It’s been almost a year since the National Hockey League (NHL) paused the 2019-20 season due to the coronavirus pandemic.
During the pause, it became obvious that COVID-19 would have a massively negative financial impact on the world economy and, by extension, the NHL.
The agreement between the NHL and the National Hockey League Players Association (NHLPA) created in May of 2019 outlined the return-to-play rules, as well as Collective Bargaining items such as escrow and deferred salaries for the 2020-21 season. As the head of the NHLPA Donald Fehr said, “This is probably not something that a lot of people are going to call a perfect agreement”. The financial impact on the NHL was massive. As Commissioner Gary Bettman said “The magnitude of the loss starts with a ‘B’. We’re out of the ‘M’ range and into the ‘B.’ “
Then finally, there was some light at the end of the tunnel. With vaccines rolling out, the general belief is that a vaccinated population will return to normal and NHL arenas will be packed with thousands of screaming fans. With the hope of crowded arenas and a new television deal in the US, COVID-19’s impact on NHL revenues–and by extension the impact on players’ salaries and contracts–could be mercifully short and fans flooding back into old habits will help the league rebound strongly. Or is it really this simple?
What is the IP Hockey Family Office?
IP Hockey Family office is a wealth management firm devoted to the career and financial wellbeing of hockey professionals. Our ‘family office’ model is designed to get all your advisors working collaboratively so that you end up with one clear gameplan. Our director, former NHLer Kent Manderville, ensures that each plan takes into account the unique nature of your hockey career and earnings, ensuring that your personal, athletic, and post-hockey goals are included in your wealth planning process. Learn more here.
The dream of a quick rebound: how much of this is a reality?
Data from a recent Populous/Navigate Venue Readiness Report shows that the expectation of a quick “return to normal” for professional sports may be wishful thinking. Consider these statistics from the recent survey:
- Fully 58% of all respondents said they will continue social distancing for at least a few months after they receive a vaccine.
- Only 54%* responded that they would be comfortable returning to full-capacity indoor events, even if ticket holders have to verify their vaccination (*56% for Americans and 50% for Canadians).
- Only 59%* were comfortable returning to partial-capacity indoor event with only verified vaccinated attendees, (*58% of Americans and 59% of Canadians).
These numbers suggest that the lag on a “return to normal” for the NHL may be longer than expected. The NHL receives approximately 50% of league revenue from ticket sales, so fans delaying their return to the arena will impact on future league revenues. Since the players share in 50% of league revenues, lower future league revenues will mean lower future salaries. The marquee names will be impacted less, and those in the middle and lower tiers will be the most squeezed.
NHL players face a “double whammy” hit to their wealth: COVID-19 has effectively shortened their career “earnings window”, while total earnings will also likely be lower.
Hope is not a plan: NHL players need to prepare for all scenarios.
For the entire world, COVID-19 will be an impactful two years, and virtually everyone has been affected financially to some degree; but the aftermath of a two-year shutdown on a professional athlete’s career may echo through his financial future for much longer than the average person.
The bottom line: while vaccinations may get fans back in the stands, the speed of that return is still unknown. Hockey players cannot afford to let optimism cloud their judgement. Proper financial planning and true comprehensive wealth management is more important than ever–particularly, a plan created and handled by advisors that understand the life and career of a player. Where players once had breathing room to participate in more casual spending and riskier investments, they now must take a more conscientious approach to money management.
The good news is that vaccines are coming, our loved ones are safer, and the fans will, in time, return to the arenas. The players who are wise will take planning steps now, to ensure they can relax and enjoy the return to sport.
