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Lockout IV: One likes to believe in the freedom of hockey (Moderated: see post #2)

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Old
12-11-2012, 07:31 PM
  #376
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Originally Posted by Melrose Munch View Post
Thing is if contraction plus the elimination of the floor would push a lot of teams into the black. The floor above all the stuff we are arguing is why so many teams are in the red. Or we can even keep the 30 teams and eliminate the floor. If I am an owner, I go with contraction + no floor or no floor. They pay the bills so that is the best way to create a safety net
The problem then is that you're going to have teams that really really suck. That hurts both those teams, and the teams those guys play - remember that only 41 of their games are at home. The other 41 games are in other peoples rink. Having 2 semi competitive teams is a better product than having 1 good team and 1 crappy team. Even the Jackets/Oilers/etc had enough skill on their teams that watching a game against them wasn't completely painful. Going back to the days where Minny had 1/2 to 1/3rd the payroll of a big club would royally suck - for EVERYONE. Sure some fans could watch their teams beat up on others... but even the game itself still wouldn't be as good as a close intense game.

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12-11-2012, 07:46 PM
  #377
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What if the cap floor was half of the cap ceiling? That eliminates the 16 mil gap that smaller markets cant keep up to while still not being low enough to ice non competitive teams. Yearly fluctuations of the floor would be less extreme as well. And to prevent smaller markets from compiling high cap low pay contracts, make that cap floor actual salary spent. Thoughts?

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12-11-2012, 07:59 PM
  #378
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And what did you do with your econ degree? Go to law school? (Nicely done piece, by the way, to further one argument, not to expand this to an academic or analytical approach of what would be the most efficient market-- the hallmark of the legal mind. )

My first question is to ask you if you believe in market protection (e.g, French farmers, Japanese rice farmers)? Those societies make a trade-off from market efficiency to protecting a way of life, for example.

You bound this argument nicely by making us believe that the ideal situation is the one piece of land and that we're stuck with the same number of farmers and their ten cows in perpetuity. It's interesting that you also bounded it by saying that there simply were too many farmers x cows for the land in question. Food for thought.

A market system would find that equilibrium naturally, and systems or approaches like yours do what any artificial economy perpetuates-- it ensures that the best guys at farming cows won't be able to get ahead because they have to share with those who aren't as good or as hard-working. Just because something is good for one collective of people doesn't not mean it's also the best thing for that marketplace, or in our case, the customers.
I'm not really sure where you're going with the market protection angle, but, yes, I believe in market protection in the abstract. Market protection is just economics bowing to democracy. People have all sorts of frictions in their lives that are hard to quantify economically - they get too old to learn new skills, they become emotionally invested in a cultural heritage, they become attached to a place, they get politically entrenched. Market protection tends to happen when, whether their reasons are good or bad, the economically efficient solution is not preferable to the 51%. Which is possible.

I wasn't trying to lay out the example so that it came across as one-sided, but rather to explain what the connection is between a collective action problem and this labor negotiation. You simply can't explain what a collective action problem is if you suppose, like you're saying, that folks can just go to another field, or we can just get rid of some of the farmers or some of the cows, or imagine that the field can support all the farmers in the first place. You'd be opening up the problem so wide that there wouldn't be a problem in the first place.

Your final paragraph is a conclusion that says markets will find healthy equilibrium naturally and that all that a collective action argument seeks to do is punish the good farmers and reward the bad ones. With this, you've effectively rejected the hypothesis of collective actions problems altogether without ever really addressing them. And I'm not here to tear down anyone's articles of faith.

If, however, you want to accept the idea that collective action problems can exist, I'll be happy to debate with you whether or not sports leagues qualify under that model. Clearly, I believe, they do. Here's why:

The free market line of thinking works great for explaining competitive markets. Walmart is able to provide a better product at a better price than Mom & Pop stores around the country, so they go out and compete with them and put them out of business. If, however, we set a price floor on widgets so that M&P could compete with Walmart, we'd be hurting the market, propping up inefficient participants, and gouging the consumers. Let's imagine for a minute that Walmart was better because they put big R&D into developing automation - all of sudden, they wouldn't have the incentive to put that money into it, technologies might not ever get developed, and people would have fewer widgets at a higher cost in the long run. That's the free market parable that everyone knows and loves.

What I've been trying to say is that sports league's don't function on that model, for a few reasons. (1) The Toronto Maple Leafs, unlike Walmart, are not looking to take customers away from the Phoenix Coyotes by offering a better product - the clientele is geographically fixed. It's in their interest that more people flock to the Coyotes, not less, because it takes nothing away from Toronto and helps the league. (2) The Toronto Maple Leafs, unlike Walmart, don't want to put their rivals out of business. Walmart wins when they've put their competitors out of business. Toronto folds when they put their competitors out of business. People won't show up every year to watch the Maple Leafs award themselves the Stanley Cup. (3) The better the quality of Toronto's competitors, the more Toronto profits. Folks in Toronto could put $200M into the Marlies any time they want, but they don't. Even if the Marlies had the better roster, they wouldn't. Because folks pay to see the NHL product, and the NHL product is not about any one team, it's about a healthy network of 30 teams at once. It would be as if folks went to Walmart, not for Walmart's product, but just to see the comparison between Walmart's and Mom and Pop's product, for the entertainment value of observing that dynamic between two products. If that were the case, Walmart would want, need, to keep all the little Mom and Pop's healthy.

And if that's what the NHL needs, then you get into the idea that how they get there is solving a collective action problem, and refer to my first post.


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12-11-2012, 08:12 PM
  #379
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^^
I like your definition/explanation.

A couple of issues to add to your M&P/Walmart example. What is to prevent Walmart from rapidly escalating prices when all the M&Ps are gone? What happens when Walmart carries a cheaper but inferior product when the superior product is only carried by the M&Ps? There isn't enough demand for Walmart to achieve economies of scale with the superior product but here is a demand for it albeit a smaller demand that an M&P can fulfill with their different scale.

On the cattle example. The counter to Fugu is when the farmers agree to only graze 8 but Farmer X ignores the issue by grazing more and taking the land by force and enforcing a graze 8 on Farmers Y & Z. That isn't market efficiency. It approaches the issue that the colonials had with the British prior to the revolution.

My major point about pure capitalism is that its endpoint is one giant corporation. The social animal is not best served by pure capitalism; it is best served by competition. At times that competition needs protection. There needs to be a well thought out system of checks and balances.

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12-11-2012, 08:27 PM
  #380
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Originally Posted by SJeasy View Post
I like your definition/explanation.

A couple of issues to add to your M&P/Walmart example. What is to prevent Walmart from rapidly escalating prices when all the M&Ps are gone?
Nothing, which is why you should pray that Walmart never completely runs out of competition, or alternatively be thankful for anti-monopoly legislation. We saw some of these kinds of practices back in the 1930s, where a giant corporation would see one little regional competitor that was offering something better than it could. And it had an easy fix: drop prices so low just in the region where that competitor worked so that the competitor went out of business. It was a small loss for the giant that kept them from risking a bigger one down the road. It's also now illegal.

Quote:
What happens when Walmart carries a cheaper but inferior product when the superior product is only carried by the M&Ps? There isn't enough demand for Walmart to achieve economies of scale with the superior product but here is a demand for it albeit a smaller demand that an M&P can fulfill with their different scale.
Exactly right, which is how Walmart often coexists with a lot of M&P's around the world. You should ask yourself, though, if that's an apt model for understanding how the NHL works. Really, all NHL franchises seek to deliver an identical product: winning. If they tried to diversify (i.e., your team will play great defense and my team will play great offense), it would require that all defense loving fans lived in one city and all offense loving fans lived in another. Just doesn't happen that way.

Quote:
On the cattle example. The counter to Fugu is when the farmers agree to only graze 8 but Farmer X ignores the issue by grazing more and taking the land by force and enforcing a graze 8 on Farmers Y & Z. That isn't market efficiency. It approaches the issue that the colonials had with the British prior to the revolution.

My major point about pure capitalism is that its endpoint is one giant corporation. The social animal is not best served by pure capitalism; it is best served by competition. At times that competition needs protection. There needs to be a well thought out system of checks and balances.
A little dramatic in the way you put things, but I think we agree on the general thrust. The NHL is not 30 isolated products that happen to compete. The healthy competition of 30 franchises IS the product.

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12-11-2012, 08:48 PM
  #381
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On the cattle example...
Indeed...


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12-11-2012, 08:52 PM
  #382
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The issue is that it's not bad for Philly or Minny to do this (or at least they don't feel it's bad enough not to offer the contracts), but it's bad for the league as a whole.

And while no one is screaming collusion that Burke refuses to hand one of these contracts out, you can be damn sure that after an attempt to get 5 years in a CBA, that if every GM suddenly stopped handing out 5 yr deals regardless of what's in the CBA, the PA would be suing them in short order.
Baloney.
THis is a red herring.

If they agree on eight years and 80 percent of the owners don't go beyond $5M, that's not collusion, nor would anyone pretend it is.

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12-11-2012, 09:01 PM
  #383
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Sure it's been brought up: if the middle guys are so concerned about how much cap space star players would take up, let's lower the max number

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12-11-2012, 09:31 PM
  #384
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This is nicely written. My problem with this is that it justifies incompetence on the part of the teams. And any one can use this to justify not have a cap as well, as the ultimate point is to win.
You draw a direct cause and effect between management competence and revenue at every turn that simply does not exist. One could argue that at least one of the most profitable franchises has management that has been average at best since the last lockout.

Phoenix is obviously not all that profitable. Is their management team incomptent? Not when it comes to the on-ice product.

Why is that? Could it be that they are in a market place where their customers will accept mediocrity? Why can't teams with below average success on the ice, yet large revenues, compete on a level playing field when it comes to acquiring talent?


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12-11-2012, 09:34 PM
  #385
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The problem then is that you're going to have teams that really really suck. That hurts both those teams, and the teams those guys play - remember that only 41 of their games are at home. The other 41 games are in other peoples rink. Having 2 semi competitive teams is a better product than having 1 good team and 1 crappy team. Even the Jackets/Oilers/etc had enough skill on their teams that watching a game against them wasn't completely painful. Going back to the days where Minny had 1/2 to 1/3rd the payroll of a big club would royally suck - for EVERYONE. Sure some fans could watch their teams beat up on others... but even the game itself still wouldn't be as good as a close intense game.
Sure, but do you want parity or a healthy league? That's the question. Let the floor go and no one is losing money. Forcing a team to spend more then what a market or team can be is a losing proposition.

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12-11-2012, 09:35 PM
  #386
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Originally Posted by KINGS17 View Post
You draw a direct cause and effect between management competence and revenue at every turn that simply does not exist. One could argue that at least one of the most profitable franchises has management that has been average at best since the last lockout.

Why is that? Could it be that they are in a market place where their customers will accept mediocrity? Why can't teams with below average success on the ice, yet large revenues, compete on a level playing field when it comes to acquiring talent?
I agree with that. My point is if people go there will be more money to spend. Constricting spending has lead to mediocre hockey(like this years playoffs)

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12-11-2012, 09:39 PM
  #387
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Sure, but do you want parity or a healthy league? That's the question. Let the floor go and no one is losing money. Forcing a team to spend more then what a market or team can be is a losing proposition.
Here again you don't factor in how much a team will lose in revenue if all they are doing is spending way below the existing floor and putting a sub-par product on the ice. NHL revenues are driven by the live gate. To get people to attend in person you have to ice a competitive team.

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I agree with that. My point is if people go there will be more money to spend. Constricting spending has lead to mediocre hockey(like this years playoffs)
Why do you feel the playoffs were mediocre?

One team kind of dominated the way you would like to see the Leafs dominate.

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12-11-2012, 09:56 PM
  #388
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Here again you don't factor in how much a team will lose in revenue if all they are doing is spending way below the existing floor and putting a sub-par product on the ice. NHL revenues are driven by the live gate. To get people to attend in person you have to ice a competitive team.
This is more a prediction. Look at Edmonton for the past 3 years. Or New York before the lockout


Quote:
Why do you feel the playoffs were mediocre?

One team kind of dominated the way you would like to see the Leafs dominate.
The play was sloppy. The ratings kind of say it all.

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12-11-2012, 10:01 PM
  #389
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Originally Posted by Melrose Munch View Post
Sure, but do you want parity or a healthy league? That's the question. Let the floor go and no one is losing money. Forcing a team to spend more then what a market or team can be is a losing proposition.
What's wrong with both? Get the correct system in place, have some RS, and we can have a healthy exciting league. So while the players would get paid less than now, the league would be stable. Once the league is stable, it can finally maximize it's growth - and at that point everyone makes money.

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I agree with that. My point is if people go there will be more money to spend. Constricting spending has lead to mediocre hockey(like this years playoffs)
While I wasn't a fan of the NJ games (which sadly included the final) or the games my Penguins lost (yeah I know), I did enjoy almost all the other games I watched.

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12-11-2012, 10:23 PM
  #390
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Sure, but do you want parity or a healthy league?
Can't we aim for both?

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12-11-2012, 10:24 PM
  #391
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Phoenix is obviously not all that profitable. Is their management team incomptent? Not when it comes to the on-ice product.

Why is that? Could it be that they are in a market place where their customers will accept mediocrity? Why can't teams with below average success on the ice, yet large revenues, compete on a level playing field when it comes to acquiring talent?
Well lets just use Toronto as an example shall we? Come right out with it. The Leafs. Where mediocrity would actually be a step up from the neolithic ponds upon which theyve been skating for the last 45 yrs (but for one break in the clouds in 94, late 70's). However, if you then look at how they won all those Cups in the 60's, defensively, with what has since been Lionized as the Neutral Zone Trap & Left Wing Lock which won the Red Wings & Devils several cups a couple of decades later, then look at what Maloney & Tippett accomplished in Phoenix with the same over the past 2 seasons, then the answer becomes clear.

You dont need superior higher priced talent to be successful, you just need a Coach to get the room to buy into the system. Burke in Toronto is not prepared to "present" that style of hockey, type of game to the fans. Conscious decision. Wasnt prepared to do it in Hartford, Vancouver or Anaheim. So the question youd ask is "well, why the Hell not, a wins a win and thats what your paid the big bucks to deliver". Im not Brian Burke obviously so I cant answer that question. I guess just philosophically he abhors the Art Ross, Punch Imlach, Jacques Lemaire & Dave Tippett type of game. Wants entertaining hockey. Figures he can deliver yet as has been the case in Toronto for decades with GM's & Coaches, clocks ticking & his times just about up; cooked. Everything else he's tried to initiate a bust or gone south. Luck, timing, sometimes not your friend.

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Constricting spending has lead to mediocre hockey(like this years playoffs)
I didnt find that myself through this past springs playoff's MM, quite enjoyed watching Smith & the Coyotes frustrating the Dickens out of their opponents, really only the team that went deep playing the LeftWingLock & NZ Trap, or as Art Ross called it in the 20's & 30's, Kitty Bar the Door.

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One team kind of dominated the way you would like to see the Leafs dominate.
Our day will come.

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Boom headshot
Concrete jaw haseoke. Mandatory equipment for members of LeafNation.... and remember, when youve got nothin to sell in the present, future looks bleak, why, you just sell the glorious past. Over & over & over again. Works a treat.

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12-11-2012, 10:29 PM
  #392
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Why don't they split the gate of every game, 50-50?'

Then change the divisions so that there are no divisions that are completely and utterly barren of hockey fans,

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12-11-2012, 10:30 PM
  #393
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Baloney.
THis is a red herring.

If they agree on eight years and 80 percent of the owners don't go beyond $5M, that's not collusion, nor would anyone pretend it is.
The problem is they would all have to never offer any other deal. If even one were to gain an advantage from breaking this unwritten rule every owner would do it or the fans would be upset that the team wasn't trying. Once a team that was "cheating" does well the damn would open. Look at back diving contracts. First there was one then another then the Kovy thing. If it isn't against the rules someone will figure out how to use it to gain an advantage.

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12-11-2012, 10:43 PM
  #394
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Why don't they split the gate of every game, 50-50?'

Then change the divisions so that there are no divisions that are completely and utterly barren of hockey fans,
Captain,

This the first time I can say I wholeha\eartedly agree with the sense of one of your posts.

I think 50/50 is too much, though. 80/20 might be better.

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12-11-2012, 10:45 PM
  #395
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Captain,

This the first time I can say I wholeha\eartedly agree with the sense of one of your posts.

I think 50/50 is too much, though. 80/20 might be better.
The NFL splits the live gate 60/40.

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12-11-2012, 10:45 PM
  #396
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Shatter the illusion of integrity, yeah

For the words of the prophets were written on the studio wall, Concert hall

And echoes with the sounds of salesmen. Of salesmen. OF salesmen. (guitar solo)


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12-11-2012, 10:53 PM
  #397
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The NFL splits the live gate 60/40.
NFL also has a TV contract that pays for most, if not all, of the players salaries. The gate revenue split is just splitting profits among the teams more evenly

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12-11-2012, 10:58 PM
  #398
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Captain,

This the first time I can say I wholeha\eartedly agree with the sense of one of your posts.

I think 50/50 is too much, though. 80/20 might be better.
Why not 50/50?
So Phx comes to town, they get half the gate wherever they go.

What would a 50/50 gate split do for the poor teams in the NHL? How bad would it hurt the rich teams?

What would such a split do toward fixing the systemic problem the league has regarding runaway revenues of rich teams making it impossible for poor teams to catch up?

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12-11-2012, 11:04 PM
  #399
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NFL also has a TV contract that pays for most, if not all, of the players salaries. The gate revenue split is just splitting profits among the teams more evenly
They had the 60/40 gate split before they got the national TV deal when the TV rights were still regional.

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12-11-2012, 11:05 PM
  #400
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Why not 50/50?
So Phx comes to town, they get half the gate wherever they go.

What would a 50/50 gate split do for the poor teams in the NHL? How bad would it hurt the rich teams?

What would such a split do toward fixing the systemic problem the league has regarding runaway revenues of rich teams making it impossible for poor teams to catch up?
Let me clarify, Bob. If we were starting from scratch, I would say 50/50 is great. But, in this situation, one has to respect that the owners purchased Toronto and Montreal, for example, knowing they could print money at the gate. I am not sure it works to take 50% of that away now...

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