SHARING THE CRUMBS – NHL REVENUE PLAN DOES LITTLE TO RESCUE LEAGUE

Larry Brooks,

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Mar 1, 2005

THE NHL has published specific details of each proposal it has made to the NHL Players Association within the last three months – but the league has steadfastly refused to disclose any of the financial elements of its revenue-sharing plan for the next CBA.

The Post has obtained the heretofore confidential Feb. 9 NHL revenue sharing model, presented to the PA in Toronto as part of the league’s “compromise trigger” proposal. And now that we’ve been able to review it ourselves, we completely understand all the secrecy.

Analysis of the plan reveals stunning avarice on the part of the NHL’s wealthiest franchises – and explains why Commissioner Gary Bettman was able to essentially bribe the big markets into going along for the lockout ride but now faces an insurrection from those clubs as the Board of Governors prepares to meet today in Manhattan.

It also explains why the small markets remain so militantly opposed to unlocking the rinks until the league gains a punitive hard cap.

Based on reported revenues for 2003-04 and a cap plan under which the players would receive 54 percent of a $2.082 billion gross, with each club assigned a hypothetical payroll of $34 million, the league would mandate a total revenue-sharing pool of $88.9M, with only $42.9M flowing from the top 10 revenue producers to the bottom 15 – with the remaining $46M created by taxing playoff gate receipts, regardless of the financial status of the postseason participants.

Remarkably, this model would increase the percentage of overall league-wide revenue-sharing from 11 percent to just 12 percent – this to a great extent created by the NHL’s projected $64.8M decline in television revenue. By comparison, the NFL shares 63 percent of its revenue; the NBA, 35 percent; and even Major League Baseball divvies up 26 percent.

The NHL’s seven top revenue-generating franchises – Toronto, Dallas, Detroit, Colorado, Philadelphia, the Rangers and Montreal – produce $661 million. Under the league’s revenue-sharing plan, these teams would contribute only $38.2 million to the pool – a paltry 5.78 percent of their combined gross earnings.

As a combined result of the meager revenue-sharing and an artificially low hard cap, these seven teams would reap windfall profits right out of the box under this proposed CBA. Assuming level revenue, the Maple Leafs project a profit of $38.8M; the Red Wings, a profit of $30M; the Avalanche, $26.1M; the Stars, $25.7M; the Flyers, $22.5M; the Canadiens, $20.4M; and, the Rangers a profit of $17.8M.

At the same time, the relatively small total that would flow to the 15 poorest teams – with the Islanders, Anaheim and Chicago excluded under the plan from receiving aid because they’re located in TV markets with more than 2.5 million households – would be at best a Band-Aid fix for the NHL’s neediest franchises.

Indeed, even upon implementation of the plan, the league projects that 11 teams would lose money in the first year. The Mighty Ducks are projected to lose $12.8M. The Islanders would lose $11.3M; the Blackhawks, $10.6M; Phoenix, $10.3M. Incredible. What happened to the pledge of “guaranteed profits for all”?

What’s more, the NHL intends to eliminate revenue-sharing entirely – entirely – as league-wide revenues increase. The league assumes that the imposition of a cap will create greater parity and thus, automatically increase the gate receipts taken in by small-market franchises. This, of course ignores empirical evidence from places like Nashville, where, despite a franchise-best 91 points and first-ever playoff berth, the Predators’ attendance declined last year for the fifth straight season.

It’s clear that Bettman has made different promises to different, and indeed, competing constituencies within the Board. The large-market franchises want to stuff their pockets. The small-market clubs want to suppress payrolls. And so the players are forced to pay . . . and pay . . . and pay.

The players, that is . . . plus the thousands in the industry who have already lost their jobs . . . plus the game, itself.

It’s been a shell game all along. The league’s revenue sharing model simply proves it.

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Ice try (m)

The Post has obtained a copy of the NHL’s proposal for revenue sharing, and its contents explain why the league went to such lengths to keep it under wraps. The plan would increase overall revenue sharing to just 12 percent – a fraction of that shared by the other three major sports leagues. Under the proposal, hockey’s 10 richest franchises would contribute just under $43 million, or 5.78 percent, of their combined revenues, to the 15 poorest clubs. Here’s how much the NHL’s seven richest teams would be expected to share.

TEAM — GROSS REVENUES — AMT. SHARED

Toronto $117.3 $7.8

Dallas $96.8 $7

Detroit $93.9 $6.2

Colorado $93.6 $5.5

Philadelphia $89.8 $4.7

Rangers $85.3 $3.9

Montreal $84.3 $3.1

(numbers in millions)

Revenues shared, by sport:

NFL 63%

NBA 35%

MLB 26%

NHL* 12%

*proposed

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Ice try (s, lcf)

The NHL’s new proposal for revenue sharing would redistribute just 12 percent of the league’s revenues from richer to poorer teams – a fraction of that shared by the other three major sports leagues. Under the plan, hockey’s 10 most prosperous franchises would contribute just under $43 million, or 5.78 percent, of their combined revenues, to the 15 poorest clubs. Another $46 million in playoff gate receipts would also be shared. Here’s how much the NHL’s seven richest teams would be expected to kick in.