The salary cap is headed for a big fall, not this year but next. By then, there could be a whole new way of thinking around the National Hockey League.
PALM BEACH -– There is a deadly cycle playing out in several American markets inside the National Hockey League, one that poses a simple question yet begs the impossible answer.
With no billion dollar TV deal like the other major leagues, the NHL has forged a ticket-driven economy. But there are teams that sell far too few tickets, for prices that are far too low.
There are huge blocks of open seats these days in Phoenix, in Florida, on Long Island, in Atlanta, in Nashville, in Columbus. More open spaces are creeping into the so-called good U.S. markets of Denver, Dallas, Detroit.
Where there is no demand for tickets, there is no pressing reason for someone to buy a season ticket or spend on lower bowl seats at the ticket window. In Phoenix last week, scalpers sold tickets to see the Toronto Maple Leafs for $15, not much more than the price of a cold beer when watching the Leafs play at home in Toronto.
There is too much supply and not enough demand.
And now, the American owner’s original business, which has been supporting the NHL “toy” for some years now, has been hit head on by a recession.
What next?
“You’ve got to give value to your customer. That’s Business 101,” reasoned Nashville governor David Poile, who knows well the model of which we speak. “It could be entertainment, it could be merchandise, it could be reconfiguring your building to what people can afford. You might just have to have a different model…”
Reconfiguring your building.
Did you catch that?
How do you create demand, when you have an 18,000 seat arena, but only 11,000 fans who show up on a given night?
Reconfigure your building.
How do you create a demand for tickets that allows you to charge in Phoenix what they’re charging in Calgary or Ottawa?
Reconfigure your building.
“We’ve lost a lot of money over the last number of years, and we’re continuing to lose money,” said Phoenix governor Doug Moss. “We don’t like losing money. Nobody does. But we think we’re heading in the right direction with this team.”
Rumours have persisted this season that the Coyotes are in dire financial straits.
“We haven’t missed payroll. We don’t anticipate missing payroll at all. We’re just losing money,” Moss said. “Our ticket sales are up, the team is playing better on the ice…”
How many season ticket subscribers do they Coyotes have?
“We’ve never revealed our season ticket base,” he said. “That’s a number that’s too low.”
Reconfigure your building.
That little nugget stacks up as a theme that permeated the board of governors meetings here this week. There is no corner too small to cut. No budget too untouchable to touch.
No line of thinking – you couldn’t possibly curtain off the upper reaches of an NHL arena, could you? – that can’t be re-thought.
On Monday commissioner Gary Bettman brought in two economists - nicknamed Dr. Doom and Dr. Gloom by Maple Leafs president and CEO Richard Peddie – who laid down the law, or their version of it.
On Tuesday the governors talked about how to apply that new way of thinking to the new NHL. One of the areas was travel costs, and how clubs can work together to minimize them.
“Every time you move that [team charter] plane, it costs thousands,” said Edmonton governor Pat Laforge. “When we go to New York, we have to play four teams there without moving that plane. When teams come out west, they have to play all three Western Canadian teams. Not play Edmonton and Vancouver, then come back later to play Calgary.”
How about the Oilers and Flames, or Canadiens and Senators, teaming up to save money on jet fuel? Or buying U.S. dollars together? How about buying 82 road games worth of hotel space together, rather than each team separately buying their 41-game road schedule?
How about back to back games, where a team plays two nights in a row in the same city to save costs of going there twice?
If Canadian governors are talking about saving a few bucks here and there, how do you think the guys in Columbus and Florida are thinking?
“Canada’s a very unique situation, period, full stop,” Ottawa’s Eugene Melnyk said. “Because it is our national game, that’s why the sense of optimism: I think that at the end of the day, people will go out to hockey games, they’ll continue to go to hockey games, their kids will go to hockey games, and we’re going to do I think very, very well.”
Not so much in the 24 markets south of the border.
“We’re going into unprecedented, uncharted waters,” said Detroit GM Ken Holland, whose organization is watching with much hope as the US government talks about bailing out the auto sector. “So to say I've got a game plan? I don't know how anybody could have a game plan. You don't know from week to week what's going on.
“I think the feeling was two years ago that the cap was increasing, the game was growing.”
The salary cap is headed for a big fall, not this year but next. By then, there could be a whole new way of thinking around the National Hockey League.
And perhaps even, a few less teams.
