NHL proposes expanded revenue sharing

NHL proposes expanded revenue sharing
August 1, 2012, 8:06 pm
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The NHL faces a differences in revenue unlike all major American sports except for the NBA.The disparity between the highest-grossing team -- the Maple Leafs -- and the lowest-grossing team -- the Islanders is more than 3-to-1, according to Forbes, helping the Maple Leafs post an operating income of more than 80 million while the Islanders lost 8.1 million in 2011.With a discrepancy as large as this, it comes as no surprise that with the NHL and the Players' Association continue to hash out a new collective bargaining agreement, the league has sought to expand revenue sharing.The NHL's current revenue-sharing system has faced criticism in the media for its convoluted format that makes it difficult for teams to predict whether they'll have to contribute to or receive from the revenue-sharing pool and if so, how much. The current system also excludes any team in a market of more than 2.5 million households from receiving funds in the revenue sharing. That prevents teams like the Islanders that generate little revenue despite playing in a large market from receiving any assistance to their bottom lines.For the Sharks, increased revenue sharing should make little difference. San Jose was precisely in the middle for revenue in 2011, the most recent year for which Forbes has data. The Sharks' revenue has steadily increased from 69 million in 2006 to a peak of 96 million last year.While expanded revenue sharing may minimally affect the Sharks, it could vastly change the finances of some of San Jose's Pacific Division foes. The Coyotes, Stars and Ducks all fall behind the Sharks in revenue, with Phoenix's 70 million in revenue the second-lowest figure in hockey. Increased revenue sharing could suck more out of the Kings, whose revenue of 101 million was 11th-most in 2011 and presumably will increase after Los Angeles' run to the Stanley Cup.The bigger impacts of the league's latest proposal for a new CBA on the Sharks would be from the altered distribution of hockey-related revenue. According to the Associated Press, the league's proposal to the players on July 13 called for lowering the share of hockey-related revenue given to the players from 57 percent to 46 percent.Despite the Sharks' 96 million in revenue, they still posted an operating loss of 7.8 million in 2011, their biggest loss since 2003. As San Jose's revenue has increased, so have its expenses, especially player expenses, which have nearly doubled since 2006. By lowering the percentage of hockey-related revenue given to the players, the league could limit the Sharks and other NHL franchises' player expenses and thereby help the 18 franchises that posted operating losses in 2011 float out of the red.