NATIONAL HOCKEY LEAGUE Experts: Cancel the season
The league will need years to repair the damage from the lockout.
PITTSBURGH (AP) -- The NHL would further alienate its diminishing fan base by trying to salvage a season that's ruined beyond repair, and is better off canceling the season as it tries to solve its labor mess, according to some well-known sports economists.
Negotiations between the league and its locked-out players union ended Thursday with no progress reported, creating speculation NHL commissioner Gary Bettman will cancel the 2004-05 season early next week. Bettman said a labor deal was needed by this weekend so each team could play a 28-game schedule -- about one-third as long as normal -- before the playoffs.
The league will find it difficult enough to win back fans that have seemed disinterested at best during the five-month lockout, the economists said, so asking them to support a shortened season played mostly in the springtime with watered-down rosters would be a huge mistake.
Some NHL players already have committed to playing full seasons with European teams and thus won't play in North America even if there is a season.
"They [NHL franchises] are going to be hurting when they come back -- they were hurting before the lockout, with a fan base that is thinning out," said Andrew Zimbalist, an economics professor at Smith College who studies economic trends in American sports. "They're alienating a large part of the small fan base they already have."
Neither side has budged from the positions they've long held, with team owners insisting they must have "cost certainty" -- a cap on player salaries -- and players strongly opposing it.
"They're playing with fire, which isn't a good idea for a sport that skates on ice," Zimbalist said.
Even if the NHL emerges from what would be the first full-season shutdown of a major North American pro sports league with a more favorable owner-friendly labor agreement, the analysts warn hockey will need years to repair the damage.
Franchise values, already the lowest of the four major pro team sports, will be appreciably diminished, they warn, and revenues likely will be lower because ticket prices may have to be lowered to win fans back.
Last fall, Forbes Magazine valued six franchises -- the Anaheim Mighty Ducks, Atlanta Thrashers, Edmonton Oilers, Buffalo Sabres, Pittsburgh Penguins and Carolina Hurricanes -- at barely one-tenth as much as the NFL's Washington Redskins, which are worth an estimated $1.1 billion.
"When you have labor strife like this, certainly that impacts value," said Jackie Dal Santo, a Chicago-based executive who evaluates franchises for Willamette Management Associates. "It's difficult to say it's a certain percentage, but it does have an overall impact on the whole league. A lot of NHL teams already filed for or were close to filing for bankruptcy."
The Penguins, Sabres and Ottawa Senators have declared bankruptcy since 1999, although all were later acquired by new owners who kept the clubs operating.
Roger Noll, an economics professor at Stanford University who studies sports business issues, questions if some small-market and Sun Belt franchises will survive longterm.
Within 10 years, he envisions a North American super league stripped of perhaps a dozen current franchises, which would fold or become minor-league clubs.
"The notion that the NHL can solve its problems with a salary cap is ludicrous," Noll said. "It will increase profits for the best teams, but it doesn't make the small-market teams viable."
The disparity of revenues across the league is greater than in any other sport, and there's no salary solution to that problem. Some teams have 25 times [the local TV revenue] of other teams. The only solution is to get rid of the small-market teams or subsidize them.
"Even if salaries were zero dollars per year, I question if some small-market teams would have enough revenue to cover costs. Blowing up the league is the likely outcome because the big-market teams don't see revenue sharing as being in their best interest," Noll said.