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Keller: Sorry, Canada – the NHL Just Got Stable

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12-01-2013, 02:40 AM
  #1
sawchuk1971
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Keller: Sorry, Canada – the NHL Just Got Stable

http://www.theglobeandmail.com/globe...ticle15617778/

keller says just because the canadian-based company rogers signed a new contract to televise the NHL doesn't mean struggling sun belt teams are going back to canada...

this deal "stabilizes" the NHL, especially in the southern part of the US.....

Quote:
The deal is the biggest in league history, and one of the biggest ever in Canadian media. It raises question marks about the business model of Rogers’s main competitor – BCE-owned TSN, which is apparently shut out of national NHL broadcasts for at least the next decade. It similarly rewrites the script at the CBC, which will continue to carry Hockey Night in Canada for at least four years, but under a partnership agreement that appears to put Rogers in the driver’s seat, creatively and financially. Canada’s media landscape just got hit by an earthquake, and the aftershocks will be felt for years to come.

But the deal has the opposite effect on the NHL’s foundation: It solidifies what had been a shaky status quo. After the Atlanta Thrashers moved to Winnipeg in 2011, ditching a money-losing U.S. market for a money-making Canadian one, there were hopes in Canada that more teams might be on the way. The U.S. Sunbelt is filled with teams that consistently fail to bring in enough paying fans. The Phoenix Coyotes were the most obvious candidate for the moving trucks; had the host city of Glendale, Ariz., not committed to providing tens of millions of dollars in subsidies, the Coyotes would have gone the way of the Thrashers.

But over the past year, the league’s economics have changed. Player expenses have gone down. Revenue sharing has gone up. And now, the league has landed the biggest TV contract it’s ever seen. Thanks to nothing of their own doing, Sunbelt teams are suddenly in much better financial shape.

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12-01-2013, 02:54 AM
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Killion
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I think it most assuredly helps a lot of them, but he's awfully adamant that its "fixed" the situation & nothing could be farther from the truth.

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12-01-2013, 04:27 AM
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Hammer79
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Bettman bought some time for the sunbelt teams so that he doesn't have to make a decision under financial duress. That said, it's hard to ignore when a franchise value doubles after moving from Atlanta to Winnipeg. The clock is still ticking loudly on these teams.

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12-01-2013, 04:32 AM
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BigZ65
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Player expenses are about to go up as the cap rises relative to HRR, so the TV deal will have little relative effect on markets where revenues are currently low and/or flat.

The only thing keeping teams in crappy markets are arena leases and desperate municipal governments.

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12-01-2013, 05:54 AM
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Quote:
Originally Posted by Killion View Post
I think it most assuredly helps a lot of them, but he's awfully adamant that its "fixed" the situation & nothing could be farther from the truth.
Situation wont be fixed till there is a rather large US deal in place. Many of the teams that are mentioned as losing money are only able to function due to non-hockey night events in their arenas. The non-hockey nights are propping up the hockey teams. Some would say that is bad business overall

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12-01-2013, 05:55 AM
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The sun belt teams weren't going back anyway so....

I mean Florida have a long lease and Tampa are a good team.

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12-01-2013, 07:14 AM
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Mightygoose
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Same sentiments were said after the CBA from 2004-05 lockout, signing of the NBC deal and the new CBA after the recent lockout as well.

No team was going to move up north short-tern anyways. This deal will help a few but the ones at a bottom revenue-wise may have even a larger gulf now. Time will tell.

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12-01-2013, 08:07 AM
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This was the first thing I thought of when I heard of the deal, that Phoenix might actually last.

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12-01-2013, 08:48 AM
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Elliotte Friedman mentionned on Hotstove yesterday that some teams expected the salary cap to be at $90M within 4-5 years which would mean the floor would be at $70M+... not so sure that teams who are at the bottom in attendance will be profitable in this scenario.

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12-01-2013, 09:43 AM
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Acesolid
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It's not a bad thing that the NHL is stable.

It just means expansion will come soon.

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12-01-2013, 10:15 AM
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Buck Aki Berg
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Quote:
Originally Posted by bozwell View Post
Situation wont be fixed till there is a rather large US deal in place. Many of the teams that are mentioned as losing money are only able to function due to non-hockey night events in their arenas. The non-hockey nights are propping up the hockey teams. Some would say that is bad business overall
As a hockey fan, I have the same emotional response - I want hockey to be where it's watched, enjoyed, and appreciated, not where it's propped up by subsidies and complimentary products on off nights.

From an economic standpoint, it's certainly not a bad business plan. It's no different than how a grocery store sells staple products below cost to bring people in, knowing they'll come out ahead because these people will buy a dozen other things at a markup. If the operation comes out ahead, it's not bad business.

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12-01-2013, 11:54 AM
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Dr Robot
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The TV contract is 5.2b over 12 years. Thats ~430m per year. The players get half so the salary cap goes up. 215mil divided by 30 teams=7million per team.

The US teams get 65% of that 430 mil. 65% of 430=280mil. Then you take that 280 divided by the remaining 23 US hockey teams. 280/23=12mil per team.

So all the US teams now take in an extra 12 mil and have to pay 7mil because of the increased salary cap. Not entirely sure how 5mil per year is going to stabilize everything.

Note:Rounded all my numbers but everything is pretty close.

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12-01-2013, 12:04 PM
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mouser
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Few things to consider with your math:
- There is already an existing Canadian TV deal, so it's not all "new" money.
- The contract probably escalates over the course of the deal, though that may not be the case.
- The cap floor is 85% of the midpoint average. So if it were a $7m increase that only ups the floor $5.95m.

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12-01-2013, 12:18 PM
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Dr Robot
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Quote:
Originally Posted by mouser View Post
Few things to consider with your math:
- There is already an existing Canadian TV deal, so it's not all "new" money.
- The contract probably escalates over the course of the deal, though that may not be the case.
- The cap floor is 85% of the midpoint average. So if it were a $7m increase that only ups the floor $5.95m.
All very legitimate points I didn't think of when I wrote this up. I guess that would change the situation and not the math so much though, the cap wouldn't just jump dramatically into an extra 7mil a year. Weren't the combined Canadian TV contracts already paying something like 200mil a year? So this really just boosts the numbers up by about half what I calculated for 6mil increased average revenue and 3mil increased average cap hit for the american teams. If the previous contract didn't have the 65/35 split and thats a new addition then the US teams would barely be making a profit off this whole thing.

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12-01-2013, 12:22 PM
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Whether this deal stabilizes the NHL or not all depends on how they split up the money. That, I think, will be the most interesting part of all of this. I would defer any predictions on what effect this deal will have until we find out exactly who gets what money. That will be the key.

If it were true that Canadian teams get a much larger share than American teams, then that could make the disparity of revenue even worse.

The problem has never been that the NHL doesn't make enough money: it's that the money it does make is too unevenly distributed. It might be a little too early to tell if this deal makes the problem better or worse.

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12-01-2013, 12:27 PM
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Quote:
Originally Posted by Dr Robot View Post
So all the US teams now take in an extra 12 mil and have to pay 7mil because of the increased salary cap. Not entirely sure how 5mil per year is going to stabilize everything.
So the increased revenue from the new TV deal still amounts to less than the annual Glendale taxpayer subsidy for the Yotes?

I know this forum is basically Phoenix-free now but can't help notice them still #30 in attendance this year even with the touting of stability from new ownership and on-ice performance putting them in playoff contention. They just made a big deal about largest single-game revenue and first time selling out all suites at Jobing from their Saturday night game against the Blackhawks, but that's only 2 games out of 41.

Still hard to see the situation there as solid.

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12-01-2013, 12:35 PM
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Quote:
Originally Posted by Dr Robot View Post
The TV contract is 5.2b over 12 years. Thats ~430m per year. The players get half so the salary cap goes up. 215mil divided by 30 teams=7million per team.

The US teams get 65% of that 430 mil. 65% of 430=280mil. Then you take that 280 divided by the remaining 23 US hockey teams. 280/23=12mil per team.

So all the US teams now take in an extra 12 mil and have to pay 7mil because of the increased salary cap. Not entirely sure how 5mil per year is going to stabilize everything.

Note:Rounded all my numbers but everything is pretty close.
You forgot to subtract the $190M that was already there from the previous deals... Which is probably what Keller did to. Which is why this is overblown.

It's an extra $3M/year, (Give or take) which isn't going to save a team like Phoenix from hitting their $50M trigger that opens up potential for relocation.

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12-01-2013, 12:38 PM
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Quote:
Originally Posted by Mightygoose View Post
Same sentiments were said after the CBA from 2004-05 lockout, signing of the NBC deal and the new CBA after the recent lockout as well.

No team was going to move up north short-tern anyways. This deal will help a few but the ones at a bottom revenue-wise may have even a larger gulf now. Time will tell.
Can't disagree at all, though I'll point out a few devils advocate opinions on the bolded.

Had the Atlanta owners not been actively trying to ditch the team from the moment they bought the three entities (Thrashers, Hawks, Phillips) from Turner aren't the odds significantly in favor of the Jets still being the Thrashers? Same can be said with the Coyotes and Moyes, though the NHL at least had the ability to prevent that one from happening.

The CBA (especially the cap) also went a long way in allowing teams like Nashville and Carolina to become competitive and turn from teams that were hemorrhaging money and in turn become teams that are break-even or better as much as they are not of late?

But that said, the increase in the Canadian TV deal still means the mid and lower revenue teams need to keep up lest they financially not be able to play on a level playing field with 10+ million differential in payrolls. The money from expansions (Seattle and whichever of QC/Toronto2/Hamilton) in the next few years are only going to exacerbate that.

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12-01-2013, 01:15 PM
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Originally Posted by hisgirlfriday View Post

I know this forum is basically Phoenix-free now but can't help notice them still #30 in attendance this year even with the touting of stability from new ownership and on-ice performance putting them in playoff contention. They just made a big deal about largest single-game revenue and first time selling out all suites at Jobing from their Saturday night game against the Blackhawks, but that's only 2 games out of 41.

Still hard to see the situation there as solid.
...after 13 of 205+ games

My prediction? Phoenix will somehow manage to stay in until the original lease expires, in 2028. At which point the building's shelf life will be starting to wane anyway... and the NHL will still be in business, thriving even.

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12-01-2013, 02:26 PM
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you still have leases expiring over the next decade. Nashville 2021 and Carolina in 2024 (Karamanos can't live forever).

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12-01-2013, 02:31 PM
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you still have leases expiring over the next decade. Nashville 2021 and Carolina in 2024 (Karamanos can't live forever).
Any sort of Nashville relocation would be a damn shame.

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12-01-2013, 03:58 PM
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you still have leases expiring over the next decade. Nashville 2021 and Carolina in 2024 (Karamanos can't live forever).
He could have the Ralph Wilson gene.

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12-01-2013, 04:58 PM
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Even if there wasn't going to be expansion, I think most of the pro-Canada sentiment is satiated with the 7th team. I think most reasonable Canadian fans would acknowledge that an eight team is pushing it (particularly if the conditions aren't just right), but getting back the Jets went a long way to healing old wounds. Getting back the nordiques would be icing on the cake.

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12-01-2013, 04:59 PM
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you still have leases expiring over the next decade. Nashville 2021 and Carolina in 2024 (Karamanos can't live forever).
Canes have more then enough local investors into things now that it's not a worry even when he does retire from things.

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12-01-2013, 05:13 PM
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nashville is not going anywhere

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