American NHL Teams the Big Winners in New Canadian TV Deal

Jonathan WillisNHL National ColumnistNovember 26, 2013

EDMONTON, AB - SEPTEMBER 25:   Steve Tambellini, the new General Manager for the Edmonton Oilers, speaks to TSN suring a pre-season game against the Florida Panthers on September 25, 2008 at Rexall Place in Edmonton, Alberta, Canada.  (Photo by Andy Devlin/NHLI via Getty Images)
Andy Devlin/Getty Images

In April 2011, the NHL announced that it had agreed with NBC on a 10-year deal to broadcast hockey in the United States. The deal saw the league land roughly $200 million annually and was heralded as an end to the days of hockey being a second-class sport on American television. It was a big deal for U.S. teams.

But a new Canadian television deal, announced by the league on Tuesday morning, is even bigger news for clubs south of the border.

Why is it such a big deal?

For starters, because the new 12-year deal with Rogers Communications that the NHL revealed this morning is for huge money: $5.232 billion, more than double the total dollar commitment from NBC.

And thanks to the NHL’s policy of distributing centrally generated revenue (such as national television deals), every team in the United States gets a cut of that money.

WINNIPEG, CANADA - FEBRUARY 15: (L-R) Don Cherry and Ron MacLean of CBC's Hockey Night In Canada give the thumbs up during NHL action between the Winnipeg Jets and the Pittsburgh Penguins at the MTS Centre on February 15, 2013 in Winnipeg, Manitoba, Canad
Travis Golby/Getty Images

Of course, American hockey teams have always been given a share of Canadian national television revenues, but never has that share been so rich. Sports Business Journal's excellent Chris Botta reported that the national TV rights under the old deal were worth approximately $190 million, split between TSN, CBC and RDS.

As it turns out, the actual average yearly value of the new Canadian deal is more than $400 million. Rogers Sportsnet revealed that the deal between their network and the NHL gradually ramps up, “starting at just over $300 million next year then increasing gradually to more than $500 million in the final year.”

How much money does that mean for every NHL team? While all clubs get a share, that money isn’t divided evenly. TSN’s Darren Dreger reports that Canadian clubs will get a portion of those dollars off the top.

That means that what would have worked out to roughly $14.5 million per team will be disproportionately handed over to teams north of the border.  

NEW YORK - APRIL 20: Doug MacLean, President and General Manager of the Columbus Blue Jackets arrives at the Westin New York Hotel on April 20, 2005 in New York City. (Photo by Bruce Bennett/Getty Images)
Bruce Bennett/Getty Images

Still, the money is significant. Doug MacLean, the former general manager of the Columbus Blue Jackets and now a hockey analyst for Sportsnet, suggested on that channel’s Hockey Central that the money involved boils down to between $7 and $10 million per year for a team like Columbus.

If he’s right, that means American teams could earn more money off the Canadian deal than they do off the NHL’s U.S. national television agreement.

Naturally, the salary cap will be going up as a result of the deal, though the biggest increase likely won’t come for two years. The cap each season is based on revenues from the year before it, and as this deal doesn’t kick in until next year, that means the big spike (absent other factors) should land in the 2015-16 season.  

But even with the salary cap going up, it won’t go up the same amount that revenue does. The players and owners split dollars 50/50 after certain expenses are removed from the equation, so something like a $10 million per team increase in revenue will correspond with a cap increase south of $5 million.

Apr. 26, 2013; Glendale, AZ, USA; Towels sit on the seats at Arena prior to the game between the Phoenix Coyotes and the Colorado Avalanche. Mandatory Credit: Matt Kartozian-USA TODAY Sports
Matt Kartozian-USA TODAY Sports

That’s good news for all NHL owners, but especially so for small-market teams with narrow profit margins. For teams like the Phoenix Coyotes that are just barely hanging on, this new money is a godsend.