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To some the NHL missed a great opportunity in the 1980's to expand the game's popularity in the United States. And some believe when the league tried to increase its popularity in the 1990's, its efforts were misguided and laid the foundation for the league's current financial woes.
Financial woes that will be a key issue in the negotiations over a new Collective Bargaining Agreement.
To many people the early 1980's were an ideal time for the NHL to extend its popularity in the U.S. by taking the game to a national television audience. Not only would there be an increase in popularity, but an increase in revenue as well. There were several reasons the time seemed right.
Team USA's stunning upset of the Soviets and a gold medal at the 1980 Olympics in Lake Placid, New York was still fresh in the U.S. public's mind.
The early 80's saw the New York Islanders, once a league laughing stock, become the first U.S.-based dynasty in the NHL since the Detroit Red Wings of the 1950's.
And the early 80's saw the rise to prominence of a young man named Wayne Gretzky, who would go on to rewrite the hockey record books.
But then NHL President John Ziegler didn't see the point of trying to land a national TV contract in the U.S. Later that decade, Ziegler explained to an audience at the Empire Club in Toronto why the NHL had not pursued a deal with the major U.S. television networks.
"In the United States, we knew that we would not become a sport for the national networks. The people in the south and southwest don't want to watch hockey and, as a business, it would be bad for the networks," Ziegler told the audience.
Some though that was a mistake.
"Not having the games on TV [in the 1980's] was a detriment to growing our sport," a league official once told the Toronto Globe and Mail. "Unless your team was playing the Oilers, the sports fan didn't see Gretzky in the United States. It was a huge impediment and one that challenges us to this day."
The Ziegler regime thought the future wasn't in U.S. national TV, but in regional cable in the states. And part of the strategy was to increase it's regional reach and increase revenues through expansion. The theory went something like this. The league would expand revenues by collecting expansion fees for each new team. Those fees would provide immediate profits and, down the road, cable TV, possibly pay-for-view, would bring in the money of the future. Possibly $100 million in revenue for a playoff team.
The expansion kicked off in 1990. The NHL granted approval for George and Gordon Gund to sell the Minnesota North Stars in return for the rights to an expansion franchise in the Bay Area. Later that year the league announced new franchises in Ottawa and Tampa Bay.
The San Jose Sharks would enter the league in 1991-92 and the Ottawa Senators and Tampa Bay Lightning would start play in 1992-93. The Florida Panthers and Anaheim Mighty Ducks would enter the NHL in 1993-94.
But problems were starting to mount for Ziegler. The expansion was underway, but the league was still having TV problems in the U.S. The NHL almost started the 1991-92 season with no TV presence in the United States. The league was in a dispute over blackouts with SportsChannel America, which had carried NHL games the three previous seasons. At the last minute, the league agreed to a deal that would pay it $5 million for the season, or about one third the annual fee from the previous contract.
Many found the NHL's relationship with SportsChannel America, a company that linked together several regional companies, to be a mistake under the Ziegler regime.
In the late 1980's the league had made some inroads to a U.S. national audience through ESPN, which was carried in some 50 million to 60 million homes. But when the ESPN deal came up for renewal, Ziegler went with SportsChannel America. The reason? Money.
SportsChannel was offering $51 million over three years, more than double what ESPN had paid ($24 million) for the previous three years. But there was a problem. SportsChannel's audience reach was about a third of ESPN's and it wasn't even in some markets. Many considered it another set back in the U.S. market for the NHL.
The SportsChannel deal ended in 1992 and so did Ziegler's 15-year run as President of the NHL. He resigned after settling a ten-day strike by the players. The league returned to ESPN for another contract that would pay $80 million over five years.
After one year of Gil Stein running the league, the Chairman of the Board of NHL Governors, Bruce McNall, orchestrated the hiring of Gary Bettman as the first Commissioner of the National Hockey League.
With Bettman at the helm the league would go after a deal with a U.S. broadcast network. It would also see a further push into U.S. markets. Not through expansion, but through franchise relocations.
The Minnesota North Stars moved to Dallas for the 1993-94 season. In 1995-96 the Quebec Nordiques moved to Denver. The following season the Winnipeg Jets became the Phoenix Coyotes.
That season would also kick off the league's deal with the fledgling Fox Network, which was starting to become a major player in sports broadcasting. Fox, which had landed the NFL in 1994, would sign a five-year, $155 million dollar deal with the NHL that began in 1996.
And the push into the U.S. continued. In 1997-98 the Hartford Whalers became the Carolina Hurricanes. And the league announced another round of expansion. Hockey would return to Minnesota and Atlanta, and Nashville and Columbus would get franchises as well.
With the league set approach 30 teams, another U.S. TV deal came down. This time it was ABC, which along with ESPN and ESPN2 would pay $600 million over five years to broadcast NHL games in the U.S. starting in 1999.
Earlier this year Bettman said the expansion from 21 teams to 30 paid big dividends for the National Hockey League. It made it competitive in the U.S. national market, which was the plan all along.
"Expansion was intended to improve our footprint and make us a more prominent place on the national landscape in terms of media coverage and the like," Bettman said earlier this year. "It made us truly competitive. In 1990, we were in 11 U.S. markets and we were perceived to be regional, and now we're in 22 U.S. markets.
"We have unprecedented exposure and, in fact, we have unprecedented revenues. In this Collective Bargaining Agreement in the last decade we have managed to grow revenues from a little over $400 million to $2 billion dollars. So in some respects, the business side, as it relates to revenues, has never been stronger."
But critics say the NHL's expansion in the 1990's was misguided.
"The NHL in markets like Nashville, Atlanta, Tampa, Miami, Anaheim, Raleigh ... I could go on and on ... doesn't make any sense," said SportsBusinessNews.com publisher Howard Bloom during a chat session on USA Today's web site earlier this year. "When 'historians' look back at what happened to the National Hockey League they'll see a league in the 1990's that was driven by greed and utter lack of proper business acumen. The NHL expanded to 30 franchises first and foremost believed that expansion fees were a new form of revenue."
And critics say that so-called revenue played a role in what Bettman says is the league's big problem heading into negotiations with the NHLPA over a new Collective Bargaining Agreement-- escalating player salaries. That theory says expansion fees artificially elevated team revenues and owners used those revenues to spend money on players, which then drove up player salaries. In other words, more teams, along with more money, meant more competition for players.
"The strategy was to expand, each [expansion] team paid $80 million, and it went to the league and got distributed among the owners. As long as they brought in new teams, it was an easy way to get money. But it is inevitable when you have that many teams you are going to have competition for players and player salaries are going to go up," a former owner, who asked not to be identified, told the Washington Post earlier this year.
Couple that with the fact that all the expansion and foray into the U.S. did not produce the big television deal the league envisioned. The $120 million per year from ABC/ESPN was the biggest in league history, but it paled in comparison to other leagues.
"The miscalculation of expansion was a TV contract that would be more on par with other major sports," Jeff Citron, a sports attorney Toronto and former associate counsel to the NHL Players Association, told the Washington Post. "Chasing the pot of gold that was a national TV contract diluted the quality of the product."
And critics say the product suffered because the talent pool was diminished, increasing the number of less skilled players in the league. That would lead to stifling defensive hockey that now rules. Even one of the big proponents of expansion agrees the quality of game has suffered because of expansion.
"I loved the game with its stars. Unfortunately, what came with expansion is that teams need to win by taking away those stars. The 'star' becomes a defensive coaching system," said Bruce McNall, the former chair of the NHL board of Governors and former owner of the Los Angeles Kings. ""Could a Wayne Gretzky do today what he did back then? He'd have to dump and chase today. Where does today's game allow the stars to shine? "
And all this leads many to say the league needs more than just a new CBA. It's needs something else that begins with the letter "C." And it's something Bettman says isn't even on the league's radar screen.
More on that in our next report.
