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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.

Contraction a necessary evil for survival of NHL says economist

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Old
11-29-2012, 11:56 PM
  #1
Hamilton Tigers
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Contraction a necessary evil for survival of NHL says economist

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economist Todd Jewell sees contraction of the National Hockey League – especially the money pits in the southern United States – as an inevitability.
http://www.theglobeandmail.com/sport...rticle5830873/

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11-30-2012, 12:22 AM
  #2
Elever
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This article is correct but then it makes this point and which basically says that the article is pointless because this will never happen due to the "poorer owners" not randomly deciding to give up their cash cows one day (and maybe they aren't making $ but I don't exactly see the poorer owners trying to get out even if they are losing $ on the NHL side of business. They want those teams).

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Contraction, to the minds of some, would be great, sharpening up the game with better players concentrated on fewer teams. But most people can see that it seems improbable, given that owners and players would both stand against it, the owners because it would cost money, and the players because it would cost jobs.
We all know that there are a few bad markets, if the NHL was serious about being more efficient then it would relocate them, fix their economic model so that more revenue does not equal teams losing more $ due to a screwed-up cap mid-point/floor, and limit the number of handouts to a few other after a periodof time ones which show no historic evidence of turning a profit if they also fail to do so in the future and the possibility of a sale rises. However based on what happened with Phx, we know that it's against the current NHL regime's policy to shrink anything outside of goals per game.

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11-30-2012, 12:23 AM
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Killion
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The Globe&Mails gone to a subscriber format ht.

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11-30-2012, 02:23 AM
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Fugu
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^^ I have no problem viewing it. Canadian IPs?

Of course, I agree.

http://hfboards.hockeysfuture.com/sh...&postcount=917
http://hfboards.hockeysfuture.com/sh...&postcount=951

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11-30-2012, 02:34 AM
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The Zetterberg Era
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Isn't the Globe and Mail owned by one of the owners in the league. You know the same guys that don't want to share enough to save the southern franchises. I know they aren't forced to write this stuff and I agree some things need to be done. But revenue sharing is one of the ways.

I couldn't get it to click either.

They could always just ask the players for the 200 million plus to buy out the owner and arena lease, while eliminating jobs. Love to see Fehr's face when they said it had caused that.

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11-30-2012, 02:38 AM
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Fugu
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They may have a limit on the number of visits you can have to site for free. NY Times has that structure.

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11-30-2012, 03:03 AM
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Contracting the league would doom it into irrelevancy permamently as it would be giving up on the new markets that are growing in fans and players. The way to fix the situation is to start using an NFL-style economic redistribution.

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11-30-2012, 05:29 AM
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Quote:
Originally Posted by Killion View Post
The Globe&Mails gone to a subscriber format ht.
What browser are you using?

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11-30-2012, 06:29 AM
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Quote:
Originally Posted by Fugu View Post
I would support a contracted league for sure - be it the NHL, or other, newer entity containing the franchises that can profitable ice a competitive team.

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11-30-2012, 08:37 AM
  #10
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“You’ve got to get rid of some of these teams with so little public support that can’t exist without subsidies from the rest of the league,”
New hockey fans don't appear out of thin air. You can easily tap out every 'hockey city' capable of supporting an NHL team sans revenue sharing and have a 10 or 15 team league. That's not what the business is about. You take the strengths of the big markets, use it to help smaller markets and in the end everyone wins. It's the whole 'growing the game' argument that people like to ignore.

The NFL helps subsidize a few markets, and they're pretty damn successful. You can make a solid argument for more revenue sharing and help for the poor teams.

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11-30-2012, 08:42 AM
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You wouldn't believe it by the way he talks today, but Doug MacLean said almost exactly the same thing a couple of months ago. "The way to finally fix this was to get rid of teams that will never make money and will never field a competitive team", or words to that effect.

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11-30-2012, 08:46 AM
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Quote:
Originally Posted by moosehead81 View Post
"The way to finally fix this was to get rid of teams that will never make money and will never field a competitive team", or words to that effect.
Doug MacLean commenting on competitive teams hilarity aside, that is basically the premise of the salary cap. Coyotes don't even have an owner for ****s sake and went to the conference finals/won their division.

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11-30-2012, 08:47 AM
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I am not against contraction at all, particularly when it comes to Phoenix, but I think it would be a much better idea to just move them QC or Hamilton.

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11-30-2012, 08:48 AM
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Originally Posted by Hamilton Tigers View Post
Lets not forget if the players get their way, and get de-linkage? When the Canadian dollar falls a number of canadian teams become money pits again. De-linkage will also push Toronto2 and Quebec to the back of the cue to get a franchise.

It wasn't that long ago a U.S. $1.00 was worth $1.55 Canadian.And Canadian teams had to pay players in U.S. dollars.

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11-30-2012, 08:49 AM
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coldsteelonice84
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Quote:
Originally Posted by moosehead81 View Post
You wouldn't believe it by the way he talks today, but Doug MacLean said almost exactly the same thing a couple of months ago. "The way to finally fix this was to get rid of teams that will never make money and will never field a competitive team", or words to that effect.
The first thing you do is look at those teams when they were winning. Were they selling out all year. Were they making a profit? If the answer is yes, then you leave them alone. If the answer is no, it is a failed market and will never succeed.

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11-30-2012, 08:49 AM
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Quote:
Originally Posted by coldsteelonice84 View Post
I am not against contraction at all, particularly when it comes to Phoenix, but I think it would be a much better idea to just move them QC or Hamilton.
While that makes sense, trying to get a sucker to buy them while you reap expansion fees for new markets like QC is better. Those are untapped oil wells that the owners will protect fiercely.

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11-30-2012, 08:51 AM
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Quote:
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While that makes sense, trying to get a sucker to buy them while you reap expansion fees for new markets like QC is better. Those are untapped oil wells that the owners will protect fiercely.
Yeah but when you contract a team, the owners would have to buy out the previous owner, somewhat of a reverse expansion fee. I mean, I guess technically they already have, but they just wouldn't get any of that money back.

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11-30-2012, 08:53 AM
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Quote:
Originally Posted by Fugu View Post
So you think if the |Players get de linkage, some teams will go?

Quote:
Originally Posted by Rutkowski View Post
Contracting the league would doom it into irrelevancy permamently as it would be giving up on the new markets that are growing in fans and players. The way to fix the situation is to start using an NFL-style economic redistribution.
I'm sure you would be saying this if Edmonton and Calgary were on the chopping block. Look at the NBC time table. NY, Chicago, Detroit, Philadelphia, Boston, Washington. No wild western teams.

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11-30-2012, 08:55 AM
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Quote:
Originally Posted by XX View Post
Doug MacLean commenting on competitive teams hilarity aside, that is basically the premise of the salary cap. Coyotes don't even have an owner for ****s sake and went to the conference finals/won their division.
Well you can be somewhat successful on the ice and never make a cent (or lose lots), you can be unsuccessful on the ice and never make a cent and, finally, you can be unsuccessful on the ice and make lots of money. i think the first two apply.

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Old
11-30-2012, 08:59 AM
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Quote:
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While that makes sense, trying to get a sucker to buy them while you reap expansion fees for new markets like QC is better. Those are untapped oil wells that the owners will protect fiercely.
The NHL charged the Jets a relocation fee. If they get money via relocation fee or an expansion fee makes no difference. Considering they'd have to buy out an owner if they want to contract a team the money received would be the same.

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11-30-2012, 09:14 AM
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The NHL charged the Jets a relocation fee. If they get money via relocation fee or an expansion fee makes no difference. Considering they'd have to buy out an owner if they want to contract a team the money received would be the same.
No, the money would not be the same.

Jets paid a relocation fee of $60m.

The press is reporting an expansion fee, could be as high as $400m-$500m per team.

Team sales have been between $130m-$170m on the last few teams sold: Blues, Thrashers and Coyotes.

NHL would prefer expansion to relocation and no league will take the pr hit of contraction, if they can avoid it.

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11-30-2012, 09:20 AM
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I'm sure you would be saying this if Edmonton and Calgary were on the chopping block. Look at the NBC time table. NY, Chicago, Detroit, Philadelphia, Boston, Washington. No wild western teams.
You can see in the alignment of the league that anything outside of the northeast corridor is really just considered white noise. Detroit has gotten a raw deal in that aspect, which I think is why karma has to have played a part in them being so good for the better part of two decades.

That SE division is hidden away, only in the minds of northeastern fans come playoff time because of the seeding the division winners get. There are 2 divisions that span 3 time zones in the West, and the entire conference spans all 4 time zones.

It's also interesting that the first home game for the Ducks after they won the Cup was against Boston. The first home game for the Kings was supposed to be against the Rangers. Clearly designed to get people to watch NBC(or whatever it was in Oct 2007) at such a late hour as the banner was raised for a Cup win.

The NHL should just go with 10 or 12 teams in the northeast, and kick the other teams out. Let them form their own leagues if they want. The NHL didn't want that type of competition back in the 60's and 70's though, so they expanded for the easy money, and then sort of just forgot those new teams existed. Except the Flyers. They've been the only real, long term success story, in every aspect, of the 24 additional franchises after the O6.

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11-30-2012, 09:26 AM
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OT, I do not believe contraction is the way to go. The game cannot grow if potentially profitable markets are abandoned or subsequently ignored. Relocation is a feasible alternative that would lessen the reputation damage I suspect contraction would garner.


Last edited by Fugu: 11-30-2012 at 01:25 PM. Reason: can't discuss circumvention of pay walls
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Old
11-30-2012, 09:27 AM
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Quote:
Originally Posted by XX View Post
New hockey fans don't appear out of thin air. You can easily tap out every 'hockey city' capable of supporting an NHL team sans revenue sharing and have a 10 or 15 team league. That's not what the business is about. You take the strengths of the big markets, use it to help smaller markets and in the end everyone wins. It's the whole 'growing the game' argument that people like to ignore.
I believe what you mean to say is... You take the strengths of the hockey markets, and use it to help the non-hockey markets. "Big" and "small" aren't the correct terms. Not saying it's a bad idea to try and grow the game this way, just the terminology is wrong.

Last year in the NHL a city of 700,000 people made a profit of $13.3M, while a city of 6,000,000 people lost ~$20M. Who exactly is the big market and who is the small market? The city of 700,000 is considered by the general press and NHL to be a small market, where the city of 6,000,000 is considered to be a big market ( untapped, but big ). So it's not the "big" helping the "small".

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Old
11-30-2012, 09:33 AM
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GordieHoweHatTrick
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Quote:
Originally Posted by Rutkowski View Post
Contracting the league would doom it into irrelevancy permamently as it would be giving up on the new markets that are growing in fans and players. The way to fix the situation is to start using an NFL-style economic redistribution.
Revenue sharing modeled after the NFL is not suitable for the NHL. Do the opposite instead, contraction. Get it done already. That big fat TV contract is never gonna happen for the NHL so further expansion into the states is a fool's errand

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