Ending Hockey's Biggest Fight
(FORTUNE Magazine) - Gary Bettman, commissioner of the National Hockey League, is breathing easier. After a bitter lockout that earned the NHL dubious distinction as the only professional sports league to lose an entire season to a labor dispute, the puck finally dropped on the 88th season last October. New rules like overtime shootouts have captured attention, but it was the changes to the league's business model--capping salaries, sharing revenue--that have indelibly altered the game and improved its profitability. FORTUNE's Matthew Boyle talked with Bettman about hockey's return--and its wired, ubiquitous future.
How is the NHL's reinvention playing out?
The new collective-bargaining agreement means we have control over our largest cost, player salaries. We now pay 54% of our revenue to players and not a penny more. We were at 75%. There's a salary cap [$39 million] and revenue sharing. As a result, all our teams can afford to be competitive. And that competitive balance has enhanced the product that we put out on the ice.
How badly did the lockout hurt hockey?
Based on the vital signs we're seeing, the rebound has been extremely strong. I attribute that to our fans. Our fans knew what we were doing, and they stood by us.
How are those vital signs?
We're fairly certain that revenues will equal if not exceed what we did in 2003--04, which means more than $2 billion. We'll turn a meaningful profit. Before, we were losing almost $300 million a year. We're also likely to set an attendance record. Ratings for Hockey Night in Canada are up over 20%. Our U.S. regional ratings are up over 30%.
What about U.S. national TV? You're now on Comcast's Outdoor Life Network, which has a smaller audience than your ex-partner ESPN, and you're getting no rights fees from NBC.
Instead of being one of many on ESPN, we needed a partner that valued us as much as we valued us, and we're getting that with Comcast. OLN is a work in progress, and NBC had a magnificent first broadcast. The overnight ratings came in at a 1.5 audience share, and NBA is in the low 2's now. So that isn't bad.
Are there still clubs in the red?
Yes. To have expected every club to get healthy immediately would be too high an expectation. I do expect over the next couple years that all our clubs will break even, if not make money.
How's the NHL using technology?
We're providing video on demand to Comcast. We're also in talks with Apple to do video highlights on iPods. And we're starting an NHL TV Network in the U.S. next fall. We already have a network up in Canada. It will be 24/7 hockey--highlights, features, and old games.