NHL Business is growing (MIT Sports Analytics Conf); HRR $3.2 billion this year?

[LadyStanley]

http://www.nesn.com/2012/03/statisti...e-so-much.html

NESN - new stats may have increased role, but may have to co-exist with with proven evaluation methods.

[Fourier]

Originally Posted by thinkwild

It never even dawned on me to add the numbers up. Im getting lazier lately, if the numbers arent right in my face, I miss them.

So I added up the columns in your stats. Let me tell you what I did and you can tell me if my math is right.

Totalling the single game ticket sales and multiplying that by 41 home games, I show the following for total game day revenue each season:

2005-06 $ 935 Mil
2007-08 $ 1,121 Mil
2010-11 $ 1,181 Mil

If I assume that 05-06 total revenues were 2Bil and 10-11 revenues were $3 Bil, that would mean game day ticket revenues as a percentage of total revenues went from about 47% to 39% last year.

And if game day revenues as according to these numbers in 2010-11 add up to $1.2 Bil, then other revenues must be about $2Bil?

What am I missing?
**Edit: just noticed you said game day ticket revenue is less than 50% of locally generated revenues and not 50% of tot revenues. I wasnt aware of that bit of conventional wisdom. Looking at the 05 stats where game day revenue totalled $930 Mil when to revenues were claimed to be between 1.8 and 2.2 bil, that seems implausible.


Also interesting to note from those stats is that while ticket revenue increased by 25%, total revenue increased by 50% and the Sens franchise value which isn’t part of HRR, increased 100%.

The statement about ticket revenues being less than 50% of the locally generate revenues was based on data from the 2002-2003 Levit Report that had gate reciepts at $886M, total revenue at $1.996B and centrally generated revenues at about 10% of the total. This puts ticket sales at about 48% of locally generated revenue.

As for the claim being valid in 2005-2006, I am happy to admit that it looks like the number could be in the 47%-53% range depending on what end of the revenue spectrum you quoted the actual number ended up. So while I am also happy to admit that in the stictest sense the claim may be wrong it does not change any of the core points of the argument.

To be honest it is not a surprise that ticket sales have lagged other growth. In fact I would say that it would be shocking had this not neen the case. And while I have consistently said that central revenues have increased substantially (just the tv numbers alone suggest this), in absolute terms there is no way they represent the majority of the growth.

[thinkwild]

How can this not change the core points of the argument? That would take quite a leap of faith wouldnt it?

The argument i thought was that its understandable why as revenues went up, players would need to take less, and that is because it is believed to be large markets driving the revenue increases and they dont want to think of revenues in one global pot that they share when they go up as they do with player expenses.

But your own numbers show that it isnt large markets per se increasing revenues, there are many other obvious reasons for why these numbers have fluctuated the way they have recently for the teams at the top and the bottom. And overall, it is a small amount anyway.

And that:
ticket revenues increased 25% from about $0.9 Bil to $1.1 Bil
total revenues increased 50% from about $2 Bil to $3.2 Bil

To me this suggests that the core points of that argument are in danger of being blown out of the water.

Perhaps we are disagreeing on what central revenues and local are? But regardless it seems impossible to make the point things have gotten worse for small markets when total revenues increased more than gate revenues by a significant amount; relatively and absolutely.

[Fugu]

I think HRR increases have come from:

-Canadian teams and markets, and Canada in general
-This growth, whatever the organic growth was, is amplified by the strength of the CAD. Keep in mind that the NHL must translate the CAD value into USD for its audit and thus Cap and Escrow requirements.
-Several US teams have grown in all facets (Chicago, Washington, Pittsburgh, NYR, Boston, Philly, Detroit) since the lockout ended
-Winter Classic, NBC money, CBC, TSN.ca etc have all increased the values of their deals with the NHL as well
-Everyone has raised ticket prices, well except the teams that are really hurting and they can't get many people to buy their tickets

[Fourier]

Originally Posted by thinkwild

How can this not change the core points of the argument? That would take quite a leap of faith wouldnt it?

The argument i thought was that its understandable why as revenues went up, players would need to take less, and that is because it is believed to be large markets driving the revenue increases and they dont want to think of revenues in one global pot that they share when they go up as they do with player expenses.

But your own numbers show that it isnt large markets per se increasing revenues, there are many other obvious reasons for why these numbers have fluctuated the way they have recently for the teams at the top and the bottom. And overall, it is a small amount anyway.

And that:
ticket revenues increased 25% from about $0.9 Bil to $1.1 Bil
total revenues increased 50% from about $2 Bil to $3.2 Bil

To me this suggests that the core points of that argument are in danger of being blown out of the water.

Perhaps we are disagreeing on what central revenues and local are? But regardless it seems impossible to make the point things have gotten worse for small markets when total revenues increased more than gate revenues by a significant amount; relatively and absolutely.

The post you are quoting was a counter to your claim that it is perfectly reasonable to assume that growth in central revenues could account for the vast majority of the NHL's growth. Whether ticket revenue represents 47% of local revenue or 53% does not change the core of the argument that there is simply no data to support this claim.

As I said the Coyote filing together with what we know about increased ticket revenues pretty much shows this to be impossible.

For me centrally generated revenues are as defined by the CBA. This would primarily be national broadcast deals and mechandise sold outside of team owned venues. This is money that is split equally by all teams.

That said I have never argued that the rate of growth for central revenue would not have exceeded that of ticket growth. Based on the new TV deals alone this must certainly be the case. But in terms of absolute numbers central revenue clearly pales in comparison with locally generated revenue. And in the case of the latter all evidence suggests that growth has been decidedly uneven. (By the way, even with respect to locally genreated revenues I would expect that non-ticket growth has exceeded ticket growth in both absolute numbers and in %-age).

I would pretty much agree with Fugu's summary above as to where the vast majority of the NHL's growth has come from.

[Fourier]

Originally Posted by thinkwild

Perhaps we are disagreeing on what central revenues and local are? But regardless it seems impossible to make the point things have gotten worse for small markets when total revenues increased more than gate revenues by a significant amount; relatively and absolutely.

I think this point needs to be addressed specifically to illustrate why it is definitely possible for small market teams to lose ground even when overall revenues grow substantially.

First off I am going to do something that I vowed never to do and that is to refer to the Forbes revenue numbers. These show that the top 15 teams have 60% of the league revenues and the bottom teams have 40%. (I am not going to defend the Forbes numbers but since we are working with hypotheticals so be it).

Now assuming we started with 10% centrally generated revenue which would be roughly equally distributed (not quite true under the CBA but oh well) We could assume a distribution of roughly

10% - Central
55% -High rev
35% - Low rev

Assuming equal player costs this would mean that after player costs we have for $100 in revenue:

High rev = 60 -(57/2) = $31.5.
Low rev = 40 - (57/2) = $11.5

Now assume that after a period revenues grow at the rate (pulled out of a hat for illustrative purposes)
Central ---15%
High rev ---10%
Low rev ---5%

That same $100 would now be
Central ---$11.5
High rev---$61.5
Low rev---$36.75

Player costs have increased to $62.56 so the actual amounts left over are
High rev --$35.97
Low rev--$11.22

Now this is certainly a very simplified view of how the NHL works. And I am not saying these were the actual numbers. The purpose is simply to illustrate why it is possible even with significant growth in central revenues and significant over all growth in revenues,that if growth is not equally distributed locally small revenue teams could still fall behind certainly in relative terms if not absolutely.

[Hank Chinaski]

Originally Posted by LadyStanley

http://www.nesn.com/2012/03/statisti...e-so-much.html

NESN - new stats may have increased role, but may have to co-exist with with proven evaluation methods.

"This whole Moneyball thing aggravates me. It's horse [expletive]. No one's won a championship with Moneyball."

Oh good grief Burkie. Really?

Each and every team in the MLB (granted, some more willingly than others) is using some form of "Moneyball" approach. That term gets thrown around like a buzzword, which is maybe what aggravates Burke. But the underlying concept, to find players that are undervalued by the normal metrics and subjective "eyeball test" of sports...that's horsebleep?

When there is a breakthrough in hockey analytics, I'm guessing Burke will be one of the last dinosaurs to catch on.

[Fugu]

Originally Posted by Fourier

I think this point needs to be addressed specifically to illustrate why it is definitely possible for small market teams to lose ground even when overall revenues grow substantially.

First off I am going to do something that I vowed never to do and that is to refer to the Forbes revenue numbers. These show that the top 15 teams have 60% of the league revenues and the bottom teams have 40%. (I am not going to defend the Forbes numbers but since we are working with hypotheticals so be it).

Now assuming we started with 10% centrally generated revenue which would be roughly equally distributed (not quite true under the CBA but oh well) We could assume a distribution of roughly

10% - Central
55% -High rev
35% - Low rev

Assuming equal player costs this would mean that after player costs we have for $100 in revenue:

High rev = 60 -(57/2) = $31.5.
Low rev = 40 - (57/2) = $11.5

Now assume that after a period revenues grow at the rate (pulled out of a hat for illustrative purposes)
Central ---15%
High rev ---10%
Low rev ---5%

That same $100 would now be
Central ---$11.5
High rev---$61.5
Low rev---$36.75

Player costs have increased to $62.56 so the actual amounts left over are
High rev --$35.97
Low rev--$11.22

Now this is certainly a very simplified view of how the NHL works. And I am not saying these were the actual numbers. The purpose is simply to illustrate why it is possible even with significant growth in central revenues and significant over all growth in revenues,that if growth is not equally distributed locally small revenue teams could still fall behind certainly in relative terms if not absolutely.

I came up with this conclusion too, but my thought process was bit more nonlinear.

Nicely illustrated.

[Fourier]

Originally Posted by Fugu

I came up with this conclusion too, but my thought process was bit more nonlinear.

Nicely illustrated.

Too bad my math is lousy. Should never do things in my head as I am not young anymore!

55+5.5 =60.5... But oh well. The point still stands.

[thinkwild]

Im not really making the claim, im just also interested in testing the hypothesis put forth at the high level conference that licensing revenues now account for $1.3 bil. And that central revenues are driving revenue gains meaning small markets when accounting for revenue sharing arent likely being disadvantaged in any what wouldnt have been expected and accounted for by the revenue sharing model.

Originally Posted by Fourier

Now this is certainly a very simplified view of how the NHL works. And I am not saying these were the actual numbers. The purpose is simply to illustrate why it is possible even with significant growth in central revenues and significant over all growth in revenues,that if growth is not equally distributed locally small revenue teams could still fall behind certainly in relative terms if not absolutely.

Well yeah, if they design a linkage system and then the only rev sharing is splitting central revenues, then sure.

But those arent actual numbers are they, as they dont accommodate the revenue sharing which increases as revenues increase.

Nor do i remember any such analysis during the lockout warning that, "hey, you know what, linkage may not work if revenues increase more in the big markets?"

I think you did a post on the effect of the Cdn$, i dont remember the number but it wasnt $100mil was it?

If ticket revenues league wide have only increased in absolute terms during this CBA by a few hundred thousand, then in what way is the big market effect killing all the small market teams? Besides increasing ticket sales, and i guess leafs tv, where are most of the Leaf revenue increases for example coming from?

Most of the league gains appear to be coming from central revenues and revenues that are shared and creating an increasing revenue sharing amount.

If fugu is right that that is the main list of sources of league revenue increases, then i dont understand how small markets could claim to be so disadvantaged as to require drastic lockout action when the existing revenue sharing model should be dealing with this normal fluctuation between markets and cycles satisfactorily.

For example, if big markets are making the playoffs, 50% of 1st round playoff revenue is now shared. If ticket revenues only increased a few hundred k but licensing revenues are now $1.3 bil, i dont know if its true, but it seems more likely to be plausible than to reach for a rather unlikely scenario in order to suggest that the owners arent lying.

[kdb209]

Originally Posted by thinkwild

For example, if big markets are making the playoffs, 50% of 1st round playoff revenue is now shared.

Not quite. For every home playoff game, a team contributes 30-50% of the hypothetical gate from a sold out regular season game (at regular season prices) - not 30-50% of the playoff gate itself.