The KHL leadership informed clubs about economic and international aspects of the KHL Development Strategy at December’s meeting. The Republic of Tatarstan hosted the Week of Hockey Stars in the middle of January.
The Financial Fair Play
The KHL has been trying to transform the teams economy into a healthy business model to ensure their financial sustainability. The league has tried to achieve the goal through various tools. One of them is the financial fair play. The league’s partner, likely Ernst & Young, has been analysing the clubs financial documents. They have been looking at a financial statement of SKA, Spartak, Jokerit, Sibir, Traktor, Ak Bars and Torpedo this season. The KHL wants detailed information on the financial condition of the clubs to find out the differences between them and propose a way on how to achieve more parity within the league. First of all, it is not a secret that some teams are spending more on a front-office, transportation and accommodation than others.
“There is still an imbalance in the budgets between clubs, albeit the gap is being reduced. The largest budgets are still 8 times the size of the smallest budgets for clubs at the bottom end. However, if you remove the clubs at either end of the spectrum, then budgets are significantly closer aligned. To close the gap further, the KHL will develop a list of recommendations for improving efficiency and financial sustainability, using the findings of the financial fair play audit,” said Dmitry Chernyshenko.
The Economic Plan
Commercial income of clubs currently makes up 10% of overall income, a ₽100 million increase from the previous season by December. The league has proposed that the commercial income of clubs be 20% of overall earnings by 2023. Furthermore, the KHL’s key request is to decrease team funding from regional governments or state corporations. The league expects the decrease of state funding by 17% this season and the growing of private funding by 22% if comparing to the 2017-18 season.
Seeing how young consumers prefer using mobile devices nowadays, therefore the league has recommended that clubs develop their websites and applications to follow this trend.
The KHL and the NHL Memorandum of Understanding
The Memorandum of Understanding of Contracts between the KHL and the NHL has been extended. The MoU regulates player movements between both leagues, this was signed for the first time in 2011. This agreement was in place meaning league’s could not poach players after the Radulov case in 2008.
The MoU is very unique in the world hockey community because both leagues honour player contracts with clubs of the opposite league. A player with a valid contract in one league cannot sign a contract with a club of an opposite league. A new version of the MoU ensures that the decisions of the arbitration bodies in both leagues will now be recognized, as well as being assisted in their ongoing functions. This document also sets out the procedure for negotiating any future contracts with players who are currently under contract in either league. Both leagues have been developing a transfer system outside of IIHF’s regulations.
The Plundering of the Market
Alexander Medvedev, the former KHL President, once said: “we do not want the NHL to plunder our players market.” He is right, the MoU has been protecting the KHL from players being poached. Russian players can still move to the NHL, but the KHL clubs control this movement. A player with a valid KHL contract needs the approval of his club to move to the NHL.
In contrast, we can compare this system to the NHL Transfer Agreement (NHL TA) signed by the NHL and several European hockey federations. Tomáš Hertl was under contract with the Czech club Slavia Prague for one season and the club did not want to release him to the San Jose Sharks (NHL). At the end of a day, Slavia had to release him according to the NHL TA. It is a strange situation when an opinion of a club having a valid contract with a player is ignored. An ideal environment for plundering your players market by a stronger league.
The Swiss hockey federation and their elite competition the National League (formerly NLA) has not signed the NHL Transfer Agreement. They protect the interests of the Swiss clubs and the National League.
Russian Youth Hockey Reform
Arkady Rotenberg became the Chairman of the Russian Hockey Federation Board in 2015. That year is very important in Russian hockey because it is the year of structural changes in the KHL and the Russian Hockey Federation (FHR). Dmitry Chernyshenko has been the KHL President since November 2014, but his colleagues Georgy Kobylyansky, Sergey Dobrohkvalov, Sergey Krasnov and others came to the league in 2015.
Similarly, the FHR started to work on a reform of a Russian development model after Arkady Rotenberg became the Chairman. They analysed the developing models of all leading hockey countries and the Soviet system as well. Also, they have been working on methods for all age groups and new hockey rinks to be built in the country.
New Regulations for Agents
Last but not least, the FHR changed the rules regulating agents services. They need to get new licences and pay ₽500,000 for a yearly licence instead of ₽50,000. So, it is clear the FHR wants the credible agents to offer their services to players, especially to young prospects. According to new rules, an agent cannot organise a prospects departure to a foreign league otherwise the agent’s licence may be revoked. It is applicable to players under the age of 23. Only time will tell if the rules will work as the FHR wants.
Many Russian prospects have moved to the Canadian or the American junior leagues recently, but only a few of them have made it to the NHL. Others have come back home or quit hockey. The Russian superstars at NHL level have paradoxically developed in the KHL´s system and moved to the NHL in older age as fully developed players. Bobrovsky, Kuznetsov, Panarin, Kucherov, Tarasenko, Dadonov, Radulov, Vasilevsky, Orlov or Zaitsev are the greatest examples.
The KHL And The Champions Hockey League
The KHL leadership met with Peter Zahner at the KHL World Games in Zűrich. He is CEO of ZSC Lions and he has been the Chairman of the Champions Hockey League Board since June 2018.
Both sides understand that they need to work together. They differ in a key way however. While the CHL would like to integrate the KHL into their current model, the KHL does not see such a scenario. The CHL’s prestige would increase a lot, but the KHL would gain close to nothing. You can argue the KHL’s approach is not correct, that the KHL should participate to show their superior level of the game. While I agree, we need to see the other side of the story as well.
The CHL needs to show the credibility of the competition and the overall level. It is not the best way to show that if the games, even the final, are played at training rinks as we witnessed in the past. It is a good signal that Scandinavium, which is home to Frölunda HC will host the 2019 CHL Final.
The CHL Board decided that Arlan Kokshetau, the IIHF Continental Cup winner, cannot be accepted as a CHL qualifier for the reason that travel logistics to Kazakhstan are too extensive for CHL teams. Hence it is difficult to imagine the travelling of CHL clubs to the Volga region, Ural region or Siberia if the KHL joined the competition. I guess the KHL would not accept a scenario that teams from the Eastern Conference are excluded from the participation in the CHL.
The KHL as an Equal Partner
KHL President Chernyshenko has another proposal, “we are ready to co-operate with the CHL only as an equal partner. If we launched a joint project, it would be possible.” The KHL prefers a new joint project over joining the CHL with their current structure. They will use the KHL World Games to promote the league’s product in European markets, but the CHL’s doors are still open. “We are interested in games between both leagues because the leading KHL and CHL clubs are able to offer amazing hockey,” concludes Chernyshenko.
There has to be a few more conversations between both parties until the joint project happens. “As early as the 2020-21 season,“ Zahner predicts.
The 2018 Hockey Classic Saint Petersburg
Russian hockey officials, especially Roman Rotenberg, have talked about a hockey game at a football stadium for a few years. Russia hosted the 2018 FIFA World Cup. New football stadiums were constructed to host the biggest football event. Saint Petersburg Stadium was such a stadium. Actually, the stadium was renamed to the Gazprom Arena in December 2018.
Russia hosts a stage of the Euro Hockey Tour (EHT) every December. The tournament was unique in December 2018, when Team Russia defeated Team Finland at the Gazprom Arena. It was the fifth most attended hockey game ever, with 71,381 people in attendance. SKA hosted CSKA at the Gazprom Arena a week later, the game was attended by 67,770 hockey fans. It is the highest attended regular season game of any European hockey league ever.
Roman Rotenberg revealed the plans for next season. They would like to organise a hockey game at the Luzhniki Stadium. The capacity of the stadium is 81,000 seats. This game would be the most attended hockey game on European soil ever. The record currently is 77,803 attendees and is held by the Veltins-Arena in Gelsenkirchen, where Team Germany hosted Team USA at the 2010 IIHF World Championship.
Dinamo Riga will host Dinamo Minsk at another outdoor game on the 15th of February. Both clubs met in the open air, in front of an 8,500 sell-out crowd at a specially installed temporary arena in the Riga City Hall Sports Complex in January 2018. Dinamo Riga won a close game then but who will win the 2019 Winter Ice Break?
The KHL World Games Coming to Paris?
The Week of Hockey Stars is the KHL’s prominent event. It consists of an All-Star Game of three leagues – the KHL, the MHL (junior), and the Women’s Hockey League, with the KHL operating all three leagues. The Republic of Tatarstan hosted the 2019 Week of Hockey Stars, the city of Kazan hosted the KHL All-Star Game. There will be an announcement soon from the KHL as to who the host city will be for the 2020 Week of Hockey Stars.
Russian club Salavat Yulaev Ufa will play at the 2019 Spengler Cup. Both parties signed the agreement at the KHL All-Star Game in Kazan.
Russian media revealed that KHL leadership met with the French delegation in Kazan. Luc Tardif led the delegation as he is the President of the French Ice Hockey Federation. They talked about the KHL World Games in Paris, and most likely they discuss a French KHL team as well. But coming back to the current event, The AccorHotels Arena should host two Avtomobilist’s regular-season games in November 2019. French hockey star Stéphane Da Costa should lead the Russian team.
The KHL organised the KHL World Games in Vienna, Austria and Zűrich, Switzerland this season. Both events took place in October and November respectively. It is unknown if the KHL plans to organise the event in two cities again. Furthermore, the league should announce its decision at the end of the current season.
Feature Image Credit: Photo by Robert Hradil/Icon Sportswire via Getty Images)