Future of the NHL in the COVID-19 pandemic is anything but certain
Oct 17, 2020
Golden Knights majority owner Bill Foley says the NHL needs to be playing in front of fans to make it financially. "Who knows if we’re going to be playing," Golden Knights owner Bill Foley said in a radio interview on Wednesday to KSHP in Las Vegas, giving a public voice to those persistent, private concerns circulating around the league. "If we aren’t playing in front of fans, a lot of teams can’t make it. That’s including us, to make a serious financial commitment to fund the team without playing in front of fans." The league staged a successful postseason in pandemic-resistant, fan-free bubbles in Toronto and Edmonton with the Tampa Bay Lightning lifting the Stanley Cup on Sept. 28 after COVID-19 ended the regular season on March 12. The league, heavily reliant on arena-generated revenue, has said it hopes to start next season on Jan. 1 and the 31 teams are currently navigating through the offseason, trying to squeeze players under a flat $81.5 million salary cap. But uncertainties abound, most importantly no guarantees fans can return to the arenas and the U.S.-Canada border remaining closed to non-essential travel. So, everything about the 2020-21 NHL season is in question, including whether it can be played at all. "I don’t think there’s any question that the NHL business model is — definitely more than any of the other major sports — dependent on the stadium revenue, the gate and the other stadium revenue," said sports economist Joel Maxcy, Drexel’s department head of sports business and professor of general business. "They just don’t have the same level of national TV contracts. In some cities, the regional sports contracts are pretty good for TV. But, in others, not so much. The bottom line is they have less TV revenue than the other leagues." Foley said he believed next season would not start until Feb. 1 and that it would be limited to "48-56" games. NHL Commissioner Gary Bettman has repeatedly said the league wants to play a full, 82-game season. Foley added he expects there to be an all-Canadian division for the seven teams north of the border and said the bubble model is financially unfeasible for the regular season. Subscribe to Sports Now newsletter
But all of this is contingent on having NHL arenas at, at least, 40-50% of capacity. "With 1,800 people in the arena?" Foley said. "That’s not enough." "It’s definitely a difficult situation," Maxcy said. "I think the problem for the league and, really, all the live sports situations, is that there’s just so much uncertainty about this upcoming season. They really are at the mercy of what happens with the pandemic in general, and then what the laws are and then what people’s attitudes are even if events are allowed." Still, Maxcy said he expects this to be a "short-term situation" with the NHL being able to bounce back — despite potentially "significant" financial losses next season — once the pandemic is ultimately contained. He said the NHL was able to mostly salvage last season from an economic standpoint — and survive a postseason without fans in the buildings — because it had already collected three quarters of its expected regular-season arena revenues. Starting a season with the arenas off-limits to fans, and with no timetable for when the doors might open, is a completely different financial quandary. The NHL has recovered economically once after losing an entire season as the owners’ lockout wiped out 2004-05. But that was a deliberate, long-term play on the owners’ part to finally implement a hard salary cap. "I think the distinction there is it was really a finance situation so you’re looking long-term and they could give up a season knowing they got a labor agreement that was very much in their favor," Maxcy said. "You could make financial calculations on that basis." "This time, you’re just not sure what they’ll come back to," Maxcy added. "So, by 2021-22, if things are back to so-called normal, you still might have a reluctance from fans to come back to the stadiums. There still may be issues. Maybe people have moved on to other things in terms of entertainment. So, I think there’s a lot more uncertainty this time around than then that they could forgo a season." Maxcy said the NHL’s future financial health is strongly tied to the national economic health in the U.S. and Canada. "A lot of what will happen with sports bouncing back depends on how quickly the economy bounces back," Maxcy said. "Sports is discretionary income. If the economy doesn’t bounce back quickly and people are struggling to make ends meet, pay the rent or buy groceries, that has to hurt sports."