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Can KHL ever become profitable?Does the league even want to become profitable?

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01-24-2013, 01:12 AM
  #1
BalticWarrior
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Can KHL ever become profitable?Does the league even want to become profitable?

Seeing how theres still problems with things like buying KHL games,KHL site not beeing all that great(f.e you cant easily buy merchandise from KHL online shop if you want a jersey or whatever) among other things,it looks like KHL is not even trying to position it self in a position that it will ever be profitable. What do you think?

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01-24-2013, 02:40 AM
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SoundAndFury
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Originally Posted by Helo View Post
Seeing how theres still problems with things like buying KHL games,KHL site not beeing all that great(f.e you cant easily buy merchandise from KHL online shop if you want a jersey or whatever) among other things,it looks like KHL is not even trying to position it self in a position that it will ever be profitable. What do you think?
In Russia (and many other countries) sport is still not seen as a product which you could sell and I think a lot of teams are not really bothered by being non-profitable because it has been so for years and everyone is ok with that. So this way most of the teams haven't got ambitions or ability to become more profitable.

So to answer your questions: no, in foreseeable future it can't and no, it doesn't really care about that.

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01-24-2013, 02:42 AM
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Making the website better etc will do **** all in terms of making the league profitable, only way for it to become profitable in the immediate future to is lower operating costs and salaries (Which will do more harm than good).

Areas such as the website will only improve with time, just like KHL-TV has become a lot better in terms of content and rapid improvement in growth.

The league will take a long time to become profitable, Russia needs to continue improving and growing as a country (as it has been over the last 10 or so years) only then will more sources of revenue appear. Even then the KHL will need to be wanted by TV stations to increase the TV Deal which is peanuts at the moment. For that to occur TV ratings must improve a lot more, interest in the league has to continue to grow to allow for more sponsorship money etc.

For now, I see the league following the route of some of the top football leagues in Europe (Except the Bundesliga that is posting profits of around 250 million IIRC). The English Premier League's 20 clubs collectively made a loss of 361m in 2011-12, after spending all of their record 2.3bn income.

I don't think making the league profitable in the immediate future is a goal for the KHL because it is an unrealistic goal.

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01-24-2013, 03:14 AM
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There's no way it can become profitable in the near future. There are too many teams with old areas that can't hold enough people to turn a profit. When only one team made ends meet last year (after having the second lowest payroll and operating budget in the league), there's just too long of a way to go. But since no one is in a hurry to get there, nor do they care to make a profit, it's simply not going to happen. Lowering expenditures will simply diminish the quality of the on ice product. The KHL is now solidly the second best league in the world. If teams start lowering payrolls, they'll be tossed right back in between Sweden, Finland, the AHL, etc in no time. The prestige is obviously a lot more important to the country and its hockey program than profits.

As for improving the webstore, it's completely beyond their control. There's a reason it's run out of Latvia. The Russian shipping system is stuck 50 years in the past. People cannot send multiple items freely, so operating it with any sort of regularity is impossible. This is probably why getting a proper, consistent stock in the store itself is hard as well (Russians, please correct me if anything has changed. I was told about two years ago that there are limits as to how much a person or company can send - something like one parcel a month, and there are strict regulations to ensure no one abuses the system).


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01-24-2013, 04:50 AM
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imo KHL will become profitable when it turns into gate-driven league, NHL style, which probably dont happen in less than 2-3 decades. I expect KHL becoming gate-driven league when buying power of EE folks gets anywhere close to buying power of NA folks.

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01-24-2013, 05:10 AM
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No.
Some teams do, but (watch the 1st answer).

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01-24-2013, 08:37 AM
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Originally Posted by v-man View Post
There's no way it can become profitable in the near future. There are too many teams with old areas that can't hold enough people to turn a profit. When only one team made ends meet last year (after having the second lowest payroll and operating budget in the league), there's just too long of a way to go. But since no one is in a hurry to get there, nor do they care to make a profit, it's simply not going to happen. Lowering expenditures will simply diminish the quality of the on ice product. The KHL is now solidly the second best league in the world. If teams start lowering payrolls, they'll be tossed right back in between Sweden, Finland, the AHL, etc in no time. The prestige is obviously a lot more important to the country and its hockey program than profits.

As for improving the webstore, it's completely beyond their control. There's a reason it's run out of Latvia. The Russian shipping system is stuck 50 years in the past. People cannot send multiple items freely, so operating it with any sort of regularity is impossible. This is probably why getting a proper, consistent stock in the store itself is hard as well (Russians, please correct me if anything has changed. I was told about two years ago that there are limits as to how much a person or company can send - something like one parcel a month, and there are strict regulations to ensure no one abuses the system).
They don't work like NHL teams there, they don't need to fill their arena to make money, they make their money through other ways, like sponsors etc.

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01-24-2013, 08:39 AM
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Originally Posted by SoundAndFury View Post
In Russia (and many other countries) sport is still not seen as a product which you could sell and I think a lot of teams are not really bothered by being non-profitable because it has been so for years and everyone is ok with that. So this way most of the teams haven't got ambitions or ability to become more profitable.

So to answer your questions: no, in foreseeable future it can't and no, it doesn't really care about that.
That's not true at all, sport is big business there.

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01-24-2013, 08:45 AM
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They don't work like NHL teams there, they don't need to fill their arena to make money, they make their money through other ways, like sponsors etc.
They take money, don't make it.

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01-24-2013, 09:09 AM
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Originally Posted by Scouter View Post
That's not true at all, sport is big business there.
I guess you live somewhere very, very far away from Russia

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01-25-2013, 06:37 AM
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If im correct, that GM of Slovan Bratislava said, even if they have a full stadium, its not enough for all the expenses for this particular game. Maybe if the stadium will have about 20 000 seats, then it will be ok.

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01-25-2013, 06:40 PM
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They said KHL were about to make profit in 2012.

read here in russian

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02-06-2013, 05:58 PM
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This is absurd of course they want to make money, their building a market.

It takes time and won`t happen over night.

Seriously this expectation for a league to magically appear out of thin air and make profit is absurd and has zero historical basis.

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02-07-2013, 02:18 AM
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I'm pretty sure the KHL is profitable as a league. The individual teams obviously arent and wont be for a long time, but the league itself is profitable right now.

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02-07-2013, 11:08 AM
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That would make it little different from the NHL where, I think, a big majority of the 30 clubs are not profitable either.

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02-07-2013, 11:11 AM
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That would make it little different from the NHL where, I think, a big majority of the 30 clubs are not profitable either.
And if 30 new mcdonald franchises were opened in west texas, it`d be much the same story.

Franchises take time to develop.

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02-08-2013, 09:44 AM
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Originally Posted by HugoSimon View Post
And if 30 new mcdonald franchises were opened in west texas, it`d be much the same story.

Franchises take time to develop.
This has to be one of the worst analogies i have ever read. Haha. McDonalds franchises have low costs, high brand awareness and huge sales.

Hockey teams have HUGE costs. I think comparing the average salary of a hockey player in the KHL/NHL to what Fat Hobblin Harry makes in a Fast food Restaurant ... yeah

As long as wealthy Russian businessmen and the government continue to fund the KHL, it will be fine. Can't last forever of course. The question is, in 30-40 years time, will A) the KHL be a large consumed and watched sport in Russia B) Will the average Russian make enough relative capital to pay prices like we see in some NHL cities.

Difficult to know. The Russian economy will inevitably grow for sometime, but of course a crash is likely given how its structured (But we can say the same for all economies really given the nature of the system).

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02-08-2013, 02:23 PM
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Originally Posted by J17 Vs Proclamation View Post
This has to be one of the worst analogies i have ever read. Haha. McDonalds franchises have low costs, high brand awareness and huge sales.

Hockey teams have HUGE costs. I think comparing the average salary of a hockey player in the KHL/NHL to what Fat Hobblin Harry makes in a Fast food Restaurant ... yeah

As long as wealthy Russian businessmen and the government continue to fund the KHL, it will be fine. Can't last forever of course. The question is, in 30-40 years time, will A) the KHL be a large consumed and watched sport in Russia B) Will the average Russian make enough relative capital to pay prices like we see in some NHL cities.

Difficult to know. The Russian economy will inevitably grow for sometime, but of course a crash is likely given how its structured (But we can say the same for all economies really given the nature of the system).
Hockey teams have huge costs? Huge in comparison to what? They pay for a building, maintenance equipment, practice facility, player salaries, employee salaries? For the oligarchs, these are petty change items, pennies, farthings. Don't you understand that most of these owners have no way of even noticing their hockey losses? Do you think Abramovich even notices any petty losses in his English Premier League football operations? A few teams aren't owned by exceptionally rich individuals, and they may end up in jeopardy, but that was all factored in at the outset. They expected some franchises to drop out. Let's say someone like Abramovich started losing $100,000 a day, every day of the year. Assuming no other revenue coming in, which is probably absurd, my calculator tells me that Abramovich could lose $100,000 a day for 264 years, until the year 2277. Hockey costs are nothing, especially in Russia, where operation expenses are lower. Any positive cash flow is just gravy.

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02-08-2013, 03:21 PM
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Hockey teams have huge costs? Huge in comparison to what? They pay for a building, maintenance equipment, practice facility, player salaries, employee salaries? For the oligarchs, these are petty change items, pennies, farthings. Don't you understand that most of these owners have no way of even noticing their hockey losses? Do you think Abramovich even notices any petty losses in his English Premier League football operations? A few teams aren't owned by exceptionally rich individuals, and they may end up in jeopardy, but that was all factored in at the outset. They expected some franchises to drop out. Let's say someone like Abramovich started losing $100,000 a day, every day of the year. Assuming no other revenue coming in, which is probably absurd, my calculator tells me that Abramovich could lose $100,000 a day for 264 years, until the year 2277. Hockey costs are nothing, especially in Russia, where operation expenses are lower. Any positive cash flow is just gravy.
lets have a look at CSKA owner - Rosneft

google
Quote:
We invested about 23 billion rubles in the social sphere in 2012: built eight new kindergartens, 47 - repaired, two schools - one school in Ingushetia at all from scratch, in Stavropol, a deep modernization of school spent almost a new school also emerged, further 38 schools repaired , two new playgrounds and made ​​about 10 repaired. This is a significant component of our work.
source

If we believe these numbers, Rosneft spent approximatelly 761 000 000 USD for social projects last year. How much money does Rosneft spend in CSKA for one season? 30-40 mil USD? Thats nothing for them.

Of course, not every club has Rosneft type of company as sponsor/owner.

Interesting news a few days ago. TNK-BP will sponsor Avtomobilist Ekaterinburg in year 2013. Amount of money is not releaved. Everyone can google about TNK-BP and its connection to Rosneft.

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02-08-2013, 05:37 PM
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lets have a look at CSKA owner - Rosneft

google

source

If we believe these numbers, Rosneft spent approximatelly 761 000 000 USD for social projects last year. How much money does Rosneft spend in CSKA for one season? 30-40 mil USD? Thats nothing for them.

Of course, not every club has Rosneft type of company as sponsor/owner.

Interesting news a few days ago. TNK-BP will sponsor Avtomobilist Ekaterinburg in year 2013. Amount of money is not releaved. Everyone can google about TNK-BP and its connection to Rosneft.
You are absolutely right, Vorky. There is Rosneft, and I believe that the head of the KHL, Aleksandr Medvedev, is the primary owner of Gazprom, which holds a very large percentage of the World's natural gas reserves. These aren't small time players, and they are not fooling around with their investments. They are in it for the long term, and their goal is to build a league that will someday rival the NHL. Whether that will happen, time will only tell. But there is no question that their investment is over the long term, and they are prepared to write off any and all losses in the early years. I have no doubt that that support goes all the way up to Putin, who would not be hesitant to funnel state resources on behalf of the KHL to keep it afloat. To some extent, he already has taken actions that support KHL development.

Building a hockey model to challenge the best in the West isn't unprecedented in Russian history. Back in the late 1940's, people laughed at Anatoli Tarasov when he vowed to create a hockey team that would challenge the NHL, but not by studying or learning from the NHL, but by staying home and building something that was uniquely Russian. Skeptics abounded until September 2, 1972, when the Soviet national team beat Team Canada, a team of NHL all-stars, 7-3, at the Montreal Forum.

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02-08-2013, 05:57 PM
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Agree with you, more or less

I see KHL as long-term project. Yes, owners are prepared to lose money because they need to establish the league, market. You dont have such television market in Russia/Eastern Europe as in North America - needs investments, it has been happening since 2009, but still not ideal. You dont have great new arenas in Russia/East Europe as in NA. A few projects are there. NHL has great clean/white ice, moders boards - do you know guys that KHL is in touch with canadian leaders to have the same boards,ice in KHL? Not tommorow, but trend is there. If KHL did not care about development, no contacts/seminars/meetings with canadian experts would happen. The latest in Magnitogorsk with Jetice, rus. KHL has own developing center and management school or so. You know, KHL clubs have problem with marketing and sport managment. It is simple, you dont have such people in Russia, not for 20+ teams. If there are experts, they work outside hockey.

It is a bussiness model, company needs to invest to be succesfull within 10, 20, 50 years. KHL and its clubs are not ideal but are making progress. It takes time, moscow was not built over night

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02-08-2013, 07:59 PM
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Agree with you, more or less

I see KHL as long-term project. Yes, owners are prepared to lose money because they need to establish the league, market. You dont have such television market in Russia/Eastern Europe as in North America - needs investments, it has been happening since 2009, but still not ideal. You dont have great new arenas in Russia/East Europe as in NA. A few projects are there. NHL has great clean/white ice, moders boards - do you know guys that KHL is in touch with canadian leaders to have the same boards,ice in KHL? Not tommorow, but trend is there. If KHL did not care about development, no contacts/seminars/meetings with canadian experts would happen. The latest in Magnitogorsk with Jetice, rus. KHL has own developing center and management school or so. You know, KHL clubs have problem with marketing and sport managment. It is simple, you dont have such people in Russia, not for 20+ teams. If there are experts, they work outside hockey.

It is a bussiness model, company needs to invest to be succesfull within 10, 20, 50 years. KHL and its clubs are not ideal but are making progress. It takes time, moscow was not built over night
I agree that there is a long, long way to go before all of the many problems are addressed. Some things may work out well, others may not. But I do think the league is fully ready to absorb losses in revenue for a long time, but continue to invest and build. A lot of people in Russia want to see the KHL develop into a league they can be proud of. There is a large talent and a strong hockey culture in the countries where the KHL currently operates.

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02-09-2013, 11:58 AM
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That would make it little different from the NHL where, I think, a big majority of the 30 clubs are not profitable either.
You're right. As in KHL, ticket prices in the NHL are relatively cheap, because high prices would just create more empty seats (a problem for a number of franchises). Merchandising is successful in Canada and hockey hotbed areas of the US, which is about half the league. Local TV and radio contract receipts for each franchise are dismally low in comparison to other sports, especially in Southern and Western US markets, where viewing and listening audiences for the NHL are too tiny for advertisers to pay much to sponsor.

The NHL makes a lot of its money from the national TV contract with NBC network, but the national contract seems to be constantly shifting from network to network. The biggest reason why the NHL is suddenly more desirable for a national TV contract in the US is because of international hockey - specifically, the Olympic Games. NBC promotes the NHL in order to boost its Olympic viewership. If the NHLPA decided not to play in Sochi, you would have seen revenues from TV plummet, and many franchises would be back in fire sale mode.

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02-09-2013, 02:08 PM
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This has to be one of the worst analogies i have ever read. Haha. McDonalds franchises have low costs, high brand awareness and huge sales.

Hockey teams have HUGE costs. I think comparing the average salary of a hockey player in the KHL/NHL to what Fat Hobblin Harry makes in a Fast food Restaurant ... yeah

As long as wealthy Russian businessmen and the government continue to fund the KHL, it will be fine. Can't last forever of course. The question is, in 30-40 years time, will A) the KHL be a large consumed and watched sport in Russia B) Will the average Russian make enough relative capital to pay prices like we see in some NHL cities.

Difficult to know. The Russian economy will inevitably grow for sometime, but of course a crash is likely given how its structured (But we can say the same for all economies really given the nature of the system).
Do you even know how much a franchise fee cost. I donno about mickydee`s but there are many franchises that cost a half million a pop. Depending on the franchise it takes years just to pay back those fee`s.

In fact I`m gonna have to guess that you have no understanding on how franchises work and leave it at that.

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02-10-2013, 02:45 PM
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Originally Posted by HugoSimon View Post
Do you even know how much a franchise fee cost. I donno about mickydee`s but there are many franchises that cost a half million a pop. Depending on the franchise it takes years just to pay back those fee`s.

In fact I`m gonna have to guess that you have no understanding on how franchises work and leave it at that.
I understand that comparing a hockey team to one of the most well known brand's in the world is somewhat ridiculous.

A bad analogy is a bad analogy.

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