Today, the NHL and MGM Resorts announced a partnership to build on the now legal sports betting in the USA. At the news conference Jim Murren, the Chairman of MGM Resorts and Gary Bettman, the Commissioner of the NHL, answered questions after a brief and detail-light announcement on this partnership.

But how does this affect the Leafs?

One Canadian reporter asked this question. In the broader sense, of course. Bettman’s answer was brief, and he said that Canadian clubs work with lotteries in each province, and that will continue. He mentioned there has been discussion (he did not say by who) on single game betting as opposed to the method used now, but, “As the law evolves [in Canada] you’ll see our evolution in dealing with it.”

So, in a direct sense, Canadian teams and fans in Canada won’t see much change as a result of increased access to gambling on NHL games in the USA. Not unless they hop the border. But the effects of this partnership will be felt by every team in the NHL to some extent.

The revenue generated by this deal is considered Hockey Related Revenue or HRR for salary cap purposes. In brief all HRR received by the teams or the league is added up at the end of every season, split 50-50 and that figure becomes the actual total amount of salaries paid. The salary cap is estimated each year based on projections for the coming year’s HRR. The more HRR there is, the higher the cap goes, and the higher the cap is, the happier rich teams with a stable of elite players are.

Presumably, the higher the cap, the happier the players are too. But how much is this going to raise the cap? When asked about the revenue amounts, Bettman consistently returned to the theme of fan engagement as their motivation, not dollars. This is consistent with the form of the partnership with a friend to the NHL in MGM Resorts — they are part owner of the arena the Golden Knights play in.

Murren also emphasized fan engagement, and mentioned that when they were developing plans to bring an NHL team to their arena, he was aware that most of the fans there would be fans of the visiting team. This is a clue to why the league is looking into this sort of broader appeal to fans via mobile apps for betting and for other forms of engagement. If you want teams in many markets in North America with varying numbers of fans, growing interest in the game in and of itself is a good idea. Just relying on local growth in fanbases gives you failed franchises.

But about that dollar amount. The American Gaming Association released some figures that were quoted by Bettman today. He didn’t directly endorse this projection, but he didn’t scoff at it either.

The National Hockey League’s (NHL) annual revenue may increase by $216 million annually due to widely available, legal, regulated sports betting, according to a new Nielsen Sports study commissioned by the American Gaming Association (AGA).

According to Nielsen Sports, greater fan engagement and viewership could boost the NHL’s total annual revenue from media rights, sponsorships, merchandise and ticket sales by 3.5 percent, producing $151 million in new revenue from increased consumption of the league’s products.

So, this is a projection of overall revenue, including advertising and fees for access to data, not the results of this one partnership with MGM Resorts. This partnership is not exclusive, and there could be future deals to add to the actual revenue coming in. Note: the revenue is not tied to the amount of gambling that ensues. The NHL is not getting a cut of the take.

In real terms, this looks like something more than pocket change, but not a game changing amount. Scotiabank paid $800 million to brand the arena in Toronto. And while that’s paid over 20 years, that’s still $40 million per year that goes into HRR (Edited to add: We don’t  know for sure if this revenue is split between the Leafs and the Raptors for this function or not).  Reading between the lines in the AGA report, the MGM Resorts deal itself may well be less than that.

Legal sports betting could help the NHL generate an additional $65 million in revenue as a result of spending by betting operators and data providers. The study projects that gaming operators may spend $24 million on advertising, which will directly increase the league’s rights fees by the same amount. An additional $35 million in sponsorship revenue and $6 million in data is also projected for the league and its teams.

That “could” is a very important word. There’s no reason to expect this first deal is at this level. If nothing else, this shows the scale of the branding opportunities in Canada vs the USA.


UPDATED:

This new information from Rovell’s sources indicates that this deal is much more in line with the advertising amounts from the AGA report, and not the very sunny and optimistic total figures.


The other part of this deal that will affect Canadian teams is about “real-time data”.  Like with the dollars and cents, the details were a bit hazy on this.  Bettman referred to “enhanced data”, delivered in real time by the NHL exclusively. He said they have invested in the process of inventing this data collection, and have tested it with more tests planned. He mentioned the World Cup of Hockey and the All-Star Game, so we can safely assume this is the tracking data we saw a taste of at the World Cup.

Bettman expects this data to be ready for next season. He also emphasized that they started developing this for broadcast and streaming purposes, but as the laws have changed in America and this opportunity came up, this data will be used by MGM Resorts in the betting side of this relationship.

Data use like this has to go by the NHLPA before it can become a reality, however. There are privacy concerns with respect to this sort of data collection and dissemination, but there are also concerns about how it could be used in arbitration hearings or contract talks. I personally look forward to knowing how fast a player was moving when he lined up that open-ice head hit too.

While both Murren and Bettman made pains to mention the Players’ Association in positive terms, the reality might not be that rosy. Murren made a good case that the players’ personal interests lie in allowing this data collection and use. He talked at length in non-specific terms about individual athlete’s branding opportunities being enhanced with this data.

What this sounds like is something like these advanced metrics going into video games to make player profiles more realistic. But the question is, who gets paid for that, the league or the player? I find it hard to believe this will be a simple thing to get the NHLPA to agree to, particularly when there is a looming CBA negotiation coming. We’ll see in time if the lure of Vegas money can get everyone to agree to a new CBA sooner, and if so, maybe as fans, we’ll have to say thank you to Vegas for labour peace paid for with vice.

With gambling interest in a sport, it is inevitable there will be a call for greater transparency on player health and injury status. Bettman was asked if there was going to be an “NFL-style injury report” where injuries are classified by type and players are listed clearly as probable to play or not. In light of the amazing level of transparency today on Auston Matthews’ status, you might expect the answer here to have been a nod that yes the NHL is going that route. There were rumours as the season started that the league had issued instructions for team to drop the “lower body injury” vagueness and to get specific.

This was the answer:

Which sounds very “100 Hockey Men” but I’m not sure it’s 100 percent true. We’ll find this out in time, too.

So, how does this affect the Leafs? It might goose the salary cap, and it might goose the CBA negotiations. Other than that, we were getting this “enhanced data” anyway, and whatever that turns out to be worth, we’ll learn in time. Murren said more data is always good, but I say data is only as good as what you do with it.