Sympathy for the Devil
A review of The Instigator: How Gary Bettman Remade the League and Changed the Game Forever, by Jonathan Gatehouse.
Spare a thought in your more charitable moments, citizens of Canada, for the one named Gary Bettman. What must it be like to know you are the most vilified man in the country, and not even live here?
Detested prime ministers come and go, but the most unpopular man in Canada has staying power. He was named commissioner of the National Hockey League in December 1992—Brian Mulroney was still in office and eBay had not yet been invented—and almost immediately the fans soured on him. These days, he is booed at the start of the season when he shows up at the NHL draft and booed at the end when he presents the Stanley Cup to the playoff champions. The two most common words he hears in public come in the form of a chant: “Bettman sucks!”
That would warp you somehow, surely. You are a powerful, successful business leader, a titan of Manhattan. You fly on private jets. But your customers, the ticket buyers, mock you openly and jeer you from the stands. You have the charisma of a prison warden.
And yet for Gary Bettman we should be truly thankful. There are only a few things that unite this country coast to coast, English and French. Hockey and a resolve not to be American are two. Contempt for Gary Bettman, the American in charge of hockey, is the third. He is a tool of nationhood. If he did not exist, Canada would be forced to invent him.
As I write, the nation seethes. Bettman is presiding over the third lockout he has forced in his 20 years as commissioner. The first came in 1994, nine months into his new job, and lasted 104 days. The second scrubbed the 2004–05 season. I do not know how the third turns out, but I guarantee it will not make Gary Bettman any more popular.
That is the secret of his success. As Jonathan Gatehouse points out in The Instigator: How Gary Bettman Remade the League and Changed the Game Forever—the title comes from a league rule that hands out a misconduct penalty to any player deemed to have picked a fight—Bettman does not have to be liked by the NHL’s millions of fans or its hundreds of players. He just has to hold the confidence of the owners of the 30 teams that currently make up the league—which is to say, he has to keep the money happy.
Gatehouse’s thesis is that Bettman has become the most powerful chief executive in the history of the NHL, able to corral the rampant egomaniacs who own the franchises and singularly responsible for buoying league revenues from $400 million to $3.3 billion. His driven purpose is to make the NHL as profitable as possible. It just so happens that what Bettman believes is good for the league, his legions of detractors believe is bad for the game.
Here’s the thing. Canada may be mad for hockey but the NHL is not a Canadian enterprise. It is headquartered in New York. Of the league’s 30 teams, 23 are in American cities. But as a continental op, hockey is a poor cousin to football, baseball and basketball. So, while Bettman has to be mindful of the worked-up fan base in hockey’s homeland, he knows his real job is tapping into where the money lies, through expansion and exposure. More teams and more TV. Bigger sponsorship deals and more lucrative merchandising.
He moves franchises around North America like Rommel advised by accountants, the strategy being to take and hold populous U.S. markets. In 1995, the numbers did not look good for the Quebec Nordiques, so the team was uprooted and became the Colorado Avalanche. In 1996, the Winnipeg Jets became the Phoenix Coyotes. By 2011, the numbers did not look good for the Atlanta Thrashers, so they got airlifted to Winnipeg and the Jets were reborn. The Phoenix Coyotes, by the way, continue to lose money. The only reason they are still alive is an annual $25 million subsidy from the city of Glendale, Arizona, where their rink is located, along with the beneficence of the man who moved them there in the first place. For the good of the league, you understand. Leadership by spreadsheet.
Bettman is the International Monetary Fund of the NHL—deciding where to inject emergency millions to keep foundering franchises afloat while turning his back on beseeching millionaires about to go under.
What a bizarre business the NHL is. One might think its endorsement of smash-your-face-in violence would make it the preferred sport of troglodytes. In fact, Gatehouse reveals, compared to other sports its 20 million most dedicated followers are “more affluent (average household income is over $100,000), better educated (70 percent attended college or university), and more tech savvy.” Hockey is the thinking man’s mayhem.
Meanwhile, the business is owned and operated by 30 different proprietors in 30 different territories. Imagine trying to run an international shipping line of 30 supertankers, but every single one has a separate owner, an unhealthy proportion of whom keep going bankrupt or being hauled off to jail, and when they do their leaky vessels get sold to someone else who thinks he can do better.
Worse, almost none of the jumbo-ego multi-millionaires who buy NHL teams made their fortunes in professional sports, much less hockey. They made their money in pharmaceuticals, real estate, oil and gas, the computer biz. For a while, the Tampa Bay Lightning were co-owned by the producer of the Saw franchise of torture-porn horror movies. The league is owned by men who fancy themselves business geniuses, but most of whom really do not know that much about the business they have bought into. They are rich men dabbling.
So the ownership of the NHL is a dragon’s den of self-interest. Hell, Ed Snider, owner of the Philadelphia Flyers, is such a devotee of Ayn Rand he bankrolled the Atlas Shrugged movies.
Bettman, who studied industrial and labour relations at Cornell University, wrote his undergraduate honours essay on the management practices of the mafia, which no doubt comes in handy in managing a business with the corporate structure of a crime syndicate. He went on to study law at New York University, held a couple of jobs at different firms and then landed in 1981 at the age of 27 as assistant general counsel for the National Basketball Association, where he played his part in the introduction of a ceiling on players’ salaries. In return for the salary cap, the promise was that the players, collectively, would take 53 percent of the NBA’s gross revenue, so as the league got exponentially richer so would the talent.
This is a decidedly un–Ayn Rand way to manage business affairs. It requires the intervention of a central authority to organize collective rewards and determine individual compensation. It is positively Soviet. Or possibly capitalism gone wild. Gatehouse reminds us that in the midst of the 2004–05 lockout, Bain Capital—yes, Mitt Romney’s Bain Capital—took a stab at cornering the market on every NHL team on the continent. It tried to buy the league outright for $3 billion.
Bain’s plan: no more warring fiefdoms, no more bidding up the price of talent only to eat into league profits. Every team would take its orders from corporate management, every team would negotiate its budget with head office, and if every team were owned by the same company then the on-ice talent would have no leverage to demand exorbitant, spiralling salaries.
The bid went nowhere. Telling multi-millionaires they are doing a lousy job of squeezing maximum profits from their holdings makes them cranky and unwilling to sell. Plus the NHL already had its little Napoleon issuing orders from corporate headquarters, and the owners liked him just fine.
Bettman was hired by the NHL to do one thing, and one thing only—make more money. The money in sports comes from ticket sales, television rights, sponsorship deals, expansion fees and merchandising—while on the other side of the ledger a major expense is the salary packet of the players. So, if the CEO of the league can bring in ever more revenue while throttling down salary expenses, that would make him the darling of the owners and secure in his job.
Hence the lockouts. In 1990, the average player’s salary was $232,000 and only four of them made more than $1 million. And still, when Bettman took the helm two years later, the league’s salary purse amounted to 63 percent of revenues. The first lockout, in 1994, was intended to introduce a salary cap—to save the owners from themselves, as Gatehouse says, since it was the owners who were driving up salaries by competing with one another for the talent. It failed spectacularly. The second, the one that wiped out the 2004–05 season, succeeded. The amount spent on salaries across the league was fixed as a percentage of revenue; individual teams were limited in the total amount they could spend on players; and an individual player’s salary could be no more than 20 percent of his team’s envelope. In return, the players were to receive 57 percent of gross revenues. The goal of the third lockout has been to claw that figure back.
Yet has Bettman truly succeeded as the hockey czar? Gatehouse—a senior writer for Maclean’s—offers an even-handed, even sympathetic, portrait of the commissioner. But he notes that record revenues do not necessarily make for record profits, or indeed any profits. In 2012, Forbes magazine calculated that, of the 30 teams in the league, 18 actually lose money. (Hence the owners’ determination to wrest more cash from their high-priced employees, whose average salary has climbed to $2.45 million.) And although the league landed a television deal with NBC last year to great fanfare—$2 billion over ten years—this amounts to $200 million a season, or pretty much what CBC and TSN together pay for television rights in Canada, a market one tenth the size of the United States.
Do the arithmetic: the $200 million NBC deal divided by 30 is $6.7 million per team. It’s not chump change, but the food franchises in the Air Canada Centre where the Maple Leafs play will bring in more a year.
Sport has entered an era in which meta-sports—marketing, sponsorship, video games—can be more profitable than the game itself. Gatehouse describes the NHL Exchange, an annual trade fair at which exhibitors display their hockey merchandise: “There are team-themed baby soothers … plush likenesses of stars like Sidney Crosby … official team garden gnomes … even a line of toasters that will scorch the logo of your favourite team onto your favourite bread.” And yet hockey remains steadfastly a business of bums in seats. Some 65 percent of league revenues still comes from ticket sales.
The Instigator is entertaining and informative, and lopes along in the breezy prose of a seasoned sportswriter. Season tickets are “ducats,” refs are “zebras,” the Stanley Cup is “the chalice,” and the Philips Arena in Atlanta was “a new barn with all the bells and whistles.” But I am not sure that in the end Gatehouse proves his point, that the towering figure of the diminutive Bettman has “changed the game forever.”
Even if the man they have delegated to manage it enjoys more authority than his predecessors, the league is still owned by outsized personalities with little in common except their own high opinion of themselves. Meanwhile, the long campaign to establish hockey in the U.S. as a sport and business comparable to basketball shows no sign of making any greater progress. It remains, in the end, Canada’s game that happens to be played south of the border, just as major league baseball is America’s pastime that also happens to be played in Toronto.
Consider the subtitle of The Instigator: “How Gary Bettman Remade the League and Changed the Game Forever.” The word hockey does not appear. It does not have to. For a Canadian readership, there is no doubt what league is being referred to because there is only one game. And only one Bettman.