may have to consign itself to being a gate-driven sport with little widespread appeal.
"The NHL is what it is," said television consultant Mike Trager. "It's a major sport that is ratings-challenged."
Staff researcher Meg Smith contributed to this report.