Revenue sharing's ugly truth
Here's the problem: Teams like the Nashville Predators, Florida Panthers and Phoenix Coyotes, which rely on revenue-sharing money, must generate "a year-to-year revenue growth rate in excess of the league average revenue growth rate," the CBA says.
Put simply, if the average NHL club increases revenue 6 per cent this season, and the Predators increase revenue 5 per cent, the club would lose 25 per cent, or about $3 million, of its revenue-sharing stipend of $11 million (all figures U.S.).
Teams that miss the league's target for revenue growth in a second straight season suffer a 40 per cent hit, and 50 per cent if it happens a third season in a row.A great deal of revenue growth these days in the NHL has been powered by the Canadian franchises, all six of which were on the giving end of revenue sharing after the 2006-07 season.
It's growth related to an increasing dollar value in this country, as well as new revenue streams in the form of pay per view television and new media, and really not something that can be duplicated in a place like Phoenix, where ticket sales are again down and the team on the ice, while overperforming, doesn't have a hope to make the playoffs this season.
A few owners have made it known in the past that the revenue sharing they receive is often the difference between breaking even and falling a few million dollars in the red, something that would only be exacerbated by this oft-overlooked article of the new CBA.
I've picked through revenue sharing stipulations before on this site, but it really is, as Westhead alludes, a tangled mess of legalese. Still, for reference sake, allow me to quote from the pertinent section, Article 49.3(d):
Beginning in the third League Year of this Agreement (the 2007-08 League Year), the eligibility of Clubs for a "full share" Distribution shall be conditioned on Club revenue performance standards ...
In the 2007-08 League Year, only those Clubs meeting the following criteria shall be eligible for a "full share" Distribution:That attendance marker rises to 14,000 per game (or the league average) for 2008-09.
(1) The Club is generating a year-to-year revenue growth rate in excess of the League average revenue growth rate (i.e., the Club's revenue growth rate from 2006-07 to 2007-08 is greater than the League average revenue growth rate from 2006-07 to 2007-08); and
(2) The Club is averaging paid attendance at or exceeding a level that is the lesser of either 13,125 per game (seventy-five (75) percent of 17,500) or the average League-wide paid attendance.
Nashville was the biggest drain on the revenue sharing pool in the league, drawing at least $11-million in 2006-07 (many reports had the figure at $14-million), and even then the team lost money according to outgoing owner Craig Leipold. Given the tumult with the Predators and the low turnout at the gate, it seems exceptionally unlikely the team will experience any revenue growth at all this season, and stand to see at least $3-million shaved off that handout figure in the off-season.
At least we know where that city's latest allowance will be going.