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Sporting Econ 101: Breaking Down The Business Of The NHL

The National Hockey League is the 4th-largest North American sports organization. Despite a solid decade of growth and expansion into non-traditional hockey markets, the NHL trails financially compared to other major regional sports. It’s one of the most financially volatile sports, yet has become a huge spectator sport throughout the U.S. and Canada. The game of hockey is hard to understand, but the economics are more complex. 

Since 2007, the value of the average NHL franchise has increased by a large margin. Now valued at around $1 billion per franchise, that’s still lower than the lowest-valued NBA, NFL, or MLB team. Hockey clubs rely on fan attendance, merchandise sales, concessions, and season ticket sales to generate revenue.

Advertisements are where the league gets most of its money.

The NHL playoffs are more than a pathway to a championship: they give teams more revenue with higher attendance rates and continued TV broadcast money. The Athletic reports that a typical home game produces between $1-$3.5 million per game.  

Hockey has never been the most popular sport in the U.S. In Canada, though, it’s the sport of choice. Having a dual-national league puts the NHL in an interesting position. They must deal with taxes, regulations, and currency exchange across two countries. Not to mention, there are state laws to consider regarding player salary. Unlike the other big North American sports and Major League Soccer, the NHL has six Canadian franchises under its wing. That’s more than the MLB (1), NBA (1), and MLS (3) combined. 

Photo courtesy Colorado Avalanche

The area where the NHL has struggled the most is broadcasting. Before 2007, the NHL was under the ESPN umbrella. In 2005, it was dropped by the sports channel before being picked by NBC in 2006. However, games were shown on networks like Outdoor Life Network – not a great look for the league. Eventually, the league was given primetime broadcast slots, but it wouldn’t be until the 2010s that things would change. A $200 million was signed with NBC Sports, but access to channels like Versus (which became NBC Sports Network) was tough for those without cable bundles. Small-market teams suffer the most in this regard. 

In 2021, the NHL signed contracts with Turner Sports (TNT, TBS) and ESPN. These primetime channels offer greater accessibility to fans. And ESPN+, the streaming service of the sports media giant, makes all NHL games available. It’s slated to bring $650 million a year for the next seven seasons. In 2021-22, viewership rose significantly. That’s more revenue for player salary, rink improvements, travel costs, etc. Though viewership is down this year, the money is still good. The 2023 Winter Classic was the most-watched NHL regular season game during the cable era. 

The NHL has a designated salary cap similar to the NFL and NBA payroll structure. This was introduced in 2004 following a new collective bargaining agreement between the league and the players’ association and has been the standard for the last 20 years.

The cap has increased incrementally over the past decade. The average NHL salary cap is $80 million, meaning teams can only pay players within the confines of it. However, this varies between the clubs. Some teams use almost all their cap space, while others keep it low. That helps with free-agent signings, trades, and buyouts. Gameday revenue, advertising, and broadcast revenue contribute to the salary cap’s rise or fall. It’s expected to increase by $1 million in 2023-24

So, what are the most valuable NHL franchises? Rounding out the top is the New York Rangers ($2.2 billion), the Toronto Maple Leafs ($2 billion), and the Montreal Canadiens ($1.85 billion).

These are three of the Original Six NHL clubs, but at No.6, the Los Angeles Kings ($1.3 billion) show that hockey in warm-weather markets can thrive. Just ask the Tampa Bay Lightning, winners of the 2019-20 and 2021 Stanley Cup and the Vegas Golden Knights, 2023’s newly minted champion. Even the Kings have won two Stanley Cups (2012, 2014) in the “salary cap era.” Not all teams benefit from being a legacy franchise, but new ownership groups for teams like the Carolina Hurricanes and Arizona Coyotes have pumped serious cash into these teams. 

Photo courtesy Toronto Maple Leafs

While the NHL competes with the NBA and NFL for viewers, it’s hard to imagine hockey ever shedding its niche sports label. Yet, it seems to be doing well for itself. The NHL has increased in value every season since Commissioner Gary Bettman took over in 1993. Franchises in Miami, Tampa Bay, Ottawa, Winnipeg, Las Vegas, and Seattle have been added under his watch, expanding the league to 32 teams. More American and European players enter the league every season, and more players of color are joining, too. While the NBA, NFL, or MLB may have the financial pull, the NHL is operating quite efficiently. 


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