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Contraction a necessary evil for survival of NHL says economist

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Old
11-30-2012, 09:37 AM
  #26
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How would contraction even work? Would the NHL have to buy the team from the owner of the contracting team?

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11-30-2012, 09:40 AM
  #27
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How would contraction even work? Would the NHL have to buy the team from the owner of the contracting team?
Yes, each owner would have to pay a part of it, but they have technically already done that with Phoenix so it would just be that they wouldn't get anything back.

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11-30-2012, 09:47 AM
  #28
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It staggers me that people still talk of contraction. It. Will. Never. Happen. Get that into your minds, people. Contraction is for leagues that are on the brink of folding. inasmuch as the NHL isn't as financially healthy as the owners (and, as much as they might not admit it publically, the players) want it to be at the moment, we're still not nearly that bad.

Whatever they have to do to avoid contracting a team, that thing will happen. They have the power to prop up teams like the Coyotes indefinitely, if they decide to do it. This is a non-thing.

The only reason this Phoenix fiasco is even getting the level of attention it is is because other markets want IN to the NHL. That makes the whole concept of contraction outright ludicrous. We're not short of talent, hockey is quite lucrative, and we have a waiting list of markets eager to try their NHL wings. That's the opposite of time for contraction.

Heck, I'd add 2 teams and prioritize the Western Conference for expansion and creation of rivalries, move Detroit and say Columbus east. Set up rivalries in Houston with Dallas and in Seattle with Vancouver and see if these teams can write some stories that the national media will pay attention to. Keep an eye on other markets like Milwaukee, KC and San Diego if they want to make a play as well and maybe we can push the entire Western Conference west of the Mississippi where it belongs.

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11-30-2012, 09:48 AM
  #29
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Originally Posted by coldsteelonice84 View Post
Yes, each owner would have to pay a part of it, but they have technically already done that with Phoenix so it would just be that they wouldn't get anything back.
Actually, I'm not sure that any clubs put up money for Phoenix. I think the NHL took out a line of credit to pay for the team and is paying the interest out of league revenues, so each team may be losing a little in what they get from shared revenue. But I could be wrong.

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11-30-2012, 09:50 AM
  #30
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I could see it making sense to the players. Heck, contract the Bruins, Leafs, Rangers, and Wild. Boom, several of the hard line owners and GM's like Burke out of work. Should be much easier for the PA to get a favorable CBA after that.

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11-30-2012, 09:53 AM
  #31
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I could see it making sense to the players. Heck, contract the Bruins, Leafs, Rangers, and Wild. Boom, several of the hard line owners and GM's like Burke out of work. Should be much easier for the PA to get a favorable CBA after that.
Which is the other joke about contraction talk. I note this was written by the globe and Mail. the only people who are talking about contraction are the ones with financially secure teams themselves -- who would like to pick up players like Doan or Vrbata or Ekman-Larsson to make their teams more competitive.

It's not that they have any real problem with the level of the talent in the league. It's just that they want more of that talent on their own team and contraction is a fantasy that would create several talented FA's.

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11-30-2012, 10:01 AM
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Originally Posted by Dojji View Post
Which is the other joke about contraction talk. I note this was written by the globe and Mail. the only people who are talking about contraction are the ones with financially secure teams themselves -- who would like to pick up players like Doan or Vrbata or Ekman-Larsson to make their teams more competitive.

It's not that they have any real problem with the level of the talent in the league. It's just that they want more of that talent on their own team and contraction is a fantasy that would create several talented FA's.
No one is saying that contraction WILL happen. They're saying that it SHOULD happen in order to fix the current problems. There are other ways but most arent viable long term solutions. They involve one side sacrificing a lot. So, please critique the reasoning why contraction wouldnt solve the economic problems.

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11-30-2012, 10:01 AM
  #33
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The economist is partially correct; the NHL does need to lose some of its money pit locations - via whatever manner that can be accomplished. Hopefully the prolonged lockout will result in additional numbers of owners of poor franchises seeking a quick exit from the league. The NHL can then buy out the owners of some of the weak locales, suspend operations of those franchises, disburse those player contracts in a draft, and then resell two or three new expansion franchises. Hopefully they would place them in areas such as QC and GTA, areas where enough built-in demand exists so that the franchises may then finally fund themselves for a change.

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11-30-2012, 10:05 AM
  #34
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You're not going to pull out of big US markets to go to medium-sized Canadian ones if you're the NHL right now.

The NHL has got to make the jump to a national sport in the United States someway, somehow. That is non-optional for the long term health and relevancy of the league. You can't just sit there and sulk in your little geographic niche, dismissing 3/4 of the money in the United States as "not hockey money." It doesn't matter if you're not winning the competition for that money right now, YOU HAVE GOT to go out there and compete for it.

If hockey teams gave up every game they thought they had no chance of winning, they would be dismissed as soft, whiny little pansies. You really want the league to be thinking like that?

What they need to do is offer better support and quicker remediation of the kind of damage a bad owner or one who isn't up to the challenge of owning in a completely new market can run into. If they'd jerked whatsisname, Moyes, up earlier, maybe Phoenix wouldn't have been as badly screwed.

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11-30-2012, 10:29 AM
  #35
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Originally Posted by Dojji View Post
You're not going to pull out of big US markets to go to medium-sized Canadian ones if you're the NHL right now.

The NHL has got to make the jump to a national sport in the United States someway, somehow. That is non-optional for the long term health and relevancy of the league. You can't just sit there and sulk in your little geographic niche, dismissing 3/4 of the money in the United States as "not hockey money." It doesn't matter if you're not winning the competition for that money right now, YOU HAVE GOT to go out there and compete for it.

If hockey teams gave up every game they thought they had no chance of winning, they would be dismissed as soft, whiny little pansies. You really want the league to be thinking like that?

What they need to do is offer better support and quicker remediation of the kind of damage a bad owner or one who isn't up to the challenge of owning in a completely new market can run into. If they'd jerked whatsisname, Moyes, up earlier, maybe Phoenix wouldn't have been as badly screwed.
Why does it have to become a national sport in the US? The NHL has been trying to do that for 20 years and it's been an complete failure.

I agree rev sharing would help but you think rich teams who keep getting burned by these lockouts want to give up profits to keep teams charging pennies for tickets in the black?

Seem to me like poor flaky US based teams/fans want cheap tickets, a competitive team, and profits for their failing owners.

Reminds of those people who treat their family like crap but are nice to random strangers on the street. They treat loyal fans like crap while bend over backwards to keep the flaky ones buying $30 tickets.

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11-30-2012, 10:50 AM
  #36
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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).



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.
Good point. Seeing as how less than a third of the owners actually show a profit off their franchise, the other use their hobbies as a tax write off. That was our biggest hurdle in Atlanta. Our owners never wanted a hockey team. The Thrash had a seven year life expectancy once the League approved the sale to ASG.

I say contract to only the Canadian, NE, and MW teams. That'll end up screwing a whole bunch of fans but nobody cares anyway.

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11-30-2012, 10:52 AM
  #37
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Originally Posted by Gump Hasek View Post
The economist is partially correct; the NHL does need to lose some of its money pit locations - via whatever manner that can be accomplished. Hopefully the prolonged lockout will result in additional numbers of owners of poor franchises seeking a quick exit from the league. The NHL can then buy out the owners of some of the weak locales, suspend operations of those franchises, disburse those player contracts in a draft, and then resell two or three new expansion franchises. Hopefully they would place them in areas such as QC and GTA, areas where enough built-in demand exists so that the franchises may then finally fund themselves for a change.
Only with a cap fully linked to revenue. It's proven through history that when the Canadian dollar is weak it's a problem.(And Quebec and Winnipeg moved) That's why they had to have the Canadian team assistance program.

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11-30-2012, 11:00 AM
  #38
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Only with a cap fully linked to revenue. It's proven through history that when the Canadian dollar is weak it's a problem.(And Quebec and Winnipeg moved) That's why they had to have the Canadian team assistance program.
Past performance of the Canadian dollar is not indicative of future results. The dollar is near irrelevant now anyway as revenue sharing now exists. That is why the Canadian teams moved in the past; they were not afforded the welfare payments given the financial basket cases of today.

Canadian teams back then also at least had currency issues to excuse them from their business issues, versus the teams today that simply are not able to fund themselves because their business doesn't warrant it.

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11-30-2012, 11:03 AM
  #39
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Forbes has recently released the historical earnings of all the NHL franchises.

Since the last lockout:

-TO has seen profits balloon from $14.1m to $81m
-Habs $55m to $66m
-Canucks $1.3m to $30.4m
-Edm $3.3 to $16.2m
-Ottawa $5.5m loss to $14.5m gain
-Cgy $2.3m to $11m


Meanwhile,

-Phoenix has increased losses from -$7.4m in 2004 to over $20m lost last season.
-Nashville went from a $6mil profit to a $3.4m loss
-Columbus went from a .9m profit in 2004 to a $13.5m loss last season
-Florida went from -$3m to -$12m losses
-Tampa went from a $8m profit to a $13m loss

Canada has been subsidizing Gary's expansion into the states?

And sure, while the economy went south in 2008, the losses have grown not grown as substantially for teams in established markets in the States. In fact their profits have grown:

-NYR has seen profits from from a $3.3m loss in 2004 to $74m profit last season.
-Detroit has seen profits grow from -$13m to +16m
-Boston $2.3m to $14.3m
-Philly -$4m to $11m
-Pittsburgh from -$.9m to +$9.1m

It seems that the last lockout didn't really help matters for small market teams. But the established markets have all flourished.


So while the last lockout was justified, in that several established-market teams were taking on losses prior to that lockout, i'm not sure how this current lockout helps anyone but the rich teams' owners even further.

Unless far more drastic profit-sharing is put into place, Bettman's current model will lead to inevitable contraction.


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11-30-2012, 11:06 AM
  #40
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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.

That is what they are doing. Six or ten, or so, articles per month without subscribing.

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11-30-2012, 11:12 AM
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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.
I know your half joking but this is what I am talking about. You hit the nail on the head. This is part of the reason why I support the players. The NHL is so two face. They talk about growing the game, yet look who is on NBC. The NHL is doing the same thing baseball does but because of the salary cap people like to pretend there is parity while turning a blind eye to the fact even the NHL know showing markets(outside LA) in the west is not a money maker. This is league is just like the MLB, except the salary cap gives people hope of false parity.

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11-30-2012, 11:19 AM
  #42
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Originally Posted by Dojji View Post
You're not going to pull out of big US markets to go to medium-sized Canadian ones if you're the NHL right now.

The NHL has got to make the jump to a national sport in the United States someway, somehow. That is non-optional for the long term health and relevancy of the league. You can't just sit there and sulk in your little geographic niche, dismissing 3/4 of the money in the United States as "not hockey money." It doesn't matter if you're not winning the competition for that money right now, YOU HAVE GOT to go out there and compete for it.

If hockey teams gave up every game they thought they had no chance of winning, they would be dismissed as soft, whiny little pansies. You really want the league to be thinking like that?

What they need to do is offer better support and quicker remediation of the kind of damage a bad owner or one who isn't up to the challenge of owning in a completely new market can run into. If they'd jerked whatsisname, Moyes, up earlier, maybe Phoenix wouldn't have been as badly screwed.
For this to work, you have to show the product. Which means you play games. This is not happening right now.

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11-30-2012, 11:21 AM
  #43
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Why does it have to become a national sport in the US? The NHL has been trying to do that for 20 years and it's been an complete failure.

I agree rev sharing would help but you think rich teams who keep getting burned by these lockouts want to give up profits to keep teams charging pennies for tickets in the black?

Seem to me like poor flaky US based teams/fans want cheap tickets, a competitive team, and profits for their failing owners.

Reminds of those people who treat their family like crap but are nice to random strangers on the street. They treat loyal fans like crap while bend over backwards to keep the flaky ones buying $30 tickets.
Southern US markets get all the gimmicks, whether its MLB, NBA, NFL, NHL.

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11-30-2012, 12:08 PM
  #44
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I have been on the contraction band wagon for the better part of a decade

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11-30-2012, 12:12 PM
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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.
Yup. A broader presence geographically also improves their chances of getting/maintaining TV deals. It would help the league immensely to move away from being so gate-driven.

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11-30-2012, 12:19 PM
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Why does it have to become a national sport in the US? The NHL has been trying to do that for 20 years and it's been an complete failure.

I agree rev sharing would help but you think rich teams who keep getting burned by these lockouts want to give up profits to keep teams charging pennies for tickets in the black?

Seem to me like poor flaky US based teams/fans want cheap tickets, a competitive team, and profits for their failing owners.

Reminds of those people who treat their family like crap but are nice to random strangers on the street. They treat loyal fans like crap while bend over backwards to keep the flaky ones buying $30 tickets.
Its their fantasy of getting a big $ from a national US TV contract. Does nothing for the fans as a whole however. But it can make the owners and players more money in the end. When you hear 'good for the game', that really means more money for owners & players, higher prices for fans. Dont know about you guys but I never watch the weekend afternoon games.

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11-30-2012, 12:25 PM
  #47
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Its their fantasy of getting a big $ from a national US TV contract. Does nothing for the fans as a whole however. But it can make the owners and players more money in the end. When you hear 'good for the game', that really means more money for owners & players, higher prices for fans. Dont know about you guys but I never watch the weekend afternoon games.
If the NHL ever does get a solid TV contract,blackouts would be on the plate. What would those fans advocating for a bigger spread say then.

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11-30-2012, 12:26 PM
  #48
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There is no need to contract. The nhl is actually planning to expand to 32 teams...an idiotic move to be sure. The solution is to move the 2 American teams struggling the most to Hamilton and Quebec City.

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11-30-2012, 12:47 PM
  #49
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Its their fantasy of getting a big $ from a national US TV contract. Does nothing for the fans as a whole however. But it can make the owners and players more money in the end. When you hear 'good for the game', that really means more money for owners & players, higher prices for fans. Dont know about you guys but I never watch the weekend afternoon games.
I disagree with that. If (and a mighty big IF I know) the NHL becomes more popular in US, the public (fans) would demand that NBCSN become as accessible as ESPN is right now.

As it is now, all our sports channels are grouped around ESPN, and NBCSN is 50 channels away. You have to seek it out - people will not just bump into it.

And when you travel, ESPN is everywhere, in every hotel room I've been in over the last 10 years - some hotels have 3 or 4 ESPN channels. I have yet to see NBCSN in any hotel room.

And now this lockout just pushes the NHL even further into the sports background. The public couldn't care less. In L.A., I have heard exactly one radio news piece on the lockout in 2 months.

It may take quite a while for the damage from this lockout to be undone.

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11-30-2012, 12:54 PM
  #50
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I disagree with that. If (and a mighty big IF I know) the NHL becomes more popular in US, the public (fans) would demand that NBCSN become as accessible as ESPN is right now.

As it is now, all our sports channels are grouped around ESPN, and NBCSN is 50 channels away. You have to seek it out - people will not just bump into it.

And when you travel, ESPN is everywhere, in every hotel room I've been in over the last 10 years - some hotels have 3 or 4 ESPN channels. I have yet to see NBCSN in any hotel room.

And now this lockout just pushes the NHL even further into the sports background. The public couldn't care less. In L.A., I have heard exactly one radio news piece on the lockout in 2 months.

It may take quite a while for the damage from this lockout to be undone.
I spend a lot of time in a particular hotel near San Diego and they just started providing NBCSN a few months ago. Of course, Fehr had to f that up for me. Last night NBCSN was running the movie "North Dallas Forty". I am sure that is not what NBC execs had in mind.

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