Future NHL free agents will cash in on TV deal

Nearly 500 regular season games will air in Canada as part of the blockbuster 12-year agreement between Rogers Communications and the NHL. (Tom Mihalek/AP)
November 27, 2013, 10:18 AM

Connor McDavid just got his driver’s licence, has to balance shaving with managing his acne and is living the not-so-glamorous life of a junior hockey player in Erie, Pa. But this, too, shall pass. And when it does, McDavid is going to be rich beyond any hockey player’s wildest dreams.

Well, check that. McDavid was already going to be rich. As the best hockey prospect to come along since Sidney Crosby, the 16-year-old from Newmarket, Ont., has been a lock as the No. 1 overall pick in the 2015 draft since he was playing minor midget as a 14-year-old.

But McDavid will have the good fortune of being the front man for the NHL’s all-platform, all-NHL, all-anywhere generation, and he’s going to be coming of age during a period of unprecedented league prosperity.

The announcement Monday of the landmark deal for Canadian broadcasting rights between Rogers Communications and the NHL will put $5.2 billion (about $4.7 billion USD) into the league over the next 12 years, beginning in 2014–15, or an average of $414 million a year. Add $200 million annually from the NHL’s U.S. TV deal with NBC, and the league’s television picture has never been rosier.

A year ago when the NHL locked out its players for three months the major point of conflict was how to share the league’s hockey-related revenue. The league wanted to cut the players’ share from 57 percent to 43 percent; the players wanted to hold firm.

They eventually settled at a 50-50 split, but both sides knew that every percentage point was worth fighting for because bigger prizes were yet to come, with the biggest prize of all being the new rights package for Canadian television.

“We knew that the Canadian rights were way undervalued,” said an NHLPA source. “We just didn’t know how much.”

Now everyone knows—the Canadian NHL rights were worth about $160 million annually; Monday’s deal more than doubled that. And it’s not just that dollar value that a company like Rogers is spending—it’s the commitment that comes with inking the largest television-rights deal in Canadian history.

There will be a lot of money, time and brain power invested in making hockey bigger, flashier and more culturally relevant than it already is—even if that would seem impossible in a place that seems saturated with hockey already.

Which means it’s become an amazing time to be a hockey player—maybe the best time in history as the league has its broadcasting rights locked up for the next decade at least and labour peace that could extend until 2022.

What kind of business will the NHL be by the time McDavid gets his first crack at free agency? It’s always tricky to speculate on these things, but it seems reasonable to presume that the NHL will grow at a rate at least consistent with the 7.2 percent pace they maintained from 2004–05 to 2011–12, if the value of their broadcast rights are any indication.

Just a percentage point or two more than that pace (league revenue grew at a 10-percent rate in the two years before the lockout) and the league could easily be a $5-billion business by the time McDavid is ready to negotiate his first free-agent contract.

If his team wanted to lock him up early—say the summer of 2019 (coincidentally the first opportunity the NHL/NHLPA have to opt out of their labour agreement) the salary cap could be approaching $90 million. Conceivably McDavid could be looking at an eight-year deal worth $144 million if he were to get the full 20 percent of the cap—the upper limit on individual player salaries.

No NHL player has ever signed for the full maximum as it prohibits a team from building around him, but even if McDavid signed a deal similar to Crosby—whose $8.7-million annual salary represented about 13 percent of the $66-million salary cap in 2011–12—he’ll be making about $12 million a year to start. That’s about $3 million more than Crosby will take home that season under the terms of the 12-year, $104-million extension Crosby started this year.

In fact there is probably a number of NHL players locked into long-term deals that might be regretting the security they have when compared to the seemingly ever-expanding pool of revenue they could be digging into if the new NHL universe unfolds according to Rogers’s multi-billion dollar bet.

Some of the richest players in the NHL might be underpaid in a few years as the growth of the game makes the 13-year, $124-million deal Alex Ovechkin is labouring under seem like servitude, and Shea Weber finds himself wondering what could have been a few years into his 14-year, $110-million contract and its average salary of $7.857 million.

While the ultimate winners might be those like McDavid who are coming into the league now, how about the likes of Steve Stamkos, Patrick Kane or Jonathan Toews? Each is a proven star. Each will be hitting free agency just as the new money washes into the system in waves. Each will earn more than enough to pay cable bills for all their friends.

The NHL’s new deal is heralded as being good for fans, who will get to watch more hockey more ways than ever seemed possible before. But those eyeballs are dollar signs and the NHL has gone from Mom and Pop to Daddy Warbucks.

It’s good to be a player.

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