Small-market hockey franchises in Canada are finding themselves on a more level playing surface in the new National Hockey League, says commissioner Gary Bettman.

"The vital signs are good," Bettman told a business audience in Edmonton at a recent Chamber of Commerce luncheon. "But this continues to be a work in progress."

Edmonton Oilers were one of the teams facing a murky future prior to the lockout that put the 2004-2005 NHL season on ice. But the team, which had struggled to compete with the bigger budgets of large-market teams, is now optimistic about its future in the league, even with a $30-million debt that could take as long as 10 years to erase.

"I would think it would have been very fragile here in Edmonton (without the new collective bargaining agreement) because our ability to compete and have a chance of winning was somewhat diminished and I don't think that's acceptable to our fan base," says Cal Nichols, chairman of the Edmonton Investors Group that came together to keep the team in that city.

Dan Riedlhuber, Business Edge
NHL commissioner Gary Bettman, left, and Edmonton Oilers forward Georges Laraque pose for a photograph during an outdoor game between Oilers coaches and neighbourhood boys.

"The other thing that has been very meaningful to us, and other teams as well, is that the talent pool has been moved around to give everybody a chance of winning at some point," he says. "So it comes down to good scouting, a developmental system, management and coaching. Because the playing field is level, if you can do all those things better than somebody else, our future looks very good."

During his speech, Bettman noted that "I've always said if the NHL didn't work here (in Edmonton), it wasn't going to work anywhere."

The "new" NHL has been welcomed like a trade favouring the home team in this Alberta city, considered by many to be the heartland of Canadian hockey. Fan reaction has been similar across Canada.

With a league-wide salary cap in place, revenue tied to expenditures and a series of rule changes designed to add excitement to the game, many Canadians are finding something to cheer about.

The collective bargaining agreement (CBA) has made a difference, agrees Richard Peddie, president and CEO of Maple Leaf Sports & Entertainment.

"It's definitely a boon to markets like Calgary and Edmonton, and it was necessary for Edmonton and Calgary. Their survival was very much in question without a good CBA," says Peddie. "There's now an economic order that can allow all teams to be competitive on and off the ice."

The fact that revenue is being rechannelled is significant, adds Roy Mlakar, president and CEO of the Ottawa Senators Hockey Club.

"The correction had to be made and I think everybody understood that at the end of the day, paying 74 per cent of your revenue to your player expenses means you're facing disaster," says Mlakar.

"Before the lockout, we were arguably probably in the best shape of any team but at the same time we were running out of runway," adds Leafs president Peddie. "We were sold out, our ticket prices are quite high, our suites are sold out - our costs were going up faster than our revenues so we needed the economic correction, too."

The Leafs' revenue growth could not keep up with the player salary growth, "so we get a system that can help us control our costs and we get a partnership with the players," adds Peddie. "We get a game that's more exciting and we get five Canadian sister clubs that are still alive and thriving and that's very important to us."

Bettman noted that this could be the first year since the 1985-1986 season that all of the NHL's Canadian teams will make the playoffs.

But the NHL, with annual revenue pegged at about $2.1 billion US at the end of the 2003-2004 season, is not completely out of the woods, even with the players' share of revenue dropping to 54 per cent.

While attendance is up just over three per cent overall - with double-digit increases in NHL sunbelt markets such as Florida and Carolina - along with the league's television ratings (up 20 per cent on CBC and 80 per cent on TSN), the league's sponsorship dollars are not what they could be given the short lead time to the 2005-2006 season.

"When you come back in September with a new CBA, advertisers haven't been waiting 11/2 years to give you their money," says Mlakar.

The Senators are also hurting from the loss of about $10 million, adds Mlakar, pointing to the end of the NHL's Canadian equalization program that is no longer in place due to the new CBA and a loss of U.S. tele-vision revenue.

It's too early to say what the impact will be from the new TV deal with NBC and the Outdoor Life Network, as teams will only find out when the season is over, notes Mlakar. Further, the salary cap was not a main concern for the Senators.

"We've always had a budget. Salary caps don't equate to Ottawa," says Mlakar. "Ottawa is a government town. We're significantly challenged because government hosting laws restrict industry from entertaining government employees.

"When your main industry is government and you're not able to host them in suites and entertain them at games, it's very, very challenging for a city like Ottawa."

In Calgary, the salary cap is allowing the team to be more competitive, though "it's not an economic home run for us," says Flames president and CEO Ken King. "But it's a much more secure footing that we can build on."

The team also lost staff members during the lockout.

"A lot of people suffered a lot of hardships in that process," says King, adding the lockout was a painful, but necessary, process.

"There were 40-per-cent pay cuts for all our staff. We didn't lay off anyone, but we lost many good people," he adds, noting that the pay cuts have since been reversed.

Edmonton Investors Group's Nichols agrees that it has been a difficult time. "We all felt badly that we had to go through this. But we had no choice. Sometimes in life you wind up doing things you don't like to do."

It was also the reason Nichols and other NHL owners voted for a setup that sees teams play their own divisional opponents more often.

Even though Edmonton, for example, rarely gets to play host to Eastern Conference opponents on home ice, "we voted to do this for the near term because it's easier to sell Calgary, Dallas and Vancouver (in Edmonton) than it is to sell Florida and Carolina," says Nichols.

Many fans believe Bettman has stick-handled the situation well, despite being the first league officer to strike down an entire major professional sports season in North America.

"Frankly, I was quite prepared to be upset with the game and the sport and the administration and everything else, and it wouldn't have bothered me had I not gone to hockey," says Bill Briggs, of Re/Max Real Estate Edmonton, who attended Bettman's speech earlier this month. "Having said that, I renewed my season tickets, I went to the very first (Oilers) game and I absolutely loved the product and have become a great big fan again. So I'm right back to where I was prior to the year off."

Ted Lelacheur, president of Edmonton's Western Moving and Storage, says that not only is he now spending the entertainment dollars he didn't spend during the lockout, they're basically all going back to the Oilers.

"We're going to way more Oiler games and I notice around Edmonton that there's a buzz back in the wintertime," says Lelacheur. "Certainly the weather has something to do with it, the great weather that we've had, but there's a certain amount of buzz back in this town and a lot of it is due to the Oilers."

(Laura Severs can be reached at laura@businessedge.ca)