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NHL lockout damage runs deep

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Struggling franchises such as the Phoenix Coyotes are most in jeopardy of suffering from fan apathy or backlash. (Victor Decolongon/Getty Images)

By Stu Hackel

It’s time for the damage assessment. After 113 days of lockout pugnacity, the Hockey Gods now look down upon the wreckage and shake their heads in wonderment and no small amount of disgust. Things were motoring along so well, never better: Record revenues, strong attendance, rising tune-in numbers, happy fans, eager sponsors and largely healthy franchise values.

The gods will eventually figure out who drove the bus into the ditch and how, but first they’ve got to get it out and running again.

“Our fans and sponsors are alienated, and this is hurting the game,” Sabres goalie Ryan Miller said of the lockout in an email to James Mirtle of The Globe and Mail in November. “This process has more of the appearance of brand suicide than a negotiation.” The phrase “brand suicide” resonated with many and, while the league avoided death, it has serious self-inflicted wounds that are in need of healing.

There’s lots to repair. Some things are gone for good, like the 2013 Winter Classic and all the promise it held on both sides of the border and especially for the city of Detroit. The league, the Red Wings and the TV networks may hope all can be recreated a year from now. Perhaps it can, perhaps not.

On the financial front, the owners sacrificed in the neighborhood of $1 billion in revenue to prosecute their grabbing an extra seven percent of the take from the players, and that cost the players nearly $830 million in pay. That money is gone, as is a percentage of their existing salaries going forward. The new split will make the owners whole again over time, well before the new CBA expires. How quickly they recoup their losses depends on how well the business does and that’s a question we can’t answer now. Economists and financial planners can do all sorts of growth projections, but there’s no telling yet how badly the lockout has hurt fan interest market by market.

Most people assume there will be little drop-off for franchises in Canada, the four U.S. Original Six teams, and some of the other well-established and traditional hockey markets in the States — Philadelphia, Pittsburgh, Washington, Minnesota, San Jose and Los Angeles, for example, where the Kings get to defend their Stanley Cup championship. It’s less clear, this conventional wisdom goes, how the Sunbelt clubs will fare and how some established teams that have been sagging might come out of this. “In places where hockey was gasping for air, or was an afterthought, that’s where danger lies,” writes Bruce Arthur in The National Post, and it well could be true, but each club has its own unique situation, its own craziness with which it must contend.

Will John Davidson’s arrival soothe feelings and boost interest in Columbus, where fans were angry before the lockout? Will his departure alienate fans in St. Louis? Will the lockout slow the upswings that Tampa Bay, Florida and Nashville experienced or can they pick up where they left off? Will the lockout’s resolution lead to a clarification of the ownership situations in New Jersey (where Jeff Vanderbeek has now taken sole control and looks for a new partner) and Phoenix/Glendale (where you never can predict what might happen next)? The Dallas Stars never rebounded from the lockout of 2004-05, but can they now with a solidified ownership situation? The Avalanche came out of the last lockout fine, but their gate has since declined. How will fans in Denver react? Will Long Islanders who are dismayed that their club will eventually move west to Brooklyn begin to abandon ship?

There’s no way to know in advance and many of those answers depend on how well the clubs play in the upcoming truncated season, and that’s going to be equally unpredictable.

Most significantly, there’s no real way to gauge how a furious fan base league-wide will respond to the resumption of play. That’s the first flashpoint of damage — and you won’t find a better expression of that than Tom Powers’ scorching story in The St. Paul Pioneer Press. “Now that the millions and billions of dollars have been divvied up, the NHL will throw open the arena doors and expect everyday people to come back and fund the whole operation,” he writes. “The real bosses, the ones who pay the bills by buying the tickets and the merchandise and by fueling the radio and TV ratings, were not represented in the negotiations. They were just handed the tab. So, again, anyone who blindly returns to the ticket window is a fool.”

Yes, there are calls for boycotts and individual pledges from those who say they are done. If you read the comments section on this blog and many others, you know the reaction: They’ve sworn off the NHL forever. They’ll watch minor pro, or college or junior hockey — or no hockey at all. But those are just the sentiments we read. It’s hazy, at best, how effective, broad or permanent any boycott will be. And even among the dissenters, despite their oaths, a portion of their anger at being treated shabbily was felt in the moment. A portion will be back at the first puck drop and it will be hard for others to stay away if their club gets off to a good start and keeps going into February and March.

“Hockey is more deeply embedded in the blood of its true fans – perhaps more so than any other sport,” writes Drew Sharp of The Detroit Free Press, who is no less incensed than Powers. “They’ll pack most of the arenas when the abbreviated season begins on Jan. 19 despite an opening two weeks that will resemble a glorified exhibition season because the addiction’s so strong for a sport they so dearly cannot live without.”

But Sharp identifies where the most critical damage among customers may be felt. “The NHL forfeited any hope of attracting any mainstream appeal with this 113-day lockout. The masses didn’t miss it. Not with the NFL, NBA, college football and college basketball filling the vacuum. There were likely those when word filtered down early this morning that the lockout had ended who responded,0 ‘What lockout?’”

That’s of crucial importance because the casual fan is the target audience for the league’s growth in the States. A league that takes its long-time fan for granted — and this lockout was hardly the first illustration of that — doesn’t stand much chance of growing beyond those borders.

Then there’s the situation among the NHL’s sponsors. Kraft Canada cancelled its Hockeyville program with the league for 2013 and Molson Coors, noting a drop in sales, will reportedly ask0 the NHL for compensation on its $375 million sponsorship deal. It’s unknown what other sponsors will do, but they can’t be pleased. “The damage from this lockout is deep,” Brian Cooper, president of the Toronto sports management company S&E Sponsorship Group told Jeff Z. Klein of The New York Times. “From the research I saw and what I heard anecdotally, a lot of fans and sponsors may not re-engage this season. The league is going to have to slowly win back their hearts and minds.”

Easier said than done and even harder for attracting new business. “If I was a company being courted by the NHL today, or if I was advising a company being courted, I would be concerned,” Michael Neuman, the managing partner at Scout Sports and Entertainment, the agency for Geico, told Chris Botta and Terry Lefton of the Sports Business Journal in November. The current commissioner has three work stoppages under his belt.”

NBC, which made a sizable investment in the NHL, giving it better exposure than it has ever enjoyed on U.S. television, wasn’t overjoyed with the lockout, either. “It’s been very challenging and very frustrating,” Jon Miller, NBC Sports Network’s president of programming told Chad Finn of The Boston Globe over the holidays. “We never had any indication that this situation with the NHL was going to last until January. It was always our understanding that this was going to be a tweak and a fix.”

It wasn’t. It dragged on and was far more combative than most believed it would be (not Red Light, however) and the antagonism between the owners and the players is yet another area that reflects serious damage that’s in need of rehabilitation. It’s something we discussed last week, writing “When this lockout ends, the time will have come for the owners to contemplate charting a new course in the way they deal with their players. No doubt the owners had some problems with this last CBA, but their way of fixing things doesn’t work.”

I’m not talking here only about the lack of civility that accompanied the negotiations, although the character assassinations that flew in both directions certainly didn’t help expedite the agreement. I’m not even just referring to underhanded maneuvers like changing documents after they had been negotiated. I’m talking about the fact that in the post-Alan Eagleson era, the NHL cannot conclude a CBA without a work stoppage, and the last three lockouts, especially — all of which have been related to the salary cap — have given this league a terrible reputation even among its own fans and business partners.

Unless things change on that front — and change in a big way — whatever monetary and image gains are made over the course of the new CBA will again be endangered. Because, despite all the resolve and rancor that went into this latest agreement, there is nothing about it that guarantees or even encourages us to believe that we won’t find ourselves watching the carnage again eight years from now. If that happens, if those who run this league have learned nothing from the most hostile and perhaps most costly lockout we’ve seen yet, even with a “corrected” CBA, it will have been even more of a colossal waste of time than it was.

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  • Published On Jan 07, 2013
  • 19 comments
    bearcub
    bearcub

    I suspect hockey fans will fill the arenas, hockey fans are a devoted bunch and hockey is fun to watch.  But I can't imagine TV networks, or advertisers, or corporate sponsors are going to be as forgiving.  I do think this lockout may make people (even hockey fans) realize how crazy it is to play such a long regular season.  i didn't miss hockey in October and November.

    alroy60
    alroy60

    TV and sponsors should not renew their contracts past the end of the 8 years. Wait for the new CBA is signed before agreeing to be a sponsor. If there is no money until after the new CBA was signed we wouldn't see a lockout, it would be settled before the season starts.

    JohnnyRotten
    JohnnyRotten

    It seems to me that the NHL cannot make a stepwise improvement until (1) Bettman is fired and (2) some modest contraction occurs.

     

    What is very clear is that relations between owners and players will not, cannot change while Bettman is in charge. Nothing more need be said other than looking at games lost by league. Bettman beats all others combined. But you could also look at the absurd negotiating tactics he took (e.g. offering the players 46% wasn't an offer, it was sending them a message that he was going to break them).  And yes, Fehr is stubborn, but baseball is doing better than it ever has while hockey is now wondering what's in store for it.  Perhaps it will be fine but... perhaps not.  And 8 years from now (when Bettman calls the option), you can bet your bottom dollar that the NHLPA is going to be looking for Fehr or Fehr 2.0 to prepare itself for another apocalyptic negotiation against the man who wanted to break them.

     

    Second, the owners as a whole will continue to support Bettman's tactics as long as they have to deal with teams who couldn't hit water if they fell out a boat. At some point, you have to say "You know what, this Phoenix thing, maybe we shouldn't keep doing it."  And it's not just Phoenix.  The money losers are mostly obvious and they are going to try to drive the hardest bargain to stay viable.  Eliminate a couple of them, though, and I bet discussions can get a lot smoother.

     

    Sadly, neither seem likely.  So in 7 years, I'd start selling off my season tickets.

    alroy60
    alroy60

    I think a lot of people do not understand how contract negotiations work. Yes Fehr and Bettman do take the lead in the process but they are not the ones making the decisions. They work for the players and the owners and do what those parties tell them to do. I've be in a contract negotiations and this is how things work. I have to say I am on the side of the player this time. Last lockout I was with the owners. Contract negotiations are suppose to be a give and take process. When one party comes in and says take it or leave it......negotiations will not go well. I believe the owners came in like the last lockout believing they would break the players. (took a lost season though) They also felt they would break them earlier than January. I believe this is why the owners hated Fehr, he kept the players together and would not let the owners bully the players. Too bad this had to go on this long. After seeing the opening proposals and what the big sticking points were I could tell where the settlement would end. I wasn't far off!!

    bzauers
    bzauers

    If they blew up the entire season I think there would be long term damage. As was stated the casual fan was like what lockout. If they were not aware of a lockout or paid little attention to the lockout, how much damage could actually have been done on that side? I think where they really cooked the golden goose is with the Winter Classic as was stated. With no momentum on this anymore and college football holding playoffs they may have iced the Winter Classic as a mainstay of New Year's entertainment.  I don't think they can underestimate how badly missing this WC will hurt next year.

    BrianSpiegel
    BrianSpiegel

    To me, the main reason why the NHL keeps shooting itself in the foot is that the owners (and the league) don't seem to know how to run the financial side of things between the lockouts. It seems amazing to me that the league had to mandate the length of contracts and the amount that could be paid because owners simply could not stop themselves from offering 15 year- $150 million dollar contracts on their own. The reason why Bettman is so innaffective is not the lockout per se, it is the time in between. The league doesn't seem to work with the owners, or the players, to put out fires until it is time to negotiate. To me, the CBA is just a bandage that are going to be ripped off in eight years anyway. You can bet there is going to be a lockout in eight years again because the owners will find another way to screw it up.

     

    arrowe77
    arrowe77

    "The real bosses, the ones who pay the bills by buying the tickets and the merchandise and by fueling the radio and TV ratings, were not represented in the negotiations. They were just handed the tab."

     

    This is the kind of argumentation I keep hearing that I never agreed with. First of all, what is this "tab" the fans were supposedly handed? Is "no hockey" really a tab? The real goal of this lockout was cost control: the salaries were getting out of hand and could lead directly to an increase in ticket cost. That would've been a real tab, not a metaphorical one.

     

    I really disagreed with the lockout and thought it could've been avoided. I also think it's very possible that some fans will never come back. If that happens, it's the same people who paid for the lockout that will pay for the losses: the owners, the players and the different partners. Not seeing what is little more than a tv show or a spectacle isn't what I call "losing".

    cg.spaceshot
    cg.spaceshot

    The new college football playoff starts in 2015.  Hockey may have a one year reprieve for it's Winter Classic before college football takes back Jan 1 (which it mysteriously abdicated for no good reason when it created the BCS marathon of games).

    Nameusr
    Nameusr

    @ the author, 'Things need to change up front" You mean you want Bettman gone, right? Trust me when I say this. I am no great fan of Gary Bettman, but to suggest he was the reason for the negotiations to go afoul is ludicrous. You need someone as arrogant and pigheaded as Gary Bettman negotiating with the NHLPA. You infer that they (NHL) should have compromised months ago the NHLPA. Quite frankly you sound like all the retired player analysts on the hockey broadcasts. Well let me help you with that. As the guy that pays for all these players, owners, and you, because quite frankly you ouldn't have a job without them, I don't trust or like Donald Fehr anymore then I like Gary Bettman. Furthermore as a fan I think the whole lot of them are no good. And as for the rest of this year, I have found new hobbies and interests. Firing Gary Bettmen would not, and will not change that. And I don't think I'm alone with that thought process!

    Stu Hackel
    Stu Hackel moderator

     @arrowe77 First of all, the quote is not mine, it's Tom Powers' so if you disagree with it, best to write to him. if you read more carefully, I think you'll see I used it as a reflection of how lots of angry fans think, right or wrong.

     

    Secondly, I think you'll find that most sports business professionals agree that higher salaries do not lead to higher ticket prices. Ticket prices are determined by what the fan will pay for them. The NHL told its fans prior to and after the last lockout that ticket prices would go down since the salaries went down 24 percent. They never went down. As for salaries getting out of hand, no, I don't think even the NHL said that. They just said they were paying too much, but they were in no way out of control the way they were prior to the last lockout, when players got over 70 percent of the revenue in salaries. This time, the NHL just wanted to get to 50-50 and only because that was what the NBA and NFL got in their most recent deals. There was never a claim that salaries were out of hand. The owners just wanted a bigger chunk of the revenue.

    Stu Hackel
    Stu Hackel moderator

     @Nameusr  Kindly don't put words in my mouth. If I wanted to say Gary Bettman should be fired, I'd say "Gary Bettman should be fired." I said there needs to be a different approach to labor relations. Now if owners agree and don't think Gary Bettman is the guy for that, they'll fire him. It's their call, not mine. And I firmly believe that whatever course of action Don Fehr took in this lockout, he did because the players were attacked by the owners, as their first offer made very clear. The result of the CBA couldn't bear this out more fully. The owners came after the players' share AND their contract rights, and Fehr's job was to minimize the damage, which he did. You may not like him or trust him, and that's your right, but don't distort what is so obviously factual.

    arrowe77
    arrowe77

    @Stu Hackel To be clear, my initial comment was a rant on the argumentation used. It wasn't a jab at Tom Powers specifically (because I heard & read that argumentation used by other people before) and I perfectly understood that you were quoting someone else, so you weren't a target at all of this rant. As for the high salary=high ticket prices, I realise the correlation isn't as direct as my first post made it seem. Generally speaking, if the cost of production of a business goes up, so will the prices of the product. Owners having a bigger share is no guarantee that the ticket won't go up but it factors in in a good way.

    seanmaguire1
    seanmaguire1

     @Stu Hackel  @arrowe77 "There was never a claim that salaries were out of hand. The owners just wanted a bigger chunk of the revenue."

     

     @arrowe77, you make a good point.  There is no tab to the fans.  They lost ZERO financially, while the owners, players, sponsors, networks, etc, were all losers in this. 

    @Stu Hackel  Your response is defensive and you're talking semantics.  If I'm an owner that wants more profit and my means of getting there is to reduce my employees (ie the players), salaries, then I believe that salaries are out of hand, or too high. Also, you fully endorsed Tom Powers' words as being "the best expression" of not knowing how furious fans will react.  His is a silly comment.  Since when do customers get a seat at the negotiation table of a business that serves them?  I doubt the average hockey fan is peeved that they were "not represented".  The vast majority are smart enough to know that this is an internal business matter.  Buying a hockey ticket is a simple business transaction. The team provides a product and the customer pays for it at will.  No product / no pay. Further, there are precedents from previous lockouts that foretell how things will shake out. The bottom line "This too shall pass".  Generally speaking, people will come back and there will be very few that actually boycott the league.

    cg.spaceshot
    cg.spaceshot

     @Stu Hackel  @cg.spaceshot Well to be fair... there will at least be the Sugar and Rose bowls, and in SOME years they will have national playoff significance.  I honestly have no idea why they stretched out the bowl season so much, but I do trust ratings and money have proved to be worth it despite the drip drip of games.

    Stu Hackel
    Stu Hackel moderator

     @seanmaguire1  Thanks for your expert diagnosis of my being defensive Dr. Macguire. But before you send me the bill, here's the facts to show just how wrong you are:  In the 04-05 lockout, the league said salaries were out of control, because they were. Players were getting 73 percent of all revenue. That was "out of hand" according to the league and they lost the season to get the deal they wanted and reduce players' share of HRR, which is a smaller pool of revenue than all revenue, went down to 54 percent, and in total revenue, it was down to about 51 percent. The success they had as a business brought the cap up to 57 percent but the floor also rose and that's what much of this was about, because the smaller revenue clubs had trouble getting to the floor.  So this time, by their own admission, what they sought was a "tweak" -- read the story above and see what Jon Miller of NBC was told by the league about what the NHL said they were trying to achieve during the lockout. A tweak. They were not seeking any sort of massive concession from the players like in '04-05 because things were not "out of hand."

     

    So the semantic argument is yours, not mine,. And on what basis do you conclude that I endorse what Tom Powers wrote? You are also making a semantic argument there, saying that because I called Powers words "the best expression" of fan anger that it was also my opinion. It was not. I don't need another person to express what I want to say. If you know how to follow a line of thought, you'd recognize that I was discussing fan anger as being one of the lockout damages, and trying to illustrate how many fans reacted to the lockout. I was not making any judgment on whether that reaction was justified, or right, or anything. It's just their visceral reaction and I thought Powers captured that sentiment. That's not an endorsement, just that he best expressed the anger.

     

    Now, as for your claim that you doubt the average hockey fan feels peeved that he wasn't represented, I don't know how you arrive at that conclusion. I see the comments and read my email daily, I monitor others in the media who are in contact with fans and I know a lot of fans myself and while they certainly do understand this was an internal squabble between the owners and players, there was also a good deal of frustration at how this lockout proceeded among fans and that they felt very helpless, especially considering -- as many said -- that it is their money that finances the league and teams.

     

    Perhaps you don't feel that way, which is fine, you're entitled to your feelings, but if so, I don't think you can speak for anyone but yourself.

    Stu Hackel
    Stu Hackel moderator

     @cg.spaceshot Yeah, that clarifies it for me. Starting in 2014 doesn't mean Jan 2014. Thanks for the correction.