Luukko chimes in on staggering Rogers TV deal

Luukko chimes in on staggering Rogers TV deal
December 1, 2013, 9:00 am
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Staggering.

That one word aptly sizes up what occurred this past week when the NHL announced its next TV rights deal with Rogers Communications for Canadian clubs – 12 year, $5.32 billion in Canadian or about $4.9 billion U.S.

It virtually doubles NBC’s 10-year, $2 billion broadcast rights deal in the U.S. that the league signed in April 2011.

“Well, I wasn’t in the negotiations, but obviously, it looked like Rogers wanted to pay for a number of exclusivities and they ponied up,” said Comcast-Spectacor president Peter Luukko.

“If you want certain exclusivities, you should be willing to pay a premium and I guess they did.”

The contract kicks in with the start of the 2014-15 season and runs through the 2025-26 season.

Rogers Communication (Sportsnet) will be granted national Canadian rights to all NHL games including the Stanley Cup playoffs and Cup Final, plus special events such the All-Star game and NHL draft.

The network will be able to broadcast any game involving a Canadian club through three portals on Wednesday, Saturday and Sunday. CBC will continue to broadcast games under the Hockey Night in Canada flagship, as well, with Rogers essentially sub-letting them for at least four years under the agreement.

“It’s great,” Luukko said. “Obviously, you see how popular the game is in Canada. I think the fact the sport has grown in the United States has helped. The huge coverage. I’m biased, but I think NBC and Comcast has had a lot to do with that.”

Indeed, NBC’s deal was the largest in league history – until now. That deal set the stage for the coup in Canada.

“Over the course of 12 years it provides a lot of economic certainty for the clubs and, ultimately, for the cap,” NHL Chief Operating Officer John Collins told NHL.com. “Fifty cents of every dollar goes into the player salaries, so this is a significant increase and it certainly helps us get to the $4 billion goal that we've been talking about.”

South of the border, U.S. clubs will reap rewards. It’s estimated the average cut will be $15 million per team, per year. That means the salary cap, currently set at $64.3 million per club will get a boost to at least $70 million and possibly beyond in the years ahead.

“We don’t yet know from the league what that net [payout] will be for each team,” Luukko said. “It should be a sizable increase for each team in the league which bodes well for the team."

Care to guess?

“Not at this point,” Luukko replied. “We’re waiting for the league to see where it’s going to come down. We just got a brief memo that the deal had been cut.”

The bottom line here is that everyone wins – the league, the owners, and the players who draw a 50/50 split of HRR – hockey related revenues under the CBA.

Two years ago, the NHL had a record $3.3 billion in revenue with projections of $4 billion a few years down the road, allowing for last season’s lockout that saw the NHL schedule chopped to just 48 games.

Collins told NHL.com that the league underestimated revenues and now sees $4 billion as a target that will come sooner, not later.

“I don’t know the effect or even what the revenues are this year,” Luukko said. “Both the players and owners want to increase revenues and that will increase the cap.”

The only loser here – and this was shocking – was TSN, which will no longer broadcast NHL games once the deal begins.

What happens to the network’s top hockey anchors, analysts and commentators – Bob McKenzie, Darren Dreger, Pierre Lebrun and its incomparable in-studio host James Duthie – remains to be seen.

Losing TSN has a far greater impact among Canadians than in the U.S. when ESPN lost hockey to NBC.