Maybe during this current CBA, the supporters to relocate teams are the ones Offside? Let's take a further review!?

Say the NHL wakes up and decides overnight to become a fiscally sound business as much as possible for all 30 teams. It would be hard to think of another way for that to happen without many relocations out of the US south. Needless to say, the commissioner may be forced to resign or dramatically change course in such a situation, but that point is for another blog.

There is a worry in that the NHL has a history in (re)locating teams without much of a plan. Many teams have come and gone, and many more teams just keep relocating over time. The Phoenix Coyotes are a prime example not only where they sit today but also because the Jets were to move to the Twin Cities for almost a year before that plan fell apart late in the game and Phoenix was an afterthought turned into reality. Not so much a second choice to Minneapolis, as it was a landing strip for a Jet flying without fuel ( a.k.a. a new arena in Winnipeg).

So conceivably the NHL with this new sense of business acumen (work with me here), the bottom 7 teams by total team revenue would be relocated. Which cities they are from, it really doesn't matter but for the sake of discussion, let’s pull these names out of the hat:

Columbus, Atlanta, Miami, Phoenix, Nashville, Carolina and NY Islanders

and just as an example they move to:

Winnipeg, Hamilton, Quebec City, Toronto, Waterloo, Seattle and Houston.

Needless to say, these new cities generate a lot more revenue than the past 7 cities did collectively for two reasons. A "honeymoon" phase exists in new or re-established cities. And second, they are better hockey markets, full stop. So the next year the cap rises $5 million over the previous year in due course to the revenue growth.

Now it is conceivable that 2 of those 7 cities (say Winnipeg and Quebec City) are once again 2 of the smallest markets in the "new, new NHL", since the 7 who were even weaker still are now relocated to better hockey markets.

Under the current CBA, unless these two cities get revenue growth at or above the league percentage growth rate, year in and year out, the revenue sharing will be clawed back. This could be a disaster waiting for a relocated team.

And with the cap upped to potentially a $60 million ceiling and a $44 million floor, these two cities, although major league for the NHL to return to, will now be suddenly looked down upon as the two "weakest links".

Before relocation applications are made, the NHL has to decide right now,
“what is considered a "weak link" that needs to be relocated?" and
"what is considered the smallest NHL market worth protecting?”

Brian Burke made a very similar comment in the last year when the whole Save-The-Preds situation was ongoing. He could see the bigger picture that the league needs to address. Not just fire-fighting in each market, but which markets need support built-in to the CBA over the long term.

I suggest that the NHL look at revenue sharing for markets that reach a certain minimum threshold of revenue. If a city can pull down $75 million per year in revenue then it should receive its’ full share of revenue sharing, regardless of growth rates. At $80 million they receive an extra $1 million. At $90 million, the team receives an extra $500,000. Above $90 million, they receive no revenue sharing support.

Basing revenue sharing off of revenue growth is ludicrous for any league. These revenue growth rates aren’t sustainable in any league environment. Why? On-ice performance will fluctuate across the league every season. Some teams rise, as others fall. As teams fall, so does their revenues. Cutting back on revenue sharing just when a team has on-ice issues is like taking their 1st round draft pick away when they are at the bottom in the standings.

The NHL has a strong history in trying to help the new and the weak teams build up as fast as possible through the draft. Imagine the Stanley Cup winner also getting the first overall pick in that summer’s draft? Now that player costs are so much higher, the same philosophy should be true for total revenues by team.

And teams that have the top ten or fifteen numbers of TV households should pay into revenue sharing regardless of their revenue growth (or decay) rates. It stands to reason that the biggest markets received teams first and then received the lion’s share of expansion dollars, so they should also be responsible for the lion’s share of revenue sharing. The exact amount of revenue sharing dollars paid out would be based on the number of teams qualifying and which revenue bracket they fall into.

Now that the rates of revenue growth aren’t involved in team sales, all teams might as well maximize their revenues since they are on the hook to pay into revenue sharing and on the hook to maintain their $75 million threshold to receive revenue sharing. The more they make, the more each team keeps, all the while assuming that the players continue to get 54 to 57 cents out of every hockey related revenue dollar generated.

Another option for the NHL to consider: all playoff revenue would be put into a pot and the revenue sharing dollars would be drawn mostly from this pool. While this would hurt playoff bound teams, it would also be fairer to the big hockey markets, who would otherwise have to pay every year, even when they would have “down” years as well.

These CBA changes would have as good a likelihood to be accepted as any other. The players should be able to see their benefit as for the first time, player jobs on all 30 teams would be safeguarded, the players percentage of HRR is maintained, while the salary cap will continue to grow with increased revenue via the relocations. Player demands for a say in team relocations in effect become a non-issue as the NHL would then have a blueprint for all future relocations should a team dip below $75 million in total team revenue for a given number of years.

While it is likely that some push back will occur from those teams that are sacred cash cows or perennial playoff advancers, they are also currently paying heavily into revenue sharing, so little would be different between the current state and this proposed one. In fact, given several relocations, you could argue that less overall revenue sharing would be required with this new NHL model, allowing most wealthy teams to keep even more money in their own pockets. But in the end, the proposed changes to revenue sharing should be rubber-stamped by all parties for the good of the league nd for the good of each team.

In talking about the CBA, another issue must be mentioned, although it is separate from the relocation issue. Players wanting a cut of future expansion monies will be the most difficult issue to bargain upon. The media and fans can expect a huge fight over this with the players having little to offer relatively speaking to the owners for a slice of the expansion pie. The players will have to give back plenty in order for the owners to even consider making them full partners in the firm called the NHL. Even with givebacks like no more salary arbitration and limited free agency before the age of 30, the owners stand to lose way more money by giving the players even a slight percentage of future expansion cash. Besides, if the players want some expansion money, then they should be expected to take on risk of franchise failure which is the other side of the same metaphorical coin. As you can see, the players might be best to leave this issue off the table as only ill-will will be result.

Without this new league-wide understanding of revenue sharing and minimum market protection safeguards, given a relocation of several teams over the next 5+ years, Canadian and Manitoban hockey fans alike should be very careful what we wish for!

Until this new understanding occurs, the NHL's return to Canada (Winnipeg among others) may just in fact become a second nightmare for fans, players and NHL alike.

Are the relocation supporters or is the CBA Offside? It's your turn to give feedback.

Chris
Chair, Manitoba Mythbusters
ManitobaMythbusters.com