NHL Revenues Uncertain with Diamond Sports Group’s Bankruptcy 

Prior to the pandemic pause in 2020, the NHL had seen a steady increase in hockey-related revenue (HRR), which, in turn, allowed the league to raise the salary cap each season. Since then, however, the NHL has been held to a steady salary cap and was expected to finally see a rise for the 2023-24 season. But now, there has been some upsetting news that can affect the NHL’s bottom line. 

Diamond Sports Group is on the verge of declaring bankruptcy. It is the parent company of Bally Sports, which oversees the regional sports networks (RSNs) for over 40 professional teams across the United States (US). The NHL had an emergency board of governors meeting on this issue. With 12 NHL teams being directly affected, this is going to be a defining moment for the salary cap and how fans can view their favorite team’s games. 

Related: Redoing the 2005 NHL Draft 

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A few years ago, streaming services entered the scene and began to erode the traditional cable market, taking on massive portions of the entertainment market. The media landscape is shifting again as streaming services like Netflix have begun reporting losses for the first time in their history. The NHL topped $5 billion in projected revenues, in large part thanks to the broadcast revenues. Now that is in jeopardy, and the salary cap can be significantly impacted. Many teams are already at or above the cap and were hoping to see a rise in the hopes of keeping their rosters intact.   

NHL Teams RSN Affected 

Bally’s currently controls the local broadcast rights to 12 NHL clubs: Anaheim Ducks, Arizona Coyotes, Carolina Hurricanes, Columbus Blue Jackets, Dallas Stars, Detroit Red Wings, Florida Panthers, Los Angeles Kings, Minnesota Wild, Nashville Predators, St. Louis Blues, and Tampa Bay Lightning

Anaheim Ducks Celebrate
Anaheim Ducks Celebrate a Goal (Jess Starr/The Hockey Writers)

For decades, RSNs were some of the most lucrative channels in the cable bundle. These local cable and broadband channels air the NHL games live in the local region. For example, the MSG network has dominated the New York City area. These RSNs pay the teams an annual fee directly for those rights, depending on the popularity of the team, which could be worth tens of millions of dollars for a franchise, which, in turn, is added to the NHL’s HRR. 

NHL Facing the Unknown 

There is uncertainty swirling around this issue, and that has an effect. How will this affect payments to different markets? Diamond could continue to make payments to some clubs and not others, or they could choose to pay based on the popularity of a franchise. That means teams like Arizona could be getting less income than someone like Dallas, which could hurt the operating costs for an organization that is already hurting from the loss of ticket sales in a smaller arena. 

“Diamond Sports Group expects that its business will continue as usual, and it will keep broadcasting quality live sports productions for fans while it addresses its balance sheet”

DSG Company Press Release Feb. 15 

Bankruptcy makes good business sense for the company as they agreed to deals before the pandemic pause and before the NHL faced a massive drop in ratings.

The decline in ratings on traditional media carriers is likely due to fans migrating to newer viewing methods. Many RSN deals expire at the end of this season, leaving Bally’s to hit the reset button and renegotiate their deals. This provides an uncertain future for the HRR and will put the brakes on any hike to the salary cap. 

NHL’s Next Step 

A silver lining in this could be that the NHL has already completed nearly 2/3 of their regular season. That limits the immediate economic impact as most of the money projected to go towards HRR has already been paid. According to Elliotte Friedman, teams were told they were still getting paid for now; some organizations were told they would be getting paid but not the full amount. The impact is still unknown, but the lack of predictability will cause the NHL to play it safe on the projected salary cap moving forward. He also reported that there is a belief among players that the new NHLPA head Marty Walsh could negotiate a new deal to raise the cap by more than the expected $1 million next season, but the Bally situation does cool off those hopes. 

This could open an opportunity for the NHL as well. Despite being a niche sport in the US, they could become their own RSN group using the NHL Network. Major League Baseball (MLB) is already planning to do just that. 

“I hope we get to the point where on the digital side when you go to MLB.TV, you can buy whatever the heck you want. You can buy the out-of-market package. You can buy the local games; you can buy two sets of local games — whatever you want. I mean, that is, to me, the definition of what is going to be a valuable digital offering going forward.”

– MLB commissioner Rob Manfred  (from ‘If Bally RSNs go bankrupt, MLB has ‘opportunity to fix this blackout problem,’ says Rob Manfred,’ The Athletic, 16 Feb 2023) 

It is still unknown what this could mean or if the NHL is capable of this type of power move. It does not appear that the NHL is anxious to start its own RSN like MLB, as shifting media platforms isn’t as easy as it sounds. It may be a better plan for the NHL to go all-in and partner with ESPN, which is already broadcasting many of the games nationally. Their brand recognition may be a short-term method to recoup any loss in revenues. 

The NHL will see their expected profits drop due to this shifting broadcast problem. This may lead to a lack of player signings and trades due to a lack of cap space. One way to open up space for movement could be negotiating with the NHLPA to add compliance buyouts for this offseason. It may also lead to the NHL looking to add more advertising revenue, which could lead to more ads on team sweaters, or worse, more digital ads littering the screens during gameplay. This problem means the NHL will need to get creative to find a way to keep growing HRR, and that may also mean that the cap could drop temporarily as the league regroups.  

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