A new report from the National Hockey League (NHL) suggests the league could be looking to spend a record $50 million a year on its trademark business, which would be the highest such expenditure in the league’s history.
The report, by the sports business research firm Sports Business Journal, said the NHL’s current business model would cost it $5 billion over 10 years, $7 billion over 25 years, and $13 billion over 50 years.
The NHL has spent $10 billion on trademarks since 2005, the last year the league was able to keep its current trademark licensing agreement, which expires in 2022.
The report said that while the league is not planning to stop using its trademarks, it is concerned that the cost of maintaining them will continue to rise, especially given that it’s the biggest business in sports.
“The business model is still very good, but the cost is getting out of control,” said Peter Leavitt, the author of the report and a senior fellow at the sports and entertainment practice at the Peterson Institute for Sports Law and Policy at the University of Minnesota.
Leavitt said that the NHL would be better off continuing to pay for its trademark license at the current rate of $1.2 million per year, or $25 million a team.
He said that with more money in the bank, the league might be willing to invest in the business of the brand, such as adding new teams or a brand-specific marketing team.
“You might be able to get a little bit more bang for your buck, but you’d have to invest more money to do it,” Leavitz said.
The new report also says the NHL is not looking to stop doing business with companies in other sports.
“We’re still in business with the NHL, and we’re looking forward to continuing to do business with all of our partners,” NHL spokesman Greg Fergus said.
In an e-mail, the NHLPA, the union representing NHL players, said it was “confident” that the new report accurately reflected its “best interests.”
The union did not immediately respond to a request for comment.
Leafing out of the union’s contract with the league, the report says the union has been able to negotiate an additional $1 million per season for a 10-year period, or about $2 million a season.
The union’s executive director, Mike Johnston, said in an interview that it would take at least 10 years for the league to begin paying back the additional money.
“It’s the first time we’ve had a report that accurately reflects our best interests and we’ve done it in a way that’s transparent,” Johnston said.
Leasewise, the new NHLPA report says it is unclear if the new agreement will include a return of $5 million annually or $10 million annually, but Johnston said the union was not seeking any kind of revenue increase.
Leap Motion, the organization representing the NHL team owners, has been looking to renew its trademark agreement for about two years.
It has a long-standing contract with a $25,000-per-year renewal fee.
“I don’t think there’s anything that’s changed in the last two years that will impact our ability to get the $25-million-per year renewal fee, so we’re hopeful that we’ll get it done,” said Brendan Shanahan, the team’s president and chief operating officer.
“The reason for the renewal fee is to help fund the building of a brand and to make sure we’re investing in the right way.”
A team’s current agreement expires in 2019, and the league wants to renew the contract in 2021, though the union is still negotiating.
A spokeswoman for the NHL Players’ Association said it “continues to support a fair and balanced renewal process, including a new agreement that ensures the league continues to grow and evolve into the next phase of its business.”
“As we have in the past, the collective bargaining agreement remains the primary source of funding for the sport of hockey, which is why we are committed to continuing our efforts to reach a deal with the players in the coming years,” the spokeswoman said.
Johnston said that he believes the union would be willing “to continue working with the union on some kind of agreement” to extend the contract.
“We’re going to continue to be a part of this discussion,” he said.
“This is an industry-wide discussion, and it’s one that the union and all of the players are interested in.”
Leavitsen said the cost could be a problem because the NHL has to keep paying the union.
“They’re not paying the right people to stay,” Levasse said.
“It’s a problem, but it’s not a problem that’s insurmountable.”
The cost could also be a challenge because the new deal includes a $50,000 per-team “market share” payment for each team that does not get enough bids from outside the