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Chipman: Jets will not receive revenue-sharing this season
Were the Thrashers a revenue sharing team? It's pretty big news when a team can be relocated from a major US city to a smaller Canadian market and be able to generate that kind of revenue without the assistance from revenue sharing.
Is that a serious question? 1/2 the teams in the NHL receive at least some revenue sharing each year. The Thrashers were at the very bottom of league revenue.
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This means Winnipeg was at least in the top 1/2 of the NHL in revenue and it would not surprise me if they were in the top 1/3rd or very close to it.
Is that a serious question? 1/2 the teams in the NHL receive at least some revenue sharing each year. The Thrashers were at the very bottom of league revenue.
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This means Winnipeg was at least in the top 1/2 of the NHL in revenue and it would not surprise me if they were in the top 1/3rd or very close to it.
Teams have to be in the lower 1/2 to qualify for revenue sharing. Not every team in that lower half actually receives revenue sharing.
I do think it's safe to assume the Jets finished in the upper 2/3 of the league revenue wise if they're not receiving any sharing dollars.
Plus, "alternative revenue streams"? I don't think it is going to get much better than this, unless they can add 2000+ seats to MTS Center.
they will very likely add suites to the MTS centre....at the level of the press box that was added for the return to the NHL....studies were done for this a few years ago...i think it is very likely that it will happen in the next year or two.
if you consider the jets more holistically, they are adding revenue streams that will not necessarily be part of team revenues, but will make owning the team more profitable....as an example, they have recently started construction on a $70m hotel/office/residential complex across the street from the arena....other opportunities like this exist as the impact of the team in downtown winnipeg takes effect.
This is good for Winnipeg and the NHL. A team that is in Canada is not worth having around unless it's making money. The goal of the NHL is growth and Canada is a pretty tapped out market. Revenue-sharing should be helping teams in the south and other new(er) American markets flourish and grow the game and their fanbases in their respective regions. Giving revenue sharing money to teams in traditional hockey markets is pointless as there is little-to-no room for growth and expansion within their market.
Winnipeg is and should continue to be a successful, profitable market. If they aren't then there is no point in the NHL keeping such a small market around long-term.
A team that is in Canada is not worth having around unless it's making money. The goal of the NHL is growth and Canada is a pretty tapped out market.
i have never understood this argument...
the amount of money i spent on the NHL last year was $0.
the amount of money i spent on the NHL this year was something like $3000.
the NHL grew exponentially in the manitoba market...and would do the same in quebec or hamilton....the league is far from having saturated its potential in canada particularly because it is a gate driven league.
in fact, i believe that its greatest opportunity for growth is the canadian market.
Wasn't Atlanta not recieving RS due to market size anyways.
No. The Atlanta DMA hasn't reached 2.5M HH yet, so the Thrashers were not disqualified from Revenue Sharing yet - in 2010-11 Atlanta had 2,407,080 households.
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Originally Posted by blues10
Doesn't the team also have an average attendance of 14 000? I can't recall the exact formula.
Atlanta had 13 000+ last season according to ESPN -
Sure is nice to see the Jets possibly in the top 10 in entire revenue in the NHL for what has to be the smallest market and smallest arena.
I'll be sure to increase those revenues tomorrow night at MTSC.
The benchmarks are: 1) year-to-year HRR growth at or above League average and 2) avg paid attendance of 14K game.
Missing a benchmark doesn't disqualify you from Revenue Sharing - it just reduces your RS distribution by 25%/40%/50% if you miss them for 1/2/3+ consecutive years.
the amount of money i spent on the NHL last year was $0.
the amount of money i spent on the NHL this year was something like $3000.
the NHL grew exponentially in the manitoba market...and would do the same in quebec or hamilton....the league is far from having saturated its potential in canada particularly because it is a gate driven league.
in fact, i believe that its greatest opportunity for growth is the canadian market.
It's not like the team wasn't bringing in revenue in Atlanta. If a team in Winnipeg is not making a profit, then the league is likely better off keeping the team in an American market where they can grow the game to a new audience.
Although you may not have spent money in previous years, most Canadian's, regardless of if they live in an NHL market or not, spend money on the NHL or at least indirectly support it. Do you think there are a lot of people in Atlanta who still support the NHL in anyway now that they've left? I doubt it, just like there are very few people who support the NHL in Kansas City, Las Vegas, Seattle, etc. (and for the record I don't believe these places should have a team over Winnipeg). However, the majority of Canadian's will support the NHL by either purchasing merchandise of locally born players, watching HNIC/ whoever is carrying live games or by following another team and buying their merchandise/watching their games. In non-traditional, non-NHL markets, the penetration rate for the NHL is almost 0%.
In other words, Canadian's (for the most part) will support and spend money on the NHL regardless of if they have a team locally or not. American's won't.
It's not like the team wasn't bringing in revenue in Atlanta. If a team in Winnipeg is not making a profit, then the league is likely better off keeping the team in an American market where they can grow the game to a new audience.
Although you may not have spent money in previous years, most Canadian's, regardless of if they live in an NHL market or not, spend money on the NHL or at least indirectly support it. Do you think there are a lot of people in Atlanta who still support the NHL in anyway now that they've left? I doubt it, just like there are very few people who support the NHL in Kansas City, Las Vegas, Seattle, etc. (and for the record I don't believe these places should have a team over Winnipeg). However, the majority of Canadian's will support the NHL by either purchasing merchandise of locally born players, watching HNIC/ whoever is carrying live games or by following another team and buying their merchandise/watching their games. In non-traditional, non-NHL markets, the penetration rate for the NHL is almost 0%.
In other words, Canadian's (for the most part) will support and spend money on the NHL regardless of if they have a team locally or not. American's won't.
There is so much wrong in this reply that it is difficult to answer it.
As Peter S stated, the NHL is very much a GATE driven market. Having untapped regions where a arena will sell out at premium ticket prices is not less preferable to one where it won't because people will watch it on TV and may buy some merchandise every once in a while.
It is important to try to expand to new regions in order to grow the product. But it is equally, or more important, to milk every dollar they can from strong markets with people that will pay to sit in seats.
Teams have to be in the lower 1/2 to qualify for revenue sharing. Not every team in that lower half actually receives revenue sharing.
I do think it's safe to assume the Jets finished in the upper 2/3 of the league revenue wise if they're not receiving any sharing dollars.
I never said it would be safe to assume anything. I said it would not surprise me if the Jets were in or near the top 10 this year.
I'm not sure what you are getting at in the first comment, but the NHL's revenue sharing formula is very complex. To be eligible you MUST NOT BE ANY of the following:
i) a franchise with revenue ranking in the top 15,
ii) a franchise located in a market with 2.5 million or more TV households, or
ii) a franchise with Available compensation that exceeds Target compensation.
The only reason a club in the bottom 15 in revenues would be ineligible for revenue sharing is because it is located in a city with a TV market over 2.5 million -- see New York, Chicago and L.A. only I believe.
Just because you are Eligible for revenue sharing, doesn't mean you get the maximum or same amount as other teams. Again, it is a complicated formula that takes into account the following:
i) whether a franchise has met certain performance targets such as attendance figures and revenue growth; and
ii) the difference between a franchise's Available and Target Compensation Levels.
Available = combined preseason and regular season revenues. Target = an amount set by the league on where they believe each team should ideally be spending based on a formula: between lower limit of payroll range plus 25% AND lower limit of payroll and 50%.
Of course, of the bottom 15 revenue earning teams some may be ineligible for other reasons. The New York Islanders, for example, are certainly a bottom 15 revenue club despite their TV contract. They don't get revenue sharing.
In regards to the Jets, the bottom line is the franchise is ineligible for revenue sharing this year because they are among the top 15 NHL teams in combined preseason and regular season revenue.
So the only question that remains is where did the Jets end up? Somewhere between, say 13 and 15? Possibly. I said it would not surprise me if the Jets this year were in OR near the top 10, which could be more in the range of say 9-12. The reason it would not surprise me if the Jets were in or near the top 1/3rd this year is that in addition to having one of the highest average ticket prices in the NHL they sold millions of dollars of merchandise through their own stores. I think Jets merchandise sales were #1 or #2 in the NHL this year. Of course, those merchandise sales will not be a strong as time goes on for obvious reasons.
I'm not so sure. I would rather wait and see if the Jets can survive a lean period where the forces of supply and demand are not nearly as helpful to their cause.
Plus, "alternative revenue streams"? I don't think it is going to get much better than this, unless they can add 2000+ seats to MTS Center.
Umm, 2000 seats won't add more for revenue, if those seats were added, they would be the "cheap" seats so the bottom line wouldn't go up by much, and if anything will lower demand and create supply. The way TNSE has it now is perfect, and it's been proven. Not much of a surprise here.
No. The Atlanta DMA hasn't reached 2.5M HH yet, so the Thrashers were not disqualified from Revenue Sharing yet - in 2010-11 Atlanta had 2,407,080 households.
The benchmarks are: 1) year-to-year HRR growth at or above League average and 2) avg paid attendance of 14K game.
Missing a benchmark doesn't disqualify you from Revenue Sharing - it just reduces your RS distribution by 25%/40%/50% if you miss them for 1/2/3+ consecutive years.
Would love to see where they pull these attendance figures from, I was at a game in Phoniex 2 years ago they announced the attendance at just under 13000 the Phoenix fans I was sitting beside guessed maybe 7000 in the building max.
Last edited by ThirdManIn: 04-07-2012 at 01:57 PM.
Reason: nope
Would love to see where they pull these attendance figures from, I was at a game in Phoniex 2 years ago they announced the attendance at just under 13000 the Phoenix fans I was sitting beside guessed maybe 7000 in the building max.
Tickets sold + Tickets given.
Last edited by ThirdManIn: 04-07-2012 at 01:57 PM.
Reason: edited quote
There is so much wrong in this reply that it is difficult to answer it.
As Peter S stated, the NHL is very much a GATE driven market. Having untapped regions where a arena will sell out at premium ticket prices is not less preferable to one where it won't because people will watch it on TV and may buy some merchandise every once in a while. It is important to try to expand to new regions in order to grow the product. But it is equally, or more important, to milk every dollar they can from strong markets with people that will pay to sit in seats.
I agree. What I was saying was that the NHL relies heavily on Canadian markets to make money and profit for the league as they support much of the revenue sharing. Having Canadian teams receiving revenue sharing is not part of their business model and is detrimental to the league in the long run.
It's not like the team wasn't bringing in revenue in Atlanta. If a team in Winnipeg is not making a profit, then the league is likely better off keeping the team in an American market where they can grow the game to a new audience.
Although you may not have spent money in previous years, most Canadian's, regardless of if they live in an NHL market or not, spend money on the NHL or at least indirectly support it. Do you think there are a lot of people in Atlanta who still support the NHL in anyway now that they've left? I doubt it, just like there are very few people who support the NHL in Kansas City, Las Vegas, Seattle, etc. (and for the record I don't believe these places should have a team over Winnipeg). However, the majority of Canadian's will support the NHL by either purchasing merchandise of locally born players, watching HNIC/ whoever is carrying live games or by following another team and buying their merchandise/watching their games. In non-traditional, non-NHL markets, the penetration rate for the NHL is almost 0%.
In other words, Canadian's (for the most part) will support and spend money on the NHL regardless of if they have a team locally or not. American's won't.
Your posts give the NHL too much latitude on decisions around franchise locations, especially now. It doesn't matter how much the NHL wants a team in a market to "grow the game", or for any other purpose. If there isn't a suitable arena and an owner that can and will support a franchise there, there is nothing much the NHL can do. That is why Atlanta relocated. There wasn't anyone who wanted to invest even $100 million to own an NHL franchise in that market. That is why the NHL still owns the Coyotes in Phoenix, and they are also in danger of relocation. Winnipeg has a team because they had owners willing to fork over $170 million to own and operate a team there. Clearly the Jets' owners think they've made a good investment, and the early returns look promising. QC's hopes of getting a franchise rest on the new arena and a rich owner willing to pay the freight. As much as the NHL might want to move into other US markets (e.g. Seattle, Houston), it makes no difference if no owner thinks that the NHL is a good investment in that market. It is simple economics.
Having viable Canadian markets without NHL franchises might also serve another purpose for the NHL -- it retains the value and purchase prices of franchises. Unless they are "Vanity Owners", most prospective NHL franchise owners likely look at two things when deciding to purchase an NHL franchise: 1) will I make money in that market? 2) if not, will I be able to sell and at least recoup my money? The worst case scenario is if the team continues to lose money, and they are unable to sell the franchise. As long as there are unfilled markets with owners willing to shell out big bucks to purchase teams, it provides hope for future sale if needed. Winnipeg was actually used as a back-up plan for the NHL in the Coyotes ownership saga, and ended up bailing out the Thrashers' owners when they needed to unload the franchise and couldn't arrange a local sale. The NHL received the side benefit of a $70 million relocation fee. However, once most or all of the available markets are saturated, the prospect of buying an NHL franchise becomes much riskier, which will almost certainly drive down franchise values. So, it is in the interests of the NHL and the existing owners to keep some of the viable markets open.
In their first year of operation, the Winnipeg Jets will not require NHL welfare.
It's a late-season surprise because the assumption far and wide -- including in True North Sports & Entertainment's own quarters until not very long ago -- was that the Jets, playing in the NHL's smallest building and in its smallest market, would need to participate in the league's revenue-sharing system to make their business viable.
Jets co-owner and governor Mark Chipman dropped the bombshell at a news conference on Friday, confidently speculating his team's own revenues for 2011-12 have exceeded expectations to the point where he believes the franchise won't qualify for the NHL's Player Compensation Cost Redistribution System (a.k.a. revenue sharing).
Chipman wouldn't disclose the Jets' projected revenue for Season 1 but given his statements and other parameters, it's likely in the $90- to $95-million range.
Having viable Canadian markets without NHL franchises might also serve another purpose for the NHL -- it retains the value and purchase prices of franchises. Unless they are "Vanity Owners", most prospective NHL franchise owners likely look at two things when deciding to purchase an NHL franchise: 1) will I make money in that market? 2) if not, will I be able to sell and at least recoup my money? The worst case scenario is if the team continues to lose money, and they are unable to sell the franchise. As long as there are unfilled markets with owners willing to shell out big bucks to purchase teams, it provides hope for future sale if needed. Winnipeg was actually used as a back-up plan for the NHL in the Coyotes ownership saga, and ended up bailing out the Thrashers' owners when they needed to unload the franchise and couldn't arrange a local sale. The NHL received the side benefit of a $70 million relocation fee. However, once most or all of the available markets are saturated, the prospect of buying an NHL franchise becomes much riskier, which will almost certainly drive down franchise values. So, it is in the interests of the NHL and the existing owners to keep some of the viable markets open.
I kinda think the league should have played hardball with Atlanta. You have a franchise for the city of Atlanta if you don't want to operate it there, too bad you get nothing.
I kinda think the league should have played hardball with Atlanta. You have a franchise for the city of Atlanta if you don't want to operate it there, too bad you get nothing.
The NHL has to maintain some balance. If owners run into financial difficulty and can't afford to operate a franchise, then they need to have some confidence that they will be able to sell the franchise. If the NHL shows that they will step in and block sales and put the financial fortunes of owners at risk, who will want to own an NHL franchise, especially in a new or uncertain market where they are expected to "grow the game"? If the NHL had an option for a local sale in Atlanta, I expect that they would have done much more to keep the team there. I expect that they had determined that they were not going to find a bona fide owner who would be willing to own an NHL franchise in that market, under those conditions, so they had to let the franchise relocate.
The only reason a club in the bottom 15 in revenues would be ineligible for revenue sharing is because it is located in a city with a TV market over 2.5 million -- see New York, Chicago and L.A. only I believe.
Dallas (2,571,310) and San Jose (2,506,510) have passed the 2.5MHH threshold. Boston is close and it probably would have passed it if Nielsen hadn't recalibrated their models - virtually every DMA dropped in HHs from 2010-11 to 2011-12 - Boston dropped from 2,460,290 to 2,379,690.
Next up would likely be Washington (2,360,180). although I expect the 2.5MHH threshold - which was basically a screw Wirtz rule - to go away (or be increased/modified) in the next CBA.
Dallas (2,571,310) and San Jose (2,506,510) have passed the 2.5MHH threshold. Boston is close and it probably would have passed it if Nielsen hadn't recalibrated their models - virtually every DMA dropped in HHs from 2010-11 to 2011-12 - Boston dropped from 2,460,290 to 2,379,690.
Next up would likely be Washington (2,360,180). although I expect the 2.5MHH threshold - which was basically a screw Wirtz rule - to go away (or be increased/modified) in the next CBA.
Philadelphia is exempt as well, their DMA is over 3 million households. IIRC their DMA encompasses most of the Delaware Valley.
