Operating in the Era of a Falling Salary Cap
View Single Post
06-21-2009, 02:28 PM
Join Date: Jun 2006
Originally Posted by
Higher ratings should translate to a better TV contract - wasn't that supposed to be Bettman's strong point?
I really don't understand how certain teams can be losing so much money. The whole point of the lockout and resultant salary cap was cost certainty by making the cap a fixed percentage (around 54-56%) of the league average hockey related revenue. The cap was supposed to assure that this never happened.
Looking at the Kings, the biggest difference I see with their hockey operations compared to a few years ago is the proliferation of highly paid upper management jobs.
Re: contraction - With the current economic conditions, how would having 24 teams instead of 30 teams directly benefit the remaining teams with a salary cap still in place? I don't think that fans would be willing to pay substantially more (i.e. 20% more) to see slightly better competition. There aren't many sources of shared revenue, so there wouldn't be much more coming in there - where would the benefit come from?
Pat, you are a good guy, but your cynicism gets the better of you. The answers to your questions are self evident if you look at how league revenues are structured.
In Atlanta and Tampa, the way they sell season tickets is buy 2 get 4. Phoenix is bankrupt. Buffalo and Pittsburgh have been. The salary cap did nothing to fix the main problem which is revenue disparity between markets. The Cap is determined by
revenues. Those revenues are generated disproportionately in NY, Toronto, Boston, Detroit and Philadelphia. In addition, look how much the Canadian dollar has appreciated against the U.S. dollar. This further inflated league revenues and caused the cap to increase. Yet, the Atlantas and Nashvilles of the world have not seen their revenues increase, but their costs go up as both the CAP and the FLOOR increase because things are good in Toronto and Chicago.
If you eliminate 4-6 teams, the pool of shared revenues (TV, NHL sponsorships) is split between fewer teams which may put some teams on the margin into the black. More importantly, you no longer have to pick the pockets of the successful franchises to subsidize the operations of teams that are 'not ongoing concerns' to quote the Levitt report. Contraction is inevitable if you want to permanently address this issue. The ONLY other solution is to take 100% of hockey revenues, put them in a pot and split them equally 1/30 to each team. Good luck getting Toronto and Montreal to agree to this. Everything is just a band aid designed to keep nonviable franchises afloat in a sport that, sad to say, is primarily regional.
View Public Profile
Find More Posts by piston