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.
How to make the NHL profitable again and prevent future lockouts: IPOs
How to make the NHL profitable again and prevent future lockouts: IPOs
Here's a simple solution which will not only bring even more money to the league, the players, and the game:
Make the league itself and all 30 teams publicly traded entities. Have 31 IPOs and allow fans and players to buy stock in the teams. Additionally, offer the players stock options as part of their contracts - this makes the players part owners of the league and the team. Teams with extremely loyal fans but poor business savvy would no longer be in jeopardy - the players and fans would buy in and attain part ownership of their teams. Thus, everyone wins - the players get more control. The fans get more control. The teams get more money.
Also, the 7% fixed increase is out - accounting for growth, all shareholders with options would effectively see a standard rate of 17-22% per season. Over the span of a decade with correct management of the NHL's collective portfolio, these numbers could climb to as much as 50%.
So the popular teams (aka the rich ones now) get more revenues from stock sales, and the unpopular teams (aka the poor ones now) have the revenue disparity grow even more?
IIRC, the NHL governing documents (i.e., bylaws) do not allow "group" ownership as you propose (ala stock ownership). There won't be any "Green Bay Packers" type team in the NHL.
IIRC, the NHL governing documents (i.e., bylaws) do not allow "group" ownership as you propose (ala stock ownership). There won't be any "Green Bay Packers" type team in the NHL.
NHL Bylaw 34 puts restrictions on the sale of shares to the public:
- the total public shares are limited to a 49% non controlling stake.
- the NHL has to approve any owner with a 5% stake (and again at 10%, 15%, etc).
- purchase of shares in any team are limited to the public of the country where the team is located.
- ownership of shares by players or employees of other teams are prohibited.
- the NHL constitution would prohibit a Controlling owner in one team from owning any stake in another. A Non-Controlling owner is permitted to own up to a 30% stake in one club and up to 10% in two others.
No, it's called Match Fixing in this case. Collusion is when the parties cooperate illegally. In this case the player with financial interests with the other team will sink the one he plays for.
Why would anyone invest in a hockey team so they could pay a margin call every year? Investing in the Rangers, Leafs, Canadiens, and maybe the Canucks would be good investments the rest of the league not so much.
The Economist ran an article recently on this very subject. NA teams (NFL especially) have shown considerable appreciation of late, so they inherently look like great candidates for IPOs. My issue would be a mix of things, but mostly in how the team is run. Your management model would have to be modified to not only icing a good team, but also answering to finicky shareholders when you're struggling.
I prefer my professional sports teams to focus on their sport, not juggling commitments.
EDIT: The article made no mention to lockouts - I don't see how this would help either.
Last edited by NYRSinceBirth: 09-20-2012 at 10:28 PM.
Interesting idea, OP. It sounds great but could it really work?
Collusion?
It's simple - limit it. If Sidney Crosby wants to buy up MTL shares, make him get approval, provide him a narrow window for the purchase and force a required hold time.
Most of the clients at my job are financial behemoths. I can only freely trade in broad index funds (and ETFs) or I'm required to get clearance for a single company - clients are strictly off limits (Unless I give my money to a money manager to works independently and uninfluenced by my direction) .
I hate how we spend so much time on here thinking of ways to generate more $ and make them more profitable. Fact is that this league brought in $3.3 B last year. That is more than enough to run and sustain a professional sports league. If you're having problems with that then either you need to cut down on costs or fix the problem (aka the ones not bringing in much revenue and losing $).
The $ could have been $4 B which is certainly profitable and we'd still have these CBA arguments. Other problem is that owners now want "profit certainty" for 30 teams! What kind of a business model is this....how are you going to guarantee 30 teams be profitable? It'd be like 30 companies forming some organization and treating their employees on the premise that all of them MUST be profitable despite half the companies being ****.
I hate how we spend so much time on here thinking of ways to generate more $ and make them more profitable. Fact is that this league brought in $3.3 B last year. That is more than enough to run and sustain a professional sports league. If you're having problems with that then either you need to cut down on costs or fix the problem (aka the ones not bringing in much revenue and losing $).
The $ could have been $4 B which is certainly profitable and we'd still have these CBA arguments. Other problem is that owners now want "profit certainty" for 30 teams! What kind of a business model is this....how are you going to guarantee 30 teams be profitable? It'd be like 30 companies forming some organization and treating their employees on the premise that all of them MUST be profitable despite half the companies being ****.
Well the NHL is pretty close to a $4 Bil industry, its just the smaller subset of that after some costs are deducted that is called HRR that is only $3.3.
Besides Bettmans lockouts, what has been driving up franchise values? How many more of those will fans stomach? 3 or 4? That might just be enough to get that 17% return for investors.
This would be a way for the owners to raise a lot of money? Why should they bother, there is apparently a much easier way at the moment to do that.
$10 billion Private Equity Buyout of entire league.
All teams run as corporate locations.
Immediate corporate expansion into Quebec, and Hamilton. Markham held back until arena is built to use as leverage against cities that don't want to play ball with favourable arena deals.
Salary cap = 50% of HRR generated by each team, individually.
