How badly will the lockout really hurt the NHL? Maybe not much
"We offer our apology." Those were the first words of a statement released by the owners of the Pittsburgh Penguins, and that is the sentiment being expressed, in varying degrees, by teams and players across the NHL now that the lockout is over and they need you to spend your money again.
Let's assume the sentiment is genuine, and let's hope it is backed up by sincere gestures -- free this, discounted that. But let's not forget: The lockout was a business decision. Any effort to win back fans will be a business decision. And while it's true you can make your own business decision and lock up your wallet, history suggests not many fans will, especially in the long term.
"They will come back," said Rodney Fort, a sports economist at the University of Michigan. "And in fact, we may not even notice any difference."
Sports leagues are businesses that don't want to look like businesses. They want to look like historical, cultural institutions. They want everyone caught up in the nostalgia and competition. In fact, that very dynamic can get the owners themselves into trouble, when they spend more than they can afford trying to win, leading to a labor showdown that snaps everyone back to reality.
If there is concern about the NHL, it is this:
One, this was the league's third lockout in a row. It has lost almost two full seasons since 1994-95. Past performance does not guarantee future returns, so what if this causes unprecedented damage?
"Sports really depend on getting people hooked on the drug, and the NHL has now given hockey fans three opportunities to go through detox," said Victor Matheson, a professor of economics at the College of the Holy Cross. "There's a real question about how much you can do that before you have fans say, 'You know, I have a lot of things I can do with $1,500 besides buy a season-ticket package.' "
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Two, the league has been trying to reach a new level. COO John Collins' goal has been to have hockey fans root for teams other than their own, to have casual fans at least watch big events and maybe get sucked in. A major vehicle was the Winter Classic, the annual outdoor showcase on U.S. national television New Year's Day. This one would have drawn a record crowd of 110,000-plus to Michigan Stadium to see the Detroit Red Wings host the Toronto Maple Leafs. It was canceled.
"My real sense is that hockey didn't lose their core base of fans, but I think they really did do something to marginalize the sport among casual fans," Matheson said. "Now, mind you, if all you need to do is sell 18,000 seats 41 times, you don't need a lot of casual fans. But that also makes it difficult to either grow your sport or to grow your sport into new markets. We've seen clear failure of the NHL in a lot of these new markets."
But I have long maintained that the greatest strength of the NHL is that it can rely on its hardcore fans, while its greatest weakness is that it has to. My suspicion is that this lockout, even though it was the third one in a row, won't change that. My suspicion is that the NHL damaged its brand, will suffer short-term pain and might have stunted long-term growth, but generally it will come back strong where it was strong, weak where it was weak, with the same challenges it had before.
Irony No. 1: That is both a reason for and against the lockout. If you're trying to grow the game in non-traditional markets, you can't afford to keep interrupting momentum. But if you're struggling in non-traditional markets, you can't afford to keep playing under a labor agreement that doesn't work for those franchises.
Irony No. 2: While hardcore fans bemoaned the loss of an 82-game season, they will love a 50- or 48-game season. Every game will matter essentially twice as much. It will be a sprint to the finish, and the playoffs will be as thrilling as ever, and the Stanley Cup will be awarded, and everyone will move on. The NHL still hopes to generate $2 billion to $2.3 billion this season. The Winter Classic will come back next year, and the Big House will be packed. What lockout?
"It seems like sports fans are pretty quick to forgive and forget," Matheson said. "In most situations, we've seen things bounce back right away."
Fort has studied the aggregate league level of attendance of all four major North American sports leagues since the data began being recorded. (Yes, he still includes the NHL as a major league. Others do not.) He has also studied revenue data, though that does not go back nearly as far. He has identified trends and break points.
Wars cause break points. Lockouts and strikes do not.
"Nothing happens, in any sport," Fort said. "Some earlier work that handled this issue a little differently found very short-term sorts of changes, so you might see a blip in a return. But these did not last very long at all. There's other work with more disaggregated data that show fans' memories are very, very, very -- if I may -- short."
Matheson has studied the effect of work stoppages on the four sports leagues since the 1980s. The '94 baseball strike that canceled the World Series caused a blip. New stadiums stabilized attendance instead of causing a boom, as they usually do. But the blip was temporary, and that was about it. In the NFL, NBA and NHL -- as well as other baseball examples -- work stoppages had little to no effect.
"Attendance and viewership bounced back essentially 100% immediately," Matheson said. "At least the first evidence we have suggests no long-run effect at all."
Look at NHL history: The NHL played a 48-game season in 1994-95 after a lockout ended in January. Throw out the numbers from that season, because it was an anomaly, and draw a line from '93-94 revenues to '95-96 revenues. The growth rate was the same as it was before.
"It's like nothing ever happened," Fort said.
The NHL became the first league to cancel an entire season in 2004-05. It was supposed to be Armageddon. But when the NHL returned, attendance went up, and revenues, which had been tailing off, went up at a higher rate. Revenues increased for seven straight seasons, reaching a record $3.3 billion. There were lots of reasons -- new rules, the arrival of Sidney Crosby and Alex Ovechkin, TV deals, a strong Canadian dollar -- and all of them trumped fan anger and apathy. Note that in the coming years the NHL will negotiate a new lucrative Canadian TV deal and might add two Canadian expansion teams.
This drives fans crazy. It makes them feel like suckers. They know if they come back running with a fistful of dollars, they will not deter this from happening again and again and again. And they're right.
But fans and media tend to be emotional and abstract, and owners can be cold and calculating. So can the players' union. The NHL and NHL Players' Association would not have allowed a lockout, or allowed it to last so long, if they didn't think it was worth it, at least in the long run.
Fans often don't do what they say. Media often overreact and opine without all the facts. The owners have the actual data. They know how many fans are canceling their season tickets, how many sponsors are defecting, what their commitments are in the future. The players' union does not have all that data, but the leaders can take their cues from the owners. If the owners feel they can hold out, the damage to the business can't be that bad, can it?
"Oh, boy, do [the owners] ever know the data," Fort said. "They don't just know sort of like aggregate numbers. They know which person is spending how much more or how much less, and they're able to categorize those people into meaningful profiles of different types of fans. I know this is going to sound outlandish, but there are literally millions of data points. Because so many people spend electronically, they have it down to the detail of, 'How many hot dogs did he buy for his kids?'
"Nobody knows more about their revenue streams than the owners do. Of course they take that into account, their best forecast, as they're thinking about how long to let a lockout go. … Owners behave pretty much like other businesspeople. There are a few who behave like fans with bigger checkbooks -- they don't just buy tickets to the game; they buy the whole damn team -- but not very many."
If you truly don't care, you haven't read this far. If you don't want to spend, that's completely understandable. But if you do decide to spend again, it is possible to do it without feeling like a sucker.
Come back, but come back with your eyes open. Get lost in the action and storylines, but keep them within the frame of the rink or the TV. Revel in the romance and history, but know it's only important because we make it so.
See the NHL for what it is -- a business, entertainment, the highest level of a great game. If it's worth your emotional and financial investment, that's your decision and yours alone.
You love the NHL, and the owners and players love you for it. For a change, they will make a point of telling you. Love means never having to say you're sorry, but of course, saying you're sorry is smart.
