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Forbes rips Bettman a new a**hole


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Best. Article. Ever.

 

NEW YORK - Hockey is a sport whose lifeblood has always been the arena. Unlike football, baseball or basketball, hockey is not a made-for-TV spectacle. You have to go to a game to understand the sport--feel the cold, hear the clank of the puck, see the blood, calculate its speed.

 

It's a sport that has thrived on the passion and fury of local rivalries. Anyone who has ever been to a Rangers-Islanders contest can tell you that Yankees versus Red Sox is a tea party in comparison.

 

The unmatched intensity of going to a National Hockey League game explains why its buildings have been filled to a greater capacity than the other major team sports. And yet, the league does not get a rights fee from its national broadcasting deal with NBC, owned by General Electric (nyse: GE - news - people ). Instead, the NHL had a profit-sharing deal with NBC that guaranteed the league no income. The NHL's cable deal with ESPN, owned by The Walt Disney Co. (nyse: DIS - news - people ), would have paid the league a paltry $60 million for 40 regular season games--half its average payments for the previous five years. In short, hockey in the United States has always been more of a cult religion than a sport.

 

No more. Yesterday NHL Commissioner Gary Bettman, who had locked out the players in September just before the start of the 2004-2005 season, cancelled the remaining games as well as the Stanley Cup playoffs because he and Bob Goodenow, executive director of the players union, could not come to terms on a new collective bargaining agreement between the league's 30 team owners and the players. While the media has focused on the NHL's operating losses ($96 million last season) and player salaries (an average of $1.8 million), the truth of the matter is that league's bloody P&L statement is the symptom, not the disease.

 

Hockey's illness is Bettman, a basketball man who is a prodigy of NBA commissioner David Stern. Bettman and the owners he works for trashed the league's identity when they tried to turn a cash-rich, mom-and-pop league into a growth industry.

 

To reap big millions in expansion fees, and with the hopes of getting a lucrative national TV deal, the NHL expanded to

 

30 teams from 24 teams in the 1990s. Aside from the quick $80 million the owners got to divvy up when teams were sold, the expansion was a disaster. By putting franchises in places like Nashville and Atlanta--cities that think the Stanley Cup is some type of athletic supporter--Bettman destroyed the sport's economics.

 

For starters, the big national broadcasting deal never materialized. Why not? While the Super Bowl is usually viewed by 40% of U.S. homes that have televisions and the NBA finals by 17%, the Stanley Cup finals are viewed in just 4%. Bettman never understood--still doesn't understand--that hockey isn't basketball.

 

Also, apparently much to Bettman's surprise, people outside the Northeast and Midwest have little interest in hockey. Attendance for the new teams in places like Raleigh, North Carolina, Atlanta, Phoenix and Nashville has been very low. Finally, the rapid expansion of the league moved the supply-demand curve towards accelerating player salaries while at the same time diluting the talent pool. To meet the growing demand for players, team rosters were often filled with European skaters with only a fraction of the passion for the game that the Canadian players have. The NHL product lost some of its appeal to its rank and file.

 

Only someone (like the current commissioner) completely unfamiliar with what makes hockey great could not see the likely result: During the 1996-1997 season the 26 NHL teams had an average operating profit (in the sense of earnings before interest, taxes, depreciation and amortization) of $2.3 million. Last season they lost an average of $3.2 million. In November the average NHL team was worth $163 million. With $2.3 billion in league revenue wiped away forever, that figure is now down to $140 million. And big sponsors like MBNA (nyse: KRB - news - people ) and Anheuser-Busch (nyse: BUD - news - people ) may be lost forever.

 

If the NHL is ever to recover from the debacle created by Bettman, it must put in place a commissioner with hockey in his blood and tremendous integrity. Someone who the fans can identify with and trust. It needs someone who has enough guts to eliminate some teams in order to make the NHL stronger. Wayne Gretzky, anyone?

 

 

http://www.forbes.com/home/services/2005/0...0217hockey.html

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