How big a threat to the NHL is the KHL these days?

Friday September 6th, 2013

Luring stars like Alex Ovechkin away from the NHL won't be easy. (KHL Photo Agency/Getty Images)
KHL Photo Agency/Getty Images

The KHL has been in the news lately and not just because its sixth season began last week. Word rumbled to the Western Hemisphere that Dynamo Moscow would love to have Alex Ovechkin leave the Capitals and rejoin his old Russian club, not unlike the way Ilya Kovalchuk left the Devils this summer to sign with SKA St. Petersburg. Of course, Kovlahuck had New Jersey's blessing to go; the Caps are not likely to give theirs to Ovie, and GM George McPhee seems convinced that his captain wants to win the Stanley Cup in Washington.

Then there was the two-sided story about Caps prospect Evgeny Kuznetsov, who told Sovietsky Sport that he was willing to forgo his NHL career if he got a long-term contract from Traktor, his KHL team. He'd like the stability, he said. He was also quoted the same day by R-Sport as saying, "I've got another year on my Traktor contract, then I'd like to go to the NHL. It'll be my last year with Traktor. At least I'd like to think this is the last year and I'm going to the NHL."

And that's why NHL teams aren't drafting many young Russian players these days. It's hard to know what they'll end up doing.

There are all sorts of currents and undercurrents flowing around the KHL at the moment, not the least of which is the sense that the reconstituted Russian Superleague has put some distance between its early troubles and is now on firm footing, moving forward in an attempt to recapture the lost glory that was the great Soviet hockey era of the 1970s and 1980s, an era that came crashing down along with the Soviet political/economic system and the Berlin Wall.

It was nearly a quarter century ago that the Soviet Union first allowed players to depart from what was then called the Soviet Elite League and play for NHL clubs. Yes, there had been NHL players from the Socialist bloc countries -- the Stastny brothers defecting from then-Czechoslovakia among them -- but by 1989, the twin phenomenon of Premier Mikhail Gorbachov's glastnost policy and the cutting of the government's subsidies to the nation's sports teams triggered the legal arrival of Sergei Priakin in Calgary during the Flames' Stanley Cup run. He was followed in the fall by Sergei Makarov to the Flames, Vladimir Krutov and Igor Larionov (Vancouver Canucks), Sergei Starikov and Slava Fetisov (New Jersey Devils), Sergei Mylnikov (Quebec Nordiques) and Helmut Balderis (Minnesota North Stars). With Fetisov and Starikov on the cover, this historic group was featured in Sports Illustrated.

That marked the end of what might be called the Golden Age of hockey in Russia and the other Soviet Republics, an era in which players wearing the famously simple red and white CCCP sweater dominated the Olympics and other world tournaments like the Canada Cup and IIHF World Championships. The Soviet club teams that faced NHL competition often came out on top.

Soviet bureaucrats permitted these older players, who were considered to ne past their prime, to come west with the understanding that they would still compete internationally for their home country. But if they thought of these releases as something of a safety valve that would allow Russia to hold on to its younger talent, they were very wrong. Young Soviet stars like Alex Mogilny, Pavel Bure and Sergei Fedorov soon figured out ways to join NHL teams, and not long after, when the entire political structure of the USSR gave way, the levee broke and a flood of Eastern European players gushed into North American leagues.

With much of its best talent leaving, Russian hockey quickly eroded and, despite some periodic successes, was never quite the same, especially its top league. As Eric Reguly of The Globe and Mail described last November in an excellent piece on Russian hockey then and now, "Arenas fell apart for lack of maintenance and some doubled up as clothing and food markets -- the ultimate dishonour for a once-proud league. (KHL executive Ilya) Kochevrin estimates that two-thirds of the very best Russian players fled, most of them to NHL but also to leagues in Scandinavia and Germany, even little Croatia . . . Arenas turned into echo chambers. In the dark days of the late 1990s and into 2000 once-thrilling teams like Saint Petersburg could barely draw an audience. In a 12,000-seat arena, the team often had trouble drawing 500 spectators."

This is only part of the wreckage out of which the KHL arose, which includes tales of rival leagues, organized crime and gunned-down team executives all plot lines in those dark days, the early years of post-Soviet hockey.

It has been an oft-stated task of the KHL, the reconstituted Russian Super League, to now do all it can to keep its players home, plus attract quality non-Russians in the hope of rebuilding a circuit that can one day compete on even terms with the NHL. At first, that caused antagonism with the NHL as the two fought over players under contract who were jumping leagues. That has been ironed out, but the question remains: Just how far along kis the KHL on its journey to anything resembling parity with the NHL after six years?

The changing landscape

Blackhawks player development director Barry Smith has coached in the KHL.
Bruce Bennett/Getty Images

Some observers see a new and unmistakable momentum generated by the KHL rebounding from some well-known struggles like the deficiencies in medical care that were exposed by the 2008 death of Rangers prospect Alexei Cherepanov, the two franchises that went belly up, and the spendthrift practices that contributed to the 2011 Yaroslavl air crash that destroyed the Lokomotiv team. The New York Times, for example, published a story last week saying the KHL is "moving markedly closer to its goal of creating a competitive, international alternative to the National Hockey League," although Steven Lee Myers ' story also explained that the KHL's business model is hardly an optimal one for success.

Still, Myers cited as evidence this summer's splashy and shocking repatriation of Devils star Ilya Kovalchuk, KHL expansion to Vladivostok in the east and Zagreb -- the capital of Croatia -- in the west, plus the purchase of the legendary Finish club Jokerit by Russian businessmen with ties to Vladimir Putin, and the projection that the team will be in the KHL next season.

Not included in the Times story was the announcement of the KHL's one-year sponsorship deal with PepsiCo in the soft drink, energy drink and snack categories. Ilya Kochevrin, KHL Commerce and Communications Vice-President, called it "a breakthrough" and added, "The most important factor for us is that the market recognizes the KHL brand as a beneficial and attractive one for a partnership. Cooperation with PepsiCo, one of the biggest companies in the world, is an opportunity for us to show that the KHL attracts world-famous brands. This will be the first time we have worked with a company whose products are consumed on a worldwide scale."

In Zagreb, which is much closer to Rome than Moscow, people are apparently highly enthused about having a new KHL club and the PepsiCo deal. On the website KHL HR from that city,, Mislav Jantoljak wrote, "The financial importance of this deal is obvious, but the commercial impact behind an American brand taking on a hockey partnership with a league other than the NHL, a league that is basically threatening the NHL's status as the No1 hockey league in the world, has to feel slightly worrisome to Gary Bettman, commissioner of the National Hockey League....One thing is certain, as with the Kovalchuk NHL retirement and following SKA contract, the hockey landscape is continuing to change, more and more in KHL's favor."

Yes, the hockey landscape is continuing to change; it always changes. But "more and more in the KHL's favor?" That seems like a whopping overstatement.

The PepsiCo deal is certainly a milestone of sorts, but apart from the Kovalchuk signing, the caliber of NHL player who is migrating to the KHL at this time is along the lines of Ryan O'Byrne, who was never much more than a depth defenseman with the Colorado Avalanche. He recently joined HC Lev Praha.

If anyone can accurately compare the NHL and the KHL today from a competitive standpoint, it's Barry Smith. A long time NHL assistant and associate coach (most notably with the Pittsburgh Penguins for their early '90s Stanley Cups and, afterward, the Red Wings, including their Cup years of 1997, 1998 and 2002), Smith added to his already impressive international resume by taking the head job with the KHL's St. Petersburg SKA, where he had good success for three seasons, averaging more than 100 points each year. Now back in the NHL as Director of Player Development for the Chicagp Blackhawks, Smith says the KHL has a good complement of quality players, but only its better teams can be considered close to NHL level and how well they might fare in head-to-head competition would depend on where the game was played: on the larger 200x100-foot international sized ice surface or the 200x85 NHL sheet.

"It's better than the American League by far," Smith said by phone on Friday from the London, Ontario, rookie tournament. "You have a different correlation because of the ice size, it's a different type game. The top teams in the KHL could play the bottom teams in the NHL because they have the skill level and they have enough good players. The differential is going to be if you want to play on the big ice surface, the KHL is going to have the advantage against those (lesser NHL) teams and if you play on the small rink, the NHL is going to have an advantage."

NHL teams are wary of Russian players, though Dallas drafted Valeri Nichushkin (43) this year. (Getty)
KHL Photo Agency/Gety Images

Smith believes that there are "quite a few Russians over there that could play here. It's just you're never going to see them because now they're making money there. Nor are we drafting them because we're afraid of the situation. So it's hands off right now."

But he also said the rise of the KHL has had a destructive side. While very few top NHL players are going to the KHL, the better players who remained in other European countries have been enticed by the kind of money the KHL has offered. "They've hurt European hockey," Smith says. "The Swedish Elite Series (where Smith has also coached) is not that strong because they've lost their better players who have gone over to make money. Finland has had numerous players there. The Czech Republic and Slovakia have numerous players there, so they've hurt those leagues by having their top-level guys disappear."

Yet that money is the source of the KHL's biggest flaw: the league's business model. In his Globe and Mail story, Reguly wrote, "Most of Russian teams play in terrible stadiums that they do not own, depriving them of crucial revenue streams. The stadiums are too often small, dark, dirty, lack concessions and corporate boxes and generally are not alluring to fans. Tickets that cost $10 or less are too cheap to add to the bottom line . . . TV revenues are pathetic. The league runs KHLtv, a subscription channel. But it generates only about $4-million (U.S.) a year. That's a bucket of popcorn compared to the NHL, which last year signed a 10-year, $2-billion (U.S.) broadcast agreement with NBC. The deal averages out to $200-million (U.S.) a year."

Deeper in the Times story, Myers describes how most of the teams are not self-sufficient but dependent on corporate and governmental funding to survive.

"The league's greatest challenge is a business model still shaped by a Soviet legacy and an uneven transition to a market economy," he writes. "Tickets are comparatively inexpensive in Russia, as low as a few dollars, and many teams play in small or antiquated arenas they do not own or control, depriving them of added revenue from merchandise and concessions.

"Instead, the teams rely on the financing from owners or sponsors, which include Russia's biggest state-run or -controlled corporations, whose stakes and spending are far from transparent . . . Other teams . . . are owned in part or whole by regional governments . . .Teams' viability depends on how much money the companies and governments who control them can afford."

Myers adds that most teams are registered as nonprofits or even charities, "which is in many ways what they are. In today's Russia, companies are expected -- some people say coerced -- to provide extensive social services, including sports and cultural events, in the cities in which they operate."

Smith understands these shortcomings well. "No, they do not have a business model that makes sense to run a corporation in North America, because you can't just continually lose money without any sense of replenishing your finances," he says. "They have budgets which are proposed by different corporations or groups of companies and the budgets are spent. That's it. You have to pay this to have operating costs and they make very little money back because they don't have the marketing, sponsorship, the type of employees who will go out and hustle for this money. Plus the people themselves can't buy tickets over a certain price because the common Russian only makes so much money a month. The oligarchs, there are only so many of them.

"No one can run a team or organization as well as the NHL. Look at the people and experience we have. And we follow rules. They don't follow rules, they don't have the background, they don't have the history of large groups running anything so they're in sort of a no man's land."

That observation echoes what Reguly wrote in The Globe and Mail last November: "Some of Putin's own men admit that turning the KHL into a sustainable, fan-pleasing business will be arduous. Sergey Belyakov, deputy minister in the Russian ministry of economic development and an avid hockey player, thinks no one should expect miracles from the KHL in the near future. 'The NHL has almost 100 years of history, the KHL five years,' he says. "It is not a commercial business and we have no history of making money."

And Smith is curious whether the energy and resources currently pouring into the KHL might have a more temporary motivation. "I'm concerned about the KHL because all this build-up may be about Sochi -- and after Sochi, perhaps they won't put the same money into it, especially if they don't have a good showing. I know that the Belarusians are very angry because they didn't even qualify for the Olympics and they're wondering why they are spending all this money to be in the KHL."

There is little doubt that hockey remains very popular in Russia and the other countries into which the KHL has expanded. Fans will gladly support whatever is played in their towns although their economic circumstances can't float the boat. And that one-year deal with PepsiCo won't change the KHL's fiscal portrait, although it might be the beginning of something that will. But until that changes, it's hard to imagine the hockey landscape shifting more and more in the KHL's direction.

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