Today I summarise the other news from the latest KHL Board of Directors meeting, including the business potential of the clubs and the loan market. Also noting the KHL clubs lead the European hockey in social media. And the Vegas Golden Knights partnership with Avangard Omsk.
Dinamo Minsk, Barys & Jokerit Among Successful KHL clubs
As we discussed earlier, the league’s strategic plan is to increase the so-called commercial revenues share in clubs’ revenues structure. So, more money from ticketing, merchandise & match-day revenues to replace the share of the state funding.
The league’s aim is not to get the state funding to zero but just decreasing it and simultaneously increase the clubs’ ability to earn money by their business activity. These commercial revenues should be at 25 per cent of all revenues in all individual clubs by 2023-24, that is the plan. As for the last season, just one club reached that level & another was close to it. The KHL President Morozov revealed in April that Jokerit’s commercial revenues were at 27 per cent. The commercial revenues were in nine clubs at 10-15 per cent in the last season and the remaining clubs were below 10 per cent. So, much work to be ahead of clubs.
Furthermore, the clubs are working on replacing the state funding with private commercial sponsors. So, the companies without the share of the state or regional governments. Dinamo Minsk, Barys Nur-Sultan, and Jokerit Helsinki are among the most successful teams in that department, so three of five non-Russian teams. We can consider all three clubs as the core teams for the league’s future.
The KHL Clubs Lead Europe in Social Media
It can not be a surprise to anybody that Spartak Moscow, SKA St.Petersburg & Avangard Omsk belong to this most progressive group as well. Of course, all are getting support from Gazprom affiliated companies, but these clubs work hard to develop their own business.
Recently, the German digital research company RESULT Sports revealed their survey of social media activity in European club hockey. And SKA, Spartak & Avangard are in the top four in Europe, another KHL club – Sibir Novosibirsk – is in third place. I remind you of Spartak’s story, the club had to skip one KHL season due to the club’s negative financial situation just to come back much stronger.
Avangard Partnering With the Vegas Golden Knights
Avangard is led by its Board Chairman Alexander Krylov. In my personal opinion, he is one of two leading KHL clubs’ officials. The second one is Roman Rotenberg from SKA. Both having the ability and experience to develop the business in their respective clubs. And results speak for them.
Krylov visited a few venues in Europe & North America to get a first-hand experience about their business. As we know, Avangard is building their new venue now, so they decided to contact the industry leaders. He also visited the home venue of the Vegas Golden Knights (NHL). While talking to each other, both clubs agreed to develop a mutual partnership program but the pandemic has halted their plans for now.
The NHL club is interested in sharing Avangard’s experience in prospects’ development because as a new franchise, they need to develop it. On the other hand, Avangard would like to share the Golden Knights’ experience in brand promotion & business. As a part of the deal, the Golden Knights planned to visit Moscow while Avangard would travel to Las Vegas. It is not clear if both teams would meet on the ice. Unfortunately, the plans are stopped for now due to the pandemic.
The Clubs and Business Potential
But coming back to the commercial sponsors. Another two clubs belong to the most successful teams in getting the commercial sponsors – Ak Bars & Salavat Yulaev. Their Green Rivalry is one of the top match-ups in the league.
The league would need more than just eight teams performing well on the commercial market. Definitely, the Moscow sides CSKA & Dynamo should reach at least the level of their rival (Spartak). Both having modern big venues.
I admit Lokomotiv & Sochi are located in tougher regions, either small regional cities or non-hockey markets. Unfortunately, I do not see much business potential in Severstal and Vityaz.
The East is much more complicated, but Avtomobilist, Torpedo & Sibir should develop with their new venues being constructed. Metallurg Magnitogorsk is located in a hockey region but the city is relatively small. While their neighbour Traktor Chelyabinsk is from a big city with hockey traditions, so the business potential is there.
The younger brother in Tatarstan, Neftekhimik Nizhnekamsk is on par with Severstal & Vityaz. Because ’the club of the Republic (of Tatarstan)’ is undoubtedly Ak Bars Kazan. They even started the campaign ’Made in Tatarstan’ this season to promote their region.
The Russian Far East & China are hockey untapped markets but let us believe their time is coming. The Kunlun Red Star should move to their Beijing venue next season, so finally being at home.
The Loan Market in the KHL
Finally, the KHL Board discussed the loan market. We talked about so-called hidden loans earlier.
Now the KHL Board presented some early details on the topic. They are still subject to change though. The league wants to regulate the loan market while getting rid of the hidden loan. But the clubs are not united in their opinion on the introduction of the loan market. Fifteen teams vote for the loan’s introduction while eight are against the idea. Based on Kirill Fastovsky statement in media, his Sibir does not support the idea while Avangard supports it. Moreover, Krylov says that Avangard plans to sell its prospects for significant financial compensation in the future.
Of course, the worldwide hockey market is limited due to the NHL’s behaviour. It is a more complicated story, so just a few words. The NHL does not have any interest to buy the prospects from European clubs for serious financial compensation. By serious, I mean the financial compensation based on the prospect’s upside and agreed by both clubs on a case-by-case basis.
So, the KHL clubs would have no problem selling their players to NHL clubs if the North American clubs were able to pay serious financial compensation. Since they are not ready to do so, Russian hockey has been developing its internal model on how to keep the best prospects at home while getting the appropriate financial compensation if under 23 players moving abroad.
This upcoming transfer model in conjunction with regulating the loan market and the new salary cap mechanism should create a lot of roster space for young Russian prospects.
So, once again, the aim is to keep them at home as long as possible.
Feature Image Credit: (Photo by Ethan Miller/Getty Images)