The board meeting summed up the financial results from the 2019/2020 season. For the sixth season running, the KHL made a profit. The league’s total turnover came to 2.68 billion rubles (US$ 35.75 million), not including payments made above the ceiling. Despite the curtailment of the season due to the pandemic, the KHL’s operational turnover was 4% above its target. The league also managed to preserve its income from sponsorship and advertising, the sale of TV rights and from its own TV channels without any significant changes. Other operational income increased by 29% thanks to increased payments from bookmakers, higher returns from tickets for special events and online projects.
The KHL’s clubs will share 466 million rubles (US$6.2 million), inclusive of sales tax, which was raised from the sale of TV rights. The sum to be distributed among the teams continues to rise and set a new record in the fifth year of this payment scheme. The league will complete all payments to the club by Sep. 30, 2020.
In the new system, 73 officials will work with the KHL, including nine rookies: two referees and five linesmen.
Prior to the start of the 2020-2021 season, all KHL officials underwent in-depth medical tests. These test were as demanding as possible to compensate for the increased workload this season, the long pause during the pandemic and the limited opportunities to get together and prepare for the new season.
As part of the measured adopted by the KHL to control the spread of COVID-19, the refereeing department, along with the league’s medical service, introduced extra steps when selecting game officials. In particular, local referees and linesmen, who have been prepared and approved by the chief referee, are to be appointed for individual games. In cities where it is not possible to rely on local officials, a party of six officials will be sent to take several games in a row.
In addition, there are changes in the system for rating referees. Inspectors will no longer make their assessments based on certain defined parameters. Instead, this season will see inspectors highlighting the strengths and weaknesses of each official, without knowing how much weight is to be attached to each attribute. Based on these results, the overall rating of each official will go up or down accordingly.
Ahead of last season, the KHL and its partner company SAP announced plans for a KHL supporters’ database. This would look to integrate each club – and the league itself – onto the SAP Marketing platform with a view to better interaction with fans and more profitable commercial activities for clubs.
In the first season, working with Ak Bars, Metallurg, Spartak and Dinamo Minsk, the league gather more than 3.7 million contacts within a single CRM system. That system enabled 35 million targeted interactions with fans.
During the previous season, and the 2020 pre-season, almost 3 million new profiles were added. The clubs, in partnership with the league, launched more than 300 promotional campaigns and sent almost 8 million emails. The project has already won recognition at the prestigious MarSpo Awards and the SAP Quality Awards.
The average increase in the fan databases is 60%. For example, Spartak had 66% more email contacts compared with the previous season. Ak Bars increased sales of electronic tickets by 12%. Metallurg’s internet sales were up 23% compared with the previous season.
The system is available to the clubs free of charge thanks to the partnership between SAP and the KHL. However, integrating with the program requires the involvement of club staff and some financial investments to improve existing information systems. To compensate clubs for the costs of joining the Unified KHL Fan Base, the board of directors agreed to consider reimbursing clubs during the current season.
The KHL’s development strategy aims to bring all member clubs to the same level of sporting and financial sustainability. To achieve this goal, the league introduced several measures, including a ranking of KHL clubs. Since the ranking was introduced, it became clear that this was a motivating factor that encouraged clubs to improve their work. In response to this, we have chosen to amend the parameters under assessment. In particular, all the parameters are to be combined into one of four blocks (sport, finance, communication and marketing, arena) while the list of general parameters is also updated.
In March 2019, the KHL Board of Directors was asked to create a working group to look at regulating the loan market for players. The task was to develop a detailed system for managing loans between clubs. Based on the work of that group, and subsequent discussions and a survey of the clubs, the following mechanism was presented to the board:
▪ KHL clubs can acquire or transfer no more than four players on loan. No more than 3 players can be younger than 22, no more than one can be younger than 24. No club can loan more than one player from the same KHL team.
▪ Players can be transferred on loan between May 1 and Dec. 27 of the current season, until the end of the current season, or – only in cases where the player is under contract – for two or more seasons including the current one.
▪ The salary and bonuses of any hockey player taken on loan are counted towards the salary cap of the host club.
▪ Once a temporary transfer agreement is signed, and the loaned player has agreed a contract with the host club, his existing contract with his parent club is suspended. This contract recommences on the day after the loan contract comes to an end, or after the early termination of the loan contract. The terms of a loan player’s contract can, with the agreement of the parties concerned, differ from the terms of the suspended contract.
As part of the league’s efforts to boost the commercial income of its clubs, the monitoring committee for club activities analyzed ticket programs, licensing programs, advertising campaigns and the use of hockey images for marketing purposes, as well as the provision of food concessions in arenas.
We observed that with each passing season our clubs are working harder to attract commercial partners. The clubs that made the biggest efforts included Spartak, Salavat Yulaev, Ak Bars, SKA, Dinamo Minsk, Jokerit, Avangard and Barys.
But so far, only one club in 2019/2020 met the target figure of achieving 25% of its turnover from its own commercial activities. One other club was close to that level. Nine further teams realized 10-15% of turnover from commercial programs and 13 clubs got less than 10% of their budgets from commercial work.
In addition, last season the committee monitored the clubs’ work and uncovered several key problems. The league is planning to set up meetings with the clubs’ management teams to discuss how to stabilize this financial situation. A number of clubs will also face more stringent financial requirements for next season, including specific protection and guarantees for budgets.
The League will make individual recommendations for each club to help enhance the commercial effectiveness of its marketing efforts.