The KHL Board of Directors held a meeting on the 6th of September, 2019. The Board members discussed the financial review of the last season and looked at the league’s future. This resulted in the approval of the salary floor.
KHL President Dmitry Chernyshenko announced that the league’s revenue was around ₽3.6 billion (€49.6 million) in the 2018-19 season. The league expected the revenue to be around ₽3.07 billion (€42.3 million) for that season. I will remind you that the KHL’s revenues were around ₽3.05 billion (€42 million) in 2017-18.
Jokerit & Dinamo Riga Got the Most Money for Television Demand
The KHL Board of Directors decided to share over ₽419 million (€5.8 million) [VAT] with the clubs last season. Similarly, the league shared ₽400 million (€5.5 million) for 2017-18. The principle of revenue sharing is very simple, with all clubs getting an equal 30% of the sum for their participation. Another 30% depends on their results on ice like making playoffs, winning the regular-season, or being Gagarin Cup champions or the runner-up. And finally, 40% of the sum goes to television demand. That criterion combines the number of games broadcasted by television corporations & the value of the television contract and is calculated for every team.
Above all, we can see that Jokerit got ₽31.3 million (€431.000) solely for television demand. It means that the value of the deal with Viasat is high. Of course, Viasat shows all Jokerit games meaning 62 regular-season games plus playoffs. But it is not only Viasat who broadcasts Jokerit’s games. The Finnish team was very popular in the DAZN (15 regular-season games) and the Swiss’ MY Sports (20) in 2018-19. Moreover, Jokerit was the most broadcasted team at these two levels in the 2018-19 regular season.
So, who is second in television demand? Dinamo Riga got ₽16.5 million (€227.000) for that criterion. The Latvian team was popular in Switzerland (13 games at MY Sports) & the UK (nine games at FreeSports) last season. So what does it mean? European clubs are paid very well due to the value of television deals. It is a good signal for potential expansion teams from Europe. They would bring more money into the league, but would also share their significant portion.
Finally, CSKA Moscow got ₽72.5 million (€1 million) for all criteria, followed by Jokerit ₽39.4 million (€543.000) & Avangard ₽31.3 million (€431.000).
The KHL Introduces a Salary Floor Since 2020-21
But moving on. We mentioned earlier the KHL salary cap starting in 2020-21 and will be ₽900 million (€12.5 million) for the season. It will be the so-called “hard salary cap” similar to the one the NHL has. So, clubs could not exceed the cap’s maximal on their players. The league wants to create more parity, but to achieve it, a salary floor – a minimal sum on players contracts – is also needed.
So, the KHL Board supported the introduction of the salary floor. It will be 30% of the overall salary cap in 2020-21, so at ₽270 million (€3.7 million), and will increase season by season. By 2023-24 the salary floor will represent 50% of the overall salary cap. If the salary cap is still at ₽900 million, the salary floor will be ₽450 million (€6.2 million) in 2023-24.
Of course, low budget clubs could have a problem with the salary floor. Dinamo Riga spent around ₽266 million (€3.6 million) on salaries in 2017-18. If a team does not fulfil the salary floor rule, it could be excluded from the league. So, there will be more parity within the league.
But how are the salary cap & floor calculated? The salary cap includes all fixed players salaries, renting of a flat or a house by a club, and individual bonuses if it exceeds 20% of the fixed salary. But team bonuses for making the top four teams in the playoffs are not counted in the salary cap. Financial compensation for winning league awards (like the best sniper, best goalie etc) are not calculated also. And the most important, salaries of U21 players are not counted in the salary cap.
The fixed players contracted salaries will be used as the basis of the calculations of the salary floor.
Smart Pucks, Loans and New Import Limit Coming Up
Certainly we can claim the KHL is the most developing European hockey league, the KHL is the first league using chips on players jerseys and smart pucks in all games. These advanced statistics show the top speed of a player, his total distance and hardest shot, his time in the offensive zone, heat maps for teams, the position of teams shots on goal, pass accuracy, attack effectiveness and others statistics.
The KHL has been considering a significant change in a redistribution of players pool. It is a loan agreement. Nowadays the league has problems with some top clubs, who trade their prospects to weaker clubs. But they re-claim them back after the season. It is a trade (de iure), but also a loan (de facto). The league wants to adopt more strict rules on how to handle this situation. There will have to be some restrictions like a period of a loan, or a maximum number of loaned players by a team, or the player’s age to avoid a situation when a few top clubs would control the market. I will just mention that the loan agreement is a common thing in European football. And even the IIHF rules allow the loan of players.
CSKA Moscow proposed to change the import limit for Russian clubs. Right now, Russian clubs can sign as many imports as they wish, but they can not skate more than five foreigners in a game. CSKA proposed to increase the limit to seven, while one foreigner could be under 20 years. It would create pressure on the European leagues, who have even now a problem to keep their prospects. At the moment, it is just a proposal, which needs to be consulted with the Russian Hockey Federation and the Russian Ministry of Sport.
Expansion and Format of the Championship
It is not a secret the KHL wants to expand to Europe and Asia. Even now, the league covers a huge geographical area, which causes problems with logistics and the travel costs for teams. Right now, all teams play each other at least once in the regular-season. The clubs want to continue with that format even in the case of an expansion. Sporting point of view has more value for them than the expenses for travelling. The league proposed to create the divisions in Western Europe and the Far East/Asia, whose teams would not meet in the regular season. With the majority of clubs refusing that proposal, the league will take it into account while negotiating with potential newcomers.
The Attendance of the First Week Is Higher Than a Year Ago
At the end of the piece, I would like to sum up the attendance figures for the first week of the season. I wrote a detailed article about the KHL’s attendance for the last season & I analysed the attendance in the remaining European hockey leagues as well.
So the average attendance of the first week was 6,107 spectators per game in 2018-19, while a total of 44 games was played that week. But for the current season and its first week, a total of 38 games were played with the average attendance of 6,925 spectators per game. That is much higher than a year ago.