NHL government subsidies for teams don’t have to be shared with players

A recent arbitration hearing between the NHL and the NHLPA determined that the NHLPA isn’t entitled to a cut of millions of dollars of government subsidy money paid to three NHL teams.

NHL government subsidies for the Columbus Blue Jackets, Nashville Predators and Winnipeg Jets are not considered hockey-related revenue, an arbitrator ruled in March. Other than allowing the three teams involved in the dispute to keep most of the millions of dollars they otherwise would have to had to pay the NHLPA, this ruling sets a precedent which creates an additional motivation for NHL owners to seek public funding for stadium construction/renovation projects.

In the dispute, the NHLPA argued that approximately $20 million of public funds given to the three franchises should be considered hockey-related revenue. Had the funds received that designation, the NHLPA would have been entitled to a good cut of that money under the current collective bargaining agreement.

To be thorough, the arbitrator wasn’t ruling on whether or not all government subsidies given to all NHL teams at any time are hockey-related revenues. The arbitration was only covering these three specific instances during the stated time frame. With that understood, NHL owners have still probably taken notice.

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Public funding for teams is attractive for owners because it often equates to free capital to build their business with. New facilities or facilities which have undergone major renovations represent a tremendous boost to franchise value, and public financing allows the teams to enjoy those benefits without having to front the cash necessary.

Adding even more value to that proposition now for NHL owners is the possibility that government subsidies paid to the teams can be mostly kept by the teams.

Public sentiment seems to be slowly turning against subsidizing professional sports teams as more information about the long-term effects of the deals are revealed. There is at the same time a concurrent movement within the industry to avoid using public funds that is gaining momentum. It may be some time before that movement becomes the norm for NHL owners, however. Right now, the prospect of having free money that they don’t have to share with the players is too tempting.