NHL Lockout: What Would Constitute Fair Revenue Sharing for Each Side?

Nicholas GossCorrespondent IDecember 11, 2012

Gary Bettman
Gary BettmanGary A. Vasquez-USA TODAY Sports

Revenue sharing will be a key component of the next CBA between the NHL and NHLPA, and even though it hasn't been publicly discussed very much over the last few weeks, it remains an important part of the league's future financial strength.

A new Forbes report detailing the revenue earned by all 30 franchises during the 2011-12 season has made it a little easier to determine how much the league needs revenue sharing to increase in the next agreement as well as which teams are most in need of the extra revenue.

The fair way to do revenue sharing is to take most—or even all—of the money in the revenue sharing pool from the owners' share of the hockey-related revenue earned each season.

How is that fair? Well, it was the owners who allowed the league to relocate or put expansion teams in Western and Southern U.S. markets, not the players.

The league has also failed to move many of these teams that are struggling financially, so if certain teams want more money from revenue sharing, it should be paid for by the owners.

If the league doesn't want to move struggling teams to better hockey markets, there's no excuse for the owners to refuse a higher revenue-sharing pool.

Let's take a look at all of the teams in non-traditional hockey markets and examine their revenue and profit (or lack thereof) from the 2011-12 season (all numbers via Forbes).

Team Revenue Operating Income
Florida Panthers $87 million $-12 million
Phoenix Coyotes $83 million $-20.6 million
Tampa Bay Lightning $88 million $-13.1 million
San Jose Sharks $101 million $-0.9 million
Carolina Hurricanes $85 million $-9.4 million
Nashville Predators $88 million $-3.4 million
Dallas Stars $100 million $3 million
Los Angeles Kings $120 million $1.8 million
Anaheim Ducks $91 million $-10.8 million

There were 13 teams that failed to make money last season, and seven of them are teams in non-traditional hockey markets listed above. With just under half of the league losing money, including many teams in Western and Southern markets, revenue sharing must be higher than ever before.

Since the NHL is earning record revenue, there's no reason to keep revenue sharing at the level that it was at last season. The players have wanted a pool of $250 million throughout the lockout, and this is a fair number given the state of the league.

If the league ultimately gets the NHLPA to agree to an immediate 50-50 split of hockey-related revenue, player contract term limits and a five percent salary variance, then the owners should pay for all of the revenue sharing.

It wouldn't be in the league's or the players' best interests to consider contraction as an option for struggling teams. This would eliminate teams and the total number of jobs for NHL players. More revenue sharing should always be considered before drastic measures such as contraction.

The hope is that league revenue continues to climb, and less teams need a large amount of revenue sharing in the future.

The NHL has a choice. It can either move teams to stronger hockey markets to improve their financial situation, or it can increase the revenue-sharing pool to provide the necessary financial assistance that struggling teams need.

Since the league has been largely unwilling to move teams from non-traditional hockey markets during Gary Bettman's tenure as commissioner, more revenue sharing, paid by the owners, is the best, and most fair, option.