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The Bottom Line

from Mike Ozanian of Forbes,

More business is boosting National Hockey League team values but climbing player costs are eroding the sport’s profitability.

The average hockey team is now worth $240 million, 5% more than last year due to a 5% increase in revenue during the 2010-11 season, to an average of $103 million per team. The sport’s popularity on television (NBC’s broadcast of the Bridgestone NHL Winter Classic was the most-viewed NHL regular season game in 36 years with an average of 4.5 million watching during prime time) and online (average monthly unique visitors to NHL.com plus all 30 NHL team Web sites has increased to a record 22 million) is up, as is the revenue from those platforms.

Sponsorship and merchandise sales have also been increasing thanks to new deals, like the one with Tim Hortons that gives the quick-service donut chain title sponsorship of the 2012 NHL All-Star Game in January, and the extremely well done reality series 24/7 Penguins/Capitals: Road to the NHL on HBO that was a big hit. And the NHL recently extended its European reach with separate regional broadcast deals for U.K./Ireland, Czech Republic, Germany and Austria, among other new territories.

But margins are getting squeezed. During the 2010-11 season the league posted operating income (earnings before interest, taxes, depreciation and amortization) of $126 million, 21% lower than the previous year. Main reason: Player costs increased 11%, to $59 million. Last season 18 of the league’s 30 teams lost money even before they had to pay bank loans or write down assets, compared with 16 the prior year.

continued

Filed in: NHL Teams, NHL Talk, | KK Hockey | Permalink
 

Comments

Down River Dan's avatar

And so it begins…..the NHL whisper campaign making the case that the current bargaining aggrement is not sustainable and all the owners are going broke. Wake me when the lockout next season is over.

Posted by Down River Dan on 11/30/11 at 04:35 PM ET

Nathan's avatar

Player costs are up because HRR is up. The cap is tied to league revenue, and the players’ share of revenue is defined as a fixed percentage in the CBA. This is what the owners wanted…

Posted by Nathan from the scoresheet! on 11/30/11 at 05:04 PM ET

Avatar

By the design of the current CBA, the amount player costs went up cannot be more than the amount revenues went up.  If profit is lower, it must be other expenses, not player costs.

Posted by Kel on 11/30/11 at 07:10 PM ET

bezukov's avatar

Surprise, surprise, a conservative periodical throwing labor under the bus.  Shocking…

Posted by bezukov from the kids are alright. on 11/30/11 at 07:15 PM ET

Red Winger's avatar

Surprise, surprise, a paranoid liberal wink

Posted by Red Winger from Sault Ste Marie, MI on 11/30/11 at 07:57 PM ET

Savage Henry's avatar

Sigh.  I agree with Dan, sounds like somebody is laying the PR groundwork for the next work stoppage.

Posted by Savage Henry on 11/30/11 at 10:12 PM ET

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Really? Climbing player costs are the only important factor leading to eroding profitability? Not the economy, poor management decisions, but player costs limited by the last CBA, which was a near-complete win for the owners? Look, I dislike overpaid, underachieving players as much as the next fan, but those contracts aren’t the players’ fault. The owners had the chance to write the current CBA, thanks to NHLPA incompetence during the last negotiations, and now they want to blame climbing player costs for all their problems?

Posted by Ken on 12/01/11 at 12:25 AM ET

Avatar

Leave the Occupy crap somewhere else.  I see a lot of empty seats in a lot of Arenas that is not a good sign.  The NBA guys just smartened up.  They get paid a lot of money to play a kids game.  Guaranteed.  These guys only lose when they throw their money away.If the owner LOSES money, the players don’t chip in to help him or her out.

Posted by 13 user names on 12/01/11 at 03:33 AM ET

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Paul Kukla founded Kukla’s Korner in 2005 and the site has since become the must-read site on the ‘net for all the latest happenings around the NHL.

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