Monday, February 2, 2009

Revenue Sharing 101

With all the talk this afternoon involving the Islanders and Revenue Sharing (note: tomorrow the fifth edition of my series, "Playing Below Capacity," will be published around noon. Fittingly, I will take a look at the Islanders), I figured I would outline what it takes to become eligible for revenue sharing in the NHL. I still plan on attempting to project these figures in the near future, I just haven't found time just yet. For some explanation of figures I will be using to do this, check out my post from last week here.

After reading up on revenue sharing last week in the CBA, there are four requirements in order to qualify for revenue sharing to begin with. There are further sub-requirements that designate how much that revenue sharing check will get you. First, the four requirements:
  1. The club must not be in a market that reaches over 2.5 million television sets for the season. That list can be found here.
  2. The club is within the top 15 clubs in terms of revenue.
  3. The clubs revenue growth rate (%) from the previous season ('07-'08) to the season just ended (currently; '08-'09) must be equal or higher than the NHL average growth rate (%).
  4. The clubs paid attendance average must be over 14,000 (for '08-'09) or the average attendance capacity percentage must be over 80 %.
If a club meets all these requirements, then they are entitled to a full maximum share of the revenue sharing funds. The first requirement knocks out 7 teams immediate, all of which are American. The Rangers, Devils, Islanders, Kings, Ducks, Blackhawks, and the Flyers are all ineligible under the current CBA to receive Revenue Sharing Funds. Like I said, I have not ran the numbers on this yet, but if I had to guess I would say no share to any team goes over $20 million. Furthermore:
  • A club that meets the requirements but has been apart of the program before (but not as of last season) will receive 75% of a full share of the funds.
  • A club will receive a 60% share if it is the clubs second year in a row in which they qualify for the program.
  • A club will receive a 50% share if it is the clubs third year in a row in which they qualify for the program.
The idea behind the program is not to keep franchises afloat using league-created revenue and player escrow funds; but to rather support a club shortfalls along with letting the club know to get their act together in the near future. As the links show above, their is a current debate going on about how fair the TV market rule is. I see it as fair. For a long time now (business-wise), the Islanders have been bottom feeders on and off the ice. They are in a solid market with a great TV deal, and although they face challenges few other teams do with two other teams in their direct market, the Islanders can be successful.

That's all for now, maybe more later, but if not check back tomorrow for the fifth edition of Playing Below Capacity.

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