There's no business like No Buisness.

The NHL is in yet another lockout seven years after it lost a season.  Last time, the owners pretty much got everything they wanted, and the players got reduced salaries but the slight majority in HRR, Hockey Related Revenues.  Fast forward to this lockout, and the only thing the players ‘won’ last time is the sticking point for this lockout, HRR - if you don’t count the contract length, the 50’s era free agency rules, and the absence of arbitration.  Fans don’t seem to get why this lockout is taking so long, there is no easy answer as to why.  From a players standpoint, imagine your job, where every 7 years you hear that your employer is having financial troubles and the only way to fix it is for you, the employee, have to give back 25% of your salary, pay a portion of what’s left into escrow that you may never see again, then essentially cap what you are able to make for the next 7 years based on revenue, not margin, then have it taken away because margin is poor. (Holy run-on sentance batman!)  For the owners, well, maybe these metrics will help you figure it out.  They aren’t doing well and to be honest, I don’t know that they ever will.

In this piece I will divide the NHL teams into four “Eras” and take a 35,000 foot view how the teams from each era are doing financially and professionally.  The four eras as pretty easy to digest: “The original six” then the “Expansion Era” thirdly “The Merger Era” and finally the Clinton Era, er, I mean “Entitlement Era” teams for lack of a better term.  I will look at the teams from each era is: 1)Number of cups the team has overall, 2) the average annual operating income since the last lockout 3) number of playoff appearances the last seven years 4) and cups won the last ten seasons.  Teams bolded in black have relocated at least once since their inception.  The purpose is to show through playoff appearances and cups won the last few years how 'competitively relevant' each team is today coupled with how they are doing financially.  I consider a team 'competitively relevant' if they have made the playoffs 4 of the last 7 seasons.

 

One country deeply loves Hockey, the other country is pretty
much just  Facebook friends with it.

 

The Original Six – these teams were the foundation of the NHL from its popularly recoginized beginning in 1942.  The league went 25 years without expanding, lets take a look at how these storied franchises do today.

Orignal Six	Cups Won	Avg Operating income since 06		playoff app since 06		Cups last 10 yrs
Toronto Maple Leafs	13	$60 million	0		0
Montreal Canadiens	23	$35.7 million	5		0
Boston Bruins	6	$3 million	5		1
Chicago Black Hawks	4	$8 million	4		1
New York Rangers	4	$30.7 million	6		0
Detroit Red Wings	11	$15.4 million	7		2

Ok, not too many surprises here.  However, it’s worth noting the Bruins have had two money losing seasons since the last lockout and the Hawks had one – the year they WON the Stanley Cup.  No other original six team has had a money losing season since the last lockout.   The Maple Leafs seem to be the only team without any competitive relevance the last 7 years, and their team is literally an ATM for ownership.  No co-winkee-dink that these are also the six teams with the highest net worth.

The Expansion Era – This started in the 1967 season when the league doubled in size from 6 to 12 teams as the WHL (not WHA) was challenging to compete with the NHL.  It also saw a playoff format where a certain number of expansion teams were guaranteed to make the playoffs.  I also lump all the tumultuous 70’s era expansion in here as well. Teams seemed to move around often, and ownership groups only went a few seasons before moving to a different city.  It was in the 70’s that NHL used expansion to keep the WHA from taking market share.

Expansion Era	Cups Won	Avg Operating income since 06	playoff app since 06	Cups last 10 yrs
Los Angeles Kings	1	$3.2 million	3	1
Philadelphia Flyers	2	$4 million	6	0
Pittsburgh Penguins	3	$3.2 million	6	1
Dallas Stars	1	$8.7 million	3	0
St Louis Blues	0	(-$4.1 million)	2	0
Vancouver Canucks	0	$15.5 million	5	0
Buffalo Sabres	0	(-$4.6 million)	4	0
New Jersey Devils	3	(-$2.9 million)	6	1
Washington Capitals	0	(-S3.8 million)	5	0
New York Islanders	4	(-$7.9 million)	1	0
Calgary Flames	1	$2.3 million	4	0

 

About half these teams struggle financially today since the last lockout.  Almost all of the teams created to combat the WHA struggle financially to this day – if they still exist (Capitals, Islanders, Devils, Sabres) .  I’m surprised at how little operating income the Flyers generate being a traditionally competitive team.  I am also shocked at the amount of money Dallas makes in a non-traditional market.  They did lose money for the first time in 2011, which I attribute to missing the playoffs 3 straight years.  Of the first six expansion teams, 4 of the surviving franchises do ok with income, if you consider 4 million dollars a year a worthwhile return on a 200 million dollar investment (hello NBA!).  What really sticks out to me though is most of these teams are regularly competitive making the playoffs, and half the teams haven’t been profitable since the last lockout.

 

No NHL hockey makes even the most chipper fans sad.

 

The Merger Era – these were the four strongest teams when the WHA ceased operations and were (eventually) absorbed into the NHL.  Think the owners are babies today, check this out.  There is a case for fan pressure I guess.  Occupy Molson.

 

Merger Era	Cups Won	Avg Operating income since 06	playoff app since 06	Cups last 10 yrs
Edmonton Oilers	5	$11.2 million	1	0
Carolina Hurricanes	1	(-$5.8 million)	2	1
Phoenix Coyotes	0	(-$15 million)	3	0
Colorado Avalanche	2	$4.4 million	3	0

Here we see hockey start to struggle in non-traditional markets – not at the time of expansion, but after their relocation.  Hartford and Winnipeg relocated because of arenas, and Quebec relocated because they were tired of taking in Canadian revenue and paying salaries at a 20% premium in US dollars.  Edmonton weathered the storm, but only seems to win draft lotteries as of late, and makes good money now that the USD is devalued.  Not much competitive relevance here, no team with a 50% average of making the playoffs the last 7 seasons.  One Stanley Cup win in the last 10 years between the 4 teams.

The Clinton Era – Nobody really thought of the consequences of making it easy to get credit and a mortgage, I mean an NHL franchise.  Only being able to get an NHL franchise in a market where hockey is typically played was discriminatory!  Need 20% down before you can get a mortgage, discriminatory!  Early in this era we see surviving WHA franchises relocate. In the latter half of the era, hotbeds for hockey like Nashville and Miami get expansion teams.  Remember when Starbucks had a store on every corner?  Not so much anymore…

 

Clinton Era	Cups Won	Avg Operating income since 06	playoff app since 06	Cups last 10 yrs
San Jose Sharks	0	(-$3.3 million)	7	0
Tampa Bay Lightning	1	(-$1.9 million)	3	1
Ottawa Senators	0	$2.4 million	5	0
Anaheim Ducks	1	(-$0.25 million)	5	1
Florida Panthers	0	(-$8.1 million)	1	0
Nashville Predators	0	(-$5.0 million)	6	0
Atlanta Thrashers	0	See Winnipeg Jets	1	0
Winnipeg Jets	0	(-$5.5 million)	0	0
Minnesota Wild	0	(-$0.5 million)	2	0
Columbus Blue Jackets	0	(-$7.9 million)	1	0

 

No rocket surgery required to make conclusions here.  However, I am seeing a trend which I will discuss in the conclusion section below.  Two Stanley Cups have come from this group of teams, yet only 4 of these 9 teams have been competitively relevant the last 7 years.  Oh, only one team has made a profit since the last lockout and it's in Canada.  I bet this group of owners like things just the way they are and are in no way motivated to see a profitible return on their 100 million dollar investments.

Conclusions:  Looking over these metrics two things stick out to me, one of which I wasn’t expecting.  The surprise to me was winning doesn’t fix everything.  Toronto and San Jose are polar opposites in the realm of competitive relevance the last 7 years and Toronto rakes in piles of money; San Jose bathes in red ink.  New Jersey regularly competes for Stanley Cups and can’t make money.  Anaheim makes the playoffs, wins a cup, and can’t make a steady profit.  While Nashville seems to make the playoffs playing 'small ball' it can't make money.  It leaves those of us in Columbus with the depressing thought, "What if winning doesn't solve everything?"

The second thing that sticks out to me, and is really no surprise, is that NHL teams in cities like Miami, San Jose, Nashville, Phoenix, Northern California, Tampa Bay, Raleigh, NC; and Columbus, OH struggle to make money.  I don’t understand from a dollars and cents standpoint how these cities got a HOCKEY franchise (I’m am very happy that Columbus did though).  I guess expanding into these markets sounded like a good idea, so did opening a Rax franchise at one point in the 80’s. 

 15 teams have made a profit since the last lockout, 15 teams haven’t.  There has been no expansion since the last lockout and one team relocation.  There is no easy answer as to what it will take to end this lockout, but I’m fairly certain this won’t be the lockout to end all lockouts.  The players are tired of having to always give back to the owners.  The owners locked out the players, the players want an opportunity to get their lost money back - considering this will be the most money they will likely ever make.  The owners, well, the owners aren’t all on the same page.  Anyone who tells you they are all on the same page has the power to fine them $1 million bucks for saying otherwise.  It's kind of sad that one half of your league loses money playing hockey, the other half loses money by not playing hockey. 

 

While it sounds like I blame expansion, you have to expand in order to grow your business - that is for certain.  However, there has to be tangible demand and real underlying economic factors driving that growth and expansion.  Sadly, I don’t see either of those since the Clinton Era NHL expansion– and these metrics support that conclusion.  I for one wish this would get settled once and for all.  Writing about NHL lockouts is not very fun.

 

Speaking of Metrics, I have a huge crush on Emily Haines.