Lockout Discussion Thread 4.0
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12-09-2012, 09:01 PM
Join Date: May 2011
Location: Canberra, Australia
Originally Posted by
100% incorrect. My argument is about what is fair between the owners who pay for everything related to hockey, and the players who people want to watch play. Both sides need the other, more or less, equally. People pay to see great players in their favoured teams' jerseys, and the owners pay everything necessary to bring in those players and make the experience at the arena as good as possible.
By the way, the players' worth is not "capped" beyond what the NHL makes. There is a salary cap in place, but as long as revenues grow, so do salaries. Significantly. Now, the owners DO pay to "sell" their team, and certain teams are far more marketable than others, no matter which players are on the team (Leafs and Habs, for example). So, owners are quite necessary to the entire process. As are the players. Ultimately, though, the owners are MORE necessary. In any case, giving both sides a 50/50 split is fair since both sides are necessary for the league to grow and develop.
The 50-50 is completely arbitrary. It's just another number between 0 and 100, and many people on this thread have posted counterexamples. For some businesses labour get a lot less than 50%, other times, they get a lot more. For the NHL, all we know is the free market rate: 76%.
It's not as though the owners are getting a 50% profit margin. They will not be getting a 50% profit margin, and to my knowledge no significant industries do. With their 50% they still need to pay for a lot of expenses such as scouts, GMs, et cetera. It's not a relevant number because we have very little idea what the pie actually looks like. We also don't know the full list of expenses subtracted from HRR.
The true profit margin for the NHL last year was 4.2%: 140 million in operating income out of 3.3 billion dollars in revenue. I think that's about average. If player salaries were to drop from 57% to 50%, and everything else remained fixed, the profit margin would rise to 11.2%, which is extremely high. However, it wouldn't go that high, I suspect lower salaries for players would lead to higher salaries for scouts.
Some examples. Apple Computers has profit margins of 35%. Wal Mart has profit margins of 6%.
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