Last week, the NHLPA declined to opt-out of the current CBA, ensuring that the NHL wouldn’t have a work stoppage at the end of the 2019-20 season. With that decision, the CBA will run its full course ending after the 2021-22 season. If the NHLPA had decided to opt-out, it would mean the NHL would have to negotiate a CBA at the same time as a new national television rights deal.
The NHL’s current deal with NBC that was signed in 2011 will run it’s course following this upcoming season and should set the NHL up for a huge payday. Under the current deal, NBC paid the NHL $200 million annually or $2 billion over the ten-year term.
For the final year of the deal, the network will carry 109 regular-season games and then over 80 Stanley Cup playoff matchups. National Hockey Leauge national television games are riding high at the moment. The 2018-19 season was a year of new heights. According to NBC Sports,their regular-season viewership, last season rose across the board. Combined average viewership was 424,000 which was up 2% versus 2017-18.
That success followed them into the Stanley Cup Playoffs when the Boston Bruins Game 7 against the St.Louis Blues delivered the most-watched NHL game on record – averaging 9 million viewers. On top of that, the 2019 Stanley Cup playoffs were the highest-rated NHL postseason in 23 years. And the success isn’t just in the ratings for the league with attendance in the regular season being plus-0.05% from 2017-18.
Previous NHL Rights Deal
In the last negotiation cycle prior to their current deal, the NHL was in discussion with both ESPN and Turner Sports. Under the previous contract, NBC had paid the NHL $75 million a year with the NHL able to get a 166% increase per year.
While ESPN offered the NHL the accessibility to more households the NHL had run into various problems when its deal with the World Wide Leader ended six years prior.
Since NBC Sports has been onboard the number of games on national television and the ratings that follow it has risen for the NHL leading me to believe they could be in for a huge payday.
Other Leagues’ TV Deals Skyrocket
In the past five years, a number of deals have come up in various leagues in the United States. Sticking with NBC owned rights the network inked a deal in 2015 to remain the home of the English Premier Leauge. That deal went from NBC paying the EPL $83 million per season for the rights to $166 million per year with a six-year, $1 billion extension signed.
Major Leauge Baseball also recently extended its deal with FOX in 2018 on a seven-year extension valued at $5.1 billion. Under the previous deal, FOX paid the MLB $525 million per season, the new deal has an AAV of $728 million. Over in the NBA, a league in-which many NHL arenas share teams with, they re-upped their deals with both Turner and Disney back in 2016. Those deals turned out to be a nine-year, $24-billion contract for the NBA with an AAV of $2.66 billion per season, up from the $930 million annually on the previous contract.
As for Major League Soccer, MLS, their deal is up in 2022. No news for now on that but they have reportedly told teamsto not extend their local deals beyond 2022. That gives an indication that MLS may try and package their national and local rights in one big deal.
Potential Value of NHL Broadcast Rights
Since the NHL signed its current deal with NBC back in 2011, their annual revenue has risen from just over $3 billion to $4.8 billion last season. That increase of 60% shows how far the league has come since it’s previous broadcast rights negotiation.
Based on the deals that other leagues have been able to acquire, and the growth of the sport of hockey in the United States, one can easily envision the NHL netting anywhere between $350-to-$400 million on their next deal per season. When factoring in inflation, a ratings bump of 20% on average since the last negotiation cycle and the general growth of the league that feels like a reasonable target.
Last time around the NHL achieved a 166% yearly increase over their previous deal. I believe shooting for this 75-100% bump is feasible for the league to hit. The question is if the league decides to diversify away from a one-broadcast company deal.
The NHL could opt to go with more digital options such as Amazon or other players in the space in addition to the native television broadcast. NBC has done a solid job with the product and I can’t envision the league shying away from them for ESPN. Of course, there could be the potential for a deal like the MLB has, a contract with both ESPN and FOX but in the NHL’s case NBC and company x.
How this Connects to the Next CBA
Now, let’s circle back to the decision by the NHLPA last week to not openthe CBA after the upcoming season. While in the press release the players association talked about how they acknowledge issues and are hoping to iron them out within the current framework, the real reason could have been the national broadcast rights.
With the broadcast rights value set to skyrocket, the potential value that has to the players in the negotiations is invaluable. If they had opted out the league would have to not only work on a television extension but also had to work to get a new CBA in place. Opting out of the CBA would have potentially affected the league’s ability to get the best value for their broadcast rights.
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And for the NHLPA when their CBA is up ahead of the 2022-23 season they will be negotiating with the knowledge of how much the NHL is making under its current deal and work that into the salary cap and other issues regarding the CBA.