The economic future of the NHL is a big concern for the league's board of governors, who will convene on Monday.
Amid a global credit crunch, an undisclosed number of franchises with For Sale signs on the front lawn, and mounting economic pressures, the National Hockey League's Board of Governors will convene at the Tony Resort Hotel, The Breakers, in West Palm Beach on Monday for two days of meetings.
Although one governor perused his agenda this week and saw that only one of more than a dozen entries directly pertained to the economy, most governors reached prior to leaving for Florida agreed that the NHL economy will very likely hijack discussion during the two-day gathering.
Commissioner Gary Bettman frowns on individual governors speaking on the record to media prior to these meetings. Those reached by sportsnet.ca however, were nearly unanimous in their concern for the economic future of the league, for a myriad of reasons:
-- Last season, with the Canadian dollar at par or better against U.S. currency, Canadian teams ranked as six of the top seven revenue earners in the league. With the Canadian dollar down below 80 cents these days, that means a US$10.6 million-dollar hit in payroll expenses for the average Canadian team. It is a slam dunk that the salary cap will recede next year, with players looking at losing the entirety of their escrow payments this season.
-- Attendance projections set by individual teams in the spring of '08 were made before the economic downturn took hold. U.S. clubs rely more heavily on walk-up ticket sales than Canadian teams, which sell out regularly. With many U.S. clubs well behind their attendance projections, that means certain budget shortfalls.
-- Though most luxury suite and in-house advertising deals were sewn up before the economy turned, many of those deals are paid for in installments. There is fear that businesses which are suffering will begin -- or have already begun -- to pull out mid-contract.
-- Added to all of these economic hockey pressures is the fact that many owners' primary businesses are suffering. In Phoenix, owner Jerry Moyes is a trucking magnate. If his trucking interests suffer, will he be less willing to support a Coyotes team that lost $30 million again last season? In Montreal, owner George Gillett just took out a high-interest, $75-million personal loan, a sign of tight times. He continues to deny reports that the Canadiens, who carry a reported $240-million arena debt, are on the block for $400 million.
All of these concerns are referred to by Andrew Zimbalist, a sports economics professor at Smith College in Massachusetts, as a "multi-pronged financial assault" on the NHL.
"Hockey is the most vulnerable of the four major North American sports," Zimbalist said. "There are franchises in the southern States that have been shaky for a while. Perhaps the Islanders as well, in New York, Nashville, and a few other teams are on the precipice of financial vulnerability.
"There might be quite a number of owners in the coming months who could be see some financial (troubles)," he said, adding that the NHL's national U.S. TV deal with NBC expires after this season as well. "This is not a good year to be renegotiating that. I'm sure they were hoping for an upward trend. That's not going to happen."
It is unknown how many NHL teams might be for sale at the moment, but rumblings are that as many as five could be had. Again, as a secondary holding, NHL teams are becoming dispensable by owners whose primary businesses are struggling.
Like the housing market however, more teams for sale drive the price of each individual team down.
In Phoenix, president and COO Doug Moss reports, "We've sold 77,000 more tickets this year than last year at this time." But while the Coyotes will tell you that average attendance has risen from 13,600 last season to 14,700 so far this winter, a Thursday night visit by the Toronto Maple Leafs produced an estimated 8,000 actual bodies in the stands at Jobing.com Arena.
How much longer can the Coyotes last? The same questions are being asked by NHL insiders about operations in Atlanta, Nashville, and Florida.
Moyes bought the Coyotes for $127 million in 2001, and this fall Forbes Magazine valued the Coyotes at $142 million -- dead last among 30 NHL teams. The Coyotes have surely lost more than Moyes' purchase price since moving down from Winnipeg a dozen seasons ago.
There is no word on whether the NHL governors will discuss layoffs at head office, as other leagues have done, including the National Basketball Association.
"There are many parallels, and the NBA cut its office staff by 9 per cent," Zimbalist said. "But that league has never skated on the thin ice that the NHL has been skating on for some time now."