The looming lockout casts a dark shadow over the NHL. The uncertain future of the 2012/2013 season affects everyone associated with the league: from players to owners, franchisers to sponsors, arena employees to fans. The lockout, which will be determined by midnight on Saturday night, could be the league’s fourth work stoppage since 1992. This “trend” is evident in other associations such as NFL, MBA, and even NBA and negatively impacts professional sports as a whole.
Why Will There Be A Lockout?
The prospect of a lockout has been looming for quite some time, as owners and players negotiate a new revenue split. Historically, the NHL has a large revenue gap between teams – some teams consistently lose money, few break even, and a handful of teams actually make profit. To assist in minimizing the revenue gap, the NHL has put into place “the player’s share”, a salary cap and floor to ensure that players receive a consistent percentage of NHL revenue. The player’s share began 2005 at 54% and climbed over the past 5 years to 57% in 2010. Owners are now asking players to cut their share of revenue from 57% to 43% (eventually modifying it to 46% later into negotiations). In a $3.3 billion industry, 46% isn’t a small amount. However, the players believe that their share should be higher, based on other league’s player shares. As it currently stands, the negotiations will more than likely end in a lockout.
Who Will be Affected By A Lockout?
The lockout will deeply impact the players and teams as they will be losing income until they can come to an agreement. Less obviously affected by the lockout will be Hockey-associated venues. Arenas, local restaurants and bars, NHL franchise stores, hockey broadcasters and more will take a huge revenue hit. In order to absorb the profit loss, these enterprises will be forced to cut costs, which could mean future job cuts. Dustin Costain, a bartender at the Loose Moose on Front Street, comments, “We really rely on sports around here. Without that, we’ll have to rely on concerts and random other stuff,” he said, adding the loss of business will deplete his personal income via tips. Another massively affected industry will be the NHL sponsors. These companies will not only suffer potential-income loss, but negative press. The NHL lockout is a highly negative event and being associated with such looks poorly on everyone involved.
The biggest impact may be irreparable damage to the game of hockey itself north and south of the border. The NHL has grown revenues to an estimated $3+ billion over the past seven years during turbulent global economic times. Core fans will remain true to game however the peripheral fans the NHL has coveted will likely find alternative entertainment options for how they spend their time and dollars.
Looking at the Bright Side
Even though the potential NHL lockout has multiple negative consequences, there is also a silver lining. With no NHL hockey games to attend, fans will want an alternative. OHL games will gain high TV views and ticket sales, thriving on their season monopoly in hockey. This increase in popularity will give sponsors a second chance to strike gold with hockey-related promotions. Other sports and arts and entertainment options may also be able to capitalize on the lockout as well. Sponsors may find new ways to invest their dollars to fill the void however, the NHL must be cognizant this if sponsors re-invest their dollars elsewhere … and those investments work, they may lose these investments for ever.
Why has the NHL Been Successful in the Past?
1. The NHL has created BIG EVENTS that reach beyond local coverage.
Previously, “all our marketing assets, all our communication assets, were inside our games,” stated John Collins COO of the NHL. “They were inside our arena, inside regional and national telecasts. We had no ability to break out beyond that and capture that casual, much broader sports fan environment.” In order to build excitement, the game needed to build at a national scale, to feed off events that were larger than the average NHL game. The genesis of the BIG EVENT branding campaign was born —seasons now begin with Face-Off, a live festival, followed by the Winter Classic which moves a game from the regular season schedule to an event where the game is played at a large venue such as a football or baseball stadium, where tickets are sold in venues that hold upwards of triple the capacity of hockey arenas and the game is played outdoors to remind fans of its heritage as an outdoor sport played by anyone with a pond or frozen lake, a few sticks, and something to slap around. The first Winter Classic was held in 2008 in front of a sell-out crowd of 71,217 and is now viewed by in excess of 4.5 million viewers.
2. The NHL has made hockey and its players more accessible.
Sports are built on storylines and stories need characters. The NHL is putting more players in front of the camera both in commercials and by making them more identifiable during games. The new NHL advertisement and the deal signed with HBO’s 24/7, a documentary series that follows athletes preparing for a big game, has allowed fans to go behind the curtain.
3. The NHL has made hockey more advertiser-friendly.
Sponsorship and broadcast revenue have increase significantly because the NHL has demonstrated that it could reach fans in a more strategic way.
4. The NHL has expanded Hockey’s Reach
In addition to CBC and TSN, NBC is now covering and promoting hockey within its other sports coverage, accomplishing what the NHL had long sought–a way to put its action in front of all sports fans.
The NHL’s rising profile has been positive BUT a lockout could seriously put these accomplishments in jeopardy and affect the growth of the game for the next 5-7 years.