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How money and politics kept the NHL out of the 2018 Winter Olympics

Rumors of the NHL’s non-participation in the 2018 PyeongChang Winter Olympics emerged immediately after the conclusion of the 2014 Sochi games and intensified with the NHL’s choice to host its own best-on-best international tournament with the underwhelming 2016 World Cup of Hockey.

NHL players have dominated the Olympic tournament for over 20 years now as 2018 is the first time since the 1994 Winter Olympics that NHL players will not represent their home countries. In my previous article I mentioned that former Roadrunners goaltender, Justin Peters, will be representing Team Canada, the traditional superpower in international hockey, even though he was just a fairly average AHL starter last season.

People that don’t follow hockey very closely may have been surprised at this especially considering that the last time the NHL didn’t attend was before U of A won its last national championship in basketball. The NHL choosing to abstain from the winter games is a fascinating storyline, one of the most interesting in all of sports over the last few years, with lots of moving parts and behind-the-scenes politics at play. In short, NHL non-participation is too interesting of a story to not write about, especially with the 2018 games just around the corner.

Team Sweden winning gold at the 2006 Winter Olympic Games in Torino, Italy.
Source: Third String Goalie

The NHL, the IIHF, and the IOC 

To fully understand the situation, one must understand the adversarial nature of the relationship between the National Hockey League (NHL) and the International Ice Hockey Federation (IIHF).

The IIHF is international hockey’s highest governing body, playing the same role in hockey as FIFA does in soccer. They are responsible for putting on virtually all major international tournaments in hockey, with the notable exception of NHL-sponsored tournaments like the World Cup of Hockey. The NHL as you know is by far the most important, talented and richest hockey league in the world and is one of the four major North American professional sports leagues.

NHL Commissioner, Gary Bettman (left) and IIHF President, Rene Fasel (right) at a press conference in 2010.
Source: tsn.ca

One thing that should be noted is that the President of the IIHF, Rene Fasel, former Swiss professional hockey player, is also a member of the International Olympic Committee (IOC) and is a winter sports representative on the IOC’s executive board. This means that he represents both the interests of the IIHF and the IOC. As a result, the interests of both organizations are almost completely in line with one another.

The conflict that led to the NHL’s choice to abstain from the 2018 PyeongChang games is rooted in two flawed, opposed beliefs held by high-ranking officials in both the IIHF and the NHL.

First, hockey is an international sport with many great players from many countries, and because of this, the IIHF thinks its FIFA. They act as if all of the major international leagues in the world have roughly equal skill levels, believing that no league in any given country is more important than another. This leads them to believe that they are the most important faction in the hockey world and that they (not the NHL) should have the final say regarding everything in the hockey world.

The NHL likes to think its the NFL when it comes to hockey. Earning $4.43 billion in league revenue last year, the NHL is the richest hockey league in the world; a testament to its status as the undisputed best hockey league in the world (the NBA, the third-highest earning league in North America made $5.87 billion for comparison). Because of this, the NHL believes that it (not the IIHF) should have the final say regarding everything in the hockey world.

As in most situations, the truth lies somewhere in between. First, the fact of the matter is that the NHL is the best league in the world and everyone knows it (even though the IIHF doesn’t like to admit it). Second, hockey is not soccer because the relatively even playing field that exists between Elite European Football Leagues simply does not exist in hockey. A KHL club could not compete with an NHL club in the same way a club from the German Bundesliga would compete with one from the English Premier League. So in that sense, the NHL is right to demand more of voice in IIHF proceedings relative to the Elite European Hockey Leagues.

But the NHL is wrong in the sense that it does not recognize the wealth of international talent in its league and more importantly, the legitimacy of top-level leagues in other countries to the extent that it should. I should note that the views presented here are held by the overwhelming majority of people in the hockey world.

But that begs the question: if all of this is true, then why won’t the NHL and IIHF reconcile and come to an agreement? The answer is money.

The Multi-Billion Dollar Hockey Industry 

It’s very easy for fans to forget that leagues like the NHL are just as much of a business as companies like GM and Apple because of the strong emotions we have for our teams. Connor McDavid with his 8-year 100 million dollar contract is just as much of asset and business investment as a hypothetical 100 million dollar Apple phone factory would be. The only difference is that Apple is trying to sell you a phone and the Edmonton Oilers are selling you hockey.

To get an idea of how big the hockey industry is, if you add all 31 NHL franchises’ listed values according to Forbes 2017 NHL franchise valuation list, you get a cumulative total of just under 18.4 billion dollars. Add that figure to the total values of all the Major European Hockey Leagues, consisting of the KHL (primarily Russia, with one club each based in China, Finland, Belarus, Latvia, Kazakstan, and Slovakia), the SHL (Sweden), the SM-liiga (Finland), the NLA (Switzerland), the DEL (Germany), and the Czech Extraliga.

Each of these leagues are very popular in their home countries with nationally televised games and players in some leagues making millions, which is especially true in the KHL. Illya Kovalchuk, for example, makes the equivalent of $5.5 million a year playing in the KHL. The point is although these European Leagues are not as valuable as the NHL, they are a lot more prominent and significant on the other side of the Atlantic than the average American might realize.

Take the NHL’s $18.4 billion total plus the aforementioned European Leagues and add that to Canadian Major Junior Hockey (which is as prominent there as college football is here), plus American NCAA Hockey, plus an assortment of North American and European minor and junior leagues and you’re looking at an industry that is worth well into the tens of billions worldwide.

Whenever there is that much money at stake, there are going to be very powerful companies and businessmen vying for as much market share as possible, and the two most important players in the hockey world are by far the NHL and the IIHF. In North America, the NHL exercises near total control over the game of hockey, with the IIHF having very little say in the North American game. In Europe the exact opposite is true, and the primary goal of both organizations is to gain more market share, whether it’s at the expense of the other organization or not.

The 2018 Olympics

The 2018 Olympics is an interesting case; given that the NHL went to five Olympics in a row before deciding to not attend the 2018 Olympics. To understand the NHL’s decision, three key questions must be addressed:

  1. Why did the NHL not attend the Olympics before 1998?  

Hockey is a business, first and foremost; that was the point of the entire previous section of this article. In this business, the NHL and the IIHF are bitter rivals because of their status as the two largest and most important players in the hockey industry.

  • So why would the NHL and IIHF ever help each other by collaborating in a tournament on the scale of the Winter Olympics?
  • Why would NHL franchise owners want to lose millions in revenue by shutting the league down mid-season in February so their players can attend the Olympics?
  • Why would NHL franchise owners want to risk their players getting injured playing in an international tournament that has no direct benefit to them?
  • Why would the NHL let the IIHF, its chief rival, make millions of dollars in marketing and television revenue, by reaping the benefits of marketing the best hockey players in the world in a tournament as prominent as the Olympics?

Mutual benefit is the only thing that would ever make NHL owners want to take all of the risks associated with allowing their players to participate in the Olympics. The main mutual benefit in NHL owners taking the risks listed above is the visibility Olympic hockey provides to the NHL.

As with the World Cup in soccer, Olympic hockey is often the only time many people will watch hockey. Because of this, Olympic hockey presents the NHL with a tremendous opportunity to market its players on a global stage and grow the game.

Before the 1998 Olympics, Olympic hockey was an amateur-only tournament because there was little benefit in the owners shutting down the league and allowing NHL players to participate. The benefits of Olympic participation were less for the NHL before the 1990s, because many of the best players in the world were still playing in leagues on the other side of the iron curtain.

During the cold war, before the fall of communism, the hockey world was divided in two by the iron curtain. As a result, before the early 1990s, the NHL was almost exclusively composed of Canadian and to a lesser extent American hockey players, with a few notable exceptions. This was because the iron curtain made it very difficult for Soviet and Czech hockey players to defect and play in the NHL.

This meant that European leagues, the same ones the NHL has never wanted to legitimize as real competitors to the NHL, were much stronger before the fall of communism than they are today. Because of the relatively high quality of the communist-run Eastern European leagues before the fall of communism, the NHL would have been running the risk of allowing a Soviet or Czechoslovakian National Team, composed entirely of players not playing in the NHL, beating a Canadian or American Team of NHL players in an Olympic tournament.

Such a defeat would have made the NHL weaker in the eyes of many because if a team with no NHL players were able to defeat a team composed entirely of the best NHL players at the time, people would have been able to argue that the NHL was not the best league in the world. Since the NHL always has thought of itself as and has always wanted to prove that it is the best league in the world, it wouldn’t have made business sense for the NHL to participate back then.

2. Why did the NHL start attending the Olympics in 1998 and continue attending four consecutive Olympics afterwards?

The entire hockey world was turned on its head after the fall of communism in the early 1990s.

The NHL has always been the highest salaried league in the world, and because of that, if given the opportunity, the best players in the world will always follow the money. Although this was just as true in 1970 as it is today, political barriers prevented many of the best players in the world from playing in the NHL.

These barriers vanished practically overnight with the fall of communism. For the first time since before the World Wars, players from the former Soviet Empire could easily move to North America and play in the NHL. By the mid-1990s, all of the best players in the world were in the NHL, regardless of nationality. This finally gave the NHL the opportunity to market its players globally in a tournament like the Olympics, without the fear of players from another league embarrassing the best players in the NHL.

After the fall of communism, it was no longer a PR disaster for the Czech National Team to beat the Canadian National Team in a prominent tournament like the Olympics because the all of the best Czech Players were in the NHL, just like the Canadians or Americans (which would not have been true just ten years earlier).

Television also revolutionized hockey as much if not more than other sports, making it easier than ever for fans to watch a game as TV technology progressed. But this only answers why the NHL chose to participate in the last five Olympics, not why they’re not going in 2018.

3. Why did the NHL choose not to participate in 2018? 

 

Logo for the PyeongChang 2018 Winter Olympic Games

The short answer is once again, marketing. If you look at the locations of the previous five Olympics, all but the 1998 games in Japan were easy for the NHL market. The location of the 2002 games in Salt Lake City and the 2010 games in Vancouver meant that Olympic games would air primetime in the North American market.

The same was true for the 2006 games in Torino, Italy and the 2014 games in Sochi, Russia. Games in these locations would be aired primetime in Europe, where both NHL hockey and hockey, in general, is very popular, exposing the NHL’s best players to the very large and extremely interested European Market in the process.

The benefits for the NHL simply do not exist in the case of the 2018 games in PyeongChang, South Korea. With the games in South Korea, Olympic hockey will not air primetime in both the North American and European Markets, and players will be primarily be playing in front of a disinterested South Korean audience. With South Korea’s much smaller population relative to other East Asian markets, namely Japan and China, the South Korean games do not present the NHL with the same growth opportunity that an Olympic tournament held in either China or Japan would.

What you’re left with is a tournament that would benefit the IIHF from a marketing and business standpoint far more than it would the NHL. The marketing benefits that made risking NHL players getting injured and lost revenue from shutting down the league acceptable are nowhere near as strong in South Korea as they were in Sochi or Vancouver.

That is the reason why the NHL is not going. The NHL and its board of governors realized that they were helping their chief competitor more than they were helping themselves. The NHL is a business, and the NHL’s leadership acted selfishly in its best interest as any business would.

The politics and bad blood between the IIHF and NHL have existed for decades, that hasn’t changed and probably won’t change. This year the NHL performed a cost-benefit analysis, just as many businesses do, and was dissatisfied with the results.

An uncertain future 

One of the bargaining chips the IOC and IIHF used against the NHL in their announcement of non-participation in the 2018 games was the 2022 Winter Olympics, which will be held in Beijing, China. China, the most populous nation in the world and formerly one of the poorest nations in the world, is finally reaching a level of economic development that would allow hockey to exist and thrive in China.

The tremendous growth opportunities in the Chinese Market makes the NHL very interested in sending its players to Beijing in 2022, and the IIHF knows it. Because of this, in an attempt to strong-arm the NHL into biting the bullet in the 2018 PyeongChang Games, the IIHF and IOC have threatened that if the NHL does not participate in the 2018 games, they will not allow the NHL to send its players to China in 2022.

This makes NHL participation in future Olympic games uncertain. The NHL’s stance on the 2018 PyeongChang games is certain, they are not going, and we’ve known it since the start of the 2017-18 season, but we do know that they are very interested in going to China in 2022.

The question going forward is: will the IIHF and by extension, the IOC cave and improve the quality of the 2022 games by allowing the NHL to participate?

Only time will tell, and the answer likely depends on the success of the NHL-less 2018 Olympic tournament. If no one cares about or watches the 2018 Olympic hockey tournament, the IIHF will want to boost its profits by allowing the NHL to participate in 2022.

But if the 2018 games are a business success and if the IIHF determines that the additional profits of allowing the NHL to participate in the Olympics are not worth the headache of collaborating with the NHL, we may not see NHL players in the Olympics for the foreseeable future.

Final thoughts

For hockey fans around the globe, the NHL’s non-participation is a shame because it deprives us of high-quality Olympic hockey, and replaces it with half-baked uninspiring tournaments like the World Cup of Hockey. But at the same time, it’s hard to blame the executives leading both the NHL and IIHF for putting their needs ahead of what’s best for the game of hockey.

Money talks and the NHL and IIHF will always act in their best interest because of it. It is likely that one of the two organizations will cave and inevitably see one organization gain the upper hand over the other in the future. We will see who wins when the conflict between the IIHF and NHL once again comes to the forefront in 2022 and it will continue being a fascinating storyline going forward.

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