The National Hockey League and the Players' Association hope to generate between $75 million and $100 million from the rekindled World Cup of Hockey, according to their preliminary estimates.
A person familiar with the matter told TSN that the eight-team tournament, which is scheduled to be held in September 2016, will raise about half its revenue from the sale of broadcast and internet streaming rights. The NHL and NHLPA have predicted those rights may garner close to $50 million.
NHL senior vice president John Collins said it's too early to say how much cash the league and NHLPA will generate.
"We are not at the finish line yet on the WC," Collins wrote in an email. "More meetings still needed with PA and federations. Premature to comment on any specifics."
NHLPA spokesman Jon Weatherdon declined to comment.
The NHL and NHLPA will hold an auction for the 17-game tournament's TV rights. In Canada, that means TSN, Sportsnet and CBC are all expected to bid for the property.
It's a gamble to spend so much on a tournament like the World Cup when there's no guarantee Team Canada will advance beyond the round robin portion. But if it does, there could be a big payoff in TV ratings. The final of the World Cup will be a best-of-three format, TSN has learned.
Besides TV rights, the NHL and NHLPA will also sell sponsorship rights to the World Cup. They anticipate selling to eight premier corporate sponsors and negotiating deals of at least $1.5 million in each category, a source told TSN.
"It's a great time of year for them to hold it," said Andy Harkness, a senior vice president with sports marketing firm SDI Marketing. "It'll have the best teams in the world, going into the busy selling season. Then there's the fact it's on Canadian soil and in the right time zones for advertisers."
Harkness said it his clients wouldn't be put off by the possibility that Canada flames out and does not advance beyond the round-robin portion of the tournament.
"It doesn't matter," Harkness said. "All the value in this happens before. Kraft and Pepsi will be going into retailers six weeks before the tournament, explaining this is destination TV and a great marketing opportunity. There's going to be great hype around this."
Hype, however, doesn't translate to newfound cash.
Many advertisers will already be committed to buying ads during the TV coverage of the Summer Olympics in Rio in 2016. With the NHL, NBA and NFL seasons also getting underway in the fall, it's unclear how many companies will commit new ad dollars to hockey's World Cup.
"There would be significant interest, but there's no new money out there waiting for this," said Fred Forster, chief executive of media planning agency Omnicom Media Group Canada. "Rio will probably suck a lot out of the market, but it's also a different market you're going after than with hockey. At least some of the spending at World Cup would be re-purposed money. Some of it will come out of NHL regular season advertising."
Canada's largest advertisers include the federal government, which spends $150 million a year, and Procter and Gamble, which spends $130 million. Forster said it's unlikely they'd boost their ad spend for the World Cup alone.
The NHL and NHLPA will also garner revenue from ticket and merchandise sales. However, it's expected that the NHL and the Players' Association will have to pay Maple Leaf Sports & Entertainment at least $5 million for hosting the three-week tournament.
While executives with the Montreal Canadiens wanted to host some of the World Cup games at the Bell Centre, the NHL and its players union decided to host all of the games in Toronto. That way, if the tournament is a success, they could auction off the rights to host the games in 2019, perhaps, to the city that offers the best revenue guarantee — be it Montreal, New York, Stockholm, Moscow, or another city.
To be sure, there are still many unanswered questions about how much profit the NHL and players union will generate from the World Cup.
They need to pay for insurance for all of the players.
Typically, the NHL and the Players' Association buy premiums that offer better coverage than simply career-ending policies. Payouts are rare, but they do happen. The Islanders' John Tavares, for instance, was covered by an insurance policy when he was injured during the Winter Olympics earlier this year in Sochi, Russia. The Islanders were compensated by an insurance company for the time he missed.
It's unclear how much insurance will cost the NHL and NHLPA.
Then Hockey Canada president Bob Nicholson said last August that it would cost at least $1 million simply to pay for insurance for the 47 Canadian players invited to Team Canada workouts in advance of the Winter Olympics.