Gear: The Spectacle of the Modern NHL
The NHL is set to play a game outdoors in Nashville, Tennessee. Against a team from Tampa, Florida. A few weeks after players shot pucks into the Bellagio fountain at the All–Star Game in Las Vegas, Nevada.
What the heck is going on here?
These are three cities where ice is typically thought of only as something you put in your drink, not something you skate on.
When I think about how far the NHL has come from the 21-team league of my childhood, it is truly astounding. Sure, I miss seeing the Hartford Whalers play the Quebec Nordiques for Adams Division supremacy, but the Predators and the Lightning squaring off on the home turf of Derrick Henry, A.J. Brown and Julio Jones is a spectacle I can get behind.
With some of the NHL’s best teams (including the Lightning, Panthers, Hurricanes, Predators, Kings and Ducks) playing in the “sun belt,” it certainly appears that the league’s master plan of patiently capturing every corner of North America has paid off.
Even more impressively, the NHL has hit grand slams with each of the last two expansions: Vegas and Seattle have already shown to be wildly successful hockey markets that look like they will have sustained business success.
In addition to further entrenching the game in the non-traditional North American hockey markets, the league has been heading down a path to significant global growth. That path has been derailed somewhat by COVID, but the NHL Global Series had featured regular season games in a number of European countries, including Sweden, Finland, Germany and the Czech Republic. That series is scheduled to resume in October.
Exhibition games in China were creating a path toward an Olympic Games in Beijing where the eyes of the entire world were expected to be on the NHL and its players. The NHL’s plans for China have obviously had to be put on pause.
To be fair, it hasn’t always been a straight line of progress and growth. There have been bumps in the road, such as the failure of the Atlanta Thrashers, the challenge (to say the least) of the Coyotes being in Glendale or the Panthers stationed in Sunrise – plus the rollercoaster of fan interest in places like Carolina and Anaheim.
But lately, even the pandemic has had trouble slowing down the NHL.
That doesn’t happen by magic. The league has an enormous staff of people that work every day on league events, initiatives and content that will keep growing the game. What many fans don’t realize is that when teams travel overseas or when they host an All-Star Game or a Stadium Series game, league staff (and not team staff) control all elements of the event.
The Predators may be playing a home game at Nissan Stadium today, but the Predators organization hasn’t done the bulk of the heavy lifting. Most staff can more or less show up and enjoy the event.
So, how does the business end of a Stadium Series or Winter Classic work?
Typically, the NHL will work out a financial deal to “buy out” the home team’s rights so that it can then produce the event itself. The Preds’ business team likely had to negotiate a fee that included compensation for the tickets, F&B, sponsorship and merchandise revenues they would have earned had the game remained at Bridgestone Arena as one of 41 regular season contests. That’s usually accomplished by an average attendance multiplied by ticket price and average food and beverage, merchandise and parking spending.
Once the team feels like they have reached a deal that makes them “whole,” it’s up to the league to sell the tickets, secure its own event sponsors, plan the entertainment and stage the game. The league will also pay for any club staff that work the game, from ice technicians, to box office staff, to PA announcer.
The NHL is technically a not-for-profit corporation that flows through revenues to the 32 clubs, so at the end of the day, all teams will share in any surplus revenue generated by the Stadium Series game and other league events.
Basically, revenues from events like the Stadium Series or All-Star Weekend will go into the larger pot of league revenues that must cover all league costs before any surplus is redistributed. That includes employee salaries (including commissioner Gary Bettman’s compensation), the lease for the NHL’s gilded New York office as well as its offices in Toronto and Montreal, and the operational costs of running the NHL events.
League revenues are derived primarily from sponsorship, broadcast, event hosting and merchandise licensing. The league has created 32 marketing territories, 32 broadcast territories and 32 licensing territories (all delineated slightly differently), within which each club can sell exclusive marketing rights and a specified portion of their television and merchandise rights.
The league then sells national television rights, national or global sponsorship rights (which carve out each club’s specific territory) and global merchandise licenses.
When you watch a hockey game aired by a regional sports network, the rights fees and an allocation of advertising dollars flow to the club. Revenues from nationally televised games flow to the league.
If you buy a jersey at your team’s arena, all of that money goes to the club. If you buy it at a league event, your local sporting goods store or online through league partner Fanatics, the league gets a royalty from the vendor, and that royalty revenue goes into the pot for ultimate allocation to the 32 teams.
You may not have realized that your purchase of an Islanders jersey at Dick’s Sporting Goods or Sport Chek is also supporting the New York Rangers. Or that the ‘Smashville’ sweater you buy this weekend at Nashville’s Nissan Stadium is supporting the Lightning to the exact same extent as your Preds.
Now you know.
I’ll be watching Filip Forsberg and Steven Stamkos glide around the ice in the fresh Tennessee air tonight, and I’ll be shaking my head in amazement – not just at their individual skill, but at how far this league has come, and how far it can still go.
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Chris Gear joined Daily Faceoff in January after a 12-year run with the Vancouver Canucks, most recently as the club’s Assistant General Manager and Chief Legal Officer. Before migrating over to the hockey operations department, where his responsibilities included contract negotiations, CBA compliance, assisting with roster and salary cap management and governance for the AHL franchise, Gear was the Canucks’ vice president and general counsel.
Click here to read Gear’s other Daily Faceoff stories.