NHL Clubs Seeking to Recoup Money Lost Due to COVID-19

What’s Happening: As the COVID-19 pandemic rages on into year 3, the financial toll it has taken on professional sports teams has been near catastrophic. Many teams have played in empty arenas where a lack of fans means a lack of revenue. Perhaps no other sports league has been impacted as much as the NHL. Now, NHL teams are trying to collect these devastating financial losses from their insurance companies.

The problem here is that the NHL’s insurance providers are refusing to pay. On January 5, the NHL, in conjunction with 20 NHL teams, filed a joint lawsuit against five of their insurance providers. The NHL and the 20 teams are looking for these insurance companies to compensate for more than $1 billion in losses due to the impact of COVID-19. Thus far, the insurance companies are trying to get the case dismissed and the matter is now before the courts.

Why It Matters: This lawsuit is important for many reasons but most importantly, it comes to money. Professional sports teams exist because sports owners want to make money, plain and simple. As we mentioned, the impact of COVID-19 has severely hampered teams’ ability to do just that. On top of this, owners have had to continually foot the bill to ensure their clubs are operating at a somewhat respectable capacity.

When you factor in that owners also must pay player salaries, you can imagine the financial burden owners are bearing due to minimal revenues flowing in. This lawsuit also matters because the NHL and its clubs need paying fans to attend games in order for clubs to remain financially viable. Clubs generate revenue when arenas are full as it opens up other streams of revenue from merchandise, food and drink, and parking, to name a few.

Doug Dirks @cbcDougDirks

Calgary mayor Jyoti Gondek says city will pursue other means of getting new arena built, after deal with #Flames collapses | CBC News cbc.ca/news/canada/ca… @CBCHomestretch @JyotiGondek @cbcsports @hockeynight @NHLFlames @NHL #NHL #COVID19 #OmicronCity will pursue other means of getting arena built, Calgary mayor says | CBC NewsCalgary Mayor Jyoti Gondek says the city will pursue other ways of getting a new downtown arena built after its deal with the Flames owners was officially terminated earlier this week.cbc.ca

January 6th 2022

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Bigger Picture: This lawsuit filed by the NHL and its clubs comes with precedent as Major League Baseball also filed a similar lawsuit against its insurers in December of 2020. Despite being filed over a year ago, that lawsuit is still pending but it does give the NHL peace of mind knowing that a similar lawsuit has been filed. Despite the NHL’s insurance companies every attempt to dismiss this lawsuit, what is likely to happen is that both parties will reach some sort of financial agreement.

As stated, the NHL and its 20 clubs are seeking compensation north of $1 billion and it’s unlikely that the insurance companies would fork over that kind of money. Rather than have this matter drag out in the courts for years to come, a mutually agreed-upon settlement between both parties is the likely outcome.

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