When will next season start? Return to Play Negotiations

[nfotiu]

Originally Posted by Strange Brew

Unfortunately both sides have shown they’re willing to lose the audience and arguably this year this impact would be less than in the past.

But as reported elsewhere, ticking a year off the current US TV deal should be a motivator for both sides.

I don't know why the US TV deal is even significant. The cable sports landscape in the US has started a sharp decline. The current 200 million only accounts for 10-15% of current NHL TV revenue. 300 million would be the absolute tops they would get, but it wouldn't surprise me if they couldn't get much more than their current deal. Either way, I don't see that moving the needle at all.

The bigger concern is whether Sinclair is able to keep paying local TV deals for more than half of the American NHL cities it has the rights to.

[Sidney Crosby's Hat]

NBA is $2.6 billion per year, MLB is $1.5 billion and NFL is $7 billion (if you include DirecTV). I think that the NHL could get around $1 billion if they divide up their US TV deal to a number of partners like the other leagues do. Their national ratings aren't that much worse than the NBA and live sports is still at a premium as it's the one thing that would cause people to keep their cable.

Another factor is that the NHL's deal with BAM/Disney expires after this upcoming season (that's $100 million per year). I could see NBC or possibly ESPN/Disney packaging up the two together as one part of the deal.

When you consider the NHL's deal of $200 million per year was signed in 2010, a lot has changed since then. If the Disney web deal alone is worth $100 million, I could see it shaking down like this:

NBC - $300 million
ESPN/Disney - $500 million
One Other - $200 million

[nfotiu]

NBC SN regular season games average less than 300,000. NBA often gets 3+ million for their TNT games.

ESPN only has 75% of their subscribers they did in 2010, and NBC SN is likely about the same. Both are losing about 10% of their subscribers (and revenue) per year, and that will likely accelerate.

ESPN has laid off half their staff in the last couple years, and is cutting all over the place.

The whole carriage fee model of the cable sports networks is crashing, and I just don't see them paying anything near that.

I don't see that they can charge much money for a digital rights package unless they include in market local games, but that would undercut their local TV deals, and that is where the real money is (for now).

[iggy_oi]

Originally Posted by SuperMatt18

The league did sign the MOU but the situation back in July when that was signed compared to now has changed and North America is in a worse sport with COVID.

This question isn’t being asked to you specifically but there are a number of posters who keep stating that things have changed from what the league expected, so could anyone answer how 35%, 45%, 50%, 75% or any other percentage of the league’s usual expected revenue in preceding years calculated in July is materially different than the results of those same exact calculations in November?

That is what the league made their projections for, to decide what they could live with agreeing to. If they really had an issue with the no fans scenario they themselves accounted for they would have negotiated safeguards against that, much like the players did to account for revenues returning to normal quicker than expected. The league acknowledging this potential outcome and negotiating a deal based on that being one of many possible expectable outcomes is in essence the league agreeing to take on the liability of that outcome.

I can appreciate that the league isn’t happy about how it worked out, the same as the players would not have liked it if revenues bounced back this season while they were still deferring 20% of their salary(which I doubt the league would have threatened cancelling the season over to remedy because “things changed” but that’s a whole other debate), but I don’t buy their argument that running their business under the current circumstances which based on their actions worked for them in July doesn’t work now.

[Strange Brew]

Originally Posted by nfotiu

NBC SN regular season games average less than 300,000. NBA often gets 3+ million for their TNT games.

ESPN only has 75% of their subscribers they did in 2010, and NBC SN is likely about the same. Both are losing about 10% of their subscribers (and revenue) per year, and that will likely accelerate.

ESPN has laid off half their staff in the last couple years, and is cutting all over the place.

The whole carriage fee model of the cable sports networks is crashing, and I just don't see them paying anything near that.

I don't see that they can charge much money for a digital rights package unless they include in market local games, but that would undercut their local TV deals, and that is where the real money is (for now).

Is there any evidence that rights fees are actually decreasing? While viewership is on a decline, broadcasters seem to be very focused in securing the content from what I gather.

[nfotiu]

Originally Posted by Strange Brew

Is there any evidence that rights fees are actually decreasing? While viewership is on a decline, broadcasters seem to be very focused in securing the content from what I gather.

Where's the evidence the money is still there? The NFL doesn't count because they have ratings to back up their deals. I think reality hit late in 2018, when Disney couldn't find a buyer for all those Fox RSNs. Ad revenue for a national NHL TV package would be well less than 100 million and almost all of that would be from playoffs. I just don't see that the sports networks are going to be seeing the upside of adding NHL games, when all these cable sports networks are losing subscribers.

Cord cutting was already hitting critical mass around 2018/2019, and has picked up a lot of steam in COVID, and most of those subscribers are not going back. The NHL's timing is terrible on shopping for a new deal.

[Strange Brew]

Originally Posted by nfotiu

Where's the evidence the money is still there? The NFL doesn't count because they have ratings to back up their deals. I think reality hit late in 2018, when Disney couldn't find a buyer for all those Fox RSNs. Ad revenue for a national NHL TV package would be well less than 100 million and almost all of that would be from playoffs. I just don't see that the sports networks are going to be seeing the upside of adding NHL games, when all these cable sports networks are losing subscribers.

Cord cutting was already hitting critical mass around 2018/2019, and has picked up a lot of steam in COVID, and most of those subscribers are not going back. The NHL's timing is terrible on shopping for a new deal.

In June 2020 MLB and Turner extended their deal for 7 years at $470 million per year, up from $325 million.

https://www.cnbc.com/2020/06/16/mlb-...3-billion.html

Here's an article from Forbes from November indicating that TV rights deals are expected to "soar" with this quote from a sports media consultant.

"Close to 90% of the top-rated programs per year, pre-COVID-19 were live sports. When you combine the broadcast audiences with the reach of streaming and the hours avid sports fans engage with ancillary sports content, it’s hard for advertisers to find those valuable impressions elsewhere. With promising news about a COVID-19 vaccine on the way, sports will be the comeback story of 2021”.

https://www.forbes.com/sites/bradadg...h=14199d1648c2

[Bingo]

Originally Posted by iggy_oi

This question isn’t being asked to you specifically but there are a number of posters who keep stating that things have changed from what the league expected, so could anyone answer how 35%, 45%, 50%, 75% or any other percentage of the league’s usual expected revenue in preceding years calculated in July is materially different than the results of those same exact calculations in November?

That is what the league made their projections for, to decide what they could live with agreeing to. If they really had an issue with the no fans scenario they themselves accounted for they would have negotiated safeguards against that, much like the players did to account for revenues returning to normal quicker than expected. The league acknowledging this potential outcome and negotiating a deal based on that being one of many possible expectable outcomes is in essence the league agreeing to take on the liability of that outcome.

I can appreciate that the league isn’t happy about how it worked out, the same as the players would not have liked it if revenues bounced back this season while they were still deferring 20% of their salary(which I doubt the league would have threatened cancelling the season over to remedy because “things changed” but that’s a whole other debate), but I don’t buy their argument that running their business under the current circumstances which based on their actions worked for them in July doesn’t work now.

Forbes article on the NHL trying to change the deal

Link

Requesting amendments to a ratified agreement is a big deal and the NHL knows that. So to approach the Union for further concessions means the league is seeing something new and material that requires urgent attention. Indeed, the NHL believes that its financial assumptions have so dramatically changed such that this coming season is no longer financially viable within the four corners of the existing framework.

So what has changed for the league? It’s fans - or more precisely no fans. The NHL didn’t anticipate that it wouldn’t have fans in arenas this season. Most were expecting some return to normalcy in Fall of 2020. That has now been pushed to at least the Fall of 2021. So there was a belief fans would be back; they will not.

That substantially alters the financial outlook for the league. Under the existing framework, players will take home $1.6 billion in salaries. With league revenue hovering around $1.8 to $2 billion without fans in attendance, players would account for 80% of league revenue. That’s a far cry from the typical arrangement of a 50/50 split of league revenue.

The NHLPA, however, is banking on an additional $1 billion injection of revenue by way of some fans attending some of the games. If that is indeed the case, then the players would take home closer to 53% of league revenue, which presumably would be far more palatable for both sides. At this point, however, fans in the stands for this upcoming season does not seem too likely.

[Funkhouser]

I wonder if a streaming platform could swoop in and purchase the rights for more than the TV networks?

Live NHL on Amazon or Netflix...sign me up!

[Knut]

I want NHL on VR. Sit in the stands. Get beer spilled on you. Get in a fight with a rival fan.

[nfotiu]

Originally Posted by Strange Brew

In June 2020 MLB and Turner extended their deal for 7 years at $470 million per year, up from $325 million.

https://www.cnbc.com/2020/06/16/mlb-...3-billion.html

Here's an article from Forbes from November indicating that TV rights deals are expected to "soar" with this quote from a sports media consultant.

"Close to 90% of the top-rated programs per year, pre-COVID-19 were live sports. When you combine the broadcast audiences with the reach of streaming and the hours avid sports fans engage with ancillary sports content, it’s hard for advertisers to find those valuable impressions elsewhere. With promising news about a COVID-19 vaccine on the way, sports will be the comeback story of 2021”.

https://www.forbes.com/sites/bradadg...h=14199d1648c2

Turner still seems to be clinging to the old model, but that article also assumed ESPN was going to negotiate for the same increase, but are looking at ways to pare down their deal if they re-sign at all

https://awfulannouncing.com/espn/esp...day-games.html

The Forbes article is pretty speculative. It's all speculative I guess. I just don't think the NHL will get anywhere near the windfall they think they will from a US national TV deal. They just don't get the eyeballs to justify any substantial targeted ad revenue, and will fall victim to the crash of the subscriber fee model.

[iggy_oi]

Originally Posted by bingo

forbes article on the nhl trying to change the deal

link

While I don’t fault the author for having an “unpopular” take, even if I don’t agree with it.

https://twitter.com/user/status/1332719155955572737

I have a hard time taking their opinions seriously when they flip flop and defend the opposing position the very next day:

https://twitter.com/user/status/1333084955317067782

The author’s wishy washy approach aside, the article you linked does little to answer my question of what has actually changed. No fans in the buildings is not a change from the summer, the same as any other of the league’s projections would not have been considered as changes from the summer.

But if you’re interested in reading more of Macramalla’s Twitter feed he does explain a few other details relating to this matter that he neglected to include in his article. Things like how the league not going ahead with the season would probably be ruled an illegal lockout in court. Geez I wonder if the NHLPA would take the league to court for not honouring its members’ guaranteed contracts through an illegal action?

[dino7c]

People can talk ratings all they want but sports and news are the only things on TV that people actually watch the commercials...that is why they are in demand

[nfotiu]

Originally Posted by dino7c

People can talk ratings all they want but sports and news are the only things on TV that people actually watch the commercials...that is why they are in demand

Ad revenue for most cable sports (especially hockey) is insignificant. All these deals are based on subscriber fees.

[DeluxeMoustache]

Originally Posted by iggy_oi

While I don’t fault the author for having an “unpopular” take, even if I don’t agree with it.

https://twitter.com/user/status/1332719155955572737

I have a hard time taking their opinions seriously when they flip flop and defend the opposing position the very next day:

https://twitter.com/user/status/1333084955317067782

The author’s wishy washy approach aside, the article you linked does little to answer my question of what has actually changed. No fans in the buildings is not a change from the summer, the same as any other of the league’s projections would not have been considered as changes from the summer.

But if you’re interested in reading more of Macramalla’s Twitter feed he does explain a few other details relating to this matter that he neglected to include in his article. Things like how the league not going ahead with the season would probably be ruled an illegal lockout in court. Geez I wonder if the NHLPA would take the league to court for not honouring its members’ guaranteed contracts through an illegal action?

Most contracts I have seen, and I have to presume this one, have force majeure clauses

It is reasonable to believe that the parties can not reasonably forecast the near to mid term effects of the pandemic, so their obligations may well be relieved, temporarily, and they have to align on a workable interim solution that allows them to work together until circumstances reflect the assumed parameters providing context for the agreement

[dino7c]

Originally Posted by nfotiu

Ad revenue for most cable sports (especially hockey) is insignificant. All these deals are based on subscriber fees.

That is why they have mandatory breaks in the action for commercials...subscriber fees are also a major factor but come on now

[iggy_oi]

Originally Posted by DeluxeMoustache

Most contracts I have seen, and I have to presume this one, have force majeure clauses

It is reasonable to believe that the parties can not reasonably forecast the near to mid term effects of the pandemic, so their obligations may well be relieved, temporarily, and they have to align on a workable interim solution that allows them to work together until circumstances reflect the assumed parameters providing context for the agreement

The league literally did forecast this outcome.

[Jay Random]

Originally Posted by dino7c

That is why they have mandatory breaks in the action for commercials...subscriber fees are also a major factor but come on now

Some teams' broadcasts average only a few thousand viewers. Subscriber fees hit everyone who gets that channel in their cable package, whether they watch it or not. In such cases, those fees produce a lot more revenue than advertising does.

[CliffFletcher]

Why is the league surprised at the near to mid-term effects of the pandemic? Most health experts back when the CBA was signed said we would not be relaxing social distancing measures on large crowds until a vaccine was rolled out, likely in the spring-summer of 2021.

NHL owners no doubt wanted to believe some beneficial turn of events would change that. And motivated reasoning is a powerful thing. But I don’t know how anyone can be genuinely surprised that fans won’t be allowed to gather in arenas in Jan-Feb-Mar.

[Bingo]

There are two arguments here.

One is that the owners are wrong, the other that it doesn't matter.

I think two of you keep bringing the first one up to people that honestly don't care.

I would agree that owners screwed up ... it was either a bad assumption as that article states that they estimated they'd have some fans in the seats. Or they didn't and had a bad model, or misjudged the financial health of some of their teams.

But the bottom line is the numbers don't add up so they have to go back to the players.

Pretty simple isn't it?

And as an aside, I wouldn't assume someone is wishy washy because he sees both sides of this.