Financial considerations: Coronavirus poses unfamiliar issues for NHL

The NHL’s decision to suspend the 2019-20 season due to the COVID-19 pandemic has left the league, the players’ union, television networks, sponsors and fans in an unprecedented situation.

No one can predict how long, what NHL commissioner Gary Bettman calls a pause, will last. There are questions surrounding how NHL players will be paid, what happens if the season is suddenly extended into summer, or how it might affect free agency.

“What’s happening is we’re making up the rules now as we go,” said Lindsay Meredith, a professor emeritus in marketing at Simon Fraser University in Vancouver. “It’s uncharted but they’ve got to come up with some rules and solutions pretty quickly.”

Craig Button, a former NHL general manager and now a television analyst, said the closest situation the league encountered previously was the lockout which cancelled the entire 2004-05 season.

“Nobody knows where to go because this is unprecedented,” Button told TSN. “We’re in in unchartered waters.”

Hockey agent J.P. Barry, whose clients include Evgeni Malkin, Morgan Rielly and Filip Forsberg, said all players remain under contract.

Usually, players are paid twice a month until the end of the regular season. The scheduled last day of this season is April 4.

“We’ll get paid for every day except technically not a couple,” he said. “We’re trying to sort that out.”

One area of unknown territory is how the suspended schedule, or possibility a reduced playoff, could impact the escrow fund players pay into.

“The money that comes out of the playoffs could affect the ultimate escrow pot,” said Barry. “If there’s no playoffs [or] there’s a little bit of playoffs, all that has to get factored in to see whether or not we’ve left enough money in the escrow pool.”

Meredith expects the NHL will be meeting with broadcasters and sponsors.

“One of the issues is going to be looking for some kind of middle ground that will allow [them] to continue to function and possibly keep some of the contracts alive,” he said.

Meredith can envision a scenario where the league returns but games are played in empty stadiums.

“We know the money in hockey is not in those seats,” he said. “The money is in the TV rights. So, anything they can do to keep TV rights partially intact is going to be the middle ground. They’re going to try [to] get a deal on that.”

The NHL and the NHL Players’ Association have no choice but to work together, said Meredith.

“The default clause is a total collapse of the structure of the system, and the whole thing comes down around us,” he said.

“The union, along with sponsors, along with the TV guys, are all going to be looking for some middle ground. They all know they’re going to take a hit. Now the question is, how do we minimize the damage from the hit and keep alive what we can keep alive.”

NHL commissioner Gary Bettman, left, speaks to media on March 7. The league has entered uncharted bureaucratic territory following the COVID-19 outbreak. (Wilfredo Lee/The Associated Press)

Berry said past labour disputes have resulted in the rescheduling of dates like the NHL draft and free agency.

If the playoffs are pushed into the summer that will cause some rescheduling for buildings that have already booked concert dates and other events.

“Usually the teams are the primary tenants,” said Barry. “So, whenever there’s playoffs they have some priority. They’re going to have to work through those priorities.”

The NHL’s action came on the heels of the NBA suspending its schedule “until further notice” following its first player testing positive for COVID-19.

Barry said to date no NHL player has tested positive. He believes the NHL followed the proper action.

“I think it’s the macro that everyone is upset with,” he said. “Should people have known more from the federal government, from the provincial government? That’s really the issue here.”

Button said its difficult to predict what economic impact the shutdown will have on the league.

“Everybody’s in the same state of uncertainty,” he said. “We’ve got to wait to see how this unfolds, what the timeline is going to be. I don’t think anybody can even tell you what the timeline is.

“You can use estimates, you can use models [but] nobody knows.”

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