Atomic Meatball Keeper
Join Date: Aug 2004
Location: Hamilton, Ontario
The Mc Rib
BREAKING THE NICE
By LARRY BROOKS
September 30, 2007 -- THE Garden's lawsuit against the NHL al leging antitrust vio lations and charging the league is acting as an "illegal cartel" by attempting to seize control of individual teams' marketing operations is not only an extraordinary measure unto itself, it represents the first public evidence of the schisms evolving within the Board of Governors and that are threatening Gary Bettman's reign as commissioner.
Make no mistake. After supporting Bettman and the Board on issues contrary to their own self-interests such as the hard salary cap, revenue sharing, and cancellation of the 2004-05 season, the Rangers are no longer amenable to ceding control of their business to Sixth Avenue, and neither are a growing number of the big-market teams who carry the league on their backs.
These clubs may support Bettman's lowest-common-denominator approach to competition on the ice, but they most certainly do not support Sixth Avenue's concept of parity when applied to individual bottom lines. Slap Shots has obtained a copy of a letter Garden CEO Jim Dolan sent by fax to the 29 other NHL owners Friday night. While affirming respect for the league Governors, Dolan leaves no doubt he not only is engaging the NHL in a philosophical battle, but is challenging the league's competence in generating revenues and growing the game.
"We know that many of us have sought the League's support on business matters from time to time, but we fundamentally object to forced consolidation of core club rights in the League's hands," Dolan wrote. "Key among our concerns has been the NHL's new media plan and the takeover of all club Web sites.
"We have repeatedly expressed our belief that individual clubs could achieve the same or better results by entering the new media business on their own terms, rather than being mandated to submit to a league-wide initiative. Moreover, the NHL's projection of revenues and implementation of this plan has been flawed - the June projected results were already $12.6 million behind plan for the first two years, even after reducing spending by $2.7 million."
Prior to the lockout, individual clubs accounted for 91 percent the NHL's total revenue for 2003-04. Now, after two seasons under a hard cap in which a defined percentage of the league's hockey-related revenues goes to the players, the NHL office generates 7 percent - 7 percent! - of total revenues through its media and merchandising deals, according to Dolan.
According to one source, the NHL projects revenue of merely $4 million through European enterprises this season, that compared to the approximately $125 million the NBA is believed to generate from its international endeavors. Despite a player base that's greater than 30 percent European, the NHL has failed to take any meaningful initiatives regarding globalization, just as it has failed to take any meaningful economic initiatives at all - other than redesigning its clubs' uniforms to capitalize on retail sales, that is.
"After sacrificing a season to set our player cost economics on a proper footing, we believe that the League continues to squander opportunities to improve our business and solidify and grow our fan base," Dolan wrote. "The proper focus for the league is the growth of interest in the game as a whole, both in North America and internationally - and we support that focus.
"The League cannot be permitted, however, to accumulate team assets in the League office, growing centralized revenues at the expense of the clubs. Hockey is a distinctly regional game - unlike other leagues, most of hockey's revenue is generated locally - 93 percent of our revenues as a league are local.
"The League's continued efforts to take over club rights hurt each of us by taking away our ability to be responsive to our fans and react to changing business opportunities or events."
The lawsuit and Dolan's letter both cite $200,000 in fines the Rangers were assessed ($100,000 per day) during the playoffs for implementing revenue-generating initiatives on their Web site including merchandise sales, virtual signage insertion, and limited in-marketing streaming of home games. The fines allegedly were imposed despite the Rangers' belief they'd been granted permission by Bettman to implement those programs on a test basis.
NHL deputy commissioner Bill Daly declined comment when contacted yesterday by Slap Shots via e-mail.
"We will [respond] at the appropriate time and in the appropriate forum," Daly wrote.
Slap Shots also has been told that while Bettman had been granted previous authority by the Board to proceed with the league's business plan, the commissioner has proceeded to implement and expand the plan without the necessary vote that would allow him to do so.
But Bettman, beginning with the lockout, is accustomed to getting his own way. He and the NHL have developed their own method of dealing with their partners. In a word, it's called "dictating."
The NHL is unable or unwilling to generate revenues on a national or international scale. As such, the league now intends to siphon unique club revenues into its Sixth Avenue pot, the better to divvy up, don't you see? Dolan sees. And he, the Garden and Rangers don't intend to stand for it. "We can no longer stand by idly and let the League continue to impair our rights, force us to ignore proper growth opportunities and attempt to make us submit to central control and cede our right to compete individually," Dolan wrote in closing. "I welcome the opportunity to discuss our position with you directly."