Tuesday, January 23, 2018
Tampa Bay Lightning

Labor deal has Lightning owner Jeff Vinik optimistic about future

In the end, owner Jeff Vinik said, the Lightning will be better off financially because of the new collective bargaining agreement.

With the owners now getting 50 percent of revenue (up from 43 percent under the old agreement) and revenue sharing of $200 million a year (up from $150 million), there certainly will be more money in every owner's pocket.

But consider this: Assuming league revenue grows 6 percent annually (it grew 7.2 percent under the old deal), the salary cap in 2021-22, the last season of the new 10-year deal, would be $96 million, according to an analysis by Canada's Globe and Mail newspaper. The salary cap floor would be $70.9 million.

The Lightning's payroll this season: $63 million, about $7 million under the $70.2 million cap.

In other words, Tampa Bay, a small-market team that annually loses money and is in the lower tier of the league in terms of revenue, according to Forbes magazine, must drastically grow its business to keep up with the projected salary inflation.

"Those numbers don't scare me," Vinik said. "I hope the league does prosper to that extent. … To the extent we get to that level, that would be awesome, because that means the game of hockey is really booming in North America."

Though Vinik would not say (and probably can't say yet) if the new agreement makes the Lightning a break-even franchise or even a money-maker, he did say, "I think if we continue to do what we've done the last three years — we've built a great organization on and off the ice — we should be in good shape."

One reason he cited is expanded revenue sharing.

The distribution is difficult to figure because even this season the amount available will be calculated on total league revenue. Individual team revenues will determine which organizations benefit, though the formula is not clear.

According to the NHL, "The distribution of the revenue-sharing pool will be determined on an annual basis by a revenue-sharing committee on which the (players union) will have representation and input."

There also are those who do not believe expanded revenue sharing will have much of an effect.

In an email, John Vrooman, a sports economics professor at Vanderbilt, said the NHL's $200 million revenue sharing "is considered a joke in a league with $3.3 billion in revenue."

"The owners argue this sharing arrangement is comparable to (Major League Baseball), where national revenue is shared equally and 31 percent of local revenue is pooled and shared. MLB shares $400 million on local revenues of $6.6 billion, which is about twice the size of NHL. The difference, of course, is that national revenue in MLB is about three times the size of NHL revenue even in relative terms."

And Drew Dorweiller of the Montreal valuation firm Dartmouth Partners told Toronto's Star newspaper that at best "(revenue sharing) will help nudge some of the marginal teams into profitability. … But (for) some of the lost causes like Phoenix and Nashville … it probably will confirm that nothing can be done."

Even so, Vinik said, "I think it's great for the league that we have enhanced revenue sharing. I think it will help many teams, including the Tampa Bay Lightning. It's a very important component of revenue for a lot of the teams, including us."

Bottom line, Vinik said, the deal is "a fair deal for the owners and the players. … It does help us on our long-term path for having hockey survive in Tampa Bay for many years to come."

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