Ticket Sales Problems Magnified in NHL

We have focused on lagging NFL ticket sales putting local games at risk of blackout, a recessionary indicator for what is hands-down the most profitable and popular sport in the country. Recent MLB numbers show significant year over year declines in two-thirds of the markets. Hidden behind these stories is the effect on hockey in the upcoming season.

Unlike MLB, the NBA, and especially the NFL, hockey does not have media contracts in excess of a billion dollars and as many big, long-term sponsorship deals as the three major leagues. Same concept applies at the local level – media deals are insignificant for most teams relative to the other sports. Without these guaranteed cash flows, teams rely for a higher percent of revenue on ticket sales, creating much greater exposure to the market.

Last week the Minnesota Wild, with the current longest sellout streak in market where hockey is popular, announced they still have tickets available for every game this year. Late last season the majority of teams announced ticket price freezes or even reductions, which may help stabilize sales but could hurt margins and will certainly not lead to increased revenues.

Given the ownership situations in Tampa Bay and Phoenix creating a glut of negative publicity in each of those markets, and nationally to an extent, the NHL could see a significant and potentially debilitating drop at the box office this season that puts many teams on alert. Someone will have to explain on Phoenix sold any tickets this off-season given the circumstances. Dallas has an owner facing bankruptcy and a lot of ticket money going towards Cowboys games, Florida has always been a bad hockey market, so its likely to be high on the list of discretionary spending cuts for struggling fans. Take the argument right to NY where unemployment is above the national average, Wall Street money is not at its previous levels, and the Yanks and Mets captured a larger share of sports spending this summer (with the Jets and Giants coming), hockey is at risk of getting squeezed.

Teams have responded by reducing cost structures, notably salaries have slightly retracted the past year or two, but likely not enough. With the CBA coming due it could be time for the league and its players to reevaluate the entire system, bring salaries further in-line with what the sport is relative to the big three (a lot smaller than they think), and look for new revenue streams (which they are trying to do online). More importantly they need to put teams into markets they can succeed in and correct the national media situation.

The NHL needs ESPN now. They need to make the NHL Network relevant. And they need to move teams into markets they can succeed in and then do a better job of selling tickets and promoting the league. Last week’s big preseason marketing push barely scratched the surface. Maybe doing it in NY and getting buried beneath the glut of news is not the best stage.

Something to keep an eye on the next few months.

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2 Responses

  1. The NHL needs ESPN, but ESPN has no need for the NHL. They got higher ratings during the lockout for timeslots formerly operated by NHL games.

    I think that Bettman should actually pursue a merger of business operations with the NBA, and negotiate TV and arena contracts together. I highly doubt that would ever happen, though.

    Another way to help the NHL is for Vs. to be more relevant. As you mentioned in your Vs. article, Comcast has the resources to make it a true competitor to ESPN. If I watched Vs. more often, I’d know when their NHL games were on.

    And back to NHL network. The fact that NHL on the Fly is not in HD is an insult. That alone would move mountains.

  2. Even if ESPN does not need it (technically they no longer “need” anything), the NHL actually needs them to push the brand and indirectly help sell tickets and increase media rights. Versus does well by the league, but pays a modest fee (relative to other leagues) and doesn’t move the needle in a meaningful way for other revenue sources.

    The NBA idea is creative, but I don’t think they have enough overlap – and the NBA probably does not want to associate with the NHL. Further, most NBA teams own the arena now, or at least want to.

    The NHL Network might as well not even exist, or go strictly online. Distribution and quality are poor – not a good mix.

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