NHL's rich new Canadian TV deal will have far-reaching impact
Though the NHL's new Canadian TV deal will affect Canadian viewers most, its impact will be felt league-wide in a variety of ways.
The news that broke overnight and was confirmed by the NHL this morning that the league was about to undergo a massive shakeup in its Canadian television rights is massive in so many ways. In Canada, it changes the way that Canadians will watch hockey and where they will watch hockey, but the impact of this move will be felt far and wide.
Rogers, owners of Sportsnet, paid $5.2 billion Canadian (or roughly $4.9 billion in U.S. dollars), to retain exclusive national broadcasting rights for the NHL in Canada starting next season. The company is sub-licensing the iconic Hockey Night in Canada to national broadcaster CBC, the program's home since 1952. French-language TVA will also enter in a sub-licensing deal. Rogers, however, will retain the advertising revenue as having paid for the rights.
The deal also knocks out Canadian cable sports network TSN, which is home to some of the biggest names in hockey on TV including insiders Bob McKenzie and Darren Dreger as well as one of the most respected studio hosts in the sport in James Duthie.
It was expected the deal would be split among Rogers, TSN and CBC, giving everyone a piece of the very large NHL pie, but Rogers' bid blew everyone else out and leads to an incredible shift in the game's TV landscape.
Here are the particulars on the financials (in Canadian dollars) from the NHL:
The financial terms comprise annual payments commencing at just over $300 million in the first year, with gradual annual escalations, increasing to approximately mid-$500 million in the final year of the contract term. These payments, together with an upfront payment amount of $150 million spread over the first two years of the contract, will amount to $5.2 billion in total payments to the NHL over the 12-year term.
So this is a massive revenue victory for commissioner Gary Bettman and the NHL. Every team in the league will stand to benefit from the yearly average of $411.35 million (USD) Rogers will be shelling out for the next 12 seasons. Each team will receive a portion of those earnings, which will surely come in handy for cash-strapped clubs.
This deal is still pending approval of the NHL's Board of Governors, but with the money they stand to make, it's going to pass.
So let's break this down a bit further.
First, for the Canadian fans, here's what Rogers' coverage of the league will entail:
· National rights across TV broadcasts, TV Everywhere, wireless and mobile
tablets, Internet streaming, terrestrial and satellite radio, and
· National rights to all regular season games, all playoff games and the
Stanley Cup Final, and all special events and non-game events (i.e. NHL
All-Star Game, NHL Draft) – in all languages;
· Out-of-market rights for all regional games;
· Ownership of all linear and digital highlights, including condensed
games and video archives;
· NHL broadcast assets: Rogers to operate NHL Centre Ice and NHL Game
· Sponsorship rights to the NHL Shield logo as an official partner of the
· Canadian representation of ad sales for NHL.com.
It is an unprecedented kind of deal in North American sports television. Rogers basically controls everything surrounding live NHL games in Canada with the exception of some regional broadcasts in Winnipeg and Montreal.
The deal also means there will be more games on TV in Canada.
Hockey Night in Canada will also go through some changes.
Canada's public broadcaster, CBC, will continue airing Hockey Night in Canada, but Rogers owns it. An internal memo to CBC staffers explained how that will change:
CBC pays no rights costs for the broadcasting of hockey games. Rogers is bearing the sole risk around hockey revenues; (they sell the inventory and keep the revenue – the overall selling process is yet to be defined), while we continue to make Canada's game available to all Canadians wherever they live.
Starting next year, Rogers will assume all editorial control (all editorial decisions with respect to the content, on-air talent and the creative direction of HNIC – we have the right to be consulted and there is a commitment to excellence) under the new agreement.
It's hard to see just how much CBC is going to benefit from this partnership beyond still being able to broadcast hockey. Without that money from advertising revenue, things could look different for the public broadcaster, though the company incurs no cost for the rights to air HNIC. The personnel could be different as well.
Hockey Night in Canada also airs most Saturdays in the U.S. on NHL Network. Details of the continuation of that partnership were not made clear, but you'd have to expect that will continue in some way.
Sportsnet president Keith Pelley said that the licensing agreement with CBC is only for the next four years. So there could be even more changes in Canadian TV when that deal is up.
The future of Canadian TV icon Don Cherry was also a very hot topic at the press conference regarding this deal. Cherry has become known to hockey fans internationally for his popular Coach's Corner segment on Hockey Night in Canada.
Pelley made no promises about Cherry one way or another, but change could be afoot somewhere in the future. However, the NHL might have some say on that. "[Cherry] is someone we take very seriously," Bettman said.
With TSN losing NHL rights for the next 12 years, it's probably going to be tough for them to hold onto their hockey-centered talent, of which there are many quality people. That leaves some ripe for the picking by Rogers and possibly even American-rights holder, NBC.
The network was also responsible for many of the go-to programs surrounding the NHL Draft, trade deadline and free agency period. Often, their broadcasts were simulcast on NHL.com.
McKenzie maintains that not much will change from TSN's newsgathering regarding the NHL even without the rights. Still, it is hard to believe TSN will be able to hold onto some of their top talent without live NHL hockey for two years.
New faces on NBC may be the only way this really impacts the NHL's American television audience, if at all.
Where this deal really counts for all NHL fans is in the revenue it generates. The salary cap ceiling and floor are both about to go up.
According to an estimate from James Mirtle of the Globe and Mail, after next season, the NHL's salary cap could increase by more than $3 million just from this television rights deal alone. That's merely one example of the massive impact this deal could potentially have on the league.
Another big piece in such lucrative long-term deal is how this will impact the future of the NHL's expansion. With this exclusive Canadian TV deal, adding an eighth Canadian franchise very well could become a more realistic proposition. Rogers certainly wouldn't be one to complain if another team was added to its expansive coverage.
"We don't have any intention of addressing [expansion] in the short term," Bettman said.
Twelve years is a long time though. A lot can change and probably will.
This television deal will massively change things in Canada, but more than anything else, it is a gigantic business victory for the NHL.
The league is at the front-end of a 10-year, $2 billion U.S. rights deal with NBC. To add another $4.9 billion to that over the next 12 years is huge.
As Bettman also mentioned in his remarks, a deal like this is further proof that the game is as healthy and vibrant as it ever has been and the future looks only brighter because of it.
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