>> the national hockey league strikes gold with a huge media deal in canada. that's just one reason the c.o.o. john collins is looking forward to the new year. >> it is an opportunity for us, we will tell some great stories around the players. hockey is also thriving in northern california. find out how the san jose sharks have become one of the coolest success stories. >> our fan base is very sophisticated and they have discretionary income that they can spend on hockey. >> college football sells postseason excitement. are the bowls half empty or half full? >> cities have to be honest with themselves about whether they

are or are not a destination for a bowl game. >> all this and a look back at the year in sports business. "sportfolio" starts right now. hello i'm rick horrow and welcome to "sportfolio." bloomberg's weekly inside look at the business of sports. what an incredible year it's been for the nhl. when it started, there was a work stoppage that threatened to wipe out the whole season. since hammering out a 10-year labor agreement in january, all signs indicate that the league is back at full strength. last month, the nhl announced a deal with rogers communication that will bring in $5.2 billion for its canadian media properties. rogers holds all the tv rights and will operate the digital services. nhl center ice and nhl game center live in canada. rogers will also take control of the iconic hockey night in canada franchise on the cbc for at least the next four years.

>> it is a remarkable revenue boost for the nhl which is also hree year into a 10-year, $3 billion contract with nbc sports. their chief operating officer john collins joins us now on "sportfolio." the bottom line that canadian tv deal is $5 billion for the league. i assume you're happy with it and what are you going to do with it? >> it is a great deal for our clubs. it is a validation for how good the game is. it is a strategy that we have put in place a couple years ago. to find ways to have fans and sponsors activate around the league as opposed to at the club level. i think it's a validation of that strategy. it's a strategy that's been well received and well executed. >> for the commissioner, it is a major validation for the nhl coming on to canada. in the right revenue way. >> never underestimate the canadian passion for hockey. fundamentally, what gary has

done, he has changed the business model for the league. it was a business that even seven years ago, when we were a $2 billion industry, 95% of net revenue was driven through the clubs. looking forward, we will be a $4 billion industry. with as much as 20% to 25% of revenue coming from the league level from the national league. >> let's talk about how that revenue is divided, 50-50 with the players. it is groundbreaking and incentivizes everybody. and you are leveling the playing field between bigger markets and smaller markets. walk us through that. >> national revenue is split 50-50 with the players. evenly across the clubs. that's where it comes in. in the salary cap system, the more national revenue you can share equally between 30 clubs, the better the system is. that's why we have had such good buy-in and good success with the clubs. >> the winter classic started off as a one-off and then an

experiment. now it is really significant. the commissioner, when we had him on, talked about making sure he did not dilute the classic. now we have six, we may have 60, ho knows what the number is. but it is an amazing event for a lot of reasons. >> the winter classic, the event strategy was a big cornerstone of how do we begin to activate fans and sponsors at the national level? our partner nbc was all in with us at the time. they saw a gap around new year's day, where there are a lot of college bowl games but the biggest games have moved off that window. it was a great opportunity for us to come in and do something on the national level, not just to core hockey fans but casual sports fans. from that moment on, people viewed the winter classic and these outdoor games as a different kind of property. a property that could really engage the casual sports fan. >> the nfl has first call on

meteorology for snowing on february 2. what about you? >> we have the same guys on retainer. the weather channel guys have been here. >> is it an example of leveraging your tv partners for maximum benefit? >> my history is with nfl films. the nfl has done such a great job of telling those stories, nfl films had a heavy hand in helping shape the image of the nfl. hockey, we have so many of those stories. our athletes are phenomenal guys. once fans know who they are, they'll really like them. we have been doing hbo's "24/7" for three seasons and the opportunity with the outdoor games in l.a. and new york and chicago and vancouver, along with the olympics, created an opportunity to tell some great tories around the teams.

>> you will come out of the olympics with some very good benefits? >> hockey is a global sport. the nhl wants to have a global business. the olympics is a great platform. there probably isn't a bigger platform. we think we're going to use it more effectively this year. ultimately, i think part of the answer for us is to have our own world cup. a world cup of hockey, which is a big tradition in hockey and has been very successful. whether that is something we do parallel to the olympics or instead of the olympic is something for the commissioner and ownership to figure out. but there is a big opportunity from a business standpoint for the nhl. >> $3.3 billion and you are now publicly stating that $4 billion is a legitimate benchmark. how do you do it? >> i think the rogers deal starts to get us there. we have some maturation of some of the platforms, the event platforms. our digital media platforms begin to do it. international gets us there. >> everybody might argue that

there were some challenges about the rapid growth of the nhl a couple of decades ago. so it's reasonable growth, i accum-- assume, in the future. how do you keep the kansas citys, houstons, québec citys, happy? do you talk about expansion in the near future? do you grow your minor league systems? do you do all that? what is the answer for reasonable growth? >> the commissioner has said that expansion is not on the horizon. but he's hoping and he's listening. for us, the growth of the business has been at about a 20% annual clip on a national level. we think that's sustainable. we're constantly introducing new media platforms, new ways of bringing our product to fans. the rogers deal in canada will be a big part of that. digital media and the ability to target fans, not just in north

america, but internationally, will grow us in the future. >> good luck with the stadium series and good luck with the winter classic. good luck with the stanley cup and everything else you do. hockey is clearly hitting on all cylinders internationally. with 12 nations set to compete in the winter olympics at sochi. it's also prospering locally, even in some areas not known as hockey hotbeds. coming up, we will go to the heart of silicon valley. the san jose sharks have gone from start up to success story. what is their secret? >> i think our popularity over time transcends hockey because we have this game. >> stay with us as "sportfolio" rolls on.

>> welcome back to "sportfolio." in the 1990s, the nhl added new franchises. many in the southern and western states. the so-called "sunbelt" teams still lag near the bottom of the league in revenue, with one notable exception. the san jose sharks are the 13th

most valuable franchise in the nhl. they ranged just outside the top 10 in revenue last year. most impressive, san jose is one of four nhl franchises that carries zero debt. the other three are the new york rangers, chicago blackhawks, and detroit red wings. how have the sharks outperformed their expansion cousins in the business arena over the last 20 years? the chief operating officer told me that it all began with clever packaging. >> the focus of the managing team at the time was to educate fans on the game of hockey and to create a uniform and a logo that people can associate with. we created a logo that was somewhat friendly but intimidating at the same time. it is a logo where a five-year-old child would not be afraid of the logo, but it reflects a fast and aggressive hockey team. that is what the sharks have become over the years. i think we also benefited from the fact that we were the first major team of the four major sports to call san jose home. i think our popularity over time transcends hockey, even though

hockey is very popular here, because we have san jose in our name. >> you have been open publicly about operating losses over the last couple years, but now you have zero debt. that gives you a lot of liquidity and options. how does that help you going forward? >> it goes back to our ownership mantra. we have a corporate philosophy, corporate goals if you will, to win the stanley cup each year. it is the same for every hockey club. you need the resources financially to meet those goals. the majority owner is committed to bringing a high-quality team onto the ice. he wants to make sure that that product remains competitive on the ice. we do not have any debt. our owners paid capital each year to get us to break even. we have some flexibility to grow our brand as needed. >> unlike the nhl's highest

re-knew teams, the sharks don't own their building or operate a television network. they doe operate the s.a.p. center -- they have responsibility for the facility and maximize their assets in their portfolio. >> we have the arena and our minor league team in massachusetts, but we also manage recreational ice facilities here in the bay area. we have three different locations. >> let's talk about the building. describe the current naming deal and the evolution. >> quite simply, hp was looking to get out of their deal. everyone is aware of their financial situation. sap was looking to get more active in the sports marketing and sponsorship business. they were willing to take on the last two years that remained on the hp agreement and extended for three additional years. we expect them to activate on their sponsorship very regularly over the next five years.

>> it is a global and somewhat iconic company. that helps parallel with your brand. and you would argue that that is a global and iconic brand. >> it parallels very well for us. we have a lot of popularity worldwide and it has been accentuated this fall with the emergence of our star rookie layer. thomas hurtle. it extends our brand even further. >> give us an anecdotal example about how hertl assists in your marketing strategy. it's a blessing but how do you take advantage of that worldwide? >> the magnificent goal that hertl scored on october 8 had 5 million page views on our -- on nhl.com the next day, the highest usage for any video. you need a product that wins and plays well competitively. >> developing winning products has been a hallmark of silicon valley over the last two decades. the sharks have adapted well to the region's culture of innovation.

is it fair to say that you grew up with silicon valley? >> we did grow up with silicon valley and we work well with them. we have a number of vibrant partners on the tech side who re sponsors of the sharks. companies like brocade and bare cue da networks and the like. furthermore, our fan base is very sophisticated and they have for the most part discretionary income that they can spend on hockey. that is a benefit of being in the bay area. it even extends to our sharks' ice facilities, we have the highest number of registered adult hockey players in the u.s. we have over 5000 registered adult hockey players. that helps grow the brand as well. they get to experience the sport and then hopefully they buy the jersey and come to the game. >> the sharks have played to 100% capacities -- have played

28100% capacity games in their home arena each of the last five seasons. last year, they were the only member of their sunbelt expansion cohort to pull off that feat. coming up, football fans are heading to warmer climates for their teams. what is the business climate in 2014? our next guest offers a forecast. and this week "sportfolio" stumper -- can you name the first team out of the league's original six to win the stanley cup? we'll give you the answer when we return.

>> here's the answer to the stumper. the nhl had only six teams for 50 seasons. the first expansion team to win the cup was the philadelphia flyers. they won the championship in 1974. the flyers are owned by comcast, one of the largest sports and entertainment firms. among its subsidiaries, front row marketing which works with clients to provide marketing services and develop revenue streams. the president of front row marketing talks to us about a particular area of marketing, the marketing of college football games. welcome to the show.

>> thank you for having me. >> 35 of them. is it too many or the right number? >> you think there might be some bowl fatigue in there with 35 games, but what you have is a content game. if content is the new oil, then certainly attendance and the ratings are stalwart. these things are interesting and people watch them. >> looking at last year's attendance, some of the games were hot tickets. the fiesta bowl. others drew very modest crowds, including a record low attendance for the sugar bowl in new orleans. should we be looking at attendance as an indicator of health of bowl economy? or is it all about tv viewers. >> you always look at attendance. without attendance, you do not have the ability to get sponsors. television comes first, with their ability to put multiple games on over the weekend. it gives a platform to partners. television comes first. attendance second. localized and national ponsorship is third.

>> all the games are important to us. the fiesta bowl is probably the most important to us. >> they're important to the schools. > and alums. >> there are groups that spend the money to generate the ad time. schools have complained about not having ticket sales and unsold tickets. is that a big issue? >> 11,000 ticket commitments by certain schools put them at the max. they turned to groups like ourselves and we do a good job of marketing the teams and the games. you have to look at attendance and you have to look at where you are going. every city has to be honest about whether or not they are a destination city. >> if they look at worst case and have a shortfall, i assume they factor that in as a cost of doing business. >> absolutely. >> next year, the college football playoff goes into effect and it could be argued that those lesser bowls may be even less

relevant. what say you? >> a rising tide raises all ships. you'll have this new national semifinal game will be some hallenges. but what does the fan base do with your alabama? do you go to both games or do you go to one? you will see a rise in attendance and a rise in interest level for three weeks when national partners can actually own the college football playoffs. if you took the super bowl from the nfl and asked, what could you redo -- now you have the college football system. the minor bowls, they'll struggle to a degree in finding what kind of partnerships they have. but there are good teams and they will be fine. >> i believe that is the key. the fiesta bowl, they're in final and semifinal rotation, they'll be all right. is it really just a conference alliance between those minor bowls? how are they proactive to make sure they will be ok? >> now more than ever, management of the bowl games

will be even more important. you may not have third or fourth line teams that will draw well. what do you do with a great kentucky basketball game but a football team that doesn't travel well. >> thank you for your insight. i will go to a lot of those games. see you there. >> thank you so much. >> "sportfolio" is still far from done. we will assemble a panel of experts to discuss 2013.

>> welcome back to "sportfolio." as we come to the end of the year, we thought we would reach out to some of our regular contributors to get their nominations for the most significant people, deals, and stories in the sports business of 2013. we asked longtime sports media executive seth abraham, a sports columnist andy dolich and legacy agency c.e.o. michael principe to weigh in on several different categories. the first is sportsperson of the year. surprisingly, there was some

consensus. two people chose the outgoing nba commissioner. they believe that stern has changed the sport more than any other individual in any sport. he made the nba a globally relevant property. andy chose as people of the year authors of the book "league of denial" that brought football's concussion issues into focus. i would split the award between two men who managed to crack a labor deal that may have saved their sport. we asked our panel to select the sports business deal of the year. seth abraham chose jay-z's ormation of roc nation sports. it's already changed the market. andy nominated the agreement etween the big east basketball -- the nhl canadian deal. and principe chose the agreement

between the big east basketball school that led to the creation of a new and powerful college basketball league. i will take an international perspective and take the $100 million partnership between the yankees and manchester city. it is a transformative deal for soccer and brings together two of the greatest sports franchises in the world. next, sports business story of the year. there was much to choose from. jason collins became the first athlete in a major sport to say that he is gay. one man declined to highlight a pecific story. principe pointed to the launch of fox sports one that changed the competitive field of sports media rights. my choice, the response of boston sports teams to the tragic bombing at the finish line of the boston marathon. it showed that sports businesses can be essential to the communities in which they work. finally, we asked each of our contributors to predict a trend in sports business in the year

ahead. for seth abraham, it is continued debate over performance-enhancing drugs. in all sports. andy dolich sees consumers taking advantage of multiple plat forls to customize sports experience. mike principe looks into his crystal ball and sees sponsors' names on jerseys. i think 2014 will be the year that the business model for college sports changes forever. pay for play, i doubt it. i predict that the power will continue to shift away from the ncaa. it will be interesting to see how it all plays out. that will do it for this edition of "sportfolio." our thanks to all of our contributors and all who participated in this week's show. keep an eye on bloomberg.com during the winter holidays for more bloomberg sports business coverage and more "sportfolio" coverage. i'm rick horrow. thanks for watching.

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