NHL lockout damage runs deep
By Stu Hackel
It's time for the damage assessment. After 113 days of lockout pugnacity, the Hockey Gods now look down upon the wreckage and shake their heads in wonderment and no small amount of disgust. Things were motoring along so well, never better: Record revenues, strong attendance, rising tune-in numbers, happy fans, eager sponsors and largely healthy franchise values.
The gods will eventually figure out who drove the bus into the ditch and how, but first they've got to get it out and running again.
“Our fans and sponsors are alienated, and this is hurting the game," Sabres goalie Ryan Miller said of the lockout in an email to James Mirtle of The Globe and Mail in November. "This process has more of the appearance of brand suicide than a negotiation.” The phrase "brand suicide" resonated with many and, while the league avoided death, it has serious self-inflicted wounds that are in need of healing.
There's lots to repair. Some things are gone for good, like the 2013 Winter Classic and all the promise it held on both sides of the border and especially for the city of Detroit. The league, the Red Wings and the TV networks may hope all can be recreated a year from now. Perhaps it can, perhaps not.
On the financial front, the owners sacrificed in the neighborhood of $1 billion in revenue to prosecute their grabbing an extra seven percent of the take from the players, and that cost the players nearly $830 million in pay. That money is gone, as is a percentage of their existing salaries going forward. The new split will make the owners whole again over time, well before the new CBA expires. How quickly they recoup their losses depends on how well the business does and that's a question we can't answer now. Economists and financial planners can do all sorts of growth projections, but there's no telling yet how badly the lockout has hurt fan interest market by market.
Most people assume there will be little drop-off for franchises in Canada, the four U.S. Original Six teams, and some of the other well-established and traditional hockey markets in the States -- Philadelphia, Pittsburgh, Washington, Minnesota, San Jose and Los Angeles, for example, where the Kings get to defend their Stanley Cup championship. It's less clear, this conventional wisdom goes, how the Sunbelt clubs will fare and how some established teams that have been sagging might come out of this. "In places where hockey was gasping for air, or was an afterthought, that’s where danger lies," writes Bruce Arthur in The National Post, and it well could be true, but each club has its own unique situation, its own craziness with which it must contend.
Will John Davidson's arrival soothe feelings and boost interest in Columbus, where fans were angry before the lockout? Will his departure alienate fans in St. Louis? Will the lockout slow the upswings that Tampa Bay, Florida and Nashville experienced or can they pick up where they left off? Will the lockout's resolution lead to a clarification of the ownership situations in New Jersey (where Jeff Vanderbeek has now taken sole control and looks for a new partner) and Phoenix/Glendale (where you never can predict what might happen next)? The Dallas Stars never rebounded from the lockout of 2004-05, but can they now with a solidified ownership situation? The Avalanche came out of the last lockout fine, but their gate has since declined. How will fans in Denver react? Will Long Islanders who are dismayed that their club will eventually move west to Brooklyn begin to abandon ship?
There's no way to know in advance and many of those answers depend on how well the clubs play in the upcoming truncated season, and that's going to be equally unpredictable.
Most significantly, there's no real way to gauge how a furious fan base league-wide will respond to the resumption of play. That's the first flashpoint of damage -- and you won't find a better expression of that than Tom Powers' scorching story in The St. Paul Pioneer Press. "Now that the millions and billions of dollars have been divvied up, the NHL will throw open the arena doors and expect everyday people to come back and fund the whole operation," he writes. "The real bosses, the ones who pay the bills by buying the tickets and the merchandise and by fueling the radio and TV ratings, were not represented in the negotiations. They were just handed the tab. So, again, anyone who blindly returns to the ticket window is a fool."
Yes, there are calls for boycotts and individual pledges from those who say they are done. If you read the comments section on this blog and many others, you know the reaction: They've sworn off the NHL forever. They'll watch minor pro, or college or junior hockey -- or no hockey at all. But those are just the sentiments we read. It's hazy, at best, how effective, broad or permanent any boycott will be. And even among the dissenters, despite their oaths, a portion of their anger at being treated shabbily was felt in the moment. A portion will be back at the first puck drop and it will be hard for others to stay away if their club gets off to a good start and keeps going into February and March.
"Hockey is more deeply embedded in the blood of its true fans – perhaps more so than any other sport," writes Drew Sharp of The Detroit Free Press, who is no less incensed than Powers. "They’ll pack most of the arenas when the abbreviated season begins on Jan. 19 despite an opening two weeks that will resemble a glorified exhibition season because the addiction’s so strong for a sport they so dearly cannot live without."
But Sharp identifies where the most critical damage among customers may be felt. "The NHL forfeited any hope of attracting any mainstream appeal with this 113-day lockout. The masses didn’t miss it. Not with the NFL, NBA, college football and college basketball filling the vacuum. There were likely those when word filtered down early this morning that the lockout had ended who responded,0 'What lockout?'”
That's of crucial importance because the casual fan is the target audience for the league's growth in the States. A league that takes its long-time fan for granted -- and this lockout was hardly the first illustration of that -- doesn't stand much chance of growing beyond those borders.
Then there's the situation among the NHL's sponsors. Kraft Canada cancelled its Hockeyville program with the league for 2013 and Molson Coors, noting a drop in sales, will reportedly ask0 the NHL for compensation on its $375 million sponsorship deal. It's unknown what other sponsors will do, but they can't be pleased. “The damage from this lockout is deep,” Brian Cooper, president of the Toronto sports management company S&E Sponsorship Group told Jeff Z. Klein of The New York Times. “From the research I saw and what I heard anecdotally, a lot of fans and sponsors may not re-engage this season. The league is going to have to slowly win back their hearts and minds.”
Easier said than done and even harder for attracting new business. "If I was a company being courted by the NHL today, or if I was advising a company being courted, I would be concerned," Michael Neuman, the managing partner at Scout Sports and Entertainment, the agency for Geico, told Chris Botta and Terry Lefton of the Sports Business Journal in November. The current commissioner has three work stoppages under his belt."
NBC, which made a sizable investment in the NHL, giving it better exposure than it has ever enjoyed on U.S. television, wasn't overjoyed with the lockout, either. "It's been very challenging and very frustrating," Jon Miller, NBC Sports Network's president of programming told Chad Finn of The Boston Globe over the holidays. "We never had any indication that this situation with the NHL was going to last until January. It was always our understanding that this was going to be a tweak and a fix."
It wasn't. It dragged on and was far more combative than most believed it would be (not Red Light, however) and the antagonism between the owners and the players is yet another area that reflects serious damage that's in need of rehabilitation. It's something we discussed last week, writing "When this lockout ends, the time will have come for the owners to contemplate charting a new course in the way they deal with their players. No doubt the owners had some problems with this last CBA, but their way of fixing things doesn’t work."
I'm not talking here only about the lack of civility that accompanied the negotiations, although the character assassinations that flew in both directions certainly didn't help expedite the agreement. I'm not even just referring to underhanded maneuvers like changing documents after they had been negotiated. I'm talking about the fact that in the post-Alan Eagleson era, the NHL cannot conclude a CBA without a work stoppage, and the last three lockouts, especially -- all of which have been related to the salary cap -- have given this league a terrible reputation even among its own fans and business partners.
Unless things change on that front -- and change in a big way -- whatever monetary and image gains are made over the course of the new CBA will again be endangered. Because, despite all the resolve and rancor that went into this latest agreement, there is nothing about it that guarantees or even encourages us to believe that we won't find ourselves watching the carnage again eight years from now. If that happens, if those who run this league have learned nothing from the most hostile and perhaps most costly lockout we've seen yet, even with a "corrected" CBA, it will have been even more of a colossal waste of time than it was.
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