Roger Noll: the NHL’s Business Model Doesn’t Work

With the imminent demise of the NHL for at least one season, and maybe more, members of the mainstream media [MSM] are finally realizing that a proposed salary cap will not solve the problems of the NHL. This is from [thanks to Adam for the pointer]:

Roger Noll, an economics professor at Stanford University who studies
sports business issues, questions if some small-market and Sun Belt franchises
will survive longterm. Within 10 years, he envisions a North American super
league stripped of perhaps a dozen current franchises, which would fold or
become minor-league clubs.

“The notion that the NHL can solve its problems with a salary cap is
ludicrous,” Noll said. “It will increase profits for the best teams, but it
doesn’t make the small-market teams viable. The disparity of revenues across the
league is greater than in any other sport and there’s no salary solution to that
problem. Some teams have 25 times (the local TV revenue) of other teams. The
only solution is to get rid of the small-market teams or subsidize them.

“Even if salaries were zero dollars per year, I question if some
small-market teams would have enough revenue to cover costs….

Noll said the NHL’s business model doesn’t work because it was designed in
the mid-1990s around increasing national TV rights and licencing fees. Instead,
the league’s latest network TV deal with NBC guarantees no money.

“They’re basically giving away their games,” Noll said. “The NHL hasn’t
built a sufficient market outside of the northeast quadrant of the United States
and southeast Canada. They’re stuck with expansion franchises that aren’t viable
and there is no solution to it. It’s just crazy. You can’t operate a league the
way they’re currently operating.”

There are some who disagree with Noll (not me, though) — check out the entire article.

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Author: John Palmer

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