As detailed in PKA's latest pro sports databook, "The Business of Hockey", NHL officials made it clear that unless teams control rising salary costs, the league will be forced to take action when the collective bargaining agreement expires in 2004.
"Hockey is polarising dangerously into haves and have-nots," says PKA sports analyst Terri Ritenour. "Small-market teams are grooming young players who end up skating away to bigger salaries in larger markets. Fans are finding it hard to stay dedicated to losing teams, with consequent drops in game attendance and club revenues."
The NHL, according to the new Kagan report, featured 225 players making at least $1 mil. in salary in the 1998-99 season, up 14% from the prior year. The average hockey salary has increased 157% since 1992, from $467,000 to $1.2 mil. That's faster than for any other major league sport: National Basketball Association +125%; National Football League +53%; Major League Baseball +23%.
The NHL has proven its spectator appeal by charging more than $43 per ticket on average and filling arenas to 90% capacity in 1998-99. ABC and ESPN are investing $600m over five years in anticipation that, for the first time ever, hockey will develop a significant television following. Annual media rights fees have soared 619% since 1992, enabling salaries to rise 157% even though ticket revenues are up only 82%.
Some teams paid as much as 77% of revenue toward player salaries, the PKA study shows. A three-year comparison of salaries to ticket revenue indicates payroll rising 11% faster than arena ticket sales. Kagan expects payrolls to surpass gate revenue by 2001 if the current situation persists.
"Players have benefited from strong gains in media rights revenue," Ritenour said, "but they've translated periodic windfalls from television into annual higher salary demands. The owners say the trend isn't their friend."
