Guest blogger: ilb2001 … a look at revenue sharing under the new CBA


(Editor’s note: Special thanks to ilb2001 for a guest blog on a topic I couldn’t even begin to tackle. Frankly, the CBA gives me a migraine and I hope to never understand it. Meanwhile, if anybody wants to volunteer to do a guest blog between now and the opening of camp Sept. 11, please drop me an email at


By ilb2001

Good morning, boneheads!

Since the 2004-05 lockout, the NHL has done a great job in increasing its revenue in general, and started to show respectable numbers, closing the gap with No. 3 money maker, the NBA. Considering that close to $1B of total basketball revenue comes from TV contract, compared to just $200M for NHL, the numbers are very comparable ($5B vs $3.3B in 2011-12).

What the NHL has been lacking, however, is any reasonable revenue sharing system which would allow the sport to stay healthy and grow further without having teams struggle to stay afloat. With the recent changes in the NBA system, the NHL remained the only major sport that had a laughable revenue sharing approach. That has changed under new CBA. It remains to be seen whether the system works, but it’s a positive step. Let’s look at some highlights of the new system. The full description is available in the new CBA, article 49 called Players Compensation Cost Redistribution system.

This is how it works.

The first step is to determine the amount of total redistribution commitment — the money that will help low income teams to stay competitive, and have sufficient funds to stay above the salary floor, and closer to salary mid-point. The formula is total HRR from the preceding year multiplied by 6.055 percent. For the 2011-12 season the HRR number was $3.303B, so the amount of total redistribution commitment would be $200M.

The second step is funding of that amount. It consists of 3 steps:

  1. 50 percent (in above case-$100M) comes from the Top 10 highest income teams based on preseason and regular season income. This is when it may become interesting. If you look here ( you will notice that only three teams (Maple Leafs, Rangers, and Canadiens) are truly making money. So those three teams contribute together the largest amount, and teams at the 8-9-10 spots contribute the minimum. Luckily for Mr. Dolan, however (not that we should worry about his financial well-being), the number is capped at 25 percent of total amount per each team.
  2. Next step is interesting. The 16 teams participating in playoffs, regardless of their income during the regular season, will have to surrender 35 percent of their playoff gate receipts. That’s right, ‘heads, playoffs aren’t pure income to teams as some people still think.
  3. If those two steps produce insufficient funds, the rest of it will be funded by the league using its centrally generated revenues, and partially by the players escrow funds.

Now, what has changed drastically, and for the better, is teams’ eligibility to receive those funds. In prior years, teams in markets with more than three million television households could not qualify for revenue sharing. Which means that the Islanders, Devils, Ducks, to name a few, were ineligible. Not anymore.  Those teams are now eligible to receive 50 percent of what the calculations would otherwise dictate. The new CBA also removed some performance parameters. In previous CBA, if the team couldn’t show at least 14,000 average paid attendance, couldn’t prove business growth at certain rate, it would lose a good chunk of its distribution. The other positive step is the removal of what used to be called a mid-point cap. Every low income team tries to spend just above salary floor, some teams higher, some lower. In the past, however, if any low income team tried to add a contract and went above midpoint ($56.3M in 2011-12), they would lose a big chunk of revenue sharing funds. In other words, some teams would be afraid to improve their roster and go by a few thousand dollars above the mid-cap because they would lose millions of dollars in distribution money. Sounds odd, but it’s true. Now, that wording has been removed from CBA.

What it also means, sadly, is that next time you pay for Rangers tickets, you also pay for Rick DiPietro’s contract. And Alexei Yashin’s. Dammit! Oh, well.

Photo by Getty Images.

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  1. I wouldnt mind paying towards DiPietro’s contract if he was still a member of the Islanders but paying for DiPietro to not be on the Islanders roster is not right!!

  2. wow . my head hurts! Good job ilb.

    being a strong capitalist and generally against anything even remotely like socialism, I can’t see why I am in such support of revenue sharing.

    it definitely helps support those fans in smaller markets to have a local team rather than root for some far away team. it sure helps create some fans when a small market team can afford some superstars.

    those tickets are still $100 each for a game, no matter the quality.

  3. tomb – i’m all for free market economies but a 10 team NHL would be a difficult thing for everyone to stomach! The other 27 teams should put out “thank you” banners each time the Leafs, Habs and Rangers play in their arenas from now on!

  4. The best revenue sharing model belongs to NFL, by the way. Granted, almost half of its revenue comes from TV contract ( $5B out of $11B), but still it’s lauded by many as the main reason why football continues to thrive in general, and in small markets in particular.

  5. The Blackhawks have signed Stevie Weeks as goaltending coach! What next Kings hire John Biebe as head coach? Rangers hire Skank Martin as Powerplay coach?

  6. Nice Post Ilb!

    I think the new CBA is fair. It should be a 50/50 split between players and owners.

    The smaller markets need to be profitable. If it takes NHL money to do so than so be it. Or don’t put the team in phoenix, put it in a market where it can survive. But I’ve always wondered if “Mark Cuban” owned the Yotes, if his “Marketing” wouldn’t make that organization profitable.

    Do what ever it takes to fill the building, than go from there.

    The NHL needs 2 more teams to balance out the divisions, so hopefully there is profitable growth in the future….somewhere.

  7. Gravy, Just Gravy on

    Great job, ilb. I’m a financial analyst, and these CBA’s still seem like a foreign language.

    I also feel like tomb does. I guess in some sense, every business operation runs in a similar fashion if you consider each team to be a “function”. While some functions may contribute more to top line revenue growth, you still need HR, IT, Finance, etc.

  8. ilb, i can make some sense of certain parts of the CBA but thanks for sharing your knowledge on a part i new little or nothing about.

    In terms of revenue growth i think given the structure of the new divisions the NHL is obviously seeking expansion out west, be that Portland, Seattle, Vegas, Salt Lake?

  9. ilb, great job!, Thanks for breaking it down.

    Seems I’ve said that to you before, happy tennis.

  10. Thanks, guys. Long summer days, just trying to fill in and share my views with people curious about those small intricacies of hockey business.

    CW- it’s absolutely gorgeous today up in Catskills. Perfect tennis weather, a bit windy for high serving toss, but I’ll take any day instead of 90 degrees weather.

  11. So if Weds. Is hump day for the work week, is August hump month for the NHL off-season?

    Bring on Traverse City. I know we have a plum prospect or two who are going to shine! (laugh track)

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