Toronto Star

by: Rick Westhead

The National Hockey League is looking for ways to woo back both advertisers and fans – not to mention television networks – as a deal with players seems within reach. Even rule changes are on the table.

Then Toronto Maple Leafs star Mats Sundin finally returns to the Air Canada Centre ice, he might look more like a motocross racer than a hockey player.

For nearly a year, the National Hockey League has quietly been working alongside U.S. athletic apparel company Reebok to redesign the uniforms of its 30 teams. Instead of the oversized tops players have worn in recent years, the NHL is considering introducing snug, form-fitting jerseys that taper to the waist. The new shirts might even boast built-in shoulder pads.

“They’re more like a football lineman’s uniform,” said a person who has reviewed the preliminary designs. “It’s definitely a different look.”

With the NHL and its players union reported close to an agreement to end their venomous nine-month standoff, which shut down the hockey season for the first time in history, the radical uniform redesign and a potential overhaul of league rules, both of which would require the approval of league owners, underscore the lengths to which the NHL may need to go to rekindle fan interest and bolster revenue.

Hundreds of millions of dollars in income are at stake – not just for a cash-strapped league, but also for the many businesses that feed off the sport, from broadcasters and sponsors to ticket vendors, concessionaires and merchandise retailers.

A report prepared last year by former U.S. Securities and Exchange Commission head Arthur Levitt, who was hired by the NHL, alleged that the league, which generated a collective $2 billion (U.S.) worth of revenue, lost a combined $273 million in its 2002-2003 season, and that 19 teams had operating losses that averaged $18 million.

Now, with its players on the verge of buckling to the demand of owners to accept a fixed salary cap that would limit salaries and help teams staunch their financial losses, the league still needs to address a handful of critical questions that include: whether U.S. fans, especially in markets such as Atlanta and Miami, will flock back to arenas; if any American TV networks will offer to show NHL games despite recent dismal audience ratings; and whether league sponsors who have already found other ways to spend marketing dollars will return to hockey.

While hockey fans in Toronto and Montreal are sure to tune in to the NHL, it’s less certain whether consumers in nascent markets will embrace the sport.

“That’s the big elephant in the corner nobody wants to talk about,” said Sal Galatioto, a New York sports banker who advised Walt Disney Co. on its sale of the Anaheim Mighty Ducks.

Galatioto and several other sports bankers said a handful of teams that have struggled financially in recent seasons, including the Carolina Hurricanes and Atlanta Thrashers – who have each lost as much as $20 million a season – and the Pittsburgh Penguins, might remain in jeopardy when the sport returns.

“A lot of people have lived without hockey and their spending patterns have changed,” Galatioto said. “Will people in places like Nashville be willing to spend $85 on a ticket again? That’s a big question.” The uncertainty that has ensnared the NHL has also affected related businesses.

For instance, NBC, which would show a limited schedule of hockey games this fall if the owners and players union bridge their divide, is in the midst of trying to sell its advertising time for the fall TV schedule. But because there’s no deal in place, NBC – not to mention Canadian broadcasters TSN, Rogers Sportsnet and the Canadian Broadcasting Corp. – haven’t been able to convince advertisers to commit.

Major hockey advertisers, such as Ford Motor Co. and Molson-Coors Brewing Co., are preparing backup moves, in case a deal fails to materialize.

At the same time, retailers are counting on a return to the ice to help spark sales of NHL jerseys, hats and other memorabilia. Last year, sales of NHL merchandise swooned 59 per cent from 2003, according to data compiled by sports research company SportScanInfo.

Several Madison Avenue executives compared the NHL’s quandary to the one faced by Major League Baseball after a players strike cancelled the 1994 World Series. When a new labour agreement was finally reached, baseball launched a $10 million ad campaign that focused initially on vendors and ticket sellers instead of millionaire players. Baseball also cut ticket prices by as much as 50 per cent, handed out free souvenirs and held special events aimed at children.

The NHL will likely adopt a similar approach, several sports marketers said.

Yet off-ice marketing schemes alone won’t help the NHL.

In a bid to jumpstart goal scoring, a move the league believes is critical to helping spur interest in the U.S., the NHL on Monday will begin a three-day series of scrimmages in Toronto to test possible rule changes.

Results from the scrimmages, which will feature larger goals, may be used by the league to tweak its rules in a bid to make the sport more appealing to U.S. TV networks and advertisers, many of whom have grown disenchanted with hockey as holding and hooking have stifled scoring chances.

“The NHL is going to have to address the entertainment side of this business and get rid of 1-0 games and ties and allow the game’s skilled players to shine,” said former Pittsburgh Penguins owner Howard Baldwin, now a movie producer. “They shouldn’t think that because the game is back, people are going to waltz back through their doors.”

Last week, major U.S. sports cable channel ESPN abandoned its $60 million option for the NHL this fall. The Walt Disney Co. unit’s decision came after the sister broadcaster ABC also spurned the NHL, which subsequently signed a two-year revenue-sharing agreement with rival network NBC.

Under its agreement with NBC, the NHL won’t receive any money until after the network recovers all of its production costs from ad revenue.

Without having its games on ESPN, the league would be hard pressed to rebuild a following.

Galatioto Sports Partners - 335 Madison Avenue - 22nd Floor - New York, NY 10017 - Tel: 212-850-4900 - Fax: 212-850-4913