NHL emerges from lockout gloom in record-breaking fashion

Nicholas J. Cotsonika
Yahoo! Sports

This might be hard to hear, but here goes: Gary Bettman was right. The commissioner of the National Hockey League knew what he was doing as he weighed the risks and rewards during the lockout. In reality, the risks were never that great. The rewards already are.

Bettman made a calculated business decision. He sacrificed a few months and ticked off a lot of people, but he secured a better labor agreement for the owners and could count on the fans and sponsors to come back, based on history and cold, hard data.

By salvaging a 48-game regular season, Bettman set up the NHL to rebound immediately. The league returned for the time of year when it always draws the most attention and generates the most revenue, anyway, and it amped up the competition with a compressed, every-game-matters sprint to the playoffs.

For all the loud protests and dire predictions, the fans haven’t seemed angry or apathetic. They have seemed eager and engaged. Just 2-1/2 months after the NHL got back to business, business is booming, and the league is looking at ways to goose growth to record levels in the future.

“I know much has been made about momentum leading up to where we are today, and most of that speculation was inaccurate,” said Bettman Sunday after announcing the Winter Classic outdoor showcase would return next season. “We’re having an extraordinarily strong season – exciting, competitive – and I think our fans have reconnected in ways for which we are both grateful and excited.”

Not everyone foresaw doom. Right after the lockout ended, Rodney Fort, a sports economist at the University of Michigan, said the fans would return. “In fact,” he said, “we may not even notice any difference.”

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While fans and media fed off emotion and anecdotal evidence, sports economists knew how little lockouts and strikes had affected attendance figures and TV ratings in the past across professional sports. They also knew what they didn’t know.

Leagues have access to information no one else does, like how season-ticket holders and sponsors are really directing their dollars and how many are actually defecting. They have an educated idea of how far they can really push in labor negotiations and what the cost-benefit calculation really is.

“We keep metrics all the time,” Bettman said. “Rather than engage in the speculation that many do, we actually try and do some real research, and our fans have reconnected in a very big way.”

Still, these metrics – compiled by the NHL halfway through this shortened season – are remarkable:

NHL arenas were at 97.2-percent capacity, with an average crowd of 17,719, up 2.7 percent over 2011-12. Eighteen teams were up in attendance percentages from last season, and seven more were at least even, leaving only five laggards.

TV ratings on major networks were up compared to full season figures from 2011-12 – 17 percent on NBC (excluding the Winter Classic), 15 percent on NBC Sports Network, 9 percent on CBC’s “Hockey Night in Canada,” 19 percent on TSN on Wednesday nights, 6 percent on TSN2, 12 percent on RDS.

TV ratings on many regional networks were up, too, sometimes spectacularly.

“In some markets, they’re going for record ratings,” said NHL chief operating officer John Collins. “The Chicago Blackhawks, I think their regional ratings were approaching the Michael Jordan Bulls. In a lot of markets where you have a hockey team and a basketball team, hockey’s [drawing higher ratings] – Boston, Philadelphia.”

Unique visits to NHL.com were up 13 percent compared to the same time last year. Page views were up 15 percent. Subscriptions to the Center Ice TV package and GameCenter Live Internet package almost doubled from 2011-12, which is impressive despite a price cut of more than half.

“It’s not really apples to apples,” Collins said. “But what it did do is show what kind of demand there is for hockey.”

What the NHL did, it seems, was pent up demand and unleash it on limited supply.

“Even I’m surprised at this level of robustness,” Fort wrote in an email Monday. “We’ve known that there really is no detectable downturn, but this type of positive response is more than I would have expected. Maybe there’s a lesson here for leagues interested in altering the length of their regular seasons?”

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That is a fascinating question. Would leagues generate more revenue per game with fewer games – especially if it improves player safety and the quality of the product? But that’s a question for another day.

For now, consider this: The NHL looks like it will end up losing a relatively small amount of revenue because of the lockout, and for the owners, it looks like it will be well worth the cost. They could take a long-term view that the players, with their limited careers, could not.

Coming out of the lockout, the NHL projected $2 billion to $2.3 billion in hockey-related revenue this season. It remains on target, the final number depending on which markets make the playoffs and how things play out.

The league generated $3.3 billion last season. Based on that figure, the lockout likely will result in $1 billion to $1.3 billion of lost revenue – 43 percent to 50 percent of which would have gone to the owners, depending on labor negotiations.

Even if you use a higher figure – to account for more growth, after seven straight years of record revenue though 2011-12 – the owners will more than make up what they sacrificed over the life of a 10-year agreement. The new deal gives the players 50 percent of HRR instead of 57.

The owners will make more than $2 billion more than they would have under the old deal if revenues stay flat at $3.3 billion each of the next nine years – and revenues are not expected to stay flat. They are expected to grow substantially.

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Collins said the NHL has a “bunch of new relationships” with sponsors that it will announce over the next couple of months. He said the league is looking hard at more outdoor games, as well as a World Cup tournament and more European events. The NHL will negotiate a new Canadian TV contract after next season.

What if new ownership sparks the Phoenix Coyotes or the team relocates to a higher-revenue market? What if the NHL expands? Bettman insists the league is not looking at relocation or expansion, and NHL sources insist expansion is years away, if it ever comes. But we’ll see.

“I would hope that in 10 years our business will be well beyond where we are today,” Collins said.

No wonder both sides fought so hard for their slices of the pie. No wonder Bettman was willing to shut down the league to get as much as he could. No wonder the lockout ended when it did.

“We were hopeful we could come back as strong as possible,” Bettman said. “How strong we came back is a testament to the game and our fans.”

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