Revenue Sharing, Playoffs, and the Nashville Predators

Christian Petersen

James Mirtle of the Globe and Mail posted a concise overview of the NHL revenue sharing situation, and just why the players are so strongly invested in seeing it increased under a new Collective Bargaining Agreement. If they succeed, the Nashville Predators should be a prime beneficiary, in more ways than one...

Players Want More Money in the Pot, and So Should Nashville

The easiest point to grab onto is that the NHLPA wants to see an increase in the overall level of revenue sharing, $260 million as compared to $150 million from last season. The owners have proposed going up to $200 million, but just adding $50 million may not make much of a difference to teams which currently receive a handout, because it seems very likely that new teams will be added to the mix such as the Dallas Stars, New York Islanders, New Jersey Devils, and Anaheim Ducks.

Under the now-expired CBA, teams in the largest media markets were excluded from receiving revenue sharing funds, but that restriction is likely to be done away with. So if the owners simply toss $50 million more into the pot, the bulk of that could get soaked up by the four teams mentioned above, leaving the current beneficiaries right where they were before.

The High Cost of Making the Playoffs

Mirtle then goes on to explain how the funding model which generates those revenue sharing funds is also open to debate, and this is where things get interesting for a team like the Nashville Predators:

If you look at the details of the NHL's last proposal, it spells out that "at least 50% of the revenue sharing pool will be funded by the Top 10 revenue grossing teams."

What's interesting is that it then goes onto say that "the remainder of the revenue sharing pool will be funded from league- and playoff-generated revenues," which is similar to how this part of the agreement functioned in the last CBA.

What the players' side doesn't like about this is that you run into a situation where a team like Phoenix, which loses a bundle, has to contribute more and more money to the revenue sharing pool when it does well on the ice.

--- James Mirtle, Globe & Mail

The way this worked under the 2005 CBA was that teams would calculate a value for a "theoretical, fully-priced, sold-out regular season game" for that season, and depending on where your team ranks in revenues earned for that season, you would pay a percentage of that figure for each home game held during the playoffs.

Under this model, a Top 10 revenue earner would pay 50% of that figure for each home game, a Middle 10 team would pay 40%, and a Bottom 10 (such as the Preds assuredly are) would pay 30%. Based on ticket sales information I've received from the Metro Sports Authority, I'd put a rough estimate of $900,000 for such a theoretical sold-out game (there was a game last year which netted $886K after taxes & fees, with about 333 tickets "comped").

Based on that figure, the Preds had to pay about $1.35 million (5 home games x $900K x 30%) into the revenue sharing pool based on their playoff success, making for a significant financial headwind for a team trying to push past the break-even point with a post-season run.

If the lower-revenue teams were exempted from having to make those payments into the fund, where might that money come from? Let's get back to Mirtle:

How would this be fixed? Well what Fehr is arguing in those meetings this week is that all that new money to the owners that's generated by cutting the players' share from 57 to 50 per cent should be used on this program.

The rough math on how much that is? Just take 7 per cent of last year's $3.3-billion ($230-million) and you've got an idea how much more the owners may be putting into their jeans each season in a new agreement.

So, the NHL wants to increase revenue sharing by $50-million but take roughly $230-million from the players in doing so?

And that figure rises as league revenues do.

You see the problem.

This has been a tenet of the NHLPA's position all along - that if they are going to give back on salary, much of that money should go towards revenue sharing, and help the financially struggling teams. They've been willing to yield ground for the benefit of Nashville, Florida, Carolina, etc., but see no reason why they should take a cut just so teams like Toronto, Philadelphia, and Boston should fatten up.

Will they succeed? Who knows, but this aspect of the CBA negotiations is worth special attention here in Nashville.

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