Thursday, December 27, 2012

A Problem With A Shortened Season

We're hearing a lot of talk that a 48 game season is the lowest the NHL will go - any lower than that and the season should be canceled, according to the NHL, because it will be a hollow contest. Tyler Dellow wrote an interesting post about why this sounds like malarkey, bunkum, or whatever other olde tyme noun you want to apply to the nonsense which Gary Bettman and his cadre of non-fanatics are constantly spewing - in fact, NHL teams sort themselves out quick enough that a 28 game season + playoffs could be pretty representative.

However, what I'm not hearing about is how the money is going to get distributed in such a scenario.  In a normal season before this lockout, players got 57% of hockey related revenue.  After this lockout, presumably NHL players will be getting 50% + some percentage of Make Whole, which percentage they'll calculate by putting 1,000 monkeys in a room with 1,000 abacuses and seeing how the beads fall.  While we don't know the exact dollar amount that will be added to Make Whole in 2013 yet, we can be pretty sure that the players are going to end up with somewhere between 51 and 53% of HRR this year if there is a season.

As I understand it, players are typically paid relative to days on the roster - the NHL season has 186 days (or thereabouts), and a player on a two-way contract gets paid his NHL rate relative to the number of days he spends on the NHL roster.  Presumably, that's how the NHL will function this year.  Let's say in the doomsday scenario, we have a 28 game season - that'll probably be something like 56 to 60 days.  Players would then get around 1/3rd of their salary this season, with adjustments relative to the new revenue split + Make Whole.  Ah, but a 28 game season also includes the playoffs - last season, the regular season was 1230 games and 86 playoff games.  Playoff games are typically higher priced, but even if we assume that they are three times the price of a regular season game, that would still only account for 20% the amount pulled in by the regular season and 17% of overall gate revenues.  (These are giant estimates with huge error ranges, but bear with me).

Right here you might be saying 'Well, who cares?'  The NHL escrow system cares.  In a 28 game season, the NHL would have 420 total games and presumably around 86 playoff games, give or take 5 either way.  That's a much larger percentage of the games being playoff ones.  Now with a system where everything isn't tied together, this wouldn't make a difference, but with the stupidity of the escrow system that I've pointed out in previous posts, what revenues the New York Rangers generate in the playoffs affect how much the New York Islanders ultimately pay out to players.  If playoff revenue constitutes a large portion of hockey-related revenue, that means making the playoffs is more important than ever - if we assume that playoff tickets are twice the cost of regular season ones, playoff revenue would constitute around 29% of total gate revenues.   If we operate under the assumption that the lower revenue teams tend to be less successful than high revenue teams, this would put an undue burden on low revenue clubs - low revenue clubs play 14 home dates, and if they miss the playoffs, that's it for them.  But they'd have to pay out salaries equal to 50% + Make Whole of the total HRR, which might be significantly more than it would be in a normal season because of the disproportion of playoff games.  These teams may well lose less money by not playing at all.

Now maybe with the players voting for the 5% cap inflator this past off-season, the cap (and consequently every player's 'written' salary) is so high relative to what revenues will end up at that it won't matter, but I have to imagine that NHL teams have made this calculation, and I think the longer this goes on, the more the small-market teams will be up for a cancellation of the season and an attempt to break Fehr and the union rather than playing an extremely short season.

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