A new business model

An interesting, supposedly confidential internal NHL report was published by the Toronto Star recently. The report lists the Habs as second in the NHL in overall revenue. It doesn't list actual profit, but this one sentence stood out: "The six Canadian teams account for 31 per cent of the $1.1 billion (U.S.) in league ticket revenue, and have gone through league-leading double-digit increases over last season."

Granted, most of the revenue increases are due to the strength of the Canadian dollar -- assuming this report was accounting for inflation and using one currency (either US or Canadian) as a baseline for comparison. Also, this is overall revenue, not profit. Given the Canadian tax situation, which can differ widely by province, it is doubtful that Canadian teams are going to turn into the NY Rangers of free agent signings.

Still, the fact that Canadian teams are getting back on a more equal footing bodes well for the future. Especially so for the Habs, who have been building from within by drafting very well. One would hope that the improved revenue situation would enable the Habs to keep their talent after having nurtured their progress for so long -- assuming the salary cap will allow them to do so.

But perhaps more interesting was the note that the NHL derives almost half its revenue from ticket sales. The NFL, on the other hand, has billion-dollar, multi-year television contracts, and is expanding its prime time television viewing with Thursday and Saturday night games.

Such was the model Gary Bettman wanted to follow when he pushed expansion teams to such hockey hotbeds as Nashville, Columbus, Phoenix and the like. The logic was that better geographic coverage in the US would lead to a big national deal with one of the four American networks.

In some places, the strategy of building a hockey fan base where none existed did work. In San Jose, games are regularly sold out. Years ago, the Sharks had the longest sellout streak in the NHL, broken only on Oscar night. But that in itself was telling. Fans would rather watch the Oscars than the Sharks -- more or less because there wasn't much else to do in San Jose.

So now that Canadian franchises are doing so well, and the huge television contract dream has failed to materialize, talk is getting louder about moving one of the poor performing US franchises (like the Coyotes) back to Canada.

And perhaps along with that, a new business model for generating revenue is needed. Instead of relying on old models from other leagues that don't necessarily translate, why not embrace new models and new technologies, especially the internet. RDS, the Montreal-based television broadcaster that owns rights to all Habs games, recently began webcasting games, for a small fee.

For fans of such storied franchises as the Montreal Canadiens, this could have a huge impact -- especially for those fans who can't get RDS as readily as others. The financial impact could be huge as well, and the NHL would be wise to both encourage such endeavors as well as to guide them to benefit the league as a whole, especially financially.

Escaping the restrictions imposed by traditional broadcast television would only serve to further nurture the US market for hockey. Currently, many US viewers have to subscribe to insanely expensive cable and satellite packages to get the games they want to see. And that's only when the packages are even available. Center Ice, despite its advertising as carrying all NHL games, consistently drops games, especially in the playoffs -- even when Versus isn't carrying the game.

Unfortunately, due to broadcast licensing agreements between Canada and other countries, RDS webcasts are not available in the US and many other countries. The NHL would do well to lobby both Canadian and American governments to drop these restrictions, so that hockey fans can see their teams in action regardless of where they live.