Is The NHL Really In Better Shape Now?

My brother says that in business/negotiations, “he who cares the most usually loses.” Under this theory I thought I could probably win an argument with Ted Leonsis about the NHL because I figured as the owner of the Washington Capitals NHL franchise (and he is a minority owner of the Washington Wizards NBA franchise as well) he is bound to care more than me. I felt like I was in a good position.

But I do not have my sea legs yet, and came out of the communication exchange feeling a little bit worn down and in need of a glass of wine. I give Ted many points for stamina. I also give him a tremendous amount of credit for making himself so accessible to the NHL fan-base (and everyone else, for that matter). I think guys like Leonsis and Cuban making themselves so accessible IS one of the most outstanding aspects of the internet. It’s possible to get guys like this engaged in very interesting conversations. Extremely engaged at times. So I will tip my hat to Ted on that, it’s a great thing.

In fact that’s the reason that I wrote him. I really think the NHL has a great opportunity because while it has lost 50% of its viewers for the Stanley Cup finals in the last 5 years, they were there as recently as 5 years ago. I do worry that more people read Ted’s blog in one month than watched the NHL finals and while that’s great for Ted, I don’t see it as so good for the NHL.

From my perceptive if you had three million homes tuned in 5 years ago and less than half that many are tuned in now, your prospects are worse now than they were before, not better. However…

The world is a wacky place and linear math like that doesn’t always work. As Leonsis himself notes there are now 2000 billionaires. That’s about 10 times as many billionaires as there are sports franchises worth buying. Because of the concentration of capital and the limited supply of sports franchises, we do live in a crazy world where because of the “limited amount of real-estate” property values are going up, up, up, even in cases where the neighborhood is having severe problems (losing half your viewers is a bad day in the neighborhood).

Leonsis points out that from a financial perspective the league is in much better shape now because although ratings were down 50% in 2006 from the 2002 numbers, the league actually broke even in 2006 and lost a significant chunk of change in 2002 when the ratings were much better.

Despite escalation of the underlying value regardless of performance (because of the 2000 billionaires and limited # of franchises), at some point performance still matters. While I agree that breaking even is better than losing money – and I do see that as both an improvement to the business model and improved financial performance, I still am not quite comfortable with the prospects, but I’m focusing on just the problem of the national ratings. Leonsis notes there have been positive improvements and that ticket revenues and actual attendance are both up, as were local ratings for regular season broadcasts.

Despite these improvements, Leonsis agrees that the national ratings remain a big issue. Current deals that have some of the finals on the Versus network really limit exposure (availability to only about 20M of the 100+M tv universe) and hampers both ratings and cross-promotional opportunities.

Though I confess Ted’s explanations do leave me feeling less panicked, I can’t see how the prospects of a league that 1.5 million homes tune in to the finals are truly better than the prospects of something with twice as many homes tuned in. Also, it seems to me that since those folks were watching as recently as 5 years ago, they’re the first people I would focus on winning back. I believe Ted has an opportunity compared to other figures in the NHL because he is out there in the popular culture with a link to his blog from Engadget and everything.

Other than the stars of the NHL themselves doing everything in their power to get face time with the American public (with the leagues assistance), Ted should somehow use his position to do his part to get the 50% back simply because he’s in a better position than most affiliated with the league to have an impact with that.

Is the NHL “really” in better shape now? Ted thinks so, but I’m still not there yet and this year’s ratings (Saturday’s game 3 did a .8 rating with a 2 share during its highest ½ hourly period on Saturday night) of less than a million homes even when the game was on NBC during primetime is not leaving me feel like the NHL is *really* in better shape, even if the franchise values are increasing and the financial performance is better than it was 5 years ago when the average rating was about 3x Saturday night’s results.

I know Paris is in jail, but maybe that’s the best time to approach her with some sort of deal to save the NHL. One thing I think Leonsis is in a better position than most involved with the NHL is really helping put a focus on how to effectively market the stars of the NHL, in fact, I believe marketing its stars is the only way to win back viewers. I see Leonsis as a very determined guy, and if he was determined, really determined to help the NHL market its stars, I think he’d succeed with it.