The NHL Brings In A Record $5 Billion-Plus In Annual Revenue

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Hey Friends,

News broke last week that former Tennessee governor Bill Haslam is set to acquire the NHL’s Nashville Predators through a unique “multi-phased purchase transaction.”

Haslam (a Republican who served from 2011-19) will quickly become a minority of the team and spend the next three years gradually purchasing shares from the current ownership group—Herbert Fritch & 17 others—until he is the majority owner.

Nashville is the NHL’s 25th most valuable franchise (out of 32) with a valuation of $600 million, according to Forbes. And Bill Haslam, the brother of Cleveland Browns’ co-owner Jimmy Haslam, will be one of the NHL’s wealthiest owners, with an estimated net worth of $2.3 billion.

The Nashville investment is super interesting. Sure, the fans are passionate—they had a 95.4% capacity at home this season which was second only to the Vegas Golden Knights—and they have a unique revenue-sharing agreement with Bridgestone Arena, where they operate the arena and share in the revenues generated by other events.

But I think this deal is also more about what we are seeing in the NHL more broadly.

The National Hockey League (NHL) is set to bring in more than $5.2 billion in revenue this season, according to commissioner Gary Bettman. That’s a new record for the league and a 13% increase from the last full NHL season in 2018-19.

This has primarily been driven by two things: new media deals & full-capacity arenas.

“What we've done is we've [continued to operate], we've done the fundamentals of our business," Bettman told ESPN. "We had a major increase in our national media revenues in the United States. Our buildings are back to basically where they were [with attendance], and maybe a little better. Our playoffs this year, the first two rounds generated 88% of the revenues that we did in the first two rounds the last time we had normal playoffs [in 2019]. We continued to put on NHL hockey under the most difficult of times. ... We were able to stabilize the business and power through."

The NHL signed new TV deals with ESPN and Turner Sports that began in the 2021-22 season. These deals are worth a combined $625 million annually, a significant increase from the previous 10-year deal with NBC that was worth $2 billion.

• ESPN: 7-year deal worth $400 million annually

• Turner Sports: 7-year deal worth $225 million annually

These deals already appear to be paying dividends. Just look at this year’s Stanley Cup Playoffs, for example. Games on ESPN and ESPN2 were up 30% compared to last year, averaging 1.2 million viewers. The Eastern Conference Final between the Rangers and Lightning was the most-watched series since 2013, averaging 2.4 million viewers. And this year’s Stanley Cup Final will easily surpass the viewership numbers from last year.

And that’s because games are more exciting than ever. For example, an average of 6.28 goals/game was scored during the regular season, the highest rate in nearly 30 years.

But fans aren’t the only ones that should be happy — the salary cap is projected to go up by just $1 million to $82.5 million next season, but after players finish paying off debt to owners accrued over the past couple of years to balance hockey-related revenue 50/50, the salary cap should substantially increase over the next few years.

NHL Salary Cap

• 2015-16: $71.4 million

• 2016-17: $73.0 million

• 2017-18: $75.0 million

• 2018-19: $79.5 million

• 2019-20: $81.5 million

• 2020-21: $81.5 million

• 2021-22: $81.5 million

• 2022-23: $82.5 million

So maybe Bill Haslam thinks that he can increase team revenue in Nashville, reduce expenses, drive profitability, and, in turn, expand the valuation. Or maybe he is just betting on the tailwinds we are seeing across all major sports leagues — larger media deals driven by new streaming bidders armed with billions of dollars in cash, the increase in sponsorship dollars from sports betting and crypto providers, the history of an uncorrelated asset that outperforms virtually all other financial assets, and more.

But the outcome almost seems obvious: blue-chip sports assets are still in high demand, and the sources that drive overall revenue & profitability are only increasing.

Have a great day. I’ll talk to everyone tomorrow.

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