NHL
...mo from NBC, and Bernadette Mansur from Reebok. As hockey was increasing in popularity, its seasonal rival, the National Basketball Association, was slowing down considerably. This was due to the loss of many star players, such as Michael Jordan. Along with this, Major League Baseball was experiencing a player’s strike. This opened the door for tremendous possible expansion for the NHL and could acquire new viewers by winning the hearts of many new sports fans. The league took advantage of this and increased exposure by signing their first network television contract in over twenty years with FOX in 1994 for $155 million. ESPN had also recently negotiated a five season, 80 million dollar contract with the league. In Canada, Molstar purchased the rights to broadcast all games within the country. In turn, Molstar sold the rights to CBC for its “Hockey Night In Canada”, which was a double header every Saturday night, and also sold the rights to broadcast a game a week to TSN, a cable network. The NHL had developed several partnerships with popular sports sponsors including NIKE, Dodge, Coca-Cola, and Anheuser-Busch. The corporate sponsors committed approximately $20-25 million annually to the National Hockey League. Despite all this success, all the teams in the NHL were worried about the weak financial status of some of the unprofitable teams in the league. These unprofitable teams were forced to cut back on player salaries, which led to icing a less competitive team. This resulted in smaller crowds at their home and road games, even when they were playing against the top teams in the league. This meant lower gate revenues for the highly competitive teams. The owners of the teams, especially the less competitive ones, asked for a salary cap on player salaries, but the Players’ Union obviously did not agree with this, which caused a labor dispute that lasted 103 days. Players ended up losing about 40% of their salaries and owner losses were estimated in the seven figures. Then, in January, a six-year contract was negotiated between the Players Union and the owners with many changes as seen in Exhibit 6 of the case. Many executives believed that more work needed to be done in raising awareness by promoting their star players. So hockey players began appearing in public relations events such as photo spreads in magazines. One such featured player was Sergei Fedorov of the Detroit Red Wings, who appeared in Vogue and GQ. The National Hockey League also put a lot of emphasis on fan development. Executives believed that the best way to create a new fan was to put a stick in their hands and let them participate in hockey. Rick Dudley, COO of NHL Enterprises, stated, “the best way to create a fan is play the game”. They decided to go after street hockey fans, in order to draw new fans to ice hockey. The NHL created a series of grassroots marketing programs, directed at developing the youth markets. As seen in Table C in the case, NHL Breakout was one such off-ice traveling tournament that would travel to ten cities and was funded by corporate sponsorships. These were successful attempts to get people to play hockey and hopefully create new ice hockey fans for life. The essential issue facing the NHL is most definitely fan development. If the NHL successfully increases its fan base, owners, players, and the fans themselves will eventually benefit. The past ideas of the NHL Grassroots Programs are all great ideas to help increase public interest in ice hockey. However, television coverage is the NHL’s best opportunity to enhance interest in hockey and to reach more fans. After the 1994-95 season, the NHL was generally pleased with its television ratings. When fans were questioned on how they first became interested in NHL hockey, 69.7% said they were first attracted when they saw it on television, as shown in Exhibit 15 of the case. This emphasizes how important television exposure really is to the sport of hockey. Television is a great way to reach a multitude of people publicly. The NHL’s executives also have to arrange that the teams be situated in popular cities and markets where the league can achieve maximum viewers. Adults like to take their families to sporting events for entertainment and a chance to cheer on their home team. This needs to be taken into account so the arenas are in easy to reach, highly populated areas. Gary Bettman felt that the primary problem facing the National Hockey League was a lack of exposure. He also thought there was a misunderstanding of the sport itself. Expansion was on approach the league used to increase exposure. The NHL established new teams in Anaheim, San Jose, Tampa Bay, and Nashville. They also moved teams from Winnipeg to Phoenix and from Quebec City to Denver. This will only help the league because it will increase the popularity of the sport by making it more available to watch. This is turn will increase television revenues because ice hockey will lose its label as a “regional” game when fans from all over the country could have their own “local” team to watch. The cities with the new NHL franchises are located in highly populated areas, and they were chosen because of the great potential to build large fan bases. Looking at Exhibit 7, you can see that the Winnipeg Jets ranked last in the league in Designated Market Area (DMA) households, which defines the reach of the media in that community. It is obvious why the Jets decided to move to Phoenix to become the Coyotes in a larger market. Another concern facing the National Hockey League was due to the location and weather. It was a tough decision deciding if an ice hockey team would survive in an area where the temperature is always warm, and where people have never played hockey in their lives. However, the NHL did an exceptional job at acquiring these new fans from the large market areas. Through market research, they first came up with popular team names that capitalized on current fads. This is evident when looking at the Mighty Ducks of Anaheim. They were named after the popular Disney movie “The Mighty Ducks”, and even set a first year NHL record with 33 wins in their inaugural season. The Ducks have been at the top as sports’ best selling logo. The Sharks, Panthers, and the Lightning are all good examples of the newly established 90’s teams who positioned their experience as entertainment, rather than selling the sport. They had colorful and attractive logos to go along with their catchy titles. The San Jose Sharks have been an exceptional marketing phenomenon to the NHL. According to Financial World, they ranked fifth in merchandise sales, and their licensing sales were fourth best in the NHL in 1991. The Sharks logo was very popular and appealing to fans. The NHL was financially rewarded due to sales of all the officially licensed hockey merchandise. The league gains revenue from every piece of clothing that is sold. The sale of their clothing product is also very important because the fans who wear the merchandise help to advertise the league so the NHL gains exposure, which is very helpful to the league. The 1993-94 National Hockey League season changed the image of the game of hockey. The NHL instituted a new rule that cut down on the number of fights during a game. The new rule was a two minute penalty was assessed to the player who initiated the fight in addition to the five minute major penalty for fighting. The league also made it a fineable offense for players to leave their benches to join in the fight. This lessened the stereotype that hockey was a violent game. The changes seemed simple, but they went a long way in showing what the NHL was really about. The change in image most likely affected the youth of the country rather than the older fans. This can be proven by Exhibit 10 in the case as well, which shows that male teens consider hockey more of their favorite sport than any other category. The NHL picked up on this point and began marketing such items as video games which are currently popular types of entertainment for the youth. They also created the Grassroots program, found in Table C of the case, which encourages anyone to play street hockey and in-line hockey. These programs are NHL Breakout and NIKE/NHL Street, which are very beneficial because NIKE sponsored it and gave out free equipment, which is very expensive. The NHL understands that the equipment is expensive, and they realize that the financial issue limits the talent pool that the league has to draw from because some families cannot afford these costs. They have attempted to solve this problem by developing these excellent youth programs. The NHL should split the market for ticket sales. They can charge higher prices to the companies who buy the luxury boxes, and higher prices for the seats closer to the ice, therefore lowering the prices for the other seats. This would allow lower to average income families to take everyone to a game without spending a fortune, even if they sit far away from the ice. These families are essential to the success of the league because these are the customers that will also be making purchases at the concession stands, and then watching the games on television. The major source of revenue for NHL teams came from ticket sales from their 41 home games. This is because the average price of a hockey ticket is $33.66, which is the highest among the four major sports, but according to Exhibit 10, hockey is the least favored of the four most popular sports in the United States. This is an...