NHL Lockout: Small Market Teams Are the Biggest Loser of Them All

Jason CappellContributor IIIOctober 19, 2012

NEW YORK, NY - SEPTEMBER 13:  Don Fehr, executive director of the National Hockey League Players Association meets with the media at the Marriott Marquis Times Square on September 13, 2012 in New York City. Joining him from left to right is Ruslan Fedotenko, Henrik Lundqvist, Zdeno Chara and Sidney Crosby.  (Photo by Bruce Bennett/Getty Images)
Bruce Bennett/Getty Images

To the disappointment of hockey fans everywhere, the NHL season has unmercifully suffered yet another lockout. This marks the fourth work stoppage in the past 20 years.  It is difficult to understand why a lockout had to occur now, when the league has grown in both popularity and revenue in every season under the recently expired CBA.

The NHL had finally gained popularity among the four major American sports and restored financial success after a full season lost during the last lockout. This lockout could undo years of success. Fans will not be quick to return to a league that has twice in under a decade failed in negotiations.

Much like any dispute, there are many stakeholders involved; players, owners, fans, related businesses and quite arguably the biggest beneficiary of them all; junior hockey teams.

A solution that promotes the balance of the league should be pursued as opposed to one that protects the owners from making poor financial decisions. Thus, the new CBA should instill a sense of fairness and not be used as a tool of leverage.

For the most part American hockey teams don’t have the same extensive fan bases, as do Canadian teams. The Panthers, Lightning and Coyotes are examples of teams that suffer economically from a small fan base.

The Coyotes arguably have the most to lose from a lockout. The NHL assumed ownership of the franchise after they filed for bankruptcy in 2009; they have since been the subject of constant talk of relocation. 

In the event a lockout cancels a significant portion or all of the NHL season, the damage done to a struggling fan base such as Phoenix could be too devastating and permanent. Despite the Yote’s success and recent playoff run they have still found it difficult to bring in a new owner wishing to keep the team in the city.

It has been proven that expansion and relocation franchises from the 1990s and 2000s have the greatest difficulty selling tickets.

Even larger-market teams such as the Pittsburgh Penguins are hurt by an NHL lockout. The Penguins headlined their summer with a blockbuster trade involving the long-tenured Jordan Staal. In return, Pittsburgh acquired a mix of youth and experience, in the form of Brandon Sutter and Tomas Vokoun.

Heading into the season, the Pens were touted as heavy favorites to contend for the Stanley Cup. Yet all this hype is for nothing if the NHL closes the door on the entire season. In the event the season is cancelled, Pittsburgh natives would likely completely shift their attention and wallets away from hockey and direct even more of their focus to the Steelers.

A major issue in many NHL cities seems to be that there are more popular sports that the city hosts. For the most part in the U.S., hockey takes a back seat to football, basketball, and baseball.

According to Forbes Magazine, 18 of the 30 NHL teams lost money last season. With so many teams operating in the red, it is clear why owners want to impose a lockout in the first place.

Owners are in business first and foremost to make money; when they fail to do so it becomes a problem. An extended lockout keeps money out of these franchises' pockets. The NHL will lose out on merchandise sales, sponsorship opportunities, network television deals, which account for millions of dollars in lost revenues.

The Carolina Hurricanes have operated in the red in the past. This promted owner Peter Karmanos to seek new investors in order to bring in additional revenue. According to a 2009 Forbes report, the recession and crumbling house market hit their fan bases hard, which has still been detrimental to the franchise.

The Blues have been frequent money losers due to their change of ownership in 2005. The franchise took on $120 million in debt by purchasing the team and its arena.

As a result, the Blues relied on building a roster with cheap, younger players and missed the playoffs for the first three post-lockout years. During this time, the Blues plummeted to among the league's worst attendance records in 2005, 2006, and 2007.

Many of these small-market teams rely on larger-market visiting teams to play to create greater attendance. Take, for instance, the Florida Panthers. Having been to many Panthers games it is quite evident that their biggest draws are over the Christmas holidays when Florida hosts northeastern teams such as the Bruins, Canadians, Rangers, and Maple Leafs.

These greater gate numbers equate to greater revenues. If the NHL were to lockout past Christmas the Panthers would miss out on their highest revenue generating games.

Last year, the NHL landed a massive 10-year, $2 billion television contract with NBC. The majority of the league's coverage takes place after thanksgiving.

NBC will be paying the NHL regardless of whether or not a lockout takes place. However its tough to imagine NHL owners being confident in forfeiting a year of prime time coverage, particularly when they are striving to grow the game in the US. After all, it is the owners who are boldly asserting they aren’t making enough money, missing out on TV coverage would only aggravate this.

Thus, the longer the NHL lockout lasts the longer small-market teams remain in danger. As time passes, more money, fans and television ratings will be lost. It is in the NHL’s best interest to end the NHL lockout as soon as possible in a manner that will be helpful to these smaller market teams. 

Until then, hockey fans may be forced to take a greater interest in sports such as the NFL, NBA and MLB.