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Jets' bottom line scores

Strong revenue means no need for NHL aid

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In their first year of operation, the Winnipeg Jets will not require NHL welfare.

It's a late-season surprise because the assumption far and wide -- including in True North Sports & Entertainment's own quarters until not very long ago -- was that the Jets, playing in the NHL's smallest building and in its smallest market, would need to participate in the league's revenue-sharing system to make their business viable.

Jets co-owner and governor Mark Chipman dropped the bombshell at a news conference on Friday, confidently speculating his team's own revenues for 2011-12 have exceeded expectations to the point where he believes the franchise won't qualify for the NHL's Player Compensation Cost Redistribution System (a.k.a. revenue sharing).

To be eligible, a team must be in the bottom half of the NHL in per-team gross revenue, be in a market of less than 2.5 million households, not spend more than the midpoint of the salary range, and it must also meet ticket-sales and other revenue minimums.

"Because our revenues exceeded what we expected... we don't participate in sharing," Chipman said Friday. "In the end, we're going to be in the exact same place we expected them to be. Which we feel good about."

Chipman wouldn't disclose the Jets' projected revenue for Season 1 but given his statements and other parameters, it's likely in the $90- to $95-million range.

He said later in the day whether the Jets' total is self-generated, or enhanced by NHL welfare, the team's total revenue is on target and does not put the franchise in position to spend to the ceiling of 2011-12's US$64.3-million salary-cap system.

Winnipeg was in the bottom third of team payroll this season at about $52 million.

Chipman has said many times he believes the franchise could comfortably spend to the midpoint of the allowed salary range, which is US$48.3 million to US$64.3 million.

 

 

This season, the stars aligned to help True North's cash flow.

A good start was that the Jets' home, the MTS Centre, has been sold out all season at 15,004 seats. Broadcast revenue, both sharing in the league's national contracts and the Jets' own regional network, provided more than expected, as has the team's wildly successful merchandising effort.

Chipman said True North won't know for certain about its revenue-sharing status until the league's revenue and finances are audited after the playoffs are over, but his point was that revenue for the NHL's first season back in Winnipeg have exceeded expectations.

So, even if the Jets are outside the league's top 15 in gross revenue, they'll be close enough to that level to make any potential revenue-sharing payment negligible.

"When we first modelled this business, we did so quite carefully," Chipman said. "We had the benefit of those years leading up and we looked at where we thought we would fit in. Initially, we thought we'd be a (revenue) share team. And so we studied that model very carefully.

"We thought we were going to be dependent on it. So we spent time with teams like Nashville that have managed their way through that process very well. As it turns out, our revenues have exceeded the point at which we are allowed to participate in revenue sharing so we feel really good about that.

"Where we would have had to be a beneficiary, we're not. The net of it all is that we end up in about the same place."

With the NHL's collective bargaining agreement with its players scheduled to end in September, the future financial rules of the NHL are murky. It's unknown how or if the revenue-sharing or salary-cap elements may change, and Chipman didn't want to discuss that on Friday.

"I am not authorized and I will not be authorized to talk about any aspect of the relationship between our league and the NHLPA. Collective bargaining is not a subject I'm going to be talking about."

tim.campbell@freepress.mb.ca

A season to remember C1-6

Republished from the Winnipeg Free Press print edition April 7, 2012 A3

History

Updated on Saturday, April 7, 2012 at 8:50 AM CDT: Adds video

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