NHL Needs Economic Reform To Survive: Why Cup Winners Are Still Losers

Cale LoneyCorrespondent IAugust 5, 2010

CHICAGO - MAY 03: Commissioner Gary Bettman of the National Hockey League speaks at a press conference before the Chicago Blackhawks take on the Vancouver Canucks in Game Two of the Western Conference Semifinals during the 2010 NHL Stanley Cup Playoffs at United Center on May 3, 2010 in Chicago, Illinois. (Photo by Jonathan Daniel/Getty Images)
Jonathan Daniel/Getty Images

This isn't a new phenomenon, plenty of NHL teams are losing money.

The only surprise is that the Stanley Cup Champions, the Chicago Blackhawks, are among the teams operating in the red. After an amazing season and playoffs, the Blackhawks have fallen short of breaking even despite the revenue from the playoffs.

According to The Chicago Tribune's Melissa Harris, the franchise ran out of cash several times throughout the season even while setting records in capacity attendance, merchandise sales, television ratings and sponsorship revenues.

Harris also stated that, although the Blackhawks are among the have-not teams in the NHL, Chicago is ineligible to receive revenue sharing due to the market size.

Adding insult to injury, Harris goes on to say that the organization had to give the NHL at least 50 percent of what the gate receipts would have been at the United Center during a regular season sell-out to account for their revenue from playoff home games.

This has two implications.

First, it automatically means that, to make money, teams have to raise the price of playoff tickets.

Secondly for some teams—Phoenix, Tampa, Atlanta, etc.—the balance of raising ticket prices vs. attendance could cause them to actually lose money depending on their arena deals.

For example, the NHL is a gate-driven league.

However, if the team in question does not own parking or concession rights (as some NHL teams don't), the playoffs generate significantly less revenue and this "50 percent NHL fee" could be very detrimental.

In a league where the champions are losing money and the second worst team is leading the league in profits by a significant margin, clearly more economic revisions are needed.

The bottom line is that teams need to be moved.

It is ugly, unpopular and a polarizing decision, but one that must be made. When one of the reasons a league cannot put a team in a market like Hamilton is because it would become a top five earner and cause an even greater cap increase, something needs to change.

It isn't fair to the people of Hamilton and, if it did occur, it isn't fair to teams like Tampa, Atlanta, the New York Islanders and others who have difficulties meeting the floor.

Teams only work in areas that already have the support for hockey needed in a gate-driven league.

Edmonton is always the Canadian market used to showcase the woes of the small market and how it even affects Canadian markets.

Oddly enough, Edmonton actually turned a profit last year despite multiple years of subpar playoff-less seasons. This proves that if the support is there, the money will follow.

Winnipeg, Seattle and Quebec City are potential markets with a strong hockey base that should be considered for relocation.

All cities would need refurbishments to their arenas or, in Quebec's case, a new arena (which is in progress). Seattle has proposed a $220 million refurbish while Winnipeg would easily find the funds to secure its arena for an NHL team.

Besides moving teams to more profitable markets, the NHL still needs to address its most pressing issue.

There will always be teams that can spend much more than others, but a system must be in place to equalize the spending. The current model is a great start but ultimately, through relocation and negotiations the NHL needs to change its economic model again or risk its dissolution.