Saturday, May 31, 2008

NHL Ticket Revenue

The Toronto Star obtained NHL documents that were not intended for public disclosure that show the NHL ticket revenue situation. Here is a summary of the information. The Canadian markets are the largest ticket revenue producers. Along with the New York Rangers, the six Canadian markets are the seven biggest producers of ticket revenue. They all show large increases in revenue due in a large part to the increasing value of the Canadian dollar against the American one. The problem is that many American markets have flat or declining ticket sales and cannot keep pace with the Canadian markets. Even with "cost certainty" and a salary cap linked to leaguewide revenues many American teams lose money. The problem gets worse as the salary cap and floor go up but their revenue doesn't. It all goes back to one of the first things I wrote the root of the NHL's problems are that too many teams are in weak hockey markets that cannot support them. The solution is to get rid of those markets. The solution is not a lockout or a salary cap or a shootout. It doesn't solve the problem.

A big problem is that a lot of the NHL's supposed growth is tied up in foreign currency markets. The Canadian dollar has risen compared to the American dollar. That leads to growth in Canadian revenues (when expressed in US dollars). This is something the NHL has no control over and its occurence does not imply health of the league. It could just as easily be that the Canadian dollar is dropping relative to the American one and things would look bad (when in reality the only change is in the foreign currency market).

The NHL happily announces its supposed successes, such as its attendance record this season, but the overall picture is not so rosy. The American economy is likely in recession and very likely, the Canadian one will follow. NHL revenue has had trouble keeping up with inflation. There are a lot of indicators that things will not be so good in the immediate future.

When markets like Phoenix, Florida and the New York Islanders cannot make half the ticket revenue of the supposedly small market Edmonton Oilers, something is wrong. Those markets are barely surviving. I would not be surprised to see movement of some of those (or other) teams in the not too distant future. The number of barely surviving, money losing markets in the NHL is a serious problem. That is the root problem that drives almost everything the NHL does to "fix" the game. Many of these "fixes" have not gone well for the fan.

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