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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.

If Revenue Sharing had been 100% Last Year...

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Old
11-19-2012, 07:41 PM
  #51
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Originally Posted by Cheesesteak Invictus View Post
So...exactly why would the big market teams lower their ticket prices? That would hurt them. Less money would be put in the pot, meaning they get less money than they would if they kept their prices up. I don't see why they'd suddenly drop their prices, at the end of the day it benefits them to keep them up regardless of the sharing situation.
ding ding ding. Give this man a prize! There would be some downward pressure, but not nearly as much as most have claimed. Hard to argue with the success of the NFL, but it also has its downsides like non-competitive teams.

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11-19-2012, 09:01 PM
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I understand your argument but it's not rooted in economic theory. The differences in ticket prices would be smaller if there was 100% RS but they would NOT be the same everywhere, just like a Big Mac doesn't cost the same thing everywhere, and just like in general everything costs a bit more here in Canada than in the US. Entertainment pricing is market-specific.

Put differently, the fact that your theory did not happen since the cap was implemented does NOT mean you should be amazed. It simply means it's wrong.
It's not that it would make everything the same price. It is that the incentive for taking risks, making investments, and generally improving or maintaining the product is not there. You place the burden of 100% of the cost of any action on the individual, but they only receive 1/30th of the profit.

Let's say you have a player come to you, and says you can sign me for the next 15 years for 100 million. Now let's say you know this player is going to make you 200 million. In a normal case, you would sign him.

Under a system where all profits are shared among 30 teams, the owner is paying out 100 million, but only getting 6.6 million back. So you don't do it.

This mentality applies for a range of situations in hockey.

There is also the "well, I'm getting the same profit as everybody else anyway, so I don't have to make the playoffs or try to be good or sign good management or coaches or trainers, etc." mentality, which is a big problem.

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11-19-2012, 09:55 PM
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Originally Posted by XX View Post
ding ding ding. Give this man a prize! There would be some downward pressure, but not nearly as much as most have claimed. Hard to argue with the success of the NFL, but it also has its downsides like non-competitive teams.
the downside of non competitive teams is poor management and not the ability to draft, attract or sign top end talent.

Coaching in the NFL is key. Drafting in the NFL is key.

The thought that competitive men will be less competitive because they all make a profit is in my mind a defeatist attitude and I doubt teams would be less inclined to generate revenue.

In fact, the more they make the better and the NFL bears that out every year.

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11-19-2012, 11:02 PM
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The thought that competitive men will be less competitive because they all make a profit is in my mind a defeatist attitude and I doubt teams would be less inclined to generate revenue.
The automatic money that comes with being in the NFL has created a few teams that could care less about the product. That's just a byproduct of the system, and one that is unavoidable. I do think it's easier to maintain parity in the NHL, even moreso when small market teams have more money to compete. That's also one of the main reasons why this will never happen. You'd have a hard time convincing the big market teams/spenders to give even more player poaching power to the small market teams.

A league that shared all revenues would have healthier teams and values would go up across the board, as location would play less of a factor. I'm not sure how current revenues split, but sharing all gate revenue while letting clubs keep merchandise/tv/misc revenue might be more palatable.

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11-19-2012, 11:25 PM
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Originally Posted by pld459666 View Post
the NFL splits all TV revenue evenly amongst it's teams.

They also split all gate receipts 60/40 for the home team.

They also split all Merch. Sales 100% evenly as well.

The NFL Revenue sharing model is awesome.
Yes but the way the NFL keeps it valuable for the ultra-high priced franchises (I'm looking at you Jerry Jones/Dallas Cowboys) is that it excludes luxury seat revenue and personal seat licenses from revenue sharing so the most valuable tickets don't have to be split.

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11-20-2012, 05:20 AM
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Originally Posted by XX View Post
The automatic money that comes with being in the NFL has created a few teams that could care less about the product. That's just a byproduct of the system, and one that is unavoidable. I do think it's easier to maintain parity in the NHL, even moreso when small market teams have more money to compete. That's also one of the main reasons why this will never happen. You'd have a hard time convincing the big market teams/spenders to give even more player poaching power to the small market teams.

A league that shared all revenues would have healthier teams and values would go up across the board, as location would play less of a factor. I'm not sure how current revenues split, but sharing all gate revenue while letting clubs keep merchandise/tv/misc revenue might be more palatable.
name those teams. I don't know of any team in the NFL that doesn't care about winning or care about the product.

Poor management decisions may give you that impression, but that's all that is, is poor management decisions.

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11-20-2012, 05:43 AM
  #57
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"Financial terms have not been released, but the three networks are expected to pay roughly $3 billion a year on average annually compared to the current $1.93 billion they collectively pay. ESPN re-upped its deal with the NFL earlier this year at an annual rate of $1.9 billion. Factor in other media deals with the NFL Network, DirectTV ($1 billion annually), Westwood One radio and others, and NFL teams will divvy up nearly $7 billion in media money starting in 2014. That is more than $200 million per team every year before one ticket, beer or jersey is sold."
http://www.forbes.com/sites/kurtbade...th-26-billion/

Why is the NFL and NHL business model being compared exactly? One league makes 3.3bil total HRR, while the other will be making 7bil from TV contracts alone.

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11-20-2012, 06:24 AM
  #58
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What's sad is that even if you did 100% of revenue sharing.


Each owner, who puts up millions in the investment and risk, would make less than Ryan Malone every year. Personally the owners should make more than sidney crosby. The players have no financial risk.

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11-20-2012, 06:35 AM
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Originally Posted by Whydidijoin View Post
It's not that it would make everything the same price. It is that the incentive for taking risks, making investments, and generally improving or maintaining the product is not there. You place the burden of 100% of the cost of any action on the individual, but they only receive 1/30th of the profit.

Let's say you have a player come to you, and says you can sign me for the next 15 years for 100 million. Now let's say you know this player is going to make you 200 million. In a normal case, you would sign him.

Under a system where all profits are shared among 30 teams, the owner is paying out 100 million, but only getting 6.6 million back. So you don't do it.

This mentality applies for a range of situations in hockey.

There is also the "well, I'm getting the same profit as everybody else anyway, so I don't have to make the playoffs or try to be good or sign good management or coaches or trainers, etc." mentality, which is a big problem.
Which is exactly what I had written in my previous post. Thank you.

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11-20-2012, 07:23 AM
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Originally Posted by pld459666 View Post
name those teams. I don't know of any team in the NFL that doesn't care about winning or care about the product.

Poor management decisions may give you that impression, but that's all that is, is poor management decisions.
You could put that same spin on the pirates, Astros, or royals in mlb, that they care its just poor management. But in reality they are just minimizing cost and maximizing profit and revenue sharing.

I think at this point youd have to say Jacksonville and kc are coasting in the NFL. Poor management is one thing, but owners who show no sign of replacing the "poor management" speaks more to simply taking advantage of revenue sharing. At least teams like Oakland try to make changes.

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11-20-2012, 07:44 AM
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Originally Posted by pld459666 View Post
the NFL splits all TV revenue evenly amongst it's teams.

They also split all gate receipts 60/40 for the home team.

They also split all Merch. Sales 100% evenly as well.

The NFL Revenue sharing model is awesome.
Yep. It's not the reason why the NFL kicks the NHL's behind in North American popularity - but it's a superior way of running a league.

Of course, no doubt Dallas Cowboys fans cry just as loud as Maple Leafs fans about having to share all that wealth with the other sad sack teams they have to be in a league with. 'It's SO UN-FFFFAIRRRRR!!!'

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11-20-2012, 07:57 AM
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You could put that same spin on the pirates, Astros, or royals in mlb, that they care its just poor management. But in reality they are just minimizing cost and maximizing profit and revenue sharing.

I think at this point youd have to say Jacksonville and kc are coasting in the NFL. Poor management is one thing, but owners who show no sign of replacing the "poor management" speaks more to simply taking advantage of revenue sharing. At least teams like Oakland try to make changes.
You can say it. In my opinion, you'd be wrong, but you can say it.

The fact is that in THOSE markets, revenue is the driving factor in the product on the field.

Pitt and KC are horrible Baseball markets, Houston is not much better. In fact any sport outside of football in Texas is a tough market. Especially when teams struggle.

Change the way Al Davis used to make changes for the Raiders is not showing signs of trying. That was an old man that could not grasp the concept that the game has passed him by. That was an old man thinking he knew better than everyone else.

And you don't sign a GM to a 4 year deal only to fire him 2 years in because things didn't go your way right away.

The teams that have success in the NFL are the teams that have stability in the front office.

I wouldn't say that teh Jag are coasting. I would say that they are at the low point of their down cycle and that in a year or two, you will see them back towards the top of their division. A quick look at their history shows a clear cycle and while this should be the first year in their up cycle, I am more than willing to give the current GM more time than he has had to get the Jags back into the PO picture. With a young QB, a solid RB the turn around in the NFL from 1-15 to 10-6 is easily done in one year.

But this is Hockey. I don't believe for one second that the Jags are happy to rest on their laurels because they get the same money everyone else gets.

I doubt that there's an owner of a team in any sport that doesn't want to win. Some may want to win more than others (Steinbrenner) but that doesn't mean that they don't care about winning.

Granted, there are exceptions to every rule (Marlins Owner) but I would bet dollars to donuts that 99% of team owners in all of sports want to win and would do what they could to meet that end.

Granted, they want to make money as well, and will choose that over winning, but the catch here is that the more you win, the more money you make. That is why you will always have teams trying to win and not just collect because they can.

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11-20-2012, 08:03 AM
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Quote:
Originally Posted by backs4mvp View Post
http://www.forbes.com/sites/kurtbade...th-26-billion/

Why is the NFL and NHL business model being compared exactly? One league makes 3.3bil total HRR, while the other will be making 7bil from TV contracts alone.
Because the NFL did not get to where they are overnight.

The NFL has had revenue sharing, significant revenue sharing for 50+ years.

The model that they operate under today is a significant reason as to WHY there is such a disparity revenue.

The NFL's model breeds pairity. The NHL's model of revenue sharing doesn't do that. The proposed salary cap WITH the increased Revenue Sharing will still not do that long term.

We are talking about a business model that MLB, NBA and NHL should all strive to achieve.

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11-20-2012, 09:29 AM
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Originally Posted by pld459666 View Post
Because the NFL did not get to where they are overnight.

The NFL has had revenue sharing, significant revenue sharing for 50+ years.

The model that they operate under today is a significant reason as to WHY there is such a disparity revenue.

The NFL's model breeds pairity. The NHL's model of revenue sharing doesn't do that. The proposed salary cap WITH the increased Revenue Sharing will still not do that long term.

We are talking about a business model that MLB, NBA and NHL should all strive to achieve.
And am telling you the NFL model only work and was implemented because they structured that way at a time when nobody made any money off TV. It not sellable in an NHL that actually got some owners already raking in major dough in local TV deals. Same for the MLB who divided online revenues before it became that massive pot of gold that it is recently. Also don't mention how great the NFL model is to any Bills fans who see their owner sell home games to Rogers you might get slug. They know the team is moving the moment the old basterd finally die god bless him.


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11-20-2012, 09:37 AM
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11-20-2012, 09:47 AM
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Originally Posted by sina220 View Post
You could put that same spin on the pirates, Astros, or royals in mlb, that they care its just poor management. But in reality they are just minimizing cost and maximizing profit and revenue sharing.

I think at this point youd have to say Jacksonville and kc are coasting in the NFL. Poor management is one thing, but owners who show no sign of replacing the "poor management" speaks more to simply taking advantage of revenue sharing. At least teams like Oakland try to make changes.
No one coasts in the NFL. The salary floor is set so high that the incentive to cut costs and collect huge revenue sharing-based profits simply does not exist. When the last CBA expired, it was 87.6% of the cap, and starting next year will be 88.8% of the cap.

The floor acts as a disincentive to simply pocket revenue sharing. MLB has a serious issue with non-competitive teams who have no incentive to complete, and that directly ties back to the lack of a floor.

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Pitt and KC are horrible Baseball markets, Houston is not much better. In fact any sport outside of football in Texas is a tough market. Especially when teams struggle.
That is absolutely absurd. The decline of about 10 MLB markets across the board goes back to one of two things:

1) Poor ownership who wants the revenue sharing check, but won't invest it in the team. Everyone in Kansas City and Pittsburgh is very much aware of what's been going on for the last 15+ years, and the way that MLB's broken economic model has created a stratified (and more or less permanent) system of haves and have-nots. Cleveland is a tremendous baseball market, but their attendance has substantially declined because of this as well.

2) Years upon years of #1, creating a generational ripple effect. Someone who grew up in Kansas City and was born after 1985 not only has no concept of the Royals ever being a contender, but also may have been subjected to years upon years of hearing his dad complaining about how MLB has changed, and how there's no point in forming attachments to a team or the players because everything's different. George Brett was drafted, developed, and became a Hall of Famer in Kansas City, damn it, but today he'd be traded as soon as he got good because that's the new natural cycle.

The 10 teams that have been the subject of this for much of the last 20 years have seen a decline in passion because fans aren't stupid. We're not going to sit around and continue to sink money into a team that is essentially in a constant rebuilding state, and is that way because the economics of the game force a constant rebuilding state.

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11-20-2012, 11:48 AM
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And am telling you the NFL model only work and was implemented because they structured that way at a time when nobody made any money off TV. It not sellable in an NHL that actually got some owners already raking in major dough in local TV deals. Same for the MLB who divided online revenues before it became that massive pot of gold that it is recently. Also don't mention how great the NFL model is to any Bills fans who see their owner sell home games to Rogers you might get slug. They know the team is moving the moment the old basterd finally die god bless him.
And I'm telling you that aside from the TV deals they have, they expanded the Revenue Sharing model to include all Merch Sales and further to the gate.

Regardless of WHEN or WHY it was put in to place, the model was expanded to include other aspects of revenue because the owners know that as the pool of revenue gorws, so grows their own profit margins.

Doing what is in the best interest of the whole IS doing whats in the best interest of the individual.

Are there going to be issues in any system? Yes. but the overall health of the league is at an all time high in the NFL.

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11-20-2012, 12:59 PM
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I'm not sure how current revenues split, but sharing all gate revenue while letting clubs keep merchandise/tv/misc revenue might be more palatable.
See I think it would be the other way around, and would be easier to implement. Share all TV revenues 100%. Every local TV deal goes into the pot and is split 30 ways. All merchandising goes into the pot and is split 30 ways. Allow teams to keep their gate. See how that goes... perhaps at some point, start putting a % of the gate into the pot.

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11-20-2012, 02:22 PM
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Like I said a system like that would require strict pricing standard meaning a hot-dog in Glendale would cost the same than a hot-dog in Montreal. Otherwise why the hell would the Habs, Leafs and Rangers fans pay what they pay currently? All the while seeing their team spend exactly the same than the guys who get to watch the games for twenty bucks and a free beer in a three third empty arena! Ultimately fans of the teams who keep the lights on in this league will ran out of patience and just watch on tv and in a gate driven league that the kind of stuff that could topple the whole house of cards.
Why the hell do the Habs, Leafs and Rangers fans pay what they pay currently? All the while seeing their team spend exactly the same than the guys who get to watch the games for twenty bucks and a free beer in a three third empty arena!

Isn't that the situation we have now with the cap? The only difference would be that instead of the owners of those teams making double-digit profits they would be making single-digit profits. It would have zero effect on the fans, or prices.

I'm sure those teams would not be happy giving up those profits, but I doubt very much they would throw in the towel and aim to "just break even". They're still making profits, are they not? Why would they want to give that up??

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11-20-2012, 03:24 PM
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No one coasts in the NFL. The salary floor is set so high that the incentive to cut costs and collect huge revenue sharing-based profits simply does not exist. When the last CBA expired, it was 87.6% of the cap, and starting next year will be 88.8% of the cap.

The floor acts as a disincentive to simply pocket revenue sharing. MLB has a serious issue with non-competitive teams who have no incentive to complete, and that directly ties back to the lack of a floor.



That is absolutely absurd. The decline of about 10 MLB markets across the board goes back to one of two things:

1) Poor ownership who wants the revenue sharing check, but won't invest it in the team. Everyone in Kansas City and Pittsburgh is very much aware of what's been going on for the last 15+ years, and the way that MLB's broken economic model has created a stratified (and more or less permanent) system of haves and have-nots. Cleveland is a tremendous baseball market, but their attendance has substantially declined because of this as well.

2) Years upon years of #1, creating a generational ripple effect. Someone who grew up in Kansas City and was born after 1985 not only has no concept of the Royals ever being a contender, but also may have been subjected to years upon years of hearing his dad complaining about how MLB has changed, and how there's no point in forming attachments to a team or the players because everything's different. George Brett was drafted, developed, and became a Hall of Famer in Kansas City, damn it, but today he'd be traded as soon as he got good because that's the new natural cycle.

The 10 teams that have been the subject of this for much of the last 20 years have seen a decline in passion because fans aren't stupid. We're not going to sit around and continue to sink money into a team that is essentially in a constant rebuilding state, and is that way because the economics of the game force a constant rebuilding state.
This is also the only reason Baseball has labor peace. I wish people would stop praising MLB for it...

The only reason MLB doesn't fight every CBA is exactly what this guy is posting.

If there was a salary floor, say 80 million. MLB owners would be crying foul and trying to take it out on the players.

The Oakland A's have had a payroll over 70 million ONCE in about a DECADE. Despite having a Billionaire owner for the last Eight years.

You can say the same for about 12 more MLB teams, over the last Decade...


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11-20-2012, 04:05 PM
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This is also the only reason Baseball has labor peace. I wish people would stop praising MLB for it...

The only reason MLB doesn't fight every CBA is exactly what this guy is posting.

If there was a salary floor, say 80 million. MLB owners would be crying foul and trying to take it out on the players.

The Oakland A's have had a payroll over 70 million ONCE in about a DECADE. Despite having a Billionaire owner for the last Eight years.

You can say the same for about 12 more MLB teams, over the last Decade...
But... but... but... It's all the NHLs fault... those meanies.

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11-20-2012, 05:01 PM
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What's sad is that even if you did 100% of revenue sharing.


Each owner, who puts up millions in the investment and risk, would make less than Ryan Malone every year. Personally the owners should make more than sidney crosby. The players have no financial risk.
Most understand this, but there are still alot who don't...not to mention that if you want the owners to share everything, then the payroll would have to be shared amongst the team, members would be paid the same...gotta felling the agents wouldn't like that...might be good for the business though?

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11-20-2012, 05:28 PM
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I think the NHL is pretty calculated with it's offer of 50/50 split of HRR and $215m revenue sharing. It's likely enough to give most teams a shot at breaking even.

The average team salary spend would be $55m, non-player costs around $45m gives teams an average of $100m in expenses and potential $10m in profit if revenues are $3.3b. We know the worst revenue generating teams bring in about $70-80m.

With revenue sharing over $200m and rumored 19 teams losing money anywhere from $1-30m, that would almost offset the loses and all but the worst 3-5 teams would be losing money each year.

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11-20-2012, 06:29 PM
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Originally Posted by pld459666 View Post
Because the NFL did not get to where they are overnight.

The NFL has had revenue sharing, significant revenue sharing for 50+ years.

The model that they operate under today is a significant reason as to WHY there is such a disparity revenue.

The NFL's model breeds pairity. The NHL's model of revenue sharing doesn't do that. The proposed salary cap WITH the increased Revenue Sharing will still not do that long term.

We are talking about a business model that MLB, NBA and NHL should all strive to achieve.
The NFL was a 14 team league when that happened, and I very much doubt the difference of franchise value was as large as it is in the NHL. I doubt some teams were making 40+ mil, while others were losing 10+ mil. Just because something worked in the 60's, doesn't mean it can work in this generation.


"Having secured agreement to his revenue-sharing plan, Rozelle quickly followed up by negotiating the NFL's first league-wide TV deal in 1961. The CBS network paid $4.65 million a year for the right to broadcast NFL games through the 1962 and '63 seasons. Under the revenue-sharing plan, that meant that each NFL team would begin the season with $332,000 in the bank. Since $332,000 was more than most teams' payrolls at the time, that meant that all NFL franchises were virtually guaranteed profitability, even before playing a single down or selling a single ticket. It took Pete Rozelle less than one year to prove the worth of his TV-centered economic model to the league's owners."

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Doing what is in the best interest of the whole IS doing whats in the best interest of the individual.
I normally agree with this line of thinking, but in this situation that is just completely wrong. How in the world is it in the best interests of Molson or Rogers/Bell to see their franchise value drop down to 300mil when they just paid .5-1billion for the team? Will those franchise owners get compensated in some way for their loses? Those owners bought those teams because they turn such a massive profit.

If I were in their situation and I lost over 35mil yearly profits so owners who paid 10-20% what I paid for my team could make a profit, I'd be pissed, I'd slash my ticket prices as a big F U. I'm only going to lose an extra 1-1.5mil worth of profits(I've already lose 30+mil, what's an extra 1mil), while the league loses 30-45mil, which is what they made me lose. Vindictive towards the league, sure, but also sympathetic towards the fans.


Last edited by backs4mvp: 11-20-2012 at 06:37 PM.
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11-21-2012, 05:43 AM
  #75
KevFu
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Quote:
Originally Posted by Mayor Bee View Post
That is absolutely absurd. The decline of about 10 MLB markets across the board goes back to one of two things:

1) Poor ownership who wants the revenue sharing check, but won't invest it in the team. Everyone in Kansas City and Pittsburgh is very much aware of what's been going on for the last 15+ years, and the way that MLB's broken economic model has created a stratified (and more or less permanent) system of haves and have-nots. Cleveland is a tremendous baseball market, but their attendance has substantially declined because of this as well.

2) Years upon years of #1, creating a generational ripple effect. Someone who grew up in Kansas City and was born after 1985 not only has no concept of the Royals ever being a contender, but also may have been subjected to years upon years of hearing his dad complaining about how MLB has changed, and how there's no point in forming attachments to a team or the players because everything's different. George Brett was drafted, developed, and became a Hall of Famer in Kansas City, damn it, but today he'd be traded as soon as he got good because that's the new natural cycle.

The 10 teams that have been the subject of this for much of the last 20 years have seen a decline in passion because fans aren't stupid. We're not going to sit around and continue to sink money into a team that is essentially in a constant rebuilding state, and is that way because the economics of the game force a constant rebuilding state.
Pretty well said. It's interesting of note, though, is that the playoff "parity" in MLB is very similar to the PAYROLL "parity" in the league. About the same number of teams have made the World Series in the last 20 years AND have appeared in the top 10 in payrolls. KC, TOR, PIT, BAL all had top five payrolls in the last 22 years.

Also, one of the MASSIVE reasons that some teams have been at the bottom for such a long time is because there was no entry-level maximum contracts, super-agents were turning the draft into an auction. There's dozens of examples of guys rated in the top 10 draft prospects list who fall well below that mark to rich teams because certain agents demand ridiculous money. Stephen Drew was a "Top Five pick." He fell to #15 because of his salary demands.

If you're PIT or KC, you can't afford to give franchise player money to an unproven draft pick. Too many top picks flame out.

And MLB HAS added restrictions on revenue sharing. You have to put that money into Payroll + Draft Signings/Player Development/Scouting.

Quote:
Originally Posted by damacles1156 View Post
The Oakland A's have had a payroll over 70 million ONCE in about a DECADE. Despite having a Billionaire owner for the last Eight years.

You can say the same for about 12 more MLB teams, over the last Decade...
Wait… how come an owner in a bad venue should be writing personal checks to cover a baseball team, but when someone in hockey (Islanders, Dallas) does it, they're "unprofitable" and the team should be relocated?

The A's are no different than the Islanders. The Indians and the Sabres/Predators are pretty similar as well. What's the difference between the Pirates and Blue Jackets? The Tigers had a decade of being total crap from 1995-2004… kind of reminds you a decade of Anaheim Ducks hockey (Or the reverse of the Dallas Stars). How are we sure the Florida Panthers are the next Tigers?

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