As surely as my parked Zamboni weeps, the National Hockey League canceled its season yesterday after owners and players couldn't come to agreeable playing terms. While I have no problem saying that fans were wronged, I'm not going to argue over who was right. You can find that commentary on your favorite sporting news site. You didn't come here for that. You came here to dig for an investing angle -- and this botched season has plenty of market implications.
Let's start with video games. NHL 2005 should have been a great title for Electronic Arts (NASDAQ:ERTS), but who wants to buy a game based on a season that never happened? Checking Amazon.com (NASDAQ:AMZN) for the popular PlayStation 2 format yesterday, I found that 2,141 other computer and video games were selling better than the EA Sports title, even though the game was marked down to nearly half its original price.
The ESPN NHL 2K5 title ranked higher in sales on the online retailer's site, but it must be yet another disappointment for the franchise that Sega and Take-Two Interactive (NASDAQ:TTWO) had once envisioned as something that could take on EA with its cut-rate basketball, football, and ice hockey games. What's worse for the game developers is how badly sales are likely to suffer when the 2006 versions are released later this year. Fans don't forget being neglected.
Who else has to deal with the cancelled season? Try Sirius Satellite Radio (NASDAQ:SIRI) on for size. Back in 2003, with just 105,000 subscribers onboard, the company signed a programming deal with the NHL. Because it was not intended to be a premium service, Sirius might make out nicely by not having to dole out broadcasting payments to the league this season, especially if hockey fans may have opted for Sirius over XM Satellite Radio (NASDAQ:XMSR). It expects to close out the year with 2.5 million subscribers.
Then we have Disney (NYSE:DIS). It wins the close-shave award by backing out of showing NHL contests on its ABC network after last season's Stanley Cup finals. While the company's ESPN was still going to carry its share of games, it forced the league to turn to General Electric's (NYSE:GE) NBC to air its games as part of a revenue-sharing deal. As far as this season goes, I guess we're down to deciding how you can share nil.
The NHL will probably be back next season. Too much money is at stake for the league not to find a way to make things work. Yet with declining ratings even before the lockout took place, the league faces waning popularity that's going to get worse before it gets better. That's bad news for Electronic Arts and Sirius -- and it vindicates the revenue-sharing model that NBC drew up to make sure all of the parties involved had a vested interest in making hockey work.
Make it your goal to check out some more related content:
- The problems with ice hockey have been evident for a while.
- Read about the NHL getting Sirius.
- Vent your frustration with fellow hockey fans in our NHL discussion board.
Longtime Fool contributor Rick Munarriz didn't have much to root for this season anyway with his mediocre Florida Panthers. Still, absence leaves a void. He does own shares in Disney but not in any of the other companies mentioned in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
