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Pucks and PR

Because hockey is more than just a game

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The NHL salary cap is many things above simply a dollar amount.

In a unionized environment, it’s a major component of labour discussion and debate. In management offices it’s a driver of decisions. In fan circles it’s a heated topic of debate. To name just a few functions.

With today’s announcement that the salary cap will be going up again, NHL head office want nothing more than for the salary cap to serve as a symbol for a prosperous league. As a set percentage of league revenues, the salary cap can quite reasonably be sold as just that by the NHL.

But the devil is in the details.

League revenue is much like a high school class average. It might be good at first look, but everyone forgets that it’s an average. While the high marks push it up, the low marks bring it down.

So to pander to the analogy, the Toronto Maple Leafs sit at the front of the classroom, while the Phoenix Coyotes sit in the back planning their next spit ball attack.

Forbes reported that in 2009-10, the NHL had 16 teams in varying states of financial loss. In its team valuations, it called the NHL a ‘two tiered league’. That is a damning analysis of a league that prides itself as a model in professional sports.

So while the salary cap may have jumped a whopping $25 million since its inception in 2005, it isn’t nearly as telling as NHL management may have hoped. Increasing league revenues look nice, but how does a league handle the image issues that arise from having 53 percent of teams in the red?

To be honest, they don’t. One can try, and the NHL has tried, but fans see what they want to see. All that can be done is manage the fallout. You can’t spin money loss. When losses are consistent, measurable and historical, there is no ‘we had a bad year’ defense as was tried by the NHL during the recession.

In the modern sporting industry, as in most industries, few strategies help a brand’s image more than open, honest and concise communication. The NHL has a reputation for doing anything but that.

The competing interests of NHL stakeholders makes that a difficult strategy. So while it would be good from an overall public standpoint for the league to be open about plans for relocation, expansion or team closure, it would be horrible from a business perspective. Attracting investors and fans in struggling markets is hard when you openly admit a product is broken.

As a result, throwing open the doors to the boardroom just won’t work for the NHL. But strategically increasing communication certainly wouldn’t hurt.

In a market like Phoenix, it’s time for the NHL to be completely open with fans and investors. It has to be a ‘use it or lose it’ message. Either the team gets support this season from local fans (through ticket purchases) and business (through TV deals, luxury box sales, etc.), or the team goes elsewhere.

That strategy is being used in Winnipeg. ‘Fill the building, or this won’t work’. It’s on the nose, but it’s the truth. In a small Canadian market, the building needs to be full and sponsors must spend. Future markets, such as Quebec City and Hamilton need to be told the same thing.

In other markets, such a hard-hitting approach could easily backfire. In those cases, simply reviewing the marketing and sales strategies of the teams could yield results. If the market only reacts to a successful team, then there is little for the league to do but trust that the hockey operations department will generate a winner. Doesn’t matter how strong the communication strategy is in some markets. If the team doesn’t win, the fans don’t come.

Ultimately, the league can’t hide behind its high achievers. Revenues might be up and there is no problem with the league being happy about overall success. But stakeholders need to know that the league recognizes the problem areas.

If the league doesn’t improve its communication about struggling markets, there is a real chance that fans and sponsors alike will start doubting the league’s ability to manage challenges.

Financial struggles are natural for any business and dealing with them can be difficult. But there is no reason to let manageable financial issues lead to public relations problems as well.

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