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The NHL’s revenue sharing problem

Greg Wyshynski
Puck Daddy

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Increased revenue sharing is expected to be at the heart of any National Hockey League Players' Association proposal in collective bargaining, seeing as how the NHL's current system is much maligned and is seen as creating "conditions for divisiveness among franchises."

It's biggest failing: clarity. As our anonymous NHL columnist "The Player" spelled out last month:

The system is so convoluted that some clubs can't reasonably predict how much money they will receive from, or pay into, the pot. Or even if they will be involved in the revenue sharing at all.

Unpredictable factors include: The final escrow return, whether or not your team makes the playoffs, your final attendance numbers and whether you end up above or below the median in terms of revenue determine your revenue sharing fate.

Streamlining revenue sharing would seem paramount in the next CBA … because as the Globe & Mail points out, it's a complicated system.

From David Shoalts:

The NHL starts by setting what it calls Targeted Team Player Compensation each season. This is a number that is between the midpoint of the salary cap and the floor. It is a result of a complicated equation involving each team's regular season and preseason revenue.

Next, the league calculates what each team should have available to pay player salaries. The available amount is subtracted from the target amount and qualifying teams are paid the difference.

But there are also exclusions and clawbacks. Any team in a market of more than 2.5-million households, such as the New York Islanders, cannot receive revenue-sharing funds. Teams who miss attendance and sales targets can see their shares clipped by up to 50 per cent.

Oy vey.

The NHLPA turned to Donald Fehr for many reasons — none the least being that he'd provide a spine to a group that had their backs broken in the last lockout — but one of them was his success in gaining significant revenue sharing in Major League Baseball.

One agent told the Globe and Mail that the NHL would be wise to work with Fehr to redesign their system, saying in part that "the NHL's cap system is doomed to fail because the revenue from the richest teams inflates the salary cap beyond the reach of the poorest teams."

Can the players, and Fehr, sell revenue sharing as a path to profitability for all NHL teams?

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