How to make the NHL profitable again and prevent future lockouts: IPOs
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10-01-2012, 04:38 PM
Join Date: Dec 2009
Location: New York, NY
Originally Posted by
In a business, your expenditures are more important than your revenues. 9 out of 10 failing businesses are making plenty of revenue - but are overburdened by unnecessary expenditures.
The amount of revenue is essentially fixed in the NHL. The supply and demand curve doesn't deviate much, there's a fixed amount of seats and raising the price of tickets will simply result in lower attendance, with the actual take being the same, give or take less than 1% per game.
In order to make it fair, I'd force all 30 teams to open up shares of stock in their teams, whether they have money or not. It's a win-win situation - so the owners shouldn't really get any chances to opt out of it. If you want to have an NHL franchise, a rule would be set in place that your franchise would be public (otherwise, your franchise would be ineligible for the NHL).
Yes, there are times that it makes sense to declare bankruptcy. However, now is not one of them, for any team in the NHL. The cities have forked over their bottom dollar. The teams are on the hook. Declaring bankruptcy to end up in the exact same situation next year makes no sense. Teams which are losing money need to have controlling shares sold to players and the general public at large - the only other option is to move them to other cities, and that nullifies any gains by disenfranchising the fans who live in those regions. Moving a team to a different city is generally a bad idea (moving a team back to its original city is okay, Winnipeg).
Player stock options: Contracts would now carry stock options as part of the initial signing bonus with the ability to purchase additional stocks at a vastly reduced rate for the duration of the player's contract. There would also be the option to give players a fixed number of shares over the course of several years to match existing multi-year contracts. The primary benefit of this can be seen in two types of players:
1. A superstar player who is in a slump, like Ovechkin. You could reduce his standard salary to match the fact that his performance doesn't match his contract - and replace that salary with stock options as incentive.
2. A rookie player on an entry-level or early-career deal. These players don't warrant huge contracts yet - giving them a bunch of shares wouldn't hurt anything though.
This and the exchange between teams provides the ability to have flexibility in the salary cap - so that all teams can get to the salary cap ceiling.
If this was implemented properly, not only would it be a rule that all 30 teams would have to publicly sell shares - any team who didn't do it would be at a disadvantage in comparison to teams who did do it, because the stock options would not count towards the salary cap.
Yep, forcing owners to sell their businesses is TOTALLY legal. Where'd you come up with that one? Also, I guarantee you the owners wouldn't agree to that as a whole. Even owners who are willing to sell shares of their team wouldn't vote to force others to do the same.
Declaring bankruptcy sure as hell makes sense. Chapter 11 bankruptcy allows a company to restructure, which essentially, in a lot of cases, means it gets to renegotiate it's debt to more favorable terms. If anything, you declare bankruptcy, restructure the debt, THEN make the IPO so the IPO is worth more. IPOs are generally for a few purposes. It's either to raise money for a newish company that wants to expand, or in the high profile cases, it's a way for existing owners of a successful company to cash out. It's NOT for a company facing bankruptcy to raise capital. Nobody would go near that turd of an IPO.
The player stock options proposal you made makes no sense at all either. Replacing salary with stock options? So essentially replacing cash with something that has cash value is supposed to be different somehow? And having stock options not count against the cap? So basically there's no cap anymore? And giving "new players a bunch of shares wouldn't hurt anything" is laughable. A bunch of shares IS CASH. Since when are stock and stock options not worth cash? So a guy like weber could be signed to a 1 million cap hit contract, and he gets 200 million worth of stock and stock options in his contract instead. Because that 100% makes sense.
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