The Business of HockeyDiscuss the financial and business aspects of the NHL. Franchise sales, valuations, TV contracts, ratings, expansion, relocation, the CBA and work stoppage discussion goes here.
Now I am not a fan of the whole luxury tax ideas, but how do you convince the Leafs to chip in 40m-50m while other teams chip in little to no money?
The same way Fehr "convinced" the Yankees to chip in an extra $150M or so in revenue sharing per season - by having the other owners gang up on them.
And it wouldn't be just the Leafs - Canucks, Flyers, Rangers, Canadiens would be on the heavy-tax list as well. A few more would on the moderate tax list.
The same way Fehr "convinced" the Yankees to chip in an extra $150M or so in revenue sharing per season - by having the other owners gang up on them.
And it wouldn't be just the Leafs - Canucks, Flyers, Rangers, Canadiens would be on the heavy-tax list as well. A few more would on the moderate tax list.
And are you going to allow the Leafs and the other 4 teams on your list the "competitive advantages" that the Yankees heavy taxes give them i.e. no cap and the ability to buy championships, a five team major league with 25 feeder teams. Cause that is really the crux of the Fehr system vs what Bettman/BOG wants.
And are you going to allow the Leafs and the other 4 teams on your list the "competitive advantages" that the Yankees heavy taxes give them i.e. no cap and the ability to buy championships, a five team major league with 25 feeder teams. Cause that is really the crux of the Fehr system vs what Bettman/BOG wants.
If they made the luxery tax hurt (like 10 into the pot to ever 1 spent over the thresh hold) there wouldnt be much of an advantage imo
Edit: however i am not a fan of a luxery tax though
The same way Fehr "convinced" the Yankees to chip in an extra $150M or so in revenue sharing per season - by having the other owners gang up on them.
And it wouldn't be just the Leafs - Canucks, Flyers, Rangers, Canadiens would be on the heavy-tax list as well. A few more would on the moderate tax list.
You would have to give something back to said teams to get them to agree to that.
The MLB has no cap system. So even if the Yankees give back 150m in revenue sharing, they have the capability to spend their other profits to make their team better, while the leafs would not be able to due to a salary cap.
The NFL actually has the money to spread it around, look at their tv deal. In the NHL ''propping up the weak links'' is much more difficult because there is not enough more to go around. You can't expect the maple leafs to be supporting 4 southern teams on their own.
The NFL didn't have anything resembling a TV deal until the Kennedy administration. And yet revenue sharing existed before that; there's a famous story that involves the president of the Green Bay Packers being accosted in an elevator at the 1959 league meetings for his team being "a bunch of leeches". This wasn't because of a TV deal, this was because of revenue sharing.
The difference is that the NFL in its early days had men of terrific foresight like Curly Lambeau (who loaned money to his biggest rival, the Chicago Bears, to keep them afloat), George Halas (who returned the favor years later when Green Bay was in trouble), Tim and Wellington Mara (whose existence as a franchise was due to Halas' generosity with the Red Grange tour), and a couple of others who went out of their way to prop up the bottom of the league.
These men had all lived through the early days and saw several excellent franchises go under because of an economic downturn of some type that crippled the ability to keep going. Recognizing that any small event could be the death knell of a franchise, they took steps to make sure it didn't happen. And this was in the 1930s.
And are you going to allow the Leafs and the other 4 teams on your list the "competitive advantages" that the Yankees heavy taxes give them i.e. no cap and the ability to buy championships, a five team major league with 25 feeder teams. Cause that is really the crux of the Fehr system vs what Bettman/BOG wants.
What does Bettman really want? And what is the reason for the existence of teams that are not financially viable with a tiny fanbase that would justify increasing the revenue sharing pie without some sort of incentive for the big market teams and fanbases? It's ridiculous to think people in Toronto have to pay $50 for a standing room ticket when southern markets are selling 4 tickets, 4 hot dogs and 4 beers for $40.
The MLB has no cap system. So even if the Yankees give back 150m in revenue sharing, they have the capability to spend their other profits to make their team better, while the leafs would not be able to due to a salary cap.
Yep.
So perhaps a cap isn't the right mechanism, after all.
You would have to give something back to said teams to get them to agree to that.
The MLB has no cap system. So even if the Yankees give back 150m in revenue sharing, they have the capability to spend their other profits to make their team better, while the leafs would not be able to due to a salary cap.
I think the luxury tax is the way to go. Big market teams who choose to spend more money in order to ice competitive, entertaining teams that justify the ticket prices should be able to do so and small market teams who feed off of these teams have to give something back.
It makes no sense to me that the league should have so many have-not teams that require such painful economic readjustments every half dozen years. If we're going to lose another season just so cities who don't care about hockey can still have a hockey team, I don't know what the payoff is.
Either have a league with elite economic teams that contribute and have some kind of incentive to pay for their poorer cousins to continue to exist as window dressing, or take the sickly teams out of the league entirely and have a competitive league with members who can pay their own way.
And are you going to allow the Leafs and the other 4 teams on your list the "competitive advantages" that the Yankees heavy taxes give them i.e. no cap and the ability to buy championships,
Sure. Sounds good to me.
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...a five team major league with 25 feeder teams.
Well that part is just nonsense. Since the NHL lockout 11 different teams - more than a third of the league - have made it to the World Series.
I think the luxury tax is the way to go. Big market teams who choose to spend more money in order to ice competitive, entertaining teams that justify the ticket prices should be able to do so and small market teams who feed off of these teams have to give something back.
It makes no sense to me that the league should have so many have-not teams that require such painful economic readjustments every half dozen years. If we're going to lose another season just so cities who don't care about hockey can still have a hockey team, I don't know what the payoff is.
Either have a league with elite economic teams that contribute and have some kind of incentive to pay for their poorer cousins to continue to exist as window dressing, or take the sickly teams out of the league entirely and have a competitive league with members who can pay their own way.
The league definitely needs a salary cap. But if they go the way of the luxury tax it should be structured like this :
60m is the cap
60-64.99m is taxed at a 1/1 rate
65-70m is taxed at a 2/1 rate
or
60m is cap
60m-63.33m is taxed at a 1/1 rate
63.34-66.67m is taxed at 2/1 rate
66.68-70m is taxed at a 3/1 rate
All revenue sharing money goes into revenue sharing
Amazing that so many don't know the difference between revenue and profit.
NHL revenue has grown by 195% since the last lockout.
The salary cap has gone up by 80% since it was put in place.
Little bit of a disconnect, no? If an NHL team's main expense is player salaries and revenue is growing more than twice as quickly as the cap is rising, how is it that the league is losing $120 million/year?
NHL revenue has grown by 195% since the last lockout.
The salary cap has gone up by 80% since it was put in place.
Little bit of a disconnect, no? If an NHL team's main expense is player salaries and revenue is growing more than twice as quickly as the cap is rising, how is it that the league is losing $120 million/year?
If you funnel most of the revenue to a few places while everyone else is losing out, it can happen pretty easily.
If you funnel most of the revenue to a few places while everyone else is losing out, it can happen pretty easily.
The implication was that league-wide revenues are up 195%, was it not?
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Allan Walsh @walsha
From NHL Release: "NHL on pace for 7th consecutive yr of record total revenue." "NHL Enterprises revenue up 195% over 2003-04."
NHL Enterprises, L.P. according to Bloomberg Business is:
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NHL Enterprises, L.P. engages in merchandising and licensing programs. The company protects trademarks and other intellectual property of the National Hockey League and its member teams. NHL Enterprises, L.P. was incorporated in 1996 and is based in New York, New York. NHL Enterprises, L.P. operates as a subsidiary of National Hockey League.
As far as I can gather, that means TV contracts, that means merchandise, that means GameCentre. Stuff that is split equally among all teams... up 195% and yet 18/30 teams lost a total of $120 million, the Rangers apparently among them? And released during CBA negotiations? I call B.S. I have no doubt that the owners have financials that say they are losing that amount, I just don't believe that is actually the case.
When they say lost $240M that might mean there are $240M in losses if you disregard the profitable teams. That I would believe to a large degree. If you were to say 24 teams lost $10M on average over the past two seasons ($5M per season per team) that is a lot more reasonable. I'm sure the Phoenix losses weigh heavily in that figure, but you probably also have Atlanta and others that help their cause.
I keep looking at the NHL's situation and comparing it to our political situation in the US. You have a group of wealth at the top with a shrinking middle class and the lower class that can't really make it as the system works today. That's a fair description of the US and NHL's economy. There is the evil word and theory of socialism to so many, but it seems like redistributing the wealth to create a stronger middle class helps everyone in both scenarios. In the US it's fair taxation, in the NHL it's revenue sharing. The ones that are sitting at the top are not acting in the best interest of the community, but only their own best interest. The league/government is the regulator in charge of looking out for the interests of the community, not just a single subgroup of that community.
But some owners are signing players to 10 year deals at 100mil just to get new deals done before the new CBA puts limits on them. Makes perfect sense that they are losing money under the old system? LOL!
NHL revenue has grown by 195% since the last lockout.
The salary cap has gone up by 80% since it was put in place.
Little bit of a disconnect, no? If an NHL team's main expense is player salaries and revenue is growing more than twice as quickly as the cap is rising, how is it that the league is losing $120 million/year?
NHL revenue has not grown by 195%. Besides, if the cap is tied directly to revenue, it moves the same ....
2005 revenue, 1.8B
2011 revenue 2.9B
61%
Salary cap over the same era
2005 - 39M
2011 - 64.3M
65%
The difference between the two percentages is small and can be explained by the cap actually being set as an estimate and rounded numbers on percentage.
When they say lost $240M that might mean there are $240M in losses if you disregard the profitable teams. That I would believe to a large degree. If you were to say 24 teams lost $10M on average over the past two seasons ($5M per season per team) that is a lot more reasonable. I'm sure the Phoenix losses weigh heavily in that figure, but you probably also have Atlanta and others that help their cause.
I keep looking at the NHL's situation and comparing it to our political situation in the US. You have a group of wealth at the top with a shrinking middle class and the lower class that can't really make it as the system works today. That's a fair description of the US and NHL's economy. There is the evil word and theory of socialism to so many, but it seems like redistributing the wealth to create a stronger middle class helps everyone in both scenarios. In the US it's fair taxation, in the NHL it's revenue sharing. The ones that are sitting at the top are not acting in the best interest of the community, but only their own best interest. The league/government is the regulator in charge of looking out for the interests of the community, not just a single subgroup of that community.
For me it's hard to equate people with NHL franchises. A government needs to step in and safeguard the lives of its citizens to some degree from socioeconomic inequalities but I don't see why unprofitable teams need to be propped up at all.
For me it's hard to equate people with NHL franchises. A government needs to step in and safeguard the lives of its citizens to some degree from socioeconomic inequalities but I don't see why unprofitable teams need to be propped up at all.
- Because it's bad for any league to have continued instability as a result of what may be simply short-term issues that cannot be weathered
- Because it devastates franchise valuation when there are a glut of teams on the market and a much smaller number of potential buyers
- Because "today you, tomorrow me". The team that is doing fine today may be looking at bankruptcy tomorrow, and the team that's floundering today may be a perennial contender tomorrow
The first year of the NFL (1920, then known as the APFA) had 14 teams. In 1921, there were 21. Most of them didn't have the money or backing to be able to sustain themselves for any real period of time. The few who did survive...let's take a closer look.
The Green Bay Packers joined the APFA in 1921 and were kicked out of the league for using college players. The group of men who paid to have the franchise reinstated were nicknamed "The Hungry Five", because the joke was that they were sinking every dollar into the (money-losing) team and were going hungry as a result. In 1935, a fan suffered serious injuries at City Stadium due to a bleacher collapse and sued; the team went into receivership. Money was raised in a stock sale to eliminate the judgment debt and keep the team from folding. During this time, the Chicago Bears were loaning money to Green Bay with some amount of regularity. Chicago was the one who tipped off the APFA about the Packers using college players, and now they were keeping their biggest rival alive year after year.
The Chicago Bears began as the Decatur Staleys in 1920. After the season ended, owner/backer A.E. Staley gave George Halas a check for $5,000 and said, "Take the team to Chicago, but this money is conditional upon you retaining the Staleys name for one year." The Chicago Staleys won the title in 1921, then became the Chicago Bears. They flirted with bankruptcy several times during the 1920s, with the Green Bay Packers floating them money to keep their rival going. Halas signed college star Red Grange in 1925 and promptly took the team on a 19-city barnstorming tour, which loaded the coffers for a few years. In his book "Halas by Halas", a careful look is given to the Bears' finances during the 1920s and 1930s.
The New York Giants started in 1925, and had enormous trouble right from the beginning. They were teetering on the brink, until owner Tim Mara convinced Halas to make New York one of the stops on the Grange barnstorming tour. 73,000 people showed up to see the game, and ensured the stability of the Giants. The team lost $50,000 in 1926, but the revenue raised from the Grange game allowed them to weather this massive loss and keep going. At the time, the pro game was seen as a game for criminals and hoodlums, and inferior to the college game. By 1930, Knute Rockne had been blathering for years about the superiority of college football, and finally Mara had enough. A game was played in December of that year between the Giants and the Notre Dame All-Stars, including the legendary Four Horsemen. The Giants won 22-0, and the superiority of the pro game was never questioned again.
All three of these teams are still going in their original cities, and it's safe to say that the NFL would not be the same without them. All three of them, despite financial difficulties that could pop up at any moment, still worked to keep the league together despite no guarantee that it would work out at all. Mara and Halas were instrumental in laying the foundation for the draft, which ensured the ability of the bottom teams to rise up. They were instrumental in devising a leaguewide revenue-sharing program, which did the same. They were willing to take actions that may well have hurt their own teams in order to bolster the league as a whole.
Chicago had opportunities to bankrupt the Green Bay Packers and ensure the western Midwest market all for themselves; they didn't do it. Green Bay had the chance to bankrupt their rival, and didn't do it. Why?
NHL revenue has grown by 195% since the last lockout.
Huh??
1) 195% increase would mean the revenues are 3x what they were after last lock-out.
2) HRR has grown by roughly 60% since the lock-out.
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Originally Posted by htpwn
Little bit of a disconnect, no? If an NHL team's main expense is player salaries and revenue is growing more than twice as quickly as the cap is rising, how is it that the league is losing $120 million/year?
Yes, there's a huge disconnect but only because your numbers are wrong.
The difference between the two percentages is small and can be explained by the cap actually being set as an estimate and rounded numbers on percentage.
Actually it's explained by players share jumping from 54% to 57% during the CBA.
