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ESPN's CBA solution

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Old
10-17-2004, 11:08 AM
  #1
Yanner39
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ESPN's CBA solution

I pologize in advance if this was previously posted.

http://sports.espn.go.com/nhl/column..._ej&id=1900712


Makes some good points. Some of them have been discussed previously, although one thing he doesn't touch on is arbitration and how the teams should be able to take the players to arbitration.

The more and more articles I read and the more and more I think about it, a hard cap won't work in this environment. That means we are left with revenue sharing and a luxury tax system. This is not encouraging since the revenue variable has been a big problem.

A big problem is teams like Ottawa and Edmonton who's entire business revolves around revenues such as gate receipts, concessions, parking, local TV and national TV. Teams like the Rangers and Dallas for example can add another stream of revenues: Intercompany revenues for rights to broadcast games. THese huge conglomerates can shift money around to earn a profit or create a loss in whatever entity or subsidiary they choose. I think Levit addressed this in his report. This is where thre NHL and the PA don't agree and this is the only point I agree with the PA on. Intercompany revenues are revenues nonetheless. Just because teams like Edmonton, Ottawa and Buffalo don't have them doesn't mean they should be excluded.

That's why revenue sharing for the Rags is out of the question.

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10-17-2004, 04:00 PM
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LoudmouthHemskyfan#1
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Quote:
Originally Posted by Dr. van Nostrin
I pologize in advance if this was previously posted.

http://sports.espn.go.com/nhl/column..._ej&id=1900712


Makes some good points. Some of them have been discussed previously, although one thing he doesn't touch on is arbitration and how the teams should be able to take the players to arbitration.

.
It's one thing to offer your player a pay cut, but who's going to enjoy going to arbitration and saying why your player is terrible?

The threat of club-initiated arbitration could work, but in practice it would destroy relationships with the player.

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10-17-2004, 04:10 PM
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Quote:
Originally Posted by LoudmouthHemskyfan#1
The threat of club-initiated arbitration could work, but in practice it would destroy relationships with the player.
This is precisely how it works now-the agent goes into arbitration saying how his guy walks on water, the GM counters by pointing out that the player skins kittens. Milbury made Tommy Salo weep in one hearing. So giving clubs the right to do this won't necessarily change the tenor of arbitration hearings.

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10-17-2004, 06:02 PM
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Under the expired CBA a team had the right to walk away from an arbitration award. I'm guessing that even though you're all in favor of the team being able to initiate arbitration you would have a big problem with the player being able to walk away.

 
Old
10-17-2004, 07:26 PM
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Quote:
Originally Posted by ZIM
Under the expired CBA a team had the right to walk away from an arbitration award. I'm guessing that even though you're all in favor of the team being able to initiate arbitration you would have a big problem with the player being able to walk away.
In the end, it would defeat the whole point of the arbitration.

A simple solution is this:

A Player can only be taken to arbitration twice in his career. The player must accept the arbitrators decision.

The benefit for the player?

If the player takes the team to arbitration, and they walk away, he is a complete UFA (no 80% clause).

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Old
10-18-2004, 07:35 AM
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Yanner39
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Quote:
Originally Posted by ZIM
Under the expired CBA a team had the right to walk away from an arbitration award. I'm guessing that even though you're all in favor of the team being able to initiate arbitration you would have a big problem with the player being able to walk away.
As long as they are subject to the same rules the owners are. I appreciate your pro-union views, but arbitration has been pretty sweet for the players and a good tool to bring salaries up.

What is a player paid for? What he has done or what he is expected to do? I remember Sather agreeing to a contract with Arnott a few years back and saying at the press conference that he is not paying Arnott for what he has done, but for what they expect him to do. If a GM could argue his case in front of an arbitrator that the player deserves less money, this IMO, would be better at controlling salaries than a hard cap.

I do agree with Dawgbone however that there has to be a limit on how many times a player AND owner chooses to take one another to arbitration.

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10-18-2004, 08:44 AM
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i like the TSN solution better. Atleast it was more of a compromise. The ESPN version is so biased to the owners. Not that there is anything wrong with that, but do you see anything even resembling that being negotiated?

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Old
10-18-2004, 01:06 PM
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ZIM
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Originally Posted by Dr. van Nostrin
As long as they are subject to the same rules the owners are. I appreciate your pro-union views, but arbitration has been pretty sweet for the players and a good tool to bring salaries up.
Oddly enough I don't consider myself pro-union but rather anti-management. I would rather hear 'facts' from both sides rather than their spin. Let me give you an example from the summary section of the Levitt report.

Quote:
D. The current relationship between League-wide player costs and League-wide revenues is inconsistent with reasonable and sound business practices. Player costs of $1.494 billion or 75% of revenues substantially exceed such relationships in both the NBA and the NFL as those relationships are set forth in their collective bargaining agreements.
Now this statement has been widely quoted and appears to show that the NHLPA is greedy compared to both the NFL and the NBA. Why do I use 'appears'? The answer can be gleaned from another part of the Levitt report, namely Appendix I - Combined URO. In that section you will discover the following interesting info about the definition of 'revenue'.
Quote:
1) Revenues are net of all reasonable and customary direct costs.
What's this? Net revenue? And people wonder why the NHLPA and some of us question Levitt. What are the definition and amounts of 'reasonable and customary direct costs'?

What's the significance? I have no idea of the magnitude of direct costs but if it were, say 10%, then NHL salaries are suddenly more in line with the NFL and NBA since Levitt has understated 'revenue'.

 
Old
10-18-2004, 01:40 PM
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Yanner39
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Quote:
Originally Posted by ZIM
Oddly enough I don't consider myself pro-union but rather anti-management. I would rather hear 'facts' from both sides rather than their spin. Let me give you an example from the summary section of the Levitt report.



Now this statement has been widely quoted and appears to show that the NHLPA is greedy compared to both the NFL and the NBA. Why do I use 'appears'? The answer can be gleaned from another part of the Levitt report, namely Appendix I - Combined URO. In that section you will discover the following interesting info about the definition of 'revenue'.

What's this? Net revenue? And people wonder why the NHLPA and some of us question Levitt. What are the definition and amounts of 'reasonable and customary direct costs'?

What's the significance? I have no idea of the magnitude of direct costs but if it were, say 10%, then NHL salaries are suddenly more in line with the NFL and NBA since Levitt has understated 'revenue'.
Good points ZIM.

I must confess I haven't read the entire Levitt report but I can offer some info given the work I do.

First off, I want to clarify this myth that the Levitt report cannot be trusted because he was hired by the owners. Most business that require an audit hire the auditor or the audit firm to provide assurance on the numbers presented in the financial statements. To get a clean audit report, the auditor must issue an unqualified audit opinion. If bad accounting practices were used or the owners restricted access to some financial data (scope limitation), he cannot issue a unqualified opnion. Therefore, this would be cause for concern if your the union.

The reason I bring this us is because even Gord Miller the other night on the TSN hot seat brought that up when questioning Bill Daly. If Levitt signed off on the report, he must not have had any reason to believe that the numbers were mistated.

As far as the Net revenues are concerned, I really don't see a problem with using this figure although I confess that it should be disclossed what the direct cost (or cost of sales or revenues are). Maybe this has been disclosed someplace else. Net sales have to be used if both sides are looking to "share" the pie. I mean, say the salaries of the game day staff is considered a direct cost, this is an expense the owners have to incur in order to provide a product and in order to make money. I know you are not disputing that but I surprise that this is not addressed in the report. Levitt has to know what these direct costs are or else he couldn't issue a proper opinion.

When I have a few seconds I'll try and find some info in the report.

You know, I think the owners are telling the truth because for the first time in the whole owners vs players war, it's to the owners' advantage to do so. Before it wasn't but now it is. No TV contract. Anyone can estimate revenues from tickets sales, luxury boxes, etc...What is left over? To me it's quite obvious.

People say owners aren't struggling. Tell that to the owners that aren't backed by conglomerates.


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Old
10-18-2004, 02:21 PM
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So could they agree on some other...

...estimate of TV contract value? What about an estimate of total advertising revenue? I suppose Comcast, Viacom, etc. have no business being involved in this negotiation strictly speaking. Good luck to the PA or anybody else getting any help on that angle.

BTW, does it make any sense to sell your TV rights to your own company for a lower price? Honestly? It seems to me that many vertically integrated companies that I am familiar with in my field often separate cost centres these days. It's about maximizing revenue - Viacom could make more money by having some other NYC broadcaster paying an outrageous sum for NYR TV rights, than by operating it themselves. It doesn't really help the corporation's bottom line at all, to screw one cost centre in favour of another.

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Old
10-18-2004, 02:30 PM
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Quote:
Originally Posted by RiversQ
...estimate of TV contract value? What about an estimate of total advertising revenue? I suppose Comcast, Viacom, etc. have no business being involved in this negotiation strictly speaking. Good luck to the PA or anybody else getting any help on that angle.

BTW, does it make any sense to sell your TV rights to your own company for a lower price? Honestly? It seems to me that many vertically integrated companies that I am familiar with in my field often separate cost centres these days. It's about maximizing revenue - Viacom could make more money by having some other NYC broadcaster paying an outrageous sum for NYR TV rights, than by operating it themselves. It doesn't really help the corporation's bottom line at all, to screw one cost centre in favour of another.
Welcome aboard, RiversQ.
Thank you, for your view.
Each added perspective is a plus.

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Old
10-18-2004, 02:46 PM
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Yanner39
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Quote:
Originally Posted by RiversQ
...estimate of TV contract value? What about an estimate of total advertising revenue? I suppose Comcast, Viacom, etc. have no business being involved in this negotiation strictly speaking. Good luck to the PA or anybody else getting any help on that angle.

BTW, does it make any sense to sell your TV rights to your own company for a lower price? Honestly? It seems to me that many vertically integrated companies that I am familiar with in my field often separate cost centres these days. It's about maximizing revenue - Viacom could make more money by having some other NYC broadcaster paying an outrageous sum for NYR TV rights, than by operating it themselves. It doesn't really help the corporation's bottom line at all, to screw one cost centre in favour of another.
It's sort of like management fees when one individual incorporated 2 businesses and one business charges management fees to the other. It some cases, it's just a sound way to move money around and save taxes (what is a revenue for one is an expense for the other), although the tax authorities are getting more vigilent.

For big corporations, I would assume it's a good way to manipulate earnings to give the shareholders a desired return on investment. Manipulating earning, done properly and reasonably, isn't always bad.

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Old
10-18-2004, 02:53 PM
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Quote:
Originally Posted by Dr. van Nostrin
Makes some good points.
Pretty good read, but I think their handling of Group IIs is a recipe for poaching by the big markets unless the collusion persists or the first-rounder options are similarly high as they are now.

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Old
10-18-2004, 02:54 PM
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ZIM
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Quote:
Originally Posted by RiversQ
BTW, does it make any sense to sell your TV rights to your own company for a lower price? Honestly? It seems to me that many vertically integrated companies that I am familiar with in my field often separate cost centres these days. It's about maximizing revenue - Viacom could make more money by having some other NYC broadcaster paying an outrageous sum for NYR TV rights, than by operating it themselves. It doesn't really help the corporation's bottom line at all, to screw one cost centre in favour of another.
I'm thinking that taxes are one reason you might move revenue between companies. If one company can take advantage of another companies depreciation, for example, you can, at least in the short term, save tax dollars.

In the end it's not about maximizing revenue, it's about keeping the revenue once you've got it.

 
Old
10-23-2004, 03:38 PM
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Just something to throw out there...

http://www.tsn.ca/nhl/news_story.asp...89&hubName=nhl

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