Monday, July 13, 2009

Business Must Be Good

In these dire economic times that we all face, many are glad to just be employed, much less get a raise of any great substance. If, however, you are the Commissioner of the NHL, not only is a raise forthcoming, but it is an increase of 27%. According to Tripp Mickle of the Sports Business Journal, Commissioner Gary Bettman received $4,197,694 in compensation from the League and $2,911,550 in compensation form the League's business arm, NHL Enterprises, for total compensation of $7,109,244. This is acording to the latest tax filings of the League.

How does Bettman's salary compare to to other league commissioners? Again, according to Sports Business Journal:

Bud Selig Major League Baseball $18.35 million

Roger Goddell National Football League 10.90 million

David Stern National Basketball Association 10.00 million (estimated)

Tim Finchem Pro Golfers Association 4.80 million

As a percentage of gross league revenues of $2.5 billion, Bettman's salary is .28% of revenues. By contrast, Roger Goodell's salary is .16% of the NFL's gross revenue of $6.5 billion. That comparison may be apples to oranges as Bettman and the NHL face a tougher sale for their game than does Goodell and the NFL, and that point can be argued either way. Perhaps the better way to look at this is to compare Bettman's percentage increase with the corresponding increase in League revenues for the same period. The League has touted increases in attendance and revenue from all sources over the past season. According to the SBJ article, net revenues for the NHL increased 14.9%, to $74.27MM. Most of the increase in revenue was membership dues paid by the existing 30 franchises ($56MM). While the growth numbers for the NHL have been very good, one must keep in mind that the growth of the game is coming off an incredibly small base, so those numbers are (hopefully) going to look good for a while.

Bettman's salary has increased 88% since the year before the lockout, and average of of 29.3% per annum. Most of us live with pay related to performance, and looking at revenue numbers alone, it can be argued that this is not the case of the NHL Commissioner. However, one can argue that Bettman has earned his compensation by maintaining franchise stability ( a tap of the stick to the Commish from fans in Pittsburgh, Nashville, and hopefully Phoenix) and by growing the game after the disasterous 2004-5 lockout year when the League was virtually on life support. All of these considerations have merit and factor in to the compensation decision. Apparently, Bettman's bosses, the owners, are pleased with his performance.

The intent here is not to bash the Commissioner over his salary. I am firmly in the camp that says one should have no limits on legally earned compensation. The question becomes, in my mind, is there a connection- or should there be a connection- between the compensation of the League executives and the growth rate of the League's revenue? And perhaps most importantly, will the compensation of League executives become an issue for the NHLPA during the negotiation of the next collective bargaining agreement?

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