Lockout Discussion Thread 3.0
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12-05-2012, 10:16 AM
Join Date: Oct 2009
Originally Posted by
The salary cap, as an example, is determined by the average revenue per team.
If you remove the weakest teams, then the salary cap should go up; according to the Forbes numbers it would go up by ~4%, if I'm adding properly. You'd have fewer players in the league, but average pay per player would go up.
That said, I made some mistakes, I apologize. My argument is not as complete as I thought it was. Here are some factors I neglected to include:
1) Even if the bottom-4 teams contribute 7-10% of league revenues, league revenues would not drop that much, because whatever playoff revenues these teams made would be reallocated to other teams who would now make the playoffs instead.
2) If you maintain an 82 game season, the remaining 26 teams would each host an additional ~13% home games... i.e. the gate revenues lost by not having Florida Panthers home games would be offset by more home games for the remaining teams. Total gate revenue should thus INCREASE if you remove the 4 weakest teams.
However, things I don't know nearly enough about to speak conclusively:
3) The salaries of scouts, coaches, GMs, etc might go up if the remaining 26 teams are on average better-managed, but I'm not sure.
4) The National TV contract would now be split 26 ways rather than 30 ways, but its total monetary value might drop if the ratings drop.
So based #1,2; I don't think contraction would solve anything, but one would need to think more about #3, 4.
Very complex mathematics. My instinct however says that 26 teams in decent markets will provide more total profit than 30 teams with four teams making a loss, thus hurting total profit.
In my mind, profit is what counts, not revenue.
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