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Lightning Round: ESPN deal won’t energize stagnant salary cap caused by COVID, says Bettman

The lost revenues will take years to recover from.

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2020 NHL Draft - Round One
SECAUCUS, NEW JERSEY - OCTOBER 06: NHL commissioner Gary Bettman prepares for the first round of the 2020 National Hockey League Draft at the NHL Network Studio on October 06, 2020 in Secaucus, New Jersey.
Photo by Mike Stobe/Getty Images

Yesterday, the NHL and ESPN announced a new media rights deal that is finally bringing the league into the TV world through Disney and Hulu. With the $400 million per year deal plus about half the American pot still to be bought, many people expected the current flat cap to skyrocket, at least a little bit.

Unfortunately, since we’re still in the middle of a pandemic (maybe you’ve heard about it), league revenues last season and this season are massively down. The NHL, like most sports leagues, are ticket sales driven, and there’s been very little of that this year. While a big TV deal from ESPN boosted the NBA’s salary cap tens of millions of dollars, they were in a much healthier economy in 2014. The additional money the NHL is getting compared to the old deal with NBC will be more recovery money than profit/growth money.

This is because the NHL players have essentially taken out a huge loan from the owners in order to keep their money coming in (aka escrow). This money (as well as Seattle’s expansion fee) will in part be paying the owners back as they definitely didn’t get 50% of the revenue in 2020. If you think about it this way, the league should’ve had a ~$40 million this season, but it was inflated using escrow to be flat. As a result, it’ll be flat for the next few years.

During his press conference with the ESPN boss and the media, Commissioner Gary Bettman revealed that this revenue hole will require four more years of a flat cap — or near flat, meaning maybe a million or so dollars in growth.

The NHL is still significantly behind in terms of viewership and reach as compared to the major sports leagues in America, but this is still a significant step along with the $5 billion deal with Canadian broadcaster Rogers in 2013 (that was for 12 years).

While this is terrible timing for the Tampa Bay Lightning (though, not so terrible considering September, 2020), all the other competitive teams in the league will have to play under the same cap. There will be loopholes and advantages found from a lack of cash, and Seattle’s introduction next season. The smart teams, hopefully like the Lightning, will be able to find a way.

Now, if only we could get rid of NTCs.

Also in money news, you’ve heard that Evander Kane filed for Bankruptcy in January after piling up massive loans to creditors. Kane notoriously spent more money than he had on himself and his many dependants, and well, here we are. Yesterday, it was reported that he is hoping to get his contract with the San Jose Sharks (which has more than $28 million left in it) in order to — and this is the legal term — screw over his creditors out of that money.

The Sharks, who are frankly also in spending hell, seem on board with taking $7 million off their books as they find ways to get rid of the massive contracts they have for lots of old, bad players on their old, bad team. The full story is on The Athletic, with Sportsnet having an un-paywalled short version (plus my slightly longer short version above).

“Why would Kane consider negating his lucrative contract? The creditor source said it is unclear, but given the emerging vitriol between the parties, Kane may want to deprive creditors of their main source of financial redress. Athlete bankruptcies are not uncommon, but the harsh friction already evident between Kane and the creditors is.” [The Athletic]

This is some very LA Kings stuff of the Darryl Sutter/Mike Richards era if you ask me. Also, fully unsurprised Sutter has found a job again. The NHL, I tell you.

Lightning Links

Former Bolt Ryan Callahan has joined the MSG Network as an in-studio guest. He’s been on the panel before, much to the joy of viewers.

In some pretty stressful news, the Lehigh Valley Phantoms vs. Binghamton Devils AHL game last night was cut off due to AHL COVID Protocols just as the second period was set to start. Obviously some tests came back, but I have to worry whether the damage was already done by letting the players interact on the ice for over 30 minutes. The game was suspended after one period with the score tied 1-1. We’ll have news tomorrow on if/how/when the game will be rescheduled.

This is an unconfirmed tweet from a fan, but if players were doing that, it undermines all the work the teams and league has undertaken for players and fans to have a season. My opinion, but jeopardizing that seems wholly unprofessional. Wear a mask! It won’t kill you, but the virus might. And at the very least, it creates this completely embarrassing affair.