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The Business of Hockey Discuss the financial and business aspects of the NHL. Topics may include the CBA, work stoppages, broadcast contracts, franchise sales, and NHL revenues.

How to make the NHL profitable again and prevent future lockouts: IPOs

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Old
09-22-2012, 04:09 PM
  #26
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It only works if you combine the entire NHL into a single financial entitiy. Sell all of the teams to a single interest or have the NHL form a corporation and absorb all of the teams with appropriate ownership percentages. It could be done, but doing it as 30 separate corporations is just as short sighted as the situation is right now and will not really solve anything and possibly create new problems.

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09-22-2012, 04:23 PM
  #27
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Yeah, the ownership structure has little to do with how profitable the business is. And IPOs are one-time payoffs. An IPO does nothing to increase or decrease profitability.

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09-22-2012, 06:11 PM
  #28
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that could work

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09-22-2012, 06:13 PM
  #29
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Make a private unprofitable company a public company makes it a public unprofitable company.

It doesn't solve anything.

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09-22-2012, 07:24 PM
  #30
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Originally Posted by DL44 View Post
Very original idea... Everyone wins except the original owners who ivested the massive $$$,

what happens when a player buys stocks into another club?
The other club profits, especially if the club is a franchise that is losing money. The league should actually reward players who invest money in teams that are in the salary cap basement. The additional revenue can be used to get them closer to the cap.

In addendum, the league could give players a higher revenue share as stock options instead of a straight $$$ cut. Thus, instead of haggling over current revenues, down the line you would strengthen the league by having players emerge as majority owners rather than random billionaires.

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09-22-2012, 07:28 PM
  #31
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Originally Posted by icerocket View Post
Oh I don't know...

Start by moving the worthless Phoenix Coyotes to a good market.
Despite all of the negative talk and the idea that Phoenix isn't a 'good market', their team actually made money last season.

The Islanders, however, lost money. Would you move the New York Islanders?

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09-22-2012, 07:29 PM
  #32
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Originally Posted by NYRSinceBirth View Post
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) .
This is a spectacular idea. Thank you for weighing in

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09-22-2012, 07:40 PM
  #33
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Originally Posted by kdb209 View Post
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.
All the more reason that this needs to be changed. We should eliminate Bylaw 34.


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Originally Posted by kdb209 View Post
I'm really interested in how this is supposedly going to generate "a standard rate of 17-22% per season".

Do tell, do tell.

Player and Fan ownership leads to deflation. The league gains value because it is now a fixed commodity. Start the shares at a very high price. Demand for them will only increase. There are people who have been waiting decades for the chance to own part or all of an NHL team.

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Originally Posted by cheswick View Post
I'm confused as to why this would prevent lockouts or strikes? Publicly traded companies lockout their employees all the time.
Players wouldn't lockout teams they own stock in.


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Originally Posted by Weber48 View Post
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.
Players who did that would sink their stock in their own teams and thus would not gain anything. If the price of one team's stock goes up +$2, but the other team's stock drops $2... you didn't gain anything and thus match fixing would be a non-issue. And players will always have more shares in the team that they play for... otherwise the owners would trade them away or bench them.

The reality is that it would actually make the competition tougher because those teams would now have a full salary cap to spend on players and prospects. Every team would be at or near the cap.

Why this prevents lockouts: Again, players would be given, as stock options, a percentage of funds equal to the additional percentage of revenue, while owners would keep the actual gross funding in order to pay their debts to the cities and states/territories in which their teams operate. Thus, it's a win-win scenario, everybody gets paid.

Basically, the idea of a 50-50 split is a misconception to begin with. There are other solutions that are less cut-and-dry and more amicable rather than forcing a 50-50 or no deal... Give the Owners 57%, but give the Players 7-14% ownership of the NHL and the teams to compensate them in addition to their 43% of revenue. Rather than seeing it as the Players vs. the Owners/League, why not make it so the Players ARE the Owners/League? That's my point in proposing this as a win-win solution.


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09-22-2012, 08:41 PM
  #34
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Originally Posted by AHockeyGameBrokeOut View Post
All the more reason that this needs to be changed. We should eliminate Bylaw 34.





Player and Fan ownership leads to deflation. The league gains value because it is now a fixed commodity. Start the shares at a very high price. Demand for them will only increase. There are people who have been waiting decades for the chance to own part or all of an NHL team.



Players wouldn't lockout teams they own stock in.




Players who did that would sink their stock in their own teams and thus would not gain anything. If the price of one team's stock goes up +$2, but the other team's stock drops $2... you didn't gain anything and thus match fixing would be a non-issue. And players will always have more shares in the team that they play for... otherwise the owners would trade them away or bench them.

The reality is that it would actually make the competition tougher because those teams would now have a full salary cap to spend on players and prospects. Every team would be at or near the cap.

Why this prevents lockouts: Again, players would be given, as stock options, a percentage of funds equal to the additional percentage of revenue, while owners would keep the actual gross funding in order to pay their debts to the cities and states/territories in which their teams operate. Thus, it's a win-win scenario, everybody gets paid.

Basically, the idea of a 50-50 split is a misconception to begin with. There are other solutions that are less cut-and-dry and more amicable rather than forcing a 50-50 or no deal... Give the Owners 57%, but give the Players 7-14% ownership of the NHL and the teams to compensate them in addition to their 43% of revenue. Rather than seeing it as the Players vs. the Owners/League, why not make it so the Players ARE the Owners/League? That's my point in proposing this as a win-win solution.
Bylaw 34 - This is to PROTECT the league, could you imagine the conflicts of interest if there's someone who owns significant shares of multiple teams?

Player and fan ownership doesn't magically make unprofitable teams profitable, and the idea of every shareholder in a public company demanding more money then they paid for their shares is ridiculous, that's NOT how the stock market works.

You mean players wouldn't strike against teams they own stock in.. sure, but the teams could still lock them out unless the players own a controlling stake.

And for the last point.. that's assuming players owned the same amount of stock in the teams, or owned more of the stock of the team they currently play for then other teams.. and how exactly is this going to be enforced? A guy who played for a team for 10 years and accumulated a ton of shares then gets traded can't be forced to sell all those shares and swap them for shares in his new team.. Huge conflict of interest for players to be owning stock in a team(s), especially ones they don't play for.

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09-27-2012, 10:15 PM
  #35
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Originally Posted by Hockey Team View Post
Bylaw 34 - This is to PROTECT the league, could you imagine the conflicts of interest if there's someone who owns significant shares of multiple teams?

Player and fan ownership doesn't magically make unprofitable teams profitable, and the idea of every shareholder in a public company demanding more money then they paid for their shares is ridiculous, that's NOT how the stock market works.

You mean players wouldn't strike against teams they own stock in.. sure, but the teams could still lock them out unless the players own a controlling stake.

And for the last point.. that's assuming players owned the same amount of stock in the teams, or owned more of the stock of the team they currently play for then other teams.. and how exactly is this going to be enforced? A guy who played for a team for 10 years and accumulated a ton of shares then gets traded can't be forced to sell all those shares and swap them for shares in his new team.. Huge conflict of interest for players to be owning stock in a team(s), especially ones they don't play for.
You're right, it's not magic. However, the odds are better than those of the system in place now, there's a track record. Publicly owned and diversified corporations are amongst the most successful businesses in the world.

Stocks that are worth more a year later than the price they were bought at... stock options are just that. So is any stock worth buying. If you think the NHL is a bust, you're right, there's no purpose in it. However, seeing that the league is already making money, this would spread out some of the NHL's earnings to players and owners (which is the whole point).

The NHL doesn't need 'more money', per se, it needs to allocate its assets and an IPO would give players more control over those assets without putting owners and the league in a situation of excessive financial risk.

The players SHOULD own a controlling stake and that's one of the reasons to get rid of Bylaw 34.

You are wrong about the 'conflict of interest'. That's simple tinfoil paranoia, the belief that players would start engaging in match fixing or anything of the sort for a few extra dollars. Absolute nonsense and I won't hear a word of it.

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09-27-2012, 10:56 PM
  #36
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Originally Posted by AHockeyGameBrokeOut View Post
Player and Fan ownership leads to deflation. The league gains value because it is now a fixed commodity. Start the shares at a very high price. Demand for them will only increase. There are people who have been waiting decades for the chance to own part or all of an NHL team.
Employing the Facebook IPO model, makes sense.

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Old
09-27-2012, 10:59 PM
  #37
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Originally Posted by AHockeyGameBrokeOut View Post
You're right, it's not magic. However, the odds are better than those of the system in place now, there's a track record. Publicly owned and diversified corporations are amongst the most successful businesses in the world.

Stocks that are worth more a year later than the price they were bought at... stock options are just that. So is any stock worth buying. If you think the NHL is a bust, you're right, there's no purpose in it. However, seeing that the league is already making money, this would spread out some of the NHL's earnings to players and owners (which is the whole point).

The NHL doesn't need 'more money', per se, it needs to allocate its assets and an IPO would give players more control over those assets without putting owners and the league in a situation of excessive financial risk.

The players SHOULD own a controlling stake and that's one of the reasons to get rid of Bylaw 34.

You are wrong about the 'conflict of interest'. That's simple tinfoil paranoia, the belief that players would start engaging in match fixing or anything of the sort for a few extra dollars. Absolute nonsense and I won't hear a word of it.
Totally wrong on all accounts again.

Publicly owned and DIVERSIFIED. Yes, you're right. Companies like Apple make a large variety of products. Exxon not only drills the oil, but also refines it and has retail gas stations. What about the NHL is diversified? It's a very VERY niche and specialized industry.

There's plenty of stocks worth owning that have significant fluctuations in price. Not to mention that the market as a whole can go down in a year.

You're also asking owners to basically sell their business, and many owners don't want to do that. Not to mention how the hell do you give the players stock options in a way that results in compensation that'll remotely be equal between the teams? Players would rather play for the leafs or the rangers for $1 million then Phoenix for $8 million because the stock options would be worth so much more.

As for the conflict of interest part, yeah, you're probably right that it won't actually happen. But the appearance that it's happening is bad enough. A goalie lets in 5 goals and gets pulled.. just a routine bad game that happens all the time, the opposing team just happens to be a team that the goalie owns a large stake in. The media would start jumping all over that.

Please, get a grasp on how businesses work before making random suggestions that make no sense.

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09-27-2012, 11:55 PM
  #38
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One rather significant problem. Could you imagine if large corporations took advantage of stock availability? Bell would practically dominate Canadian hockey. Considering their near monopolizing of media coverage as it is. That is not a good thing.

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09-28-2012, 02:25 AM
  #39
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Originally Posted by Hockey Team View Post
Publicly owned and DIVERSIFIED. Yes, you're right. Companies like Apple make a large variety of products. Exxon not only drills the oil, but also refines it and has retail gas stations. What about the NHL is diversified? It's a very VERY niche and specialized industry.
OT, but that's a bit of a mismatch. Like talking about Apples vs Foie Gras or caviar.

Apple makes technology products. And many different categories, from computers, to cell phones to music players. (They used to make printers and monitors too.) Products are used by individual consumers, businesses, governments. Diversity based on the visionary/entrepreneur Steve Jobs.

Exxon relies on a single product: petroleum. They have **vertically** integrated from exploration and production, through transportation, refinery. (AIUI, their "retail" branded outlets are not subsidiaries, but franchises, due to anti-trust/monopoly concerns.) (Shell seems to be the one company I recall in advertisements touting a variety of energy sources, including natural gas, ethanol, hydro, geothermal, wind, solar.)

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09-28-2012, 02:52 PM
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OT, but that's a bit of a mismatch. Like talking about Apples vs Foie Gras or caviar.

Apple makes technology products. And many different categories, from computers, to cell phones to music players. (They used to make printers and monitors too.) Products are used by individual consumers, businesses, governments. Diversity based on the visionary/entrepreneur Steve Jobs.

Exxon relies on a single product: petroleum. They have **vertically** integrated from exploration and production, through transportation, refinery. (AIUI, their "retail" branded outlets are not subsidiaries, but franchises, due to anti-trust/monopoly concerns.) (Shell seems to be the one company I recall in advertisements touting a variety of energy sources, including natural gas, ethanol, hydro, geothermal, wind, solar.)
I was just saying, the NHL isn't diversified with different products (the apple example) nor is it vertically integrated (the teams don't own things like the local TV stations. Some of them are owned by the same owner, but if the NHL team were to be traded it would not include the TV station).

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09-28-2012, 03:11 PM
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Quote:
Originally Posted by AHockeyGameBrokeOut View Post
Despite all of the negative talk and the idea that Phoenix isn't a 'good market', their team actually made money last season.
I'm gonna need a source on this

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09-28-2012, 03:25 PM
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I'm gonna need a source on this
I'm gonna go out on a limb here and say that said source (at least a reliable one) doesn't exist.

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09-28-2012, 03:31 PM
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Sounds like an idea in the book "Sports Fans of the World Unite", written by a sports economist and anti-trust lawyer. The anti-trust lawyer is a nice guy and will answer emails directly.

http://www.sup.org/book.cgi?id=11178

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09-28-2012, 03:37 PM
  #44
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They'd have to pay people to take shares of the Coyotes...
Well, you'd expect that Glendale would have to make it worthwhile to invest in the team. Also, the overall team valuation would likely be a lot lower. IE, if the team valuation for the IPO was $30m, if the team ever became profitable and stable you could expect a significant return on your initial investment.

This is similar to how the Green Bay Packers are run. And they are one of the best run franchises in professional sports.

Of course, you'd need some limits. For instance, no ownership over 30% by any one group or individual. Obviously no active players can own a stake.

The biggest issue IMO would be the lack of ability to absorb losses. You can't do a capital call. I guess you could issue more stock. But bankruptcies would become more frequent. On the other hand, you'd likely see a lot more revenue sharing.

However, under this scenario, I could also see the top 10 teams breaking off to form a "Premier League", leaving the majority of the teams to play in a tier two league. Especially with the opportunity for relegation / promotion.

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09-28-2012, 03:49 PM
  #45
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Totally wrong on all accounts again.

Publicly owned and DIVERSIFIED. Yes, you're right. Companies like Apple make a large variety of products. Exxon not only drills the oil, but also refines it and has retail gas stations. What about the NHL is diversified? It's a very VERY niche and specialized industry.

There's plenty of stocks worth owning that have significant fluctuations in price. Not to mention that the market as a whole can go down in a year.

You're also asking owners to basically sell their business, and many owners don't want to do that. Not to mention how the hell do you give the players stock options in a way that results in compensation that'll remotely be equal between the teams? Players would rather play for the leafs or the rangers for $1 million then Phoenix for $8 million because the stock options would be worth so much more.

As for the conflict of interest part, yeah, you're probably right that it won't actually happen. But the appearance that it's happening is bad enough. A goalie lets in 5 goals and gets pulled.. just a routine bad game that happens all the time, the opposing team just happens to be a team that the goalie owns a large stake in. The media would start jumping all over that.

Please, get a grasp on how businesses work before making random suggestions that make no sense.
I'm a small business owner and I have a degree in Business... I'm fairly sure I know what I'm talking about, thank you.

"Very niche and specialized industry"

- Food
- Clothing
- Advertising
- Television
- Special events
- Distribution
- Cleaning/waste management
- Security
- Entertainment
- etc., etc.

NHL has as many divisions as the average multinational corporation, maybe more.

Yes, I know that they don't want to do it. However, if the option for compromise is giving up shares of the company versus giving up the money necessary to operate the company... that's Business 101. It is better to have someone else become a part owner than to sink deeper into the red ink.

"Players would rather play for the Rangers or Leafs" - There's 23 slots and $70 million on the salary cap. I've made this point already - teams like Phoenix have less available funds - this change would push both teams to the cap ceiling and you would see the most competitive product out of any professional sport. Furthermore, your argument is circumstantial. My argument is concrete. The change I'm asking for would act as a buffer - the existing salary cap and roster cap does the rest. All of the teams hit the current cap ceiling - this gives them room to hire plenty of talent - and yes, some teams will just be better than others, but the extra money makes sure that teams don't drop into the red ink.

Again, not going into the tinfoil hat stuff. A goalie letting in 5 goals in 3 minutes? That's not match fixing... that's called Bryzgalov. If a terrible performance shows up as a conspiracy hoax on a some website like the #1 hockey tabloid (Bleacher Report) or they put Don Cherry on it, nothing of value will be lost, not even for a second.

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Originally Posted by Bourne Endeavor View Post
One rather significant problem. Could you imagine if large corporations took advantage of stock availability? Bell would practically dominate Canadian hockey. Considering their near monopolizing of media coverage as it is. That is not a good thing.
I think that's preferable to not having a season, myself.

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Originally Posted by Ernie View Post
Well, you'd expect that Glendale would have to make it worthwhile to invest in the team. Also, the overall team valuation would likely be a lot lower. IE, if the team valuation for the IPO was $30m, if the team ever became profitable and stable you could expect a significant return on your initial investment.

This is similar to how the Green Bay Packers are run. And they are one of the best run franchises in professional sports.

Of course, you'd need some limits. For instance, no ownership over 30% by any one group or individual. Obviously no active players can own a stake.

The biggest issue IMO would be the lack of ability to absorb losses. You can't do a capital call. I guess you could issue more stock. But bankruptcies would become more frequent. On the other hand, you'd likely see a lot more revenue sharing.

However, under this scenario, I could also see the top 10 teams breaking off to form a "Premier League", leaving the majority of the teams to play in a tier two league. Especially with the opportunity for relegation / promotion.
Losses would be absorbed by buyouts, in the same way that they're resolved now. If the business is going under, someone with more money can buy the business. That's how it works.

If the teams broke off, you would just see more new franchises added to the old league and you'd be able to watch even more hockey. If what you're suggesting did happen - it would be a good thing for fans. Eventually you'd have two leagues with 24+ hockey teams. That means twice as many hockey games to watch.

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Employing the Facebook IPO model, makes sense.
It worked when Google did it. Maybe the problem isn't the strategy, but the people behind it?

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09-28-2012, 04:22 PM
  #46
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Food - Often outsourced to a 3rd party company to run concessions
Clothing - Yes, some teams do generate good revenue from the sale of jerseys
Advertising/TV - Teams don't own the TV stations. The owners might, but again, if the TEAM is made public that's not part of the deal
Special Events - Charity events and a lot of the other publicity events do not generate revenue
Distribution - of what?
Cleaning / security - Again, these do not generate revenue.

What generates 99% of the revenue for a hockey team?
- Ticket sales
- Jersey sales and the like
- Some advertising, if it's not taken by a 3rd party company (even if the team owner owns that 3rd party company, it's still not PART OF THE TEAM)
- Some concession revenue, if it's not outsourced

Next point.. yeah, it makes sense to sell shares to raise capital if you need money. If that capital is used to pay off debt, then yes it can push a team into the green. If that capital goes into the owners' pockets (and if the owner is selling HIS shares, then that's where it's going. In order for the team to raise money they'd have to issue NEW shares while diluting existing owners), then the money losing team is still losing money. And in this case, only the losing teams would sell shares. Teams like the leafs and rangers would not.

And another point on money losing teams.. a lot of times owners have money, they have plenty of money, but it makes business sense to go bankrupt instead.

So, you want to issue stock options to players. Care to elaborate on how this would be done? How would the stock options count against the salary cap? And what would a SPC look like?


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10-01-2012, 08:45 AM
  #47
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Originally Posted by Hockey Team View Post
Food - Often outsourced to a 3rd party company to run concessions
Clothing - Yes, some teams do generate good revenue from the sale of jerseys
Advertising/TV - Teams don't own the TV stations. The owners might, but again, if the TEAM is made public that's not part of the deal
Special Events - Charity events and a lot of the other publicity events do not generate revenue
Distribution - of what?
Cleaning / security - Again, these do not generate revenue.

What generates 99% of the revenue for a hockey team?
- Ticket sales
- Jersey sales and the like
- Some advertising, if it's not taken by a 3rd party company (even if the team owner owns that 3rd party company, it's still not PART OF THE TEAM)
- Some concession revenue, if it's not outsourced

Next point.. yeah, it makes sense to sell shares to raise capital if you need money. If that capital is used to pay off debt, then yes it can push a team into the green. If that capital goes into the owners' pockets (and if the owner is selling HIS shares, then that's where it's going. In order for the team to raise money they'd have to issue NEW shares while diluting existing owners), then the money losing team is still losing money. And in this case, only the losing teams would sell shares. Teams like the leafs and rangers would not.

And another point on money losing teams.. a lot of times owners have money, they have plenty of money, but it makes business sense to go bankrupt instead.

So, you want to issue stock options to players. Care to elaborate on how this would be done? How would the stock options count against the salary cap? And what would a SPC look like?
In a business, your expenditures are more important than your revenues. 9 out of 10 failing businesses are making plenty of revenue - but are overburdened by unnecessary expenditures.

The amount of revenue is essentially fixed in the NHL. The supply and demand curve doesn't deviate much, there's a fixed amount of seats and raising the price of tickets will simply result in lower attendance, with the actual take being the same, give or take less than 1% per game.

In order to make it fair, I'd force all 30 teams to open up shares of stock in their teams, whether they have money or not. It's a win-win situation - so the owners shouldn't really get any chances to opt out of it. If you want to have an NHL franchise, a rule would be set in place that your franchise would be public (otherwise, your franchise would be ineligible for the NHL).

Yes, there are times that it makes sense to declare bankruptcy. However, now is not one of them, for any team in the NHL. The cities have forked over their bottom dollar. The teams are on the hook. Declaring bankruptcy to end up in the exact same situation next year makes no sense. Teams which are losing money need to have controlling shares sold to players and the general public at large - the only other option is to move them to other cities, and that nullifies any gains by disenfranchising the fans who live in those regions. Moving a team to a different city is generally a bad idea (moving a team back to its original city is okay, Winnipeg).

Player stock options: Contracts would now carry stock options as part of the initial signing bonus with the ability to purchase additional stocks at a vastly reduced rate for the duration of the player's contract. There would also be the option to give players a fixed number of shares over the course of several years to match existing multi-year contracts. The primary benefit of this can be seen in two types of players:

1. A superstar player who is in a slump, like Ovechkin. You could reduce his standard salary to match the fact that his performance doesn't match his contract - and replace that salary with stock options as incentive.

2. A rookie player on an entry-level or early-career deal. These players don't warrant huge contracts yet - giving them a bunch of shares wouldn't hurt anything though.

This and the exchange between teams provides the ability to have flexibility in the salary cap - so that all teams can get to the salary cap ceiling.

If this was implemented properly, not only would it be a rule that all 30 teams would have to publicly sell shares - any team who didn't do it would be at a disadvantage in comparison to teams who did do it, because the stock options would not count towards the salary cap.


Last edited by Hank Chinaski: 10-01-2012 at 09:40 AM. Reason: qep
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10-01-2012, 10:43 AM
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If revenue in the NHL is essentially fixed, why did they grow from $2.1 billion to $3.4 billion (HRR) in seven years?

What is fixed is the number of seats. If demand is very high, the price for those seats goes up. If there is little demand, teams will have trouble selling all tickets, especially at given price points.

Broadcast revenue is very high for some teams, like Toronto and Detroit, for example. Since Jacobs of Boston has a share in the network that broadcasts the Bruins and thus can 'lowball' the team, there's a prescribed method to consider the appropriate valuation of a broadcast contract (as an aside).

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10-01-2012, 04:38 PM
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Originally Posted by AHockeyGameBrokeOut View Post
In a business, your expenditures are more important than your revenues. 9 out of 10 failing businesses are making plenty of revenue - but are overburdened by unnecessary expenditures.

The amount of revenue is essentially fixed in the NHL. The supply and demand curve doesn't deviate much, there's a fixed amount of seats and raising the price of tickets will simply result in lower attendance, with the actual take being the same, give or take less than 1% per game.

In order to make it fair, I'd force all 30 teams to open up shares of stock in their teams, whether they have money or not. It's a win-win situation - so the owners shouldn't really get any chances to opt out of it. If you want to have an NHL franchise, a rule would be set in place that your franchise would be public (otherwise, your franchise would be ineligible for the NHL).

Yes, there are times that it makes sense to declare bankruptcy. However, now is not one of them, for any team in the NHL. The cities have forked over their bottom dollar. The teams are on the hook. Declaring bankruptcy to end up in the exact same situation next year makes no sense. Teams which are losing money need to have controlling shares sold to players and the general public at large - the only other option is to move them to other cities, and that nullifies any gains by disenfranchising the fans who live in those regions. Moving a team to a different city is generally a bad idea (moving a team back to its original city is okay, Winnipeg).

Player stock options: Contracts would now carry stock options as part of the initial signing bonus with the ability to purchase additional stocks at a vastly reduced rate for the duration of the player's contract. There would also be the option to give players a fixed number of shares over the course of several years to match existing multi-year contracts. The primary benefit of this can be seen in two types of players:

1. A superstar player who is in a slump, like Ovechkin. You could reduce his standard salary to match the fact that his performance doesn't match his contract - and replace that salary with stock options as incentive.

2. A rookie player on an entry-level or early-career deal. These players don't warrant huge contracts yet - giving them a bunch of shares wouldn't hurt anything though.

This and the exchange between teams provides the ability to have flexibility in the salary cap - so that all teams can get to the salary cap ceiling.

If this was implemented properly, not only would it be a rule that all 30 teams would have to publicly sell shares - any team who didn't do it would be at a disadvantage in comparison to teams who did do it, because the stock options would not count towards the salary cap.
Yep, forcing owners to sell their businesses is TOTALLY legal. Where'd you come up with that one? Also, I guarantee you the owners wouldn't agree to that as a whole. Even owners who are willing to sell shares of their team wouldn't vote to force others to do the same.

Declaring bankruptcy sure as hell makes sense. Chapter 11 bankruptcy allows a company to restructure, which essentially, in a lot of cases, means it gets to renegotiate it's debt to more favorable terms. If anything, you declare bankruptcy, restructure the debt, THEN make the IPO so the IPO is worth more. IPOs are generally for a few purposes. It's either to raise money for a newish company that wants to expand, or in the high profile cases, it's a way for existing owners of a successful company to cash out. It's NOT for a company facing bankruptcy to raise capital. Nobody would go near that turd of an IPO.

The player stock options proposal you made makes no sense at all either. Replacing salary with stock options? So essentially replacing cash with something that has cash value is supposed to be different somehow? And having stock options not count against the cap? So basically there's no cap anymore? And giving "new players a bunch of shares wouldn't hurt anything" is laughable. A bunch of shares IS CASH. Since when are stock and stock options not worth cash? So a guy like weber could be signed to a 1 million cap hit contract, and he gets 200 million worth of stock and stock options in his contract instead. Because that 100% makes sense.

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10-01-2012, 07:07 PM
  #50
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Quote:
Originally Posted by Fugu View Post
If revenue in the NHL is essentially fixed, why did they grow from $2.1 billion to $3.4 billion (HRR) in seven years?

What is fixed is the number of seats. If demand is very high, the price for those seats goes up. If there is little demand, teams will have trouble selling all tickets, especially at given price points.

Broadcast revenue is very high for some teams, like Toronto and Detroit, for example. Since Jacobs of Boston has a share in the network that broadcasts the Bruins and thus can 'lowball' the team, there's a prescribed method to consider the appropriate valuation of a broadcast contract (as an aside).
The revenue growth wasn't from ticket sales or any attempt to modify the supply and demand curve. That was my definition of 'fixed'. The growth also happens on a fixed level, it's a fixed gain, and it doesn't deviate from the line. The growth from 2.1 to 3.4 was all according to the curve and did not deviate from it for even a single second.

Quote:
Originally Posted by Hockey Team View Post
Yep, forcing owners to sell their businesses is TOTALLY legal. Where'd you come up with that one? Also, I guarantee you the owners wouldn't agree to that as a whole. Even owners who are willing to sell shares of their team wouldn't vote to force others to do the same.

Declaring bankruptcy sure as hell makes sense. Chapter 11 bankruptcy allows a company to restructure, which essentially, in a lot of cases, means it gets to renegotiate it's debt to more favorable terms. If anything, you declare bankruptcy, restructure the debt, THEN make the IPO so the IPO is worth more. IPOs are generally for a few purposes. It's either to raise money for a newish company that wants to expand, or in the high profile cases, it's a way for existing owners of a successful company to cash out. It's NOT for a company facing bankruptcy to raise capital. Nobody would go near that turd of an IPO.

The player stock options proposal you made makes no sense at all either. Replacing salary with stock options? So essentially replacing cash with something that has cash value is supposed to be different somehow? And having stock options not count against the cap? So basically there's no cap anymore? And giving "new players a bunch of shares wouldn't hurt anything" is laughable. A bunch of shares IS CASH. Since when are stock and stock options not worth cash? So a guy like weber could be signed to a 1 million cap hit contract, and he gets 200 million worth of stock and stock options in his contract instead. Because that 100% makes sense.
If they don't agree to it, you throw them out of the NHL. I already said that. Anyone who owns stock knows that stock shares are NOT cash. Go to your local department store and try to buy something and tell them you have shares and they'll laugh at your ridiculous idea, as they should. Cash is cash and options are options.

When a CEO is signed to a company in the US, it's normal for his salary to be fixed at $20-30 million, but he/she will get hundreds of millions in stock options.

It makes plenty of sense to those of us with degrees. If you don't understand, please have a friend (with a degree) help you out. Or consider attending a business school.

The entire point is that a team like Columbus, who doesn't have the cash to sign superstar players, could potentially sign a ton of them using stock options. If teams like you mentioned (Rangers) chose not to sell shares in their team - Columbus could send front-loaded stock option offer sheets to all of their players - and essentially leverage out half their guys.

Who wouldn't want to see an underdog team walk away with some/most/all the superstars of a bigger team? The market would be opened. You can only offer players so much money - stake in a team is a separate deal.

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