Everyone knows that sports is big business. It hasn’t always been this way, but in the past three decades professional sports has found a way to significantly increase the money they take in.
So how does the NHL fit into this landscape? Are they racking the money in like other sport leagues?Embed from Getty Images
What is the yearly revenue for the NHL? The yearly revenue for the NHL is about $5 billion dollars, which is predominantly made up of television revenue, gate receipts, concessions, and royalties from licensing. The collective bargaining agreement between the owners and players split these revenues 50/50.
NHL Yearly Revenue Chart
As you can see over the last ten years the NHL has significantly increased its revenue. The one dip in 2012/13 was due to an NHL lockout that limited the year to a 48 game season.
I expect the league to continue to grow their revenues significantly in the upcoming years. Let’s take a look at what makes up these revenues and where the greatest room for growth is.
What makes up the NHL yearly revenue?
Ticket Sales – the NHL still relies more on ticket sales as a proportion of its revenue than the other major sports. In fact, the largest portion of the NHL revenue comes from ticket sales. In Toronto the average ticket price is $386 Canadian ($300USD). In Calgary, you can still get the cheapest seats for about $30. Luxury boxes – wow, those rack in the money. I have sat in them a couple of times – I am glad I didn’t have to pay the bill 🙂
Television – the NHL still makes a sizeable portion of of it’s tv contract. The NHL national contract for Canada is actually worth more than the US one , even though Canada has 1/10 of the population. In Canada Rogers paid $600, whereas the U.S. national contract is $200 million.
Merchandise and Concession Sales – this involves all the money that they get from t-shirt, jersey, parking, popcorn, and those $10-12 beersEmbed from Getty Images
Royalties from licensing – The NHL gets a lot of money from the licensing of it’s logos, images of players, and association with products. If you have ever bought an NHL product it is likely that the NHL did not produce it, but, instead, the NHL sells the permission for a company to make a product with its name.
Have you ever bought a EA sports NHL video game? I have. (Actually, a lot of them through the ages)
Have you ever bought an NHL lego character? I have (I’ve got Sean Monohan and Steven Stamkos in lego form).
Have you ever bought an NHL table hockey game? I have (actually, a few of them over my lifetime).
Wow- I have bought a lot of NHL licensed products!!!
Even if I’m not buying a ticket to the game I am sending the NHL money through the purchase of these products.
Growth of revenues going to come from?
Expansion fees – the NHL has recently increased their revenue through the expansion of the Vegas Golden Knights, which accounted for $500 million to their coffers. The owners swung a good deal as they did not need to count it is Hockey Related Revenue – this means they didn’t need to share it with the players.
Anyway, Vegas has increased the revenue of year-to-year with merchandise sales, local tv, ticket sales (I hear it is amazing to attend a game their, and the players already love playing their).
The NHL is going to do this again with Seattle, who enter the league in 2021-22. The expansion fee was $650 million and Seattle has already sold all of its season tickets and has a waiting list. There is more money coming to league operations.
Gambling – Any U.S. State can now offer legalized sports betting. All have taken different approaches and some are still considering their offers, however the NHL is definitely partnering in the roll out. This could be a potential cash cow as the NHL looks to get a slice of the revenue of people betting on it’s games.
TV Revenue Growth – the biggest jump in NHL revenue will be the renegotiation of the U.S. national television deal. The $200 million/year they got from NBC is a rounding error when compared to the NFL, MLB and the NBA. I am not suggesting that the NHL will get anywhere near those leagues deals, but they will get a substantial raise.
The league has continued to increase viewership with Game 7 of the Boston – Blues series at 9 million was the highest ever for a game. People who tend to watch and go to NHL games have a higher than average income, and sports tv contracts continue to rise. All of this points to good things for the NHL when their U.S. tv contract with NBC sports comes due.
Watch for ESPN and Fox get back in the fight, but I think a combination of NBCSports and ESPN will take home the rights.
Increased game day revenue – this means an increase in ticket costs. I always wonder how much they can keep on raising prices, but they do. NHL teams are always looking at ways to increase sales in-house whether that is from more luxury boxes, restaurants, or special game experiences such as behind the scenes tours.
For example, I once got to go on the ice after a preseason game and get a picture with a few Flames players. This cost extra to the price of the ticket!
Main Expenses of Each Team
The NHLs largest expense (and this should come as no surprise) is the
An average NHL team is spending between $75 to $80 million a year on player’s salaries.
The rest of the money will go to the front-office staff, travel, local marketing, and building operations.
No one is quite sure how much money a team makes (or loses), but the setup with the players through the collective bargaining agreement is to split revenues 50/50.
This means that both players and owners share in the growth of the game.
The one thing I would wonder is what is counted as revenue. I am fairly certain that the owners have some revenue sources that are not counted towards the 50/50 split (like expansion fees).
How does this compare with other leagues?
The NHL yearly revenues of $5 billion dollars is a lot of money, there is no question about that.
However, this number does pale in comparison to the other major sports leagues in the U.S.
Here are the numbers from other sports:
The main difference between the leagues is revenue generated through television deals. The size of the television deals the other three leagues have negotiated dwarf the NHL deal in the United States.
The NHL is partially saved because it is able to negotiate a large television deal with the hockey crazed Canadian television market.
The NHL makes about $5 billion USD in revenue each year. They have significantly grown their revenues over the past 20 years.
Look to see the NHL to continue to increase the amount of revenue they accumulate as they look to renegotiate a US television deal within the next two years. This along with the continued growth of the sport in the U.S. look to be the biggest upsides for the NHL.