Further on up the road – 20 years with Gary Bettman and the NHL

Twenty years ago on December 11, 1992 Gary Bettman became the first National Hockey League commissioner. In the midst of the NHL’s third labor dispute during his tenure, it’s easy to pass judgment on Gary Bettman based on the league’s third protracted labor lockout in twenty years, that would be neither fair nor just in looking at the good, the bad and the ugly – the NHL and the Bettman years. One chilling statistic Gary Bettman can’t shake, Thursday the National Hockey League will have lost 2,210 games to labor disputes in the last two decades, a shocking number, 2,224 through December 30.

On February 1, 1993, Bettman's tenure as the first commissioner of the National Hockey League began, replacing Gil Stein, who served as the NHL's final president. The owners hired Bettman with the mandate of selling the game in the US market, end labor unrest; complete expansions plans and modernize the views of the "old guard" within the ownership ranks.

When Bettman started as commissioner, the league had already expanded by three teams to 24 since 1991, and two more were set to be announced by the expansion committee: the Florida Panthers and Mighty Ducks of Anaheim, who would begin play in 1993-94. Similar to the previous expansion cycles, the focus was on placing teams in the southern United States.

Bettman came to the NHL from the NBA, where Gary worked closely with NBA commissioner David Stern and Russ Granik then the NBA’s deputy commissioner. Bruce McNall then the owner of the Los Angeles Kings and chairman of the NHL Board of Governors approached Stern about jumping ship to join the NHL. Stern wasn’t interested but suggested the NHL take a serious look at Bettman, his third in command.

The 1994–95 lockout lasted 104 days, causing the season to be shortened from 84 to 48 games. The NBA and NFL both had salary caps in 1994, NHL owners believing they could better control labor costs wanted an NHL salary cap, changes to free agency and arbitration in the hopes of limiting escalating salaries, the union instead proposed a luxury tax system.

The two sides reached an agreement on January 11, 1995. The two sides agreed to a cap on rookie contracts; changes to arbitration and restrictive rules for free agency that would grant a player unrestricted free agency once he turned 31.

The NHL and the NHLPA extended that agreement twice through September 15, 2004. During the 2003-04 the last season before the second NHL lockout during Bettman’s twenty years as commissioner player salaries accounted for 73% of NHL Hockey Related Revenues (HRR). The NHL reportedly lost $300 million during the 2002-03 season. The NHL insisted the league needed a salary cap, the NHLPA refused to agree to a cap.

On February 14, 2005, five months after the lockout began; Gary Bettman canceled the 2004-05 season along with the Stanley Cup playoffs.

"I have no choice but to announce the formal cancellation of play for 2004-05," Bettman announced.

"Virtually immediately, we as an organization, at the league level and our clubs, are going to begin planning for (next) season," he said. When asked about the use of replacement players, Bettman would say only that the league would explore all of its options.

The NHL and the NHLPA agreed to a new CBA in July 2005, a CBA that included a salary cap where the players received 57% of all Hockey Related Revenue, the owners 43% was a key element of that CBA.

In the last year both the National Football League Players Association and National Basketball Association Players Association agreed to a 50/50 revenue split, a goal the NHL had when their latest CBA expired on September 15, 2012.

The NHLPA wasn’t interested, creating the third lockout in the last twenty years. Wednesday the NHL led by Gary Bettman and the NHLPA led by Don Fehr met with federal mediators in New Jersey – no progress to report, the NHL lockout hits day 89 Thursday, more than $600 million has been lost by NHL players in salaries.

It would be a challenge to suggest the team’s that have been added to the NHL during two decades represent a success story for Gary Bettman. Factor in franchise relocation, Gary Bettman’s belief the NHL working in non-traditional hockey markets has failed. Remember when Gary was hired he was told to moving teams and expanding into non-traditional hockey markets was very important to the NHL’s Board of Governors.

The NHL added four teams through expansion during the Bettman years - the Nashville Predators (1998), Atlanta Thrashers (1999), Minnesota Wild (2000) and Columbus Blue Jackets (2000). Five teams have relocated during Bettman’s tenure The Minnesota North Stars to Dallas (1993), the Quebec Nordiques to Denver (1995), the Winnipeg Jets to Phoenix (1996) the Hartford Whalers to North Carolina (1997) and the Atlanta Thrashers to Winnipeg (2010).

Nashville’s ownership has changed hands several times; the current ownership group has experienced six cash calls in recent years to keep the franchise afloat. The NHL failed in Atlanta for a second the team successfully relocating to Winnipeg a year ago. The NHL’s decision to return to Minnesota represents a good decision; the move to Dallas remains questionable. Tom Hicks owned the Stars when the moved from Minneapolis to Dallas, Hicks business problems forced the franchise into bankruptcy protection. The NHL’s decision to expand to Columbus hasn’t worked. The Blue Jackets continue to hemorrhage red ink, the team’s future in doubt.

Relocation to non-traditional hockey markets has been a disaster. The Phoenix Coyotes fell into bankruptcy protection in 2009. The league has owned the team, a blight on Bettman’s reputation. The Carolina Hurricanes have the third lowest ticket prices in the NHL, when the NHL returns to Raleigh six complete sections the PNC Arena will be priced at $9.95, a disaster for any NHL franchise, the NHL remains a gate driven league when it comes to revenue.

When it comes to television Gary Bettman has done the best he could with the hand he was dealt. After the 2004-05 season long lockout NBC agreed to televise NHL games, but only through a barter system, no rights fee was paid to the NHL. The NHL’s American cable partner ESPN walked away from the NHL in 2005, Bettman reached an agreement with Versus, a three year agreement paying the NHL $207.50 million. The TV deal with Versus was later extended through the 2010-11 season. Versus was owned by NBC Universal.

In January 2011, Comcast officially acquired NBC Universal, and then in April of that year Bettman negotiated a new 10-year deal with the merged media company, worth nearly $2 billion dollars. Comcast/NBC also announced that both Versus and NBC would increase the number of games they televise.

Coming out of the 2004-05 lockout the NHL announced league wide revenues of $2.1 billion. Heading into the current lockout the NHL reported league wide revenues of $3.2 billion. Sponsorship revenue anchored by Molson Coors in Canada and MillerCoors in the U.S has pushed NHL sponsorship revenue to record levels.

The Winter Classic canceled this season represents one of Gary Bettman’s crowning achievements, a classic example of creating what has become one of the NHL’s most important events out of virtually nothing, Gary Bettman deserves a great deal of credit for his leadership in driving the Winter Classic.

Three major labor battles, relocation and expansion into non-traditional hockey markets have hurt the NHL and Gary Bettman’s legacy. However when the NHL hired Gary Bettman his mandate was take control of the NHL’s labor situation and grow the game in non-traditional hockey markets. Gary Bettman’s failure in these two areas has as much to do with the hand he was dealt than anything else. As much success as other sports commissioners have enjoyed in the last twenty to thirty, David Stern, Paul Tagliabue and Pete Rozelle (and everyone else) would have produced the same results Gary Bettman did.

The NHL was the fourth North American sports league when Gary Bettman became the league’s commissioner twenty years ago, the NHL will never reach the popularity and revenues of the NFL, MLB and NBA. The NHL is a regional sport, not a national sport in the United States. Gary Bettman will never admit or suggest that the NHL is a regional sport, at the end of the day Bettman is all too aware of the NHL’s place.

The NHL has experienced tremendous growth as a business as a direct result of many of the good decisions Gary Bettman has made. However the gains the NHL has enjoyed in the last few years are on the edge of cliff and could be gone if the current NHL lockout if not settled in the coming weeks. If Bettman is forced to again cancel an entire NHL season the cancelaton will cause irreparable long term damage and harm to everything the NHL has accomplished during Gary Bettman’s twenty-years as commissioner of the National Hockey League.

For Sports Business News this is Howard Bloom