Revenue Sharing in the NHL how Does It Work

[sawchuk1971]

I was watching a video from tsn.ca and it had darren dreger saying the NHL has a revenue sharing system in place if the higher salary cap becomes unaffordable to small markets..

I got a question...how does the revenue sharing system work? luxury tax perhaps?

 

[Yukon Joe]

I was watching a video from tsn.ca and it had darren dreger saying the NHL has a revenue sharing system in place if the higher salary cap becomes unaffordable to small markets..

I got a question...how does the revenue sharing system work? luxury tax perhaps?

No, not a luxury tax. NHL has a hard cap.

I believe it comes out of league revenues - almost certainly broadcast rights. Some amount of money that might otherwise have gone to the top 10 or so teams instead gets sent to the bottom 10 or so teams in order to equalize revenues.

 

[Dr Robot]

The top 10 teams in the NHL take 6% off their earnings then throw it at the bottom 20 and call them poors who need to stop complaining. The other leagues spread 50% across the board for reference.

 

[mouser]

The details are in Article 49 of the CBA. https://cdn.nhlpa.com/img/assets/file/NHL_NHLPA_2013_CBA.pdf

High level details:
- The revenue sharing pool is 6.055% of HRR. With an estimated $6.6B HRR this season that’s a $400m target revenue distribution pool.

This $400m comes from three sources:
- 50% of the total $400m from the top 10 revenue teams in proportion to their revenues.
- 35% of playoff gate receipt for all teams regardless of their revenue (note this is 35% of playoff gate, not 35% of the $400m commitment)
- If the previous two sources are not enough to fulfill the full 100% $400m pool then any remaining contributions to the sharing pool come from league-wide revenue sources Ike tv contracts and sponsorship which would otherwise have been split between the 32 teams.

Note: it is possible for a team to both receive revenue sharing while also paying into the revenue sharing pool if they make the playoffs.

The revenue distributions are more complicated, but distributions are proportional to how much revenue a team generates. With a maximum cap on how much a single team can receive. Teams generating more revenue will receive smaller distribution amounts than the teams generating less revenue. Any team generating less revenue than the league average is likely receiving a revenue distribution of some amount.

Note that distributions are all based on how much revenue a team generates, whether the team’s bottom line is profitable or losing money does not matter.

 

[Golden_Jet]

I was watching a video from tsn.ca and it had darren dreger saying the NHL has a revenue sharing system in place if the higher salary cap becomes unaffordable to small markets..

I got a question...how does the revenue sharing system work? luxury tax perhaps?

Currently 35% of ticket playoff ticket revenue goes to revenue sharing, I don’t recall how the rest of the money is derived.

 

[LadyStanley]

Central revenue comes from national TV contracts, league sponsors, royalties on merchandise, profit from Fanantics online sales. And profits from league events (e.g., Winter Classic, Stadium Series, 4NFO, international games, World Cup, etc.). NHL auctions.

(Note, team stores sales are not included. Nor are player image/likeness payments to the union.) And realize that charity arms of teams are a separate category not included.

 

[Noldo]

What is the likely developments in this front going forward?

Do we expect that either party would push for more revenue sharing as part of the next CBA?

Would luxury tax type elements (increasing revenue sharing in a way that would allow teams with large revenue to spend more) be just a daydream of agents or could there be actual appetite among owners to consider such options?

 

[mouser]

What is the likely developments in this front going forward?

Do we expect that either party would push for more revenue sharing as part of the next CBA?

Would luxury tax type elements (increasing revenue sharing in a way that would allow teams with large revenue to spend more) be just a daydream of agents or could there be actual appetite among owners to consider such options?

I expect the current 6.055% of HRR committed to revenue sharing will increase in the new CBA. By how much I don’t know. Maybe 7-10% of HRR. Will be very interesting if it goes higher. I doubt the NHL is interested in redefining a new revenue sharing system for the next CBA, but not impossible.

Regarding Luxury Tax, that’s a pipe dream by media pundits and agents. The collective NHL owners aren’t interested in a luxury tax. The NBA is the most prominent league with a luxury tax and the majority of NBA owners would prefer they had a harder salary cap like the NHL without the luxury tax option. Every new NBA CBA has made the luxury tax penalty progressively more punishing, but the collective owners haven’t achieved their longer term movement towards eliminating it completely.