Canucks and Beyond

There's No Business Like NHL Business...

10/01/2007 at 3:28pm EDT

It’s definitely not a boring week in the hockey business when the very league we love—despite all the ways it drives us nuts—receives notification of a lawsuit filed against it by one of it’s own member teams, MSG and the New York Rangers.

The lawsuit alleges that the NHL monopolizes control over team promotion. The Rangers appear to be the only team left in the league that hasn’t handed over their website, as everyone else has followed the new standards. And that hasn’t sat well with the NHL:

The Garden says the NHL threatened last week to impose a $100,000 per-day fine, beginning today, until the Cablevision unit gave it “virtually complete control’’ over the Rangers’ Web site.

Unlike every other team in the league, MSG hasn’t taken this lying down, deciding to file a lawsuit in a U.S. District Court last week in order to stop the NHL’s “illegal cartel” from levying the fines and, ultimately, from taking control of the website, etc:

Calling the NHL “an illegal cartel,” MSG feels the league is making “unnecessary and disproportionate incursions’’ into the local broadcasting rights of teams. “The NHL has unreasonably restricted a team’s ability to distribute its own live games through the team’s Web site and/or the Web site of its local television holder,’’ according to the complaint. The Garden wants to bar the NHL from interfering in team-related businesses and isn’t seeking financial damages.

(“Illegal cartel”? Gotta love that. I figure that makes the NHL like our own personal Columbian drug cartel: they supply the hockey-crack we’re so hooked on… but no one with any common sense ever trusts their dealer as far as they can throw them…)

Anyway, here’s the thing: MSG may have every right to object to the NHL’s control over its website, and most particularly, over who controls the content of that site. The suggestion that the league has “unreasonably restricted” the team’s ability to distribute live games on their site in particular has got to be a red flag to hockey fans who are desperate to get more access, not less.

But is it that simple? Well, first of all, I haven’t got a clue what the legalese is between a team owner (like MSG) and the league itself. Like any franchise, there are always going to be necessary oversights from head office, keeping consistency in the business at all its “locations” by managing the product and its marketing to some extent.

And to be fair to the league, there are plenty of good reasons why they probably needed to assert their authority over the team websites in particular… some of them were a disaster prior to the change and have been much improved since; moreso than the NHL’s own website, even. Plus the NHL has been making small strides in how they sell themselves in general over the last 2 years.

In today’s BrandWeek, there’s a pretty insightful interview with the NHL’s John Collins (evp, marketing and sales) noting that the league needs to be marketed as a total entity much better, in order to take away the “niche sport” perception of advertisers:

BW: What marketing lessons were learned from the lockout that are now driving NHL growth?

JC: We are a $2.3 billion business, and a lot of that revenue is through the gates. We have 22 million people at our arenas every year. We have 53 million avid fans in North America. But the big insight we came to after the lockout is that our fans say they love hockey, but they don’t behave like they love hockey. They behave like a million fans of the New York Rangers, a million fans of the Chicago Blackhawks. The passion they have is at a local level, but that doesn’t translate to passion at a league level. If you are a fan of the NFL’s New York Giants, you’ll still watch Monday Night Football even if the Giants aren’t playing. You’ll watch the playoffs and Super Bowl even if the Giants don’t make it. But according to the traditional metrics that tell you about the health and vitality of broadcast ratings, we’re not able to scale at the national level of the NFL, MLB or Nascar. So we don’t feel like a $2.3 billion business; we feel like a $300 million business, like a niche sport like Major League Soccer or AVP [professional volleyball].

BW: How does that affect the NHL’s marketing partners?

JC: We have to prove to Pepsi, Anheuser-Busch, Reebok—all big corporate marketers in the U.S. and Canada—that we can get our 53 million fans to activate behind the sport not just at the club level but also at the league level. When we can do that, we can engage Madison Avenue and corporate Canada in terms of the value of the NHL as an entertainment and marketing platform. And they’ll spend more money behind us in marketing and advertising because we’ll demonstrate how we’ll sell more of their products.

I think the basis of the league’s efforts is well-founded, and probably a large part of the reason that the NHL wanted - even needed - to exert more control over the NHL as an overall brand. Whether they can do it or not, remains to be seen. (I’m not sure how possible it is to turn hockey fans into football fans of a type, that’s for sure.) But there is motivation to try—taking the league out of the perception that it is “niche” and increasing its national power.

But MSG has a point, too. They—and all individual teams, probably—know their market, their fans and their business better than the NHL does. If they can deliver the product better to their region without compromising the integrity of the league in general, they should be allowed to exercise more power than they’re being permitted at this time.

The whole situation is a clash between two drastically different business models. Where it goes from here, who knows.

Update 2:03pm ET:
For those that are interested, I just came across this little tidbit about the NFL’s websites, and their own marketing control issues:

It makes perfect sense when you have a penchant for control: the NFL manages its own digital operations, has its own cable network and flexes one of the most powerful licensing arms around. So why not create its own online ad network? The league is exploring just that, an ad net that would sell across all 32 team sites. [...]

It’s a complicated move. The NFL has to navigate between those two shoals, as well as manage conflicts between league and team sponsors. If successful though, the move could bring in significant revenue by adding national advertisers to the team sites. The sites also could make money from ads sold against NFL video that would be offered; teams producing their own video still could sell those ads.

The NFL’s effort to gain some control over its team sites is playing out against the backdrop of an NHL drama over a similar issue…

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