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KHL Expenditures, Sustainability, and the Looming Economic Crisis

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Old
11-11-2008, 10:23 AM
  #1
Antidote
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KHL Expenditures, Sustainability, and the Looming Economic Crisis

A straight up assessment of the KHL by Igor Larionov - in Toronto for his induction into the HHOF.

The Continental Hockey League, considered to be the greatest threat to NHL stability since the World Hockey Association, is undergoing growing pains in its inaugural season.

Clubs in the Russian league, commonly known by its Russian initials, KHL, have missed payroll and there's uncertainty about its smaller franchises. Worries are also mounting about the possible impact of the world economic crisis on its well-moneyed backers, many of them who rely on high world oil prices for their wealth.

Larionov said the economics of the KHL make little sense today, given that some teams in Moscow draw as few as 1,000 or 2,000 fans a game and ticket prices are modest — the equivalent of $5, $10 or $15. At that rate, he does not believe the salaries on offer last season — as much as $10-million to Pittsburgh Penguins star Evgeni Malkin — are sustainable over the long term. Malkin's former team in Russia, Metallurg Magnitogorsk, is one of several clubs struggling to meet its payroll commitments.

"I ask myself: How long is it going to last?" Larionov said. "You want to be wise economically. You want to get ticket sales and apply to the salaries. Now, we have great support from big companies and business people, but how long is it going to last? That is why we have to sit down and talk."

http://www.globesports.com/servlet/s...rtsHockey/home

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11-11-2008, 04:14 PM
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yes, everything is just like he said. I must give props to Dynamo Riga here, they say their profit each game just from merchandise is $ 13k, which is modest but respectable.

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11-11-2008, 05:13 PM
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Originally Posted by cska78 View Post
yes, everything is just like he said. I must give props to Dynamo Riga here, they say their profit each game just from merchandise is $ 13k, which is modest but respectable.
Riga could have done even better having more time to prepare all marketing activities before the first season. It would also be better if Dinamo was allowed to attract all sponsors and sell TV by themselves not share the revenue from league's general sponsors and TV rights sales. The interest for the team is huge here and I dont see the point why russian insurance company or mobile operator not doing business in Latvia has to take space on boards or be painted on the ice.

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11-11-2008, 06:59 PM
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well it's a whole diff story, KHL is a Russian league after all, and for the most part, Latvia, Kazakhstan, Belarus' and even Ukraine (sokol is in Vyshaya Liga) are blessed to be invited.
On the other hand I feel that this crisis will hurt KHL badly and the rosters next year won't be anywhere as good as they are today

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11-11-2008, 09:35 PM
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KHL having problems playing players? OMSK specifically?

http://www.sportsbybrooks.com/only-c...t-bounce-20863

Is this true? I honestly don't keep track of this stuff, wanted to know if anyone had any opions or views towards the validity of this. Sports by Brooks is hardly a credible source 100% of the time. but anways.

http://www.canada.com/ottawacitizen/...c-e9b1bdfb55d6

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11-11-2008, 10:00 PM
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Gah sorry, put this in the wrong forum, totally missedthe KHL forum somehow. I see there is a thread similiar to this already.. might wanna combine with the Larionov thread?

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11-11-2008, 10:24 PM
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Originally Posted by cska78 View Post
yes, everything is just like he said. I must give props to Dynamo Riga here, they say their profit each game just from merchandise is $ 13k, which is modest but respectable.
The figure is in euro's so it's about $16.3k. Not too bad for a team in a country getting hit hard by the economic crisis and with a culture of buying knock-off hockey merchandise. He also said that they made 25,000 euro's in merchandise sale during the two games they played in Finland. Not bad considering they only had combined attendance of about 4,000. Where they've really lucked out is in the local support. Last I heard they we're third in attendance, and they have the most expensive tickets in the league. With their low payroll (third or fourth lowest in the league), they should be one of the few teams turning a profit. Now if only they'd open a web shop and ship internationally, I know many people who want to get some Dinamo merch for Christmas.


Last edited by v-man: 11-11-2008 at 10:31 PM.
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11-12-2008, 08:51 AM
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KHL teams wasting money

CSKA Moscow loaned Jonathan Hedström from Timrå for the remainder of the season. According to some reports CSKA paid 800,000 euros to Timrå for the services of Hedström. I think this is madness.

Jonathan Hedström has had a very marginal season in Sweden. I think it is a very poor decision for CSKA to pay him and to Timrå this insane amount of money for services of an average Swedish player for a few months of service.

Igor Larionov said that many KHL teams are already facing financial troubles. I think the KHL might be digging it's own grave by foolishly overspending in a tough financial situation.

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11-12-2008, 11:54 AM
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dont worry, if they are paying this money, they dont have any financial troubles.

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11-12-2008, 12:14 PM
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dont worry, if they are paying this money, they dont have any financial troubles.
I see your point, but I still don't agree with CSKA in this.

They should not finance their rivals (Swedish league) with gifts worth 850,000 euros. KHL should only sign players, not loan them for hefty sums of money. I bet Finns and Swedes are laughing all the way to the bank with Russians giving them $1 million to have an average player to play for them half a season.

They should instead invest the extra money on junior hockey. That would benefit Russian hockey and not finance the rival leagues in Europe.

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11-12-2008, 12:28 PM
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Quote:
Originally Posted by Valic View Post
http://www.sportsbybrooks.com/only-c...t-bounce-20863

Is this true? I honestly don't keep track of this stuff, wanted to know if anyone had any opions or views towards the validity of this. Sports by Brooks is hardly a credible source 100% of the time. but anways.

http://www.canada.com/ottawacitizen/...c-e9b1bdfb55d6
Not according to Jagr's agent:

Quote:
The information that Avangard is experiencing financial difficulties and withholds my client’s salary is also a lie. So far Jagr has received all promised money on time.
http://www.izvestia.ru/sport/article3122372/

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11-12-2008, 11:19 PM
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Quote:
Originally Posted by Peter25 View Post
CSKA Moscow loaned Jonathan Hedström from Timrå for the remainder of the season. According to some reports CSKA paid 800,000 euros to Timrå for the services of Hedström. I think this is madness.

Jonathan Hedström has had a very marginal season in Sweden. I think it is a very poor decision for CSKA to pay him and to Timrå this insane amount of money for services of an average Swedish player for a few months of service.

Igor Larionov said that many KHL teams are already facing financial troubles. I think the KHL might be digging it's own grave by foolishly overspending in a tough financial situation.
I highly question this decision but I know Zaharkin (Bykov's assistant) knows scandinavian market very well, also CSKA just released 3 players (Tertyshniy, Skugarev, Kuhtinov) and signed only FA Kondratiev, so they need some bodies.

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11-18-2008, 12:49 AM
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I am wondering how much Vityaz are paying Berard...

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Old
11-21-2008, 12:33 AM
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OK seriously with such high salaries and such little revenue how much does an average owner lose in a year??

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11-21-2008, 02:20 AM
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Originally Posted by cska78 View Post
well it's a whole diff story, KHL is a Russian league after all, and for the most part, Latvia, Kazakhstan, Belarus' and even Ukraine (sokol is in Vyshaya Liga) are blessed to be invited.
On the other hand I feel that this crisis will hurt KHL badly and the rosters next year won't be anywhere as good as they are today
the sooner the KHL steps away from being a "russian league", the better its economic horizon will appear

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11-21-2008, 02:23 AM
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They should instead invest the extra money on junior hockey. That would benefit Russian hockey and not finance the rival leagues in Europe.
i agree 100%

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11-26-2008, 06:43 AM
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KHL i& GazProm n crisis- World Economy kills it!

Russian Hockey is in danger with its high ambitions for 08/09 season. KHL league lost its top sponsor GazProm (Gas Company).

NEWS from FHR web site (link: http://www.fhr.ru/news/Gasprom_izbav...ilnyhk_aktivov )

Original sourse is reputable ITAR TASS agency which it gives information to all world mass media.

ARTICLE tells: GazProm company doesn't want to develop its banking sphere anymore, ensurance activity with SoGaz company (top KHL sponsor), and TV activity its pay TV branch NTV Plus company. They close this 3 branches which aren't profitable anyways for them. GazProm only keeps their best TOY sponsored- soccer club Zenit Saint-Petersburg.

Now time ticking and we wait for the end of YEAR 2008!

We have in danger at least 3 teams with salary delays NOVOKUZNETSK (2 months) link: http://www.fhr.ru/news/v_novokuznets...u_dva-mesyatsa , CHEREPOVETS (since September), CSKA M having problems with money... VOSKRESENSK sponsored by 79 small companies refusing to invest one by one daily and now in CRISIS.

Now I will not be surprised with quick AGREEMENT between NHL-IIHF-Russia about compensations for players departures to the North America because many Russians will move straight to Junior Leagues, AHL / bests to NHL if situation be too bad here with economy.

NEWS: Russian KHL clubs cut budgets 50 per cents. Link: http://www.fhr.ru/news/krashwninniko..._50_protsentov

Head of Councel with Russian Ice Hockey Federation Mr.Krashenninikov Pavel (famous politician in Russia). Economy Crisis may be biggest problem for KHL. He is afraid that some KHL memebers clubs may not survive in the league and they loose its place with KHL next season 09/10. Those who did cuts in time for pay rolls of the players were right- at least they explained situation to the players about salary decrease in 20-50 pcts cuts. We have problem clubs who didn't change anyhing and paid nothing for last one or two months.

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11-26-2008, 10:05 AM
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and what? there have always been clubs with financial problems. They will suffer, cut salaries, but still play.

/thread.

and also all KHL discussions should be held in respective forum.


Last edited by ViD: 11-26-2008 at 10:10 AM.
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Old
11-26-2008, 09:24 PM
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Quote:
Originally Posted by Hockeycritic View Post
We have in danger at least 3 teams with salary delays NOVOKUZNETSK (2 months) link: http://www.fhr.ru/news/v_novokuznets...u_dva-mesyatsa , CHEREPOVETS (since September), CSKA M having problems with money... VOSKRESENSK sponsored by 79 small companies refusing to invest one by one daily and now in CRISIS.
In Russia has always been a financial crisis. Last year HС Sibir a few months does not pay the salaries and bonuses to its players. Now the team has found a new sponsor and has not yet complained about the lack of money.

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Old
11-26-2008, 11:33 PM
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many Russians will move straight to Junior Leagues, AHL / bests to NHL if situation be too bad here with economy.
are you saying players would rather play for free vs. play for money? that doesnt make sense...

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11-28-2008, 02:50 AM
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props to Kedr

Quote:
http://www.metallurg.ru/news/42243/

Sport-Express interviewed all KHL clubs asking about their problems because of financial crisis.

Big problems:
Metallurg Novokuznetsk (the only team who refused to speak with Sport-Express. From other sources: players just received their money for September. Rumors that base sponsor Evraz Group rejected financing MNk and there even possibility that the team will not play in KHL after the New Year)

Problems:
HC MVD (CEO: "I can say frankly: the crisis greatly touched our team. We have delays in paying our players. Luckily our sponsor VTB bank accomplishes all their obligations and I hope it can help us"); Khimik Voskresensk (team has debts in paying players, CEO: "we are struggling, I hope we'll come out"); Vityaz Chekhov (CEO: "The crisis forced us to revise many questions. Situation is not easy. We have the main task now - to save the team and accomplish our obligations to players and staff."); Metallurg Magnitogorsk (Magnitogorsk Steel Factory, MMK, like all other steel companies in the world, suffers greatly from the crisis. Team CEO: "players receive their money fully and without delays but other staff is cut in salaries for about 30%")

Little problems:
Atlant Mytischi (team has short delays in receiving financing from sponsors; begins saving money); Lokomotiv Yaroslavl (president: "We have no delays in paying salaries but it's not easy for us. We wrote a letter to KHL asking to prepare anticrisis procedure for the league"); CSKA Moscow (GM: "We feel no problems yet but our sponsors recommend us to save money"); Avangard Omsk (president: "All sponsors in Russia have some difficulties. I cannot predict the situation in our club. Right now we accomplish our obligations to players completely." From other sources: Roman Abramovich promises to support the team but only if Avangard will show positive results); Dinamo Riga (president: "We feel crisis as we are part of Latvian economics. Though no panics. Our partners fully acomplish their obligations. We are not happy how things in KHL do with TV, advertising rights etc, we have to discuss these problems with the league and develop strategy.")
this is the problem when you rely on corporate sponsorship to run a team. it needs to be viable in the first place, and now they are learning the hard way.


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11-28-2008, 11:43 AM
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in the worst case scenario the league will die and all the good Russians will be playing in the NHL. No seriously, with only what 15 good Russians in the NHL, I have completely lost interest in most teams. I haven't watched a western conference game in 2 years. Now the only teams worth watching are the Caps, Penguins and Montreal.

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11-28-2008, 01:48 PM
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how about toronto? well, we're more of a CIS team

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11-29-2008, 02:50 PM
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Things have gotten so bad for Traktor that some players are now working part time at McDonalds


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11-29-2008, 04:03 PM
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Things have gotten so bad for Traktor that some players are now working part time at McDonalds

funny-funny

many russian teams do it now days, our home basketball team did the same too (lokomotive Rostov)

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