It’s almost November and there’s still no sign of hockey. Technically, I guess, the NHL’s last plan is for the season to start on January 1st, but even signs of that are probably going to fade.
While there was a lot of harmony between the players’ association and the league to complete the 2019-20 season in bubbles, moving ahead to 2020-21 creates new issues.
From what The Athletic’s Michael Russo wrote last week, the situation in hockey for 2020-21 sounds a lot like what the MLB and baseball union grappled with as they, contentiously, struggled and haggled and negotiated with about their own 2020 season.
Money will be at the forefront. As Russo wrote:
In July, to get a flat cap and for both sides to get a collective bargaining extension, the players agreed to defer 10 percent of their 2020-21 salaries and put another 20 percent (of the remaining 90 percent) into escrow. That means they’re expecting to play for 72 percent of their salaries. A union source said the players expect the owners to adhere to the terms of the CBA no matter how many games are played next season and whether there are fans or not.
But some teams that are bleeding may scoff at that.
While there are many complications on how a season could work or start, this is basically what it will boil down to. The players have made concessions and already know their contracts for this season are only going to pay 72% of what they signed for. That won’t garner a lot of fan sympathy since many normal folks are struggling on their own right now as it is, but any worker who has agreed to give up almost 30% of their money has made a pretty big commitment.
The issue will be how will the owners make money to justify starting a season.
Take the Penguins, for instance, a team we know well. As we’ve chronicled, this off-season has been a massive overhaul not only of what players are on the roster, but also in how much Pittsburgh will outlay in salary expenses. As of right now, CapFriendly estimates $73.7 million in actual salary cash on the books due to be paid next season, with a salary cap hit of $80.1 million, since players like Mike Matheson, Kasperi Kapanen, Tristan Jarry and Jared McCann all carry lower actual salaries in 2020-21 than they will in 2021-22 (and sometimes beyond, in Matheson’s case), which means they have a higher cap hit. The cap hit right now, for once, hasn’t been the primary concern in Pittsburgh, keeping actual expense down has been the priority.
72% of that $73.7m on the books would be $53 million dollars. Add in additional operating expenses that are associated with running a professional hockey team (support staff, coaches, trainers, doctors, arena costs, travel, lodging, equipment, etc) and the rule of thumb has been that overall team expenses are usually double just the player payroll.
Working some rough math, it’s not tough to see that NHL teams are going to have to generate $100+ million in revenue simply to break even in their normal operating costs.
Right now, in the midst of the pandemic, that feels absolutely untenable with locations unwilling and unable to host large indoor gatherings, let alone knowing how much support the paying customer would be willing to participate in, even if games get off the ground.
Thus, the weird and unknown stagnation of the past few weeks is bound to carry further. Can the league really start on January 1? Will anything change by February? Or this year at all?
So far that is the big question to consider, and it’s truly an unprecedented path with no right answer as to how to plan to move forward.
The league’s No. 2, Bill Daly, seems open to possibilities and the reality we’re all in, as reported by Russo.
“As with anything else, it’s all on the fly, right?” Daly said. “We have to work with the Players’ Association over what a return to play plan looks like for next year. And anything considered, talked about, discussed in the context of that ultimately has to be signed off on by both sides. Everybody has an interest in us having a season and awarding a Cup next year. And everybody will be pulling in the same direction in terms of getting there.”
The good news for hockey is that the acrimony seen in baseball between players and team owners hasn’t yet hit. Hockey has been willing to pull together, and their CBA extension/agreement already lays out the roadmap. The players have agreed to reduce the amount they will be paid on their guaranteed contracts.
Now the easy question with the impossible answer is just how to navigate getting another return to get the season off the ground.
In the past, the NHL has usually looked to the NBA and followed the lead of that league. However, their paths are now diverging for good. Though not yet finalized, basketball is reportedly targeting a return of December 22nd for a 72 game season. They haven’t solved the question the NHL has, but it’s because the NBA doesn’t have the same urgency of the question.
Why? It’s easy: television rights. The NBA’s national contract pays the league $2.7 billion per year (which, simple math shows is $90 million per team, assuming revenue is a nice easy chop). Even if it’s not that much, it’s still a significant amount of the overall operating costs in basketball that are covered by TV fees and makes planning to start a season at least palatable from the business side of the equation.
Massive television rights fees is also the reason the NFL has been able to operate practically as normal. Their gigantic TV contracts dwarfs even the NBA with each NFL team reportedly receiving a whopping $255 million per season.
In hockey, the TV landscape is much, much different. The NHL is in the final year of their NBC contract for 2020-21, it pays “only” $200 million total annually. This divides out to less than $7 million per NHL team. The NHL has a Canadian TV deal which provides $436 million more, but still is a fraction of the overall costs that hockey teams face even added in.
So unlike NBA and NFL, the NHL is in a less advantageous position for the situation we’re faced with now. The NHL can’t cover most or all of their costs to run a season based on just TV money alone, unlike the other big sports.
Thus, we’re stuck in this weird holding pattern with hockey with no firm plans to proceed or the ability to know just when the next season will begin. It’s a totally understandable position to be in given all the unknowns and frequently shifting timelines, but it also seems dire as days and weeks continue to tick away with no real finish line, besides now burning into what would normally be the time to have a season.