Wednesday, October 15, 2008

Still a growing brand?

"Let me remind you that credit is the lifeblood of business, the lifeblood of prices and jobs." --Herbert Hoover, circa 1929

"We're acutely aware of what's going on out there, but it hasn't yet impacted us," -- Gary Bettman, circa 2008

Despite the implosion of the world economy over the last two weeks, the credit crunch that has reduced much of the banking industry to the state of locking the vaults and hiding the keys and a stock market that has more twists and turns than the scariest of rollers coasters at Canada Wonderland, in Gary Bettman's NHL, right now its 1928...

The Commish has been busy outlining the state of the game which in his opinion is still in pretty solid shape, with nothing to fear but fear itself perhaps. Going so far as to advise that in his opinion the NHL is still in a growth mode.

While others may suggest that the leagues financials aren't quite as rosy outside of the six Canadian franchises and a handful of stateside ones, Bettman has entertained no notions of any storm clouds quickly moving in on his game.

Citing season ticket increases (purchased before the downturn we suspect) Mr. Bettman is still quite bullish on his league and its fortunes in this early stage of the 2008-09 season. He does however promise to remain vigilant and watchful for any signs of economic troubles (oh maybe triple digit stock market losses on a daily basis, rising unemployment figures and banks that don't open up in the morning) that may be heading the NHL's way.

"I have no doubt that, over time, if it's long enough and bad enough, it will have some impact, but based on what we're seeing right now, our business seems to be strong."

It's with legitimate concern that those outside of the NHL offices might suggest a steady watch on the situation, the NHL which is very much a gate driven league, could find that as the economic crunch continues in the USA their weaker markets may find it harder and harder to lure the fans into the rink.

Even the gold standard franchises may find that as their fan base suffers the economic downturn, the spin off of revenues may drop off as well as the wallets get closed and the fans hunker down for tougher times.

Already this season there have been disturbing things coming out of the Nashville experience, a story which seems to have yet composed its final song.

As for the Canadian teams, as the Globe and Mail examined in a recent series of articles the NHL of today is finding that a good portion of its transfer payments come from north of the 49th, to the tune of some 40 million dollars last year.

That win fall for the struggling partners of the south may quickly dry up however, as those numbers were calculated on a stronger Canadian dollar, one that was close to par with the US dollar. Since the current financial storm has started the Canadian loonie has taken a bit of a hit, trading around the 84- 86 cent range the last few days or so, a situation that if it continues will reduce those dollar flows heading south.

Of the major sports in North America, the NHL may be the most susceptible to the ravages of a declining economy. From its gate driven economy to the lack of a television contract laden with riches in the USA, the financials could look down right scary should the anticipated recession be as deep and as long as the economists and government Sooth Sayers suggest.

Of even more concern, is the state of the leagues salary cap system which as Stephen Brunt outlined in the Globe a few days ago, is one that isn't going to be particularly kind to those teams that continue to struggle on the balance sheet.

The NBA was proactive in their recognition of the downturn, having already laid off at least 80 employees in anticipation of tough times, and that's a league with a very generous TV contract and a marketing niche laden with clothing and memorabilia sales.

The NHL doesn't have quite the same cache with the buying public of American Sports fans and their discretionary income (that which is left) and still struggles to make its place in the non traditional hockey markets.

They are but a few of the economic streams that might be worth watching, the problems may be few today, but as Mr. Hoover quickly found out in 1929 they can multiply rather quickly once the momentum starts to build.

One has to hope that Gary Bettman won't have his own words of wisdom set to be recounted many years down the path, forever enshrined as Hoover has been for many a generation.

"I'm the only person of distinction who has ever had a depression named for him."-- Herbert Hoover, thoughts post Depression era

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