Following yesterday’s NHL’s September Board of Governors meeting yesterday in Toronto, Commissioner Gary Bettman and Deputy Commissioner Bill Daly met with the media to answer questions. Among the topics discussed: the Alexander Radulov
situation; the absence of an NHL-IIHF player transfer agreement; the North American economy and its possible impact on the NHL, and the possibility of expansion.
Radulov Situation/IIHF Transfer Agreement
Q. Was there any update on the situation with Russia and players bolting from one league to the other and are you concerned going forward without a transfer agreement?
DEPUTY COMMISSIONER DALY: We gave a report on the situation. Right now the focus is on Radulov, no great surprise to any of you. It continues to be an issue that we would like to have resolved.
We've made a formal request for binding arbitration to the Kontinental Hockey League. They had come out of their meeting with the IIHF last Saturday and seemed to suggest that they were prepared to arbitrate the matter.
We requested arbitration last week but we have not gotten a response yet, so at least at this point we're just waiting.
COMMISSIONER BETTMAN: With respect to the second part of the question, I don't think the way that the KHL or the IIHF has handled the Radulov situation is either fair, appropriate or in good faith; and that's the reason that we have, to say the least, reservations about doing business with the KHL going forward.
What they did here was wrong. And they know it. I mean, because they've acknowledged that they know he has a contract with Nashville. So this will sort itself out. It's not something that currently keeps us awake at night. The best players in the world will continue to want to play in the NHL.
Q. In future years is the Victoria Cup the sort of thing that would be at risk if the Russian teams are involved?
COMMISSIONER BETTMAN: Possibly, but I'm not answering it with certainty because I don't want to appear to be the least bit heavy-handed in this situation. We will have to evaluate our options as the sun falls. It will be dealt with in a very measured way, but in a way that deals with the realities of the situation.
"The fact is anything is possible. We don't have plans yet, or maybe never, to put franchises on the continent. We think international endeavors are important because 30 percent of our players come from outside of North America, so it's a priority, but our first priority is here in North America. And nobody should lose sight of that." -- Commissioner Bettman on the possibility of an NHL franchise outside of North America
Q. I'm just wondering how important it is that a Player Transfer Agreement exist with the various international federations.
COMMISSIONER BETTMAN: We think it's better to have one. We've had one for the last 14 years. We've lived for the last three without having the Russian Federation participate.
The players that want to come to our League, come. I've said to the Board of Governors that the marketplace will adjust. If there's no transfer agreement, then the better European players will insist either on the right to buy out or short-term contracts.
And so the end result of this has been that there are a variety of clubs throughout Europe that haven't been getting transfer fees that we pay in large sum to the IIHF to disperse, and the players are coming anyway. And so we think it's better to have a transfer agreement.
Our goal has always been to be good citizens in the international hockey community, and I think, with one notable exception, we've had very good relationships over the last decade. But this change in dynamic is something that everybody's going to have to adjust to.
We've said we're happy to do a transfer agreement with the other federations, with or without the IIHF. So we'll see how it unfolds.
It's something that we're dealing with and will be worked out over time, one way or the other.
DEPUTY COMMISSIONER DALY: We had a significant number of player transfers this summer even without the player transfer agreement. European clubs and European leagues weren't compensated one penny for that, so I think there's a realization on the other side of the equation that a player transfer agreement clearly is in their interest.
And as the Commissioner said, it's better to have one than not to have one. And that protects our clubs and gives clubs fair access to European players they draft. So it's still an objective of ours to try to get the transfer agreement done.
Q. Does having no transfer agreement leave the door open for Radulov to have a change of heart and come back? If that were to happen, would that give you a bit of an upperhand in the negotiations because he's not just a player, he's a significant player?
DEPUTY COMMISSIONER DALY: Let me deal with the first part first. Not having the transfer agreement I don't think impacts one way or the other whether Radulov comes back or is told to come back.
Ultimately that's either something that will be resolved by a third party, whether that be the KHL or some independent third-party arbitrator or court. But ultimately it really has to be decided by the player himself.
I have not had any personal communications with the player. I've read the speculation, like everyone else, as to how he's doing over there and whether he likes it and whether he wants to come back and what his long-term plans are vis-a-vis playing in the NHL or playing in the KHL, but ultimately it's up to the player. And we'll see how that plays out.
COMMISSIONER BETTMAN: And Bill raises a significant point because sometimes this is portrayed as a dispute between the NHL and the KHL.
Well, if the KHL doesn't want to respect contracts, there's no dispute. They've acknowledged that he's under a valid contract. This is really in the first instance an issue because the player, who was under contract, signed a contract he shouldn't have signed.
The Softening North American Economy
Q. I was wondering with some of the things going on on Wall Street earlier this week, if any of that was discussed.
COMMISSIONER BETTMAN: Well, actually, we did, in terms of the state of the league and looking forward, discuss the state of the economy.
Obviously, nobody can predict how this is going to continue to unfold and when there might be a recovery, but interestingly enough, based on the projections that we're seeing, based on the data that we're getting with respect to things like season ticket sales, we're actually running ahead of last season, which was a record for us. So we haven't been experiencing any material short-term effects, but everybody is, of course, cognizant of what's going on with the economy.
Q. Gary, you said it's too early to tell, but other leagues have said that the softening economy they're beginning to feel some effects of it at some level. If that happens in your league and if the Canadian dollar goes down a bit, which is where it's trending right now, could we finally see the cap flatlining or maybe even going down?
COMMISSIONER BETTMAN: Well, ultimately the cap will be determined by whatever the revenues are.
You know, what you're asking is a year out when we compute the cap off of this year's revenues, could it go down. I would be extremely surprised if the slowdown in the economy was severe enough that it got to that point.
It could be that if the Canadian dollar softens and the economy slows up from a business standpoint, that the escrow that we get back from players' salaries will be larger than anybody had anticipated, but that's also a function of the Players' Association insisting that the five percent get built in.
You know, from my standpoint, I think it would have been safer not to bump it the five percent.
Having said that, you know, sponsorship is still out there. It seems to be a little slower, both at the national level and the club level in all sports leagues, but as I said before, the data on ticket sales to me is startling that we're up 4.1 percent over last year in terms of what we had sold on full-season equivalent as of September 1st. So I think that the numbers are absolutely going to get stronger, at least based on what we're seeing.
I think it's too early to speculate as to what the impact will be, but we're keeping an eye on it, and we'll keep an eye on it in terms of expenses and everything else. And the economy is a two-fold issue: It's peoples' ability to spend -- and we're very sensitive to that -- and it's the cost of doing business. Transportation costs in particular -- and obviously our clubs do a lot of it -- are getting more and more expensive.
Q. I just want to follow up on that question and a question about the health of the game. We've seen so much change in terms of gas prices. And folks are having a whole lot bigger bill when they fill up their tank to go to your hockey games as when they go anywhere else. Are you afraid -- or maybe do you have a line on how far-reaching the impact fuel costs could be on your league given the projection of a year or two years down the line?
COMMISSIONER BETTMAN: Well, you're asking us collectively to speculate on what's going to happen to the economy. Economies always go through cycles.
We don't take anything for granted, but the economic health of our game is strong. Our revenues grew nine percent last year, separate and apart from any increase in the Canadian dollar.
We're monitoring closely all of the touch points and data points in terms of our business, but we haven't seen a softening yet. And if you look at our average ticket price over the last five years, the average increase annually was about one percent, far less than any of the other major sports leagues.
So the inflationary hope of the system has absolutely been mitigated; and you know, relative to what everything costs, we're doing okay in terms of ticket prices and the like.
And so I think it's a little premature to speculate yet as to what's going to happen, other than to acknowledge that the economy seems to be softening both in the United States and Canada, and we need to be mindful of it so that we can be prepared for any consequences, if they happen, but as I said, so far right now we're not seeing it yet.
Q. It came out that said there was no in-depth discussion about expansion, but there's a building in Kansas City that's been talked about. Las Vegas has always been whispered about. Do you sense any momentum towards that?
COMMISSIONER BETTMAN: No. I think at the present time we're not ready to engage in any sort of formal expansion process.
If that changes -- and it could at some point -- that doesn't mean it will; it means it could at some point -- then we'll open it up and see what the interest is.
We've had expressions of interest from lots of places, both north and south of the 49th Parallel, and at some point we may deal with them, but not right now.
Q. What are the concerns along those lines? Is it more about strengthening what you have? Is that one of the reasons why you don't talk about expansion or is it a completely separate issue?
COMMISSIONER BETTMAN: You know, it's an interesting way that you phrased the question because normally when I get the question, it's ‘how could you ever think of expansion’? And you're asking me why aren't we thinking about expansion.
We like our 30 teams now. We don't think this is the appropriate time to do it. And you know, what the future may hold, I'm not prepared to predict, but it's not on the immediate agenda.
Q. Gary, in the future are you looking more towards going to Europe or strengthening North America?
COMMISSIONER BETTMAN: You know, I know there's been a lot of speculation about that and perhaps even some generous characterizations of what Bill Daly has said.
The fact is anything is possible. We don't have plans yet, or maybe never, to put franchises on the continent. We think international endeavors are important because 30 percent of our players come from outside of North America, so it's a priority, but our first priority is here in North America. And nobody should lose sight of that.