-- In a departure from conventional sports television deals, NBC Sports will televise NHL games next season without paying the league an upfront rights fee, an arrangement that carries some risks for the financially troubled league.
The two-year deal (with an option for two more) was announced by both parties yesterday and represents a new broadcasting strategy for the NHL, which has suffered from rock-bottom ratings the last several seasons on ABC/ESPN and most of whose 30 teams lose money.
"This is a partnership. We think both sides will do very well," NHL Commissioner Gary Bettman said on a conference call.
While ABC was getting out of the hockey business, ESPN announced that it has struck an agreement with the league to keep the league on ESPN2 next season, with options for ESPN to extend the deal for two seasons. The Associated Press, citing an industry source familiar with the negotiations, reported that the first year of the deal will be worth $60 million, the next two $70 million each.
The possibility of a lengthy work stoppage had put the NHL in a difficult negotiating position. The league's labor agreement expires in September and there is the possibility that next season could be canceled.
For NBC, a subsidiary of General Electric, the move represents a renewed interest in the four major sports. The network, which did not renew its contract with the NBA two years ago and no longer broadcasts NFL games, focused on the Olympics, securing the rights to the Games through 2012. NBC also broadcasts NASCAR, Notre Dame football, Arena Football, tennis, horse racing and the PGA Tour.
NBC Sports President Kenneth Schanzer said the deal with the NHL made too much sense to pass up. "This is the only major sports deal in which the broadcast partner makes money," Schanzer said yesterday. "We have a situation in a major sport to do a deal that makes an enormous amount of economic sense to us. We are going to make money on this deal."
Schanzer said hockey's labor problems will likely be resolved before next season. "Hockey is going to deal with its labor situation over the course of the next month, and when it's done we will be ready with our broadcasts," he said. "We went in with our eyes open. We know what we were getting into, and we will be ready with our broadcast when they are ready to play."
Under the agreement, NBC will not pay the NHL any rights fees and the network will be allowed to recoup the production costs of its broadcasts before it pays the league. The NHL will be allowed to keep a certain amount of the revenue from commercials, and a third tier of revenue will be split equally by the NHL and NBC, according to the network.
Most professional sports leagues demand an upfront premium from broadcasters for the right to broadcast their games. The NFL receives about $1.6 billion a year from ABC, ESPN, Fox and CBS for the rights to air their games. Major League Baseball receives around $400 million a year from Fox and the NBA is paid nearly $800 million annually by ABC, ESPN and TNT, which is owned by Time Warner. NBC last broadcast the league's games from 1972-73 to 1974-75. The network also aired the NHL All-Star Game in 1991, 1992, 1993 and 1994.