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Why revenue sharing might help the Islanders less than you think

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The Isles will need to get more young fans hooked on hockey.
The Isles will need to get more young fans hooked on hockey.

To his credit, when beating his tired anti-league, pro-union, save-the-Isles-even-though-they-don't-deserve-it drum, Larry Brooks has repeatedly noted that the Islanders, by CBA law, do not benefit from revenue sharing that most teams in their low-revenue situation would. As with the Anaheim Ducks and Los Angeles Kings, the size of their media market precludes revenue sharing even if the franchises themselves have been on low-revenue footing that might demand it. (Of course, market size/potential is what got the Isles a cable TV deal that pays them somewhere around $20 million annually according to most estimates.)

It certainly would be nice if the Islanders weren't excluded by market size. But even if the Islanders were eligible today, they'd not be "eligible" for what you might think. Their attendance simply doesn't measure up. The CBA says so.

The thinking is that the Islanders, who suffer from a number of peripheral issues that limit their revenue potential -- much due to the arena, much due to the scars of '90s ownership, and much self-inflicted -- are in a lot of ways a small-market team that should be aided by the league's revenue sharing, which the league in its wonderful legalese calls "Player Compensation Cost Redistribution System." In one of Brooks's columns on the matter, before the NHLPA ousted yet another leader, then-union head Paul Kelly even said the union would support a change to the system.

Would the big-market owners share that support? (By the way, I'm not sure how many people realize just how top-heavy this league is, revenue-wise. Over the past several years according to Forbes -- whose numbers are always refuted by the powers who won't...provide better numbers -- this league has about 4-5 massive haves, and then a bunch of have-nots.)

On the bright side, Chris Botta at Islanders Point Blank got league deputy Bill Daly to acknowledge [video at IPB there] [text summary at NYT here] the possibility of changing which teams are eligible in the next CBA. Yet for the Islanders to get a full share, the league would need to change the attendance requirement too. Because right now, and for the past several years, the Islanders' attendance isn't cutting it.

From article 49.3 (d) of the CBA:

(i) Beginning in the third League Year of this Agreement (the 2007-08 League Year), the eligibility of Clubs for a "full share" Distribution shall be conditioned on Club revenue performance standards, as follows:

(A) After the 2006-07 League Year, any Club that would not qualify for a "full share" Distribution based on the Club revenue performance standards applicable in the 2007-08 League Year will be notified by the NHL of such fact, and areas of potential improvement will be identified.

(B) In the 2007-08 League Year, only those Clubs meeting the following criteria shall be eligible for a "full share" Distribution:

  • (1) The Club is generating a year-to-year revenue growth rate in excess of the League average revenue growth rate (i.e., the Club's revenue growth rate from 2006-07 to 2007-08 is greater than the League average revenue growth rate from 2006-07 to 2007-08); and
  • (2) The Club is averaging paid attendance at or exceeding a level that is the lesser of either 13,125 per game (seventy-five (75) percent of 17,500) or the average League-wide paid attendance.

We can't begin to speculate on revenues, other than it's widely reported (and, I think, believed) that the Islanders currently lose money. But the Islanders 2006-07 attendance -- a playoff year -- according to ESPN was 12,886. (Which for the short of memory was above only the Blackhawks and the Blues -- two teams that are drawing packed houses today.) So the Isles -- and Blues and big-market Blackhawks -- wouldn't have qualified for full revenue sharing even if it were allowed.

(C) Beginning in the 2008-09 League Year, and for all subsequent League Years, only those Clubs meeting the following criteria shall be eligible for a "full share" Distribution:

  • (1) The Club is generating a year-to-year revenue growth rate in excess of the League average revenue growth rate (i.e., the Club's revenue growth rate from the previous League Year to the current League Year is greater than the League average revenue growth rate from the previous League Year to the current League Year); and
  • (2) The Club is averaging paid attendance at or exceeding a level that is the lesser of either 14,000 per game (eighty (80) percent of 17,500) or the average League-wide paid attendance.

Again, we can't get into revenues, but the Islanders' attendance in 2007-08 was listed as 13,640. League average attendance that year was reported at 17,265. Eighty percent of that is 13,812, which is higher than the Isles reported average.

(ii) For Clubs that do not meet the criteria for a "full share" Distribution as set forth in subsection (d)(i) during the 2007-08 League Year, or any subsequent League Year, such Clubs shall be subject to Distribution "reductions" as set forth below:

  • (A) First time "non-performers" (i.e., Clubs that do not meet the performance standards set forth above for the first time) shall have the amount of their Distribution reduced to a seventy-five (75) percent share of the full amount.
  • (B) Repeat, sequential "non-performers" that do not meet the performance standards in two (2) consecutive years shall have the amount of their Distribution reduced to a sixty (60) percent share of the full amount.
  • (C) Repeat, sequential "non-performers" that do not meet the performance standards in three (3) consecutive years shall have the amount of their Distribution reduced to a fifty (50) percent share of the full amount.

How Much Money is at Stake? A Mark Streit or Two

Bottom line: Even if the Islanders could get revenue sharing in the current CBA, their share would be at most 50 percent of their potential purse if you just slapped current standards on them. And how much money is that? Reports are wide and unverified by the league, but depending on whether their share were cut to 75, 60, or 50 percent, we're talking something like receiving $4-8 million instead of a full $8-16 million.

ESPN right now has the Islanders attendance at 10,475 per game in 2010-11. (I'm going to leave the usual attendance skepticism aside here since even that reported figure falls well short of the standard.)

Now, attendance for most U.S. teams usually increases as the year goes on. And obviously the team's poor record and new playoff drought is affecting things -- as is, most fans would tell you, a surprising ticket price hike and parking fee hike this season. And perhaps if the Islanders were even allowed to be eligible for revenue sharing in the CBA, they might approach their pricing structure differently to help meet attendance thresholds. (But remember, there is also the revenue growth standard that teams need to meet.)

So if the Islanders and their advocates are able to negotiate a way for big-market, small-revenue teams to have revenue sharing eligibility in the next CBA, that's good news for them. But unless the rich owners are feeling so exceptionally altruistic as to change the market rules and the performance standards, the Isles would still need major attendance growth they haven't seen in a decade.

To get that, well ... you know the drill: Better performance, new arena, etc. It's a tough chicken-or-egg cycle to break out of.