The NHL and the Sochi 2014 Olympics
A few weeks ago there was an article in the Pittsburg Post Gazette about the National Hockey League and the Sochi 2014 Winter Olympics. Gary Bettman, the commissioner of the NHL, was quoted as making some pretty tough statements about whether or not NHL players would be allowed to participate in the games - despite already having played in the past 3 Olympics and being scheduled to play in the next winter olympiad in Vancouver.
Here's my response:
Dear NHL International,
I recently read online (I live in Krasnodar, Russia) in the Pittsburg Post Gazette that Mr. Bettman is potentially questioning whether it's worth it for the NHL to participate in the 2014 Olympics here in Sochi.
On the face of it, Mr. Bettman may think that he is being a good negotiator and is applying leverage to the Russian league owners to sign the International Ice Hockey Federation transfer agreement as it is currently constituted.
However, I would say to Mr. Bettman to be careful. While many of you back in the U.S. and Canada may think that the NHL is the "only game in town" I would caution you to understand that the Russian Super League is not only becoming much better in terms of quality of play, but also in terms of economics for the players... (Click on the extended post to read more)
Back in America, you probably don't know don't that many of the teams here in the Super League are owned by very wealthy corporations. It is my belief that we will begin to see the migration of Russian, Czech, Swedish, and Finnish players back to Russia to play, instead of them opting to play in North America in the NHL. Ironically, the NHL strike a couple of years ago paved the way for this trend.
The Russian players, I believe, will very soon decide that the 13% flat tax structure, fresh endorsement opportunities, social life, and cultural comforts of home (i.e deyvushki - girls) that come with playing in Russia more than make-up for any potential drop in earnings.
Can no state income taxes in Florida and Texas compete with a 13% federal flat tax - as well as Russia's other attractions? (Photo: MillionairFair.ru)
But - and this point is key - if the Russian Super League begins to see its TV deals grow more lucrative and ticket prices continue to rise, there may actually not be any difference in potential earnings for a Russian player (or any player for that matter).
Now back to "Bettman's Bluff." If Mr. Bettman does decide that the NHL will not participate in the 2014 Olympics, do not be surprised if that marks the beginning of the end of the NHL's dominance as the premier hockey league in the world. Not only would Bettman alienate millions of international hockey fans but he would setting-up a potential mutiny by many of his best players. That would be a very dumb move.
The International Ice Hockey Federation transfer agreement is actually a fairly one-sided remnant of the days when the NHL was "king" and the Russian hockey league was reminiscent of the movie "Slap Shot". Those days are long gone. Why should Spartak Moscow accept only $200K for a top player who will be making millions of dollars in the NHL? Hockey needs to look at international football (soccer) league agreements for a template.
Frustratingly, the NHL has almost always been a parochial league full of owners who might have a hard time placing Stockholm on a map - much less Tomsk or Novosibirsk.
The answer, in my humble opinion, is not to try to lock-out competition, but rather opening up the NHL to the world. Turn a nice little North American sports league into an international league of relevance.
First, dump the silly warm weather cities in the NHL. Essentially, cut the number of teams in half. Say there are 30 now in North America. Go to 15 (Boston, Montreal, New York, Chicago, Pittsburg, Philadelphia, Detriot, Toronto, Ottawa, Minnesota, Colorado, St. Louis, Buffalo, Calgary, and Edmonton. That's your Western Conference.
Then, create an Eastern Conference: Stockholm, Helsinki, Prague, Minsk, Moscow, St. Petersburg, Kiev, Novosibirsk, Kazan, Nizhny Novgorod, Chelyabinsk, Ufa, Warsaw, Estonia, Latvia, and Lithuania (rough list. don't know the teams and city populations that well).
Like American baseball, each conference predominantly plays its own teams. but once or twice per season there would be a weeklong stretch of inter-league play. At the end of the year there would be play-offs, with each conference sending its winner to a true World Cup of hockey (the Stanley Cup can be reused).
Now that would be something worth following and watching. Imagine Spartak Moscow in town for two games against the Toronto Maple Leafs for the weekend. Or Kiev Dynamo hosting the New York Rangers in late February?
So, Mr. Bettman be careful not to replace good judgement with stubborn bravado. The rest of the world is no longer just the minor leagues of hockey.
Timothy Post, a native of Boston, Massachussets and an MBA graduate of Babson College, is a private equity and real estate developer in Krasnodar Krai. You can read the original post on Tim's blog, Inside Krasnodar. If you have more questions about doing business in Krasnodar, you can email him at firstname.lastname@example.org .