CBA: No cost certainty in TV deal

Sunday, January 25, 2004

NHL Commissioner Gary Bettman is pushing for "cost certainty" in the next Collective Bargaining Agreement with the NHLPA. But there isn't a lot certainty about the league's next TV deal these days.

Not only does the CBA run out after this season, so does the league's U.S. television contract with Disney/ABC/ESPN. And so far talks between the league and Disney have hit a standstill.

Television plays no role in the CBA, but it does play a role in the league's economics. And in essence that what the battle over the CBA will be all about -- economics.

This is a final year of the league's five-year, $600 million deal with ABC/ESPN. Bettman has said all along that he expects to get a comparable U.S. television deal this time around.

Not so fast, say the people at ABC/ESPN . Word has it that their offer for broadcast rights is about half the value of the current deal and is only for two years. They also want a deal, if there is one, worked out before September, when the league's current CBA is set to expire.

And to add insult to injury, ABC wants to cut back on it's already paltry NHL coverage. Reports indicate that ABC is only interested in carrying the Stanley Cup Finals and they want the Finals games they broadcast played on a Saturday afternoon.

It's shaping up to be another round of TV woes for the National Hockey League, which has struggled when it comes to national broadcast deals with the U.S. networks.

A key component are the ratings, which are down on ESPN so far this season. Ratings for games on ESPN2 are flat compared to last season. Ratings are up for ABC's Saturday games, but the ratings are still pretty unimpressive.

One of the reasons for that, some argue, is hockey doesn't translate well to television. Former CBS Sports president Neal Pilson says that has more to do with the fact that hockey isn't a well known sport in the United States.

"You have to appreciate that most Americans have never played the game of hockey. And if you have never played a sport, you have great difficulty appreciating the degree of skill it takes to do the little things, much less the big things. That is the principle reason why people say hockey doesn't translate for TV," Pilson told the Minneapolis Star-Tribune.

Compounding the problem is that ESPN now carries NBA basketball, pushing the NHL to a less prestigious place on the network schedule and a smaller role in the scheme of things.

"ESPN is in a position where nothing is a `must have.' We don't need to own everything," ABC/ESPN Sports president George Bodenheimer told the Sports Business Journal recently. "Currently we have the top four professional (team) sports. It's unlikely that can continue forever. This may be the end of one of them. Who knows? I think the contract will be renewed, but not at the rate we paid the last time."

Bodenheimer is also quoted in some press reports as simply saying, "We don't need hockey."

That's not good news for the NHL. One reason is money. If the ABC/ESPN offer holds and the league's U.S. national TV revenue would cost each team about $2 million a year. That's $60 million. It is far from catastrophic, but it is still significant considering the league claims losses of $300 million last season and is looking at a potential lockout next season.

It also plays a big role because the NFL, NBA and Major League Baseball all have big national TV contracts that add substantial revenue to the their coffers. The NHL doesn't and that forces them to rely more heavily on gate receipts for their big money.

It would also be a huge blow to a league that is hoping to expand its fan base through national television.

"We are an 86-year-old brand that had no consistent national television deal until the early 1990s," Jon Litner, NHL executive vice president and chief operating officer, told the Minneapolis Star-Tribune. "We have had strong regional interest because our fan base is so passionate, strong and consumer-oriented. The key is leveraging that regional strength nationally. Part of the importance for us in terms of national TV is obviously the revenue component. But marketing is very important as well to help spread the game and stretch the footprint."

The league has other options, but none of them as appealing at ABC/ESPN. Turner and Spike TV have been mentioned as possibilities, but the NHL would still suffer from a loss of exposure.

"Would any one of those networks step up to a level higher than ESPN?" Pilson told the Toronto Star. "That's hard to imagine."

That could mean that the league would have to give in a take the ABC/ESPN offer. ESPN seems to have made it clear that it could do without hockey. But can the NHL do without ESPN?

Previous stories:
The TV issue
TV and the price of expansion