2008-04-07

Open vs. Closed Leagues

With the NHL season now over, teams eliminated from the playoff race turn their talk to their position in the upcoming NHL Entry Draft. Among Sweden’s Elite Series' hockey bottom, talk is about relegation and the financial realities of demotion.

Right now a playoff series is on-going to determine who will play in next year's Elite Series. With only 2 matches remaining in the 10 game tournament, both Brynäs and Mora are on the outside looking in. Granted it is an extremely close race in the standings, but these two teams could well be playing next year in the Allsvenska.


Swedish professional ice hockey's system is played in what could be referred to as an open league. That is to say that any team can be promoted or relegated, up and down the various divisions. Similar to most international soccer (hereafter called football) leagues, a team can win division 2 which can mean promotion to division 1. Meanwhile the team that finishes last in division 1 will play next season in division 2.

North American sports leagues used a closed corporation of franchises and drafts to build their leagues.

Most of Europe's ice hockey is played in open leagues (eg: Switzerland & Russia) and Sweden is no different. Players develop primarily in local clubs and rise through the ranks to ultimately play for the "A" team. There are no drafts, and trades are rare.


AN OVERVIEW TO SWEDISH HOCKEY LEAGUES
(for an excellent map and overview by team, go here)
The intracacies of the Swedish hockey union (Svenska ishockeysförbundet) can vary from year to year. Here is the 2007/08 version:

  • Elite Series (Elitserien) Tier I – Consists of 12 teams with a regular season of 55 matches – top 8 teams qualify for the playoffs. Teams finishing 11th & 12th face a relegation/qualification series versus 4 Allsvenska teams (see below). The Elite Series has been run as a commericially-focused organisation (called Svenska Hockeyligan AB) since 2001.

  • Allsvenska Tier II – 16 teams play in a regular series consisting of 45 matches. The top 4 (3 +1*) teams qualify for a playoff tournament versus the 11th & 12th place teams from the Elite Series standings. The two best teams from this tournament win a spot in the next year's Elite Series. Meanwhile, the 15th and 16th teams of the Allsvenska standings face a relegation series vs. 4 teams from division 1. The Allsvenska is run by an organisation called AHF HockeyAllsvenskan AB.

  • Division 1 or Tier III - (this is complex!) During 2007, 52 teams were geographically divided into 6 leagues (A-F). At the beginning of '08 the top teams sub-divide into North, Middle & South (called Allettan) and the remaining clubs make up Division 1 (A-D). Playoffs is an extremely complicated hodgepodge of playoff showdowns that then lead to more playoffs. Eventually, 4 teams earn a chance at the Allsvenska.
* Allsvenska teams finishing 4th-7th have a mini tournament to determine the final entry into the Elite Series qualification playoff.

March 16, Swedish Television’s sports magazine Sportspegeln (discussion begins at approx the 15min mark in the program) outlined the financial chasm that is growing between the Elite Series and Allsvenska.

Plain and simple, it is becoming all the more vital to remain an Elite Series team, not for hockey but for economic reasons.

Operating an Elite Series team is expensive, but the benefits from TV rights and league payouts dwarf that received by Allsvenska clubs. The Sportspegeln story quoted royalty payouts of 18 million SEK (approx. US$3million) versus 400 000SEK (approx. US$66 000). Being demoted from the Elite Series means a US$2.4million cut to revenues!


*info from various sources including http://forums.internationalhockey.net/showthread.php?t=5178


HAVE AND HAVE NOTS

Based on the finances, one could summarize the Elite Series into large, medium and small clubs. Although only 12 clubs, the division is quite clearly delineated. Even if the Svenska Hockeyligan AB works for the equality and betterment of the EliteSeries, there are most certainly those who have, and those who have not.

NOTE: The list to the left is purely my assessment and opinion.

Teams do not freefall as easily in hockey as in football (As an example: Leeds United). Instead, teams fall simply by going bankrupt. Today's pro hockey is an exclusive group that harbour many costs and expenses in both minor and professional levels alike. Large and modern arenas, financial deep-pockets, and a deep talent pool are required to compete at the professional level. Like football, a strong financial backer is often, but not exclusively, what makes or breaks a club. It is therefore difficult for small clubs to rise into the highest league without the proper resources.

The larger question is perhaps: how much money exists in Sweden to support pro-hockey?

THE WEAKLINGS

The weak sisters of the Elite Series - based on both competitiveness and financial gusto - over the last few years have clearly been Mora IK and Skellefteå AIK (SAIK), not surprisingly both small market teams. Although Mora and Skellefteå could be termed "hockey heartland", they have small arenas and draw from a very small, albeit loyal, group of citizens and sponsors. They both have strong development systems, though both are, in the grande scheme, financial minnows. Both clubs have had some luck with signing foreign players (Canadian players Eric Beaudoin & Rob Hisey play in Mora, and Kent McDonnell and Lee Goran play for SAIK) and improving their competitiveness. Though unfortunately, hockey is no longer based on talent alone and it is financial muscle and flexibility that lead to a yearly threat of relegation.

Mora is currently in the relegation/qualification series, along with an Elite Series stalwart Brynäs IF (of Gävle). Mora has, against all odds, managed to remain in the top series since 2003 though currently is on the outside-looking-in of the relegation/qualification series. With two matches remaining, Allsvenska clubs Rögle and Malmö sit ready to be in the big show in 2008-09.

Should either Mora or Brynas be relegated, it would mean in many ways tearing up the business plan and starting from scratch with players, sponsors, fans and realistic goals and objectives. Relegation is the metaphoric punch in the gut.


THE GOLIATHS

HV71 (Jönköping), Färjestad BK (Karlstad) and Frölunda (Gothenburg) lead the league in financial flexibility (financial capital). These teams, though they are equally susceptible to rising and falling in the yearly standings, outrank all others in economic stability. All three have modern arenas, capital funds, storied histories and strong sponsor partnerships. Hypothetically-speaking any of these club could probably weather a demotion to the Allsvenska, though they would likely incur substantial losses in order to achieve promotion back upwards.

Notably missing among the goliaths is big-city team Djurgårdens IF of Stockholm. Formerly a powerhouse, Djurgården has had to cut back in recent years and refocus efforts and finances. I suspect they will return as a power, though their two arenas - Globen is often too big and in use by other events, the alternative Hovet is old - lead split persona in respect to their game presentation.

Leksand is a goliath by Allsvenska standards. They have a storied history of developing players and as an organisation have achieved a number of successes. Strong financial backers assisted in the signing of one Edward Belfour to mind their net this year, in addition to 11 other foreign-born players - among them former Maple Leaf Rick Jackman and Czechs Roman Vopat and Michal Grosek). It remains to be seen if their heavy spending with net a promotion.

THE NEW WAVE

Linköping HC is the best example of a no-name club emerging out of seemingly nowhere. As recently as 1998 Linköping was not to be found on Sweden's pro hockey map. The Cloetta Centre was of the first new generation arenas to be built in Sweden and along with the new building, steady improvement on the ice and growth financially, LHC is a club that is now on the hockey landscape - including having reached the Elite Series finals for the second year in a row (loss last year to Modo).


THE ALLSVENSKA

By my count, four teams among the current Allsvenska have the wherewithall to play in the Elite Series – Malmö IF, Västerås IK, Leksand HK, and Rögle (Ängelholm). All four teams just so happen to be in the relegation/qualification series.

At the other end of the Allsvenska standings, other teams are simply fighting to not go bankrupt. As noted in the SVT Sportspeglen documentary, Nyköping HK (100km SW of Stockholm) has resorted to selling lottery tickets on the main street in order to raise money for a 2008-09 Allsvenska license to play.

And Nyköping is not alone in financial hardships. Hammarby IF finished last in the Allsvenska and shut the team down before the relegation/qualification tournament. Most recent talk is of merging with a minor league team in nearby Nacka in order to avoid bankruptcy.

In reference to the thin economic line of bankruptcy, Göran Forssberg, chairman of Nyköping HK was quoted saying "misstep and you can end up there".

How can the gap then be so enormous within Swedish hockey and what can be done?


THE FUTURE - GROW OR SHRINK

Money plays such a big part of today’s modern sport. Even if Sweden's league ranks among the best in Europe, it is still a relatively small country and resources are limited.

The entire sport of ice hockey in Sweden should be healthy and it is then the Swedish Hockey Union (ishockeyförbundet) who should actively unite Svenska HockeyLigan AB, AHF HockeyAllsvenskan AB and other partners to secure the health and, perhaps limit, the future size of Swedish hockey.

In my opinion, The Elite Series should be a closed league. The question is really at what size?

Currently there are 28 teams in the Elite Series and Allsvenska. By my count 14 are of Elite Series caliber. The Allsvenska should clearly be a development league and affiliations to Elite Series clubs, perhaps based on geography, should be established (all similar to the NHL-AHL model).

In this manner, Allsvenska clubs can aim for success of winning the league without the haunting worry of how to financially compete in the Elite Series the following year. The Elite Series then needs to clearly share the wealth to Allsvenska club as their development league.

Others think the Elite Series should be shrunk back to 1988 size of 10 teams.

Either way, there remain far too many unknowns and hypothetical than clear answers or direction.

THE FINAL TWIST IN THE ISSUE

In mid-February, the Ottawa Citizen published a story about globalization of the NHL. What is to say that one of the existing clubs could become a franchise in the NHL?

We are at a unique time in pro sports. The idea of a sustainable future is slowly sinking into the business practices of sport and managers, owners and fans discuss and debate the limits and long term life of their teams.

As for Brynäs IF and Mora IK, they simply need to win two matches each and hope for a few miracles in order to again play in Sweden's highest level of hockey. Otherwise, that 17.5million kronor difference in royalties to the bottom line will be quite the organisational motivation to get back in the bigs for 2009-10.

2 comments:

andreas said...

Djurgården rent Globen Arena. No Starköl is sold and therefore I dont go anymore ... :)

Other arenas are either owned by the club or "sold" to sponsors.
Globen is rented.

Therefore, not enough money coming in via the Arena. No money coming in since attendence is low (not much fun to sit in an arena with capacity of 15500 people where you are among 5500 people watching.

Management cost money. See if you can get any facts on how much management was paid in comparison to income.

Slutspel - yeah right. Didnt make it last year and two games this year at home. No money coming in there.

Stockholm kommun - no interest in aiding the local teams.

Anonymous said...

Try to scout Malcolm von Rosen to Oilers. If you can add Lill-Kenta Jr, why not Malcolm.

Malcolm is a goalie. Good one. MVP when he played for Södermanland in TV-Pucken.