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A professional sports league doesn’t have two elongated work stoppages that cancel a season-and-a-half’s worth of games in an eight-year span if it has a viable business model.
Though the NHL’s new agreement goes a long way toward finding a middle ground that most can live with, it’s become pretty clear that the league cannot subsist and thrive in the long term without contraction.
The NHL’s problems almost begin and end with the league’s inability to land a viable television contract. According to Stanford sports economist Richard Noll, the NHL’s lack of centralized income would put teams at a loss even if every salary was zero. (h/t Forbes)
On paper, the NHL's $2 billion television deal sounds like a ton of money. Now prorate that over 10 years and you get $200 million per season. Once again, not a bad sum.
Divide that by 30 NHL teams. You come up with about $28.57 million. That’s how much the NHL will dole out to each of its franchises every season.
For comparison purposes, Major League Baseball, which signed its own new television contracts in 2012, makes right around $1.5 billion per year from Turner Sports, ESPN and Fox.
Per Noll, the only non-contraction solution to the NHL’s financial woes is to tax the wealthier clubs 40 percent or more on their gross income. Contraction may be the second-to-last thing owners from Toronto, Detroit, Boston, etc. want to see happen.
The last thing they want to see? The league siphoning half of their revenue and tossing it the Florida Panthers’ way.
That means the only long-term solution we have is contraction.
The NHL doesn’t need to contract swiftly. This would take years of market research, likely going back at least a decade, to see which teams are financially viable over the long-term.
Contraction may be a last-ditch effort, but it could be the only thing that keeps the league from another near-cancellation when the next collective bargaining agreement ends.