Thursday, August 22, 2019Canada's Leading Online Business Magazine

NHL Commissioner Gary Bettman Discusses Expansion, League Revenues And His Legacy

By Angus Gillespie

The love for hockey in Canada has been engrained in the lineage of our culture dating back far beyond Confederation. Similarly, the immense passion for the sport is widely discernable throughout many European nations and continues to evolve in the United States and now throughout parts of Asia.

At its inception, the National Hockey League had four teams in Canada for its inaugural season in 1917-18. By 1924 the league expanded into the United States with the Boston Bruins coming into the fray.

Until 1967, the NHL was comprised of six teams, and the nickname the “Original Six” is still applied to those founding member clubs: the Toronto Maple Leafs, Montreal Canadiens, Boston Bruins, Detroit Red Wings, New York Rangers and Chicago Blackhawks. The latter three clubs came into existence in 1926.

In its boldest expansion move in history the NHL doubled in size in 1967 when another six teams were added to the mix: the Philadelphia Flyers, Pittsburgh Penguins, Oakland Seals, Los Angeles Kings, Minnesota North Stars and St. Louis Blues. The Buffalo Sabres and Vancouver Canucks joined the league three years later, followed by the New York Islanders and Atlanta Flames in 1972. In what was the most bizarre alignment in the history of the NHL, the Canucks were originally slotted into the then East Division in order to provide a balanced number of teams with the West. But it was something the franchise needed to acquiesce with in order to gain acceptance. The following year the Washington Capitals and Kansas City Scouts were voted in, bringing the league to 18 teams.

In 1979 the NHL absorbed four teams from the rival WHA, which had folded its six-team league earlier that year following Winnipeg’s Avco Cup championship. The teams granted admission to the NHL were the aforementioned Winnipeg Jets, Edmonton Oilers, Quebec Nordiques and New England (Hartford) Whalers. The Cincinnati Stingers and Birmingham Bulls were dissolved, but the ownership groups were given $1.5 million in compensation. The WHA absorption along with the amalgamation of the Cleveland Barons with the Minnesota North Stars a year earlier brought the league to 21 franchises.

Between 1991 and 2000, the NHL expanded to 30 teams and in 2017 Las Vegas came in with all the pomp and pageantry one would expect for the city that never sleeps, receiving tremendous fanfare as the 31st member. But the Golden Knights weren’t just about glitz and glamour – they had both the sizzle and the steak, stunning the hockey world last spring by advancing all the way to the Stanley Cup finals, coming up just short against Alex Ovechkin and the Washington Capitals. And of course, Seattle has been approved as the 32nd franchise, beginning play in the 2021-22 season.

In our recent one one-on-one discussion with NHL Commissioner Gary Bettman he focused on some of the many incredible achievements the league has had, and his vision moving forward, including the addition of that new franchise in the state of Washington.

In speaking directly with the 66-year-old Bettman it is quite apparent he comes equipped with a high level of confidence, intelligence and a keen sense of humour. Having those three core personality traits comes in handy when dealing with more than 30 billionaire owners. Reaching consensus on vital business topics could, at times, require much the same effort as trying to herd 31 cats in the same direction. Among other things, it’s the job of the commissioner to assemble all the owners on the same page, lead the league in collective bargaining efforts, appoint officials, and be the main face that represents the league on a worldwide level.

As with any executive in such a high-profile position Bettman is now, and always has been, a polarizing individual with the public. The bottom line is that his bosses – the NHL board of governors – feel he has done an excellent job, and that’s why he’s the longest serving commissioner in any of the four major North American sports leagues.

In briefly reviewing its modern history, the NHL was comprised of 24 teams when Bettman took over as the league’s first-ever commissioner in February, 1993. The new position was created upon his hiring after he replaced Gil Stein, who had exited after just one year as the league’s final president. When Seattle comes onboard as the 32nd team it will equate to a 25% increase in franchises during Bettman’s era – an impressive growth statistic by any account. Developmental growth has always been measured and calculated to limit risk and ensure the absolute best chance for success. Prior to taking over as the NHL’s top executive, Bettman cut his teeth in professional sports in the NBA, beginning in 1981 at the age of 29, working as an executive alongside then commissioner David Stern.

During Bettman’s tenure as commissioner, the NHL has accrued rapid ascent of league revenues, from $400 million when he was hired to almost $4.5 billion today. There are always those who simply won’t give him any of the credit for being a significant part of the success; others will begrudgingly do so, and then there are those who give him a lion’s share of the credit. There have been the issues of work stoppages, which are virtually unavoidable when pitting the wants and desires of management against an entity whose contracted workers are backed by a union, in this instance the NHL Players Association. At this level, no professional sports leagues are immune to labour strife to varying degrees.

Of the four major North American sports leagues (NHL, NFL, NBA and MLB), the NHL has had the largest percentage of revenue growth in recent years. From a business standpoint, the league is thriving like never before in its 100-plus year history, so in spite of any shortcomings the league has endured over the past quarter of a century those positive results are realities that simply cannot be ignored. In simple unbiased terms, the positives under Bettman’s reign have far outnumbered the negatives. Bettman says it has been a combined effort by the owners, the NHL Players’ Association and the fans who can all take credit in helping to grow the game to the extent it has attained.

“It’s never one thing that leads to success,” offers Bettman. “I know people sometimes like to say ‘oh this is the one magic button you push and everything flows from that’ but I believe it’s a combination of factors.”

Sold-out arenas, merchandising sales and excellent television ratings, especially here in Canada, are just several key indicators that the league is enjoying its best years ever and Bettman believes there is still much more to come.

“The game has never been better; it’s never been more exciting; it’s never been more entertaining and our competitive balance has never been this great. In fact, our competitive balance is extraordinary and it’s probably the best in any professional sports league,” he proudly says.

Bettman and the executives at the NHL head office never lose sight that without fans, there is virtually no success to be had. The need to keep people engaged and passionate about the sport is always front and centre.

“We’re connecting with our fans in ways that we’ve never done before. Our footprint is broader so more people have an opportunity to be fans of a team locally,” he says.

With the advent of the internet becoming a public communications tool by the mid-1990s and countless other innovative technological milestones such as video replays, the NHL has effectively been able to leverage that in further promoting the game not only in Canada but on a global scale.

“We have the advantage of technological breakthroughs, which enable us to give our fans what they want, when they want and how they want it,” adds Bettman.

“HDTV in particular has made a huge difference in the way our game is now viewed on screens, whether it’s on television or streamed,” he continues.

Organic growth has escalated in large part because of the attention devoted to the game from a young age. Other sports such as soccer and basketball are also growing exceedingly fast with children, but there is still a long ways to go to catch the interest level in organized hockey. But the message needs to continually be driven home about how great the game of hockey is, and that means engagement with fans. It’s about building up its superstars like Sidney Crosby, Connor McDavid, John Tavares, Patrick Kane, Auston Matthews, Nikita Kucherov and Alex Ovechkin and making them as accessible as possible to their communities.

“The game has been supportive of growth at the grassroots level as well, so you have more and more young people playing the game in more places,” says Bettman.

Seattle Expansion

Hockey fans across North America, and especially the northwestern U.S., are excited to know that a 32nd franchise will join the NHL as an expansion team in Seattle and begin play in the 2021–22 NHL season. The official confirmation was made on December 4, 2018. The new franchise is led by an ownership group that includes Jerry Bruckheimer, David Bonderman and Tod Leiweke.

Upon joining the league, Seattle will be slotted into the Pacific Division of the Western Conference. But in the interim there are still two full NHL seasons to be played prior to that time, in which many I’s need to be dotted and T’s crossed. No doubt anxious fans would love to see the team sooner, but a number of integral aspects still need to be completed.

“The timing was principally dictated by how long it will take to construct the building,” confirms Bettman. “We are comfortable the arena will be ready in advance of the 2021-22 season but we couldn’t collectively get comfortable that it would be ready for the season before that.”

The rabid anticipation of a new professional sports franchise in the northwestern U.S. is growing with each passing day. The addition of Seattle will provide the U.S. with its first NHL team in that geographic section of the country, which will generate more broadcasting dollars for the league. Seattle, with a population of 730,000, will almost certainly produce solid revenue numbers on television, at the gate and in merchandising sales. The proximity to Vancouver should also quickly ignite the process of creating an outstanding rivalry between the two northern Pacific coast teams.

“The good news is that some of the other things that have to be done is coming along well, in addition to processing the 33,000 deposits they have for tickets for a building that will be half that size,” remarks Bettman.

Meanwhile, the NHL executive branch in New York is in regular contact with the new ownership group in Seattle. There is still a great deal of work to be done before the team steps out onto the ice for the first time.

“In addition to reaching out and connecting with their fans they need to pick a team name, there needs to be a logo, they need to design a uniform and build an organization. So the fact that this may take a little bit more time than people might have hoped, again all because of the construction timeline for the building, will give them the opportunity the to do everything else they have to do right,” notes Bettman.

Broadcast Deals

In November, 2013 Bettman and the NHL worked out an agreement on a 12-year, $5.2 billion exclusive broadcasting package in Canada with Rogers Media, who broadcast games on television, radio and online on such platforms as Sportsnet, Sportsnet One and City, with Hockey Night in Canada still broadcast on CBC for a sub-licensing deal that allows Sportsnet access to the national broadcaster, while the CBC can promote its native programming during the telecast. The main advantage to keeping the Saturday night showcase of HNIC on the CBC is that it still has a far greater reach nationwide than any Sportsnet channel. Keith Pelley, now the CEO of the PGA European Tour, was the main negotiator from Rogers who worked out the expansive deal with Bettman and his team. The pact was put together extremely fast and left Bell Media and its TSN sports network shut out of the NHL broadcasts, with the exception of regional properties.

Nearly three years prior to the comprehensive Canadian deal with Rogers Media, Bettman negotiated a successful agreement with Comcast and NBC in January 2011 for viewers south of the border. The 10-year deal came with a value of about $2 billion. In signing the new TV agreement, Bettman opted to step away from offers received from ESPN and other U.S. networks. And, with the explosion of the internet, it brings about a plethora of new marketing and branding opportunities.

“Four years ago we made a deal with what is now Disney Streaming Services. Our games are being streamed and carried in non-traditional ways through DSS, which is another access point for our fans, and that of course is in the U.S. In Canada, Rogers has been at the forefront of streaming our games to their subscribers and other people as well to ensure fans can get any of the games you want,” notes the commissioner.

“When you look at our mobile app and our website, we’re providing more content than ever before. Also, as part of the marketing and promotion there’s a focus on big events including outdoor games like the Heritage Classic,” he adds.

Extensive Branding

In addition to making a number of fan-friendly changes at the annual All-Star Game, including fast-paced three-on-three team competitions, the league is able to capitalize on technology and the use of online apps to have fans participate directly in many entertaining aspects of the game.

The league has also held a number of preseason games in Europe and China. It begs the question – are we soon to see an international division within the NHL? Not likely, by the sounds of it.

“People can dream about things way into the future but that’s not anything we’re focused on,” Bettman says. “What we’re really doing is focusing on having a regular presence, whether it is preseason games, exhibition games against local teams or even regular-season games but when you look at the places where hockey is strongest such as northern Europe – Sweden, Finland, Czech Republic and Russia – they all have their own leagues.

“We want to work with the existing hockey infrastructure in those countries to continue to see hockey grow and to continue to see them produce world-class hockey players, the best of whom come to the NHL to play,” continues Bettman.

International events such as The World Cup of Hockey and the Olympics have both served as excellent methods of developing the NHL brand on a global scale, but at this level of business, there are often obstacles that repeatedly seem to get in the way. While at its core, the NHL is a game played by grown men, make no mistake it’s first and foremost an entertainment business with billions of dollars in revenue generated at the highest level.

“When it comes to Asia, and particularly China, everybody’s efforts are really in their infancy but we think establishing a presence and introducing more people to the game will enhance the game’s growth worldwide, particularly with the 2022 Olympics in Beijing,” says Bettman.

China is the world’s most populous country with almost 1.5 billion people. One of the fastest growing sports in the country is ice hockey, where the history of the game dates back to the mid-20th century. The Chinese Ice Hockey Association acts as the governing body for the sport in the country. China has men’s, women’s, and junior national teams that compete against other national teams.

“There has been a focus in China on the growth of winter sports, and notably hockey. So whether it’s putting on clinics or further developing media relationships in China or putting on exhibition games, these are ways to introduce that country and the people there to our game as well,” adds Bettman.

Bettman also makes it abundantly clear there are absolutely no negotiations happening at this time with the International Olympic Committee regarding NHL players once again participating in the next Winter Olympics in 2022. Following the presence of NHL players in five consecutive Olympic Winter Games beginning in 1998 through 2014, participation came to an end for the 2018 Games in South Korea.

“Frankly, our decision not to go to PyeongChang – and after five Olympics to discontinue our participation – was more a function of the disruption to our season than anything else,” he states emphatically. “The principal reason that we’ve pulled back from the Olympics is what it does to our season and it is terribly disruptive.”

Bettman’s Legacy

As of this past February, Bettman has served as NHL commissioner for 26 years, making him by far the longest-serving active commissioner in professional sports. Last fall he was inducted into the Hockey Hall of Fame in Toronto for his long-term dedication and contribution to the game. His legacy is already cemented, and he’s showing no sign of being anywhere close to being finished with exuberance to continue on. So, what would Bettman still hope to accomplish as commissioner from both a personal and professional level?

“Our clubs are marketing and promoting in ways that they’ve never done before. Our teams and our ownership group is stronger than ever and so across the board we’ve modernized our operation and find ourselves to be agile and forward-thinking in a way that gives our fans the best possible experience,” says Bettman.

In speaking directly with Bettman he delivers an air of confidence and intellect that has served him exceptionally well. It’s also quite evident he is very sincere in saying it’s not his own personal gain that drives him want to continue in his position, but rather the desire to make hockey even bigger and better than it already is now.

“I don’t focus on my legacy,” he replies. “What I focus on is our great game and the wonderful people who are associated with it; the players, the front-office people and most importantly our fans. I want to continue to see the game be the most exciting and entertaining it can be on the ice and I want to see it continue to grow worldwide, but most importantly here in North America.”

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