The Business of HockeyDiscuss the financial and business aspects of the NHL. Franchise sales, valuations, TV contracts, ratings, expansion, relocation, the CBA and work stoppage discussion goes here.
I think that MLB, NBA & NHL should look at contraction to 28 teams, it would help the quality of play so much and expand the revenues for every team. The NFL is perfect at 32 teams and now just need to get new stadiums built for some of the old buildings.
MLB has two teams in the A's & Rays that can easily be contracted.
NBA has one team with the Hornets and many can argue that other teams are struggling badly.
NHL has one team with the Coyotes and many can argue that other teams are struggling badly.
Quote:
Originally Posted by nds90
i agree, but many people seem to get butthurt over the idea of contraction. but if it doesn't make financial sense, then it shouldn't be done
But let's look at the points by themselves...
it would help the quality of play so much and expand the revenues for every team
Help the quality of play? How? Do the members of the Phoenix Coyotes and a Team To Be Named Later actually get dispersed throughout the league so that each team is better? I'm thinking that may be a stretch. Assuming a roster of 23 players, a two-team contraction would free up 46 players to go over 28 teams. I hardly think that removing two teams, resulting in a net change of 1.5 players per team via a dispersal draft, would drastically "help the quality of play so much".
Expand the revenues for every team? It only helps over a really long term; the short term is the costs to buy out the contracting teams.
For example, the NHL bought the Coyotes for $140 million. Technically, the membership of the NHL bought the Coyotes for $140 million. Let's just say that another team would have to be purchased for $140 million. That's 28 teams out $10 million per team, investing money into a team so they can be contracted, which is an immediate net loss. Assuming $1.3 billion of centrally-derived league revenues (based off of another post in BoH), each of the current 30 teams are receiving $43.3M in central revenues. Contract to 28 teams, the payout goes to $46.4M, a difference of just over $3 million. It would take three-plus years to start breaking even, and then the "expand revenues for every team" finally takes place, at less than $4 million yearly.
Many have issues with that $1.3 billion in centrally derived revenues as a real number. Many believe the centrally-derived league revenues to be less. Even at the three-year benchmark after contraction, an increase of $4 million per team of league revenue distribution doesn't really "expand revenues for every team".
But what it does is the downside of contraction: takes away fans and puts a black spot on marketing the league.
And as I said in a prior post, a contraction of the bottom two teams in a league means two new teams are the bottom two teams in a league. It isn't like over the course of the years those teams haven't changed quite a bit.
it would help the quality of play so much and expand the revenues for every team
Help the quality of play? How? Do the members of the Phoenix Coyotes and a Team To Be Named Later actually get dispersed throughout the league so that each team is better? I'm thinking that may be a stretch. Assuming a roster of 23 players, a two-team contraction would free up 46 players to go over 28 teams. I hardly think that removing two teams, resulting in a net change of 1.5 players per team via a dispersal draft, would drastically "help the quality of play so much".
Expand the revenues for every team? It only helps over a really long term; the short term is the costs to buy out the contracting teams.
For example, the NHL bought the Coyotes for $140 million. Technically, the membership of the NHL bought the Coyotes for $140 million. Let's just say that another team would have to be purchased for $140 million. That's 28 teams out $10 million per team, investing money into a team so they can be contracted, which is an immediate net loss. Assuming $1.3 billion of centrally-derived league revenues (based off of another post in BoH), each of the current 30 teams are receiving $43.3M in central revenues. Contract to 28 teams, the payout goes to $46.4M, a difference of just over $3 million. It would take three-plus years to start breaking even, and then the "expand revenues for every team" finally takes place, at less than $4 million yearly.
Many have issues with that $1.3 billion in centrally derived revenues as a real number. Many believe the centrally-derived league revenues to be less. Even at the three-year benchmark after contraction, an increase of $4 million per team of league revenue distribution doesn't really "expand revenues for every team".
But what it does is the downside of contraction: takes away fans and puts a black spot on marketing the league.
And as I said in a prior post, a contraction of the bottom two teams in a league means two new teams are the bottom two teams in a league. It isn't like over the course of the years those teams haven't changed quite a bit.
how is helping the league in the long run a bad thing? waiting 3 years to break even is not long at all. then after the 3 years, it starts to pay off.
certain teams don't need the money obviously. the increased revenue could just go to other teams in financial trouble to make them stronger. so the 28th team would get the most, while the leafs, rangers, habs, etc. would get the least, if any at all.
how is helping the league in the long run a bad thing? waiting 3 years to break even is not long at all. then after the 3 years, it starts to pay off.
Because in the short-term it costs each team $10 million, and because the NHL endures a black-eye in the form of contraction. Depending on the teams that are contracted, the contraction itself might garnish some of the centrally-derived League revenues.
Quote:
Originally Posted by nds90
certain teams don't need the money obviously. the increased revenue could just go to other teams in financial trouble to make them stronger. so the 28th team would get the most, while the leafs, rangers, habs, etc. would get the least, if any at all.
Not being coy or anatagonistic, but what if it were to be stated like this?
if the status quo were maintained, certain teams don't need the money obviously. the revenues could just go to other teams in financial trouble to make them stronger. so the 30th team would get the most, while the leafs, rangers, habs, etc. would get the least, if any at all.
You've just made an argument to contract and provide better revenue sharing, while revenue sharing is more a function of the CBA. Contraction isn't required for better revenue sharing.
There's interest from many places that would like to have NHL teams. I don't think contraction is the way to go. At least not yet.
I know how to tell time, it's just that you made it sound like the Blackhawks were always a profitable business when the franchise really wasn't.
On the balance sheets they weren't, but I seem to remember reading that the Blackhawks owner contracted tons of parts of the team out to other businesses he owned so that he could claim that loss and get revenue sharing. Florida, even with losing hockey operations, is a successful team because of how it factors into their arena management agreements. Lots of other teams are successful for similar reasons. I'm pretty sure that as a whole, the league is quite healthy, with only a few really bad apples.
On the balance sheets they weren't, but I seem to remember reading that the Blackhawks owner contracted tons of parts of the team out to other businesses he owned so that he could claim that loss and get revenue sharing. Florida, even with losing hockey operations, is a successful team because of how it factors into their arena management agreements. Lots of other teams are successful for similar reasons. I'm pretty sure that as a whole, the league is quite healthy, with only a few really bad apples.
Because in the short-term it costs each team $10 million, and because the NHL endures a black-eye in the form of contraction. Depending on the teams that are contracted, the contraction itself might garnish some of the centrally-derived League revenues.Not being coy or anatagonistic, but what if it were to be stated like this?
if the status quo were maintained, certain teams don't need the money obviously. the revenues could just go to other teams in financial trouble to make them stronger. so the 30th team would get the most, while the leafs, rangers, habs, etc. would get the least, if any at all.
You've just made an argument to contract and provide better revenue sharing, while revenue sharing is more a function of the CBA. Contraction isn't required for better revenue sharing.
There's interest from many places that would like to have NHL teams. I don't think contraction is the way to go. At least not yet.
fair enough. i still don't think contraction is as bad as some of you make it out to be though
Except, as long as there are relocation opportunities, they will not contract - they will relocate or be sold locally at a discount - even if it requires bankruptcy protection to break existing leases or other commitments. An NHL Franchise is still an asset with value, that the owners (or their creditors) will act to maximize the value of.
fair enough. i still don't think contraction is as bad as some of you make it out to be though
It's the philosophy of it. If contraction of two of thirty teams (a contraction of 6.66 percent) would create the ability to generate 10 percent more revenue to the league, then of course it is a no brainer. The problem is that isn't the case.
Quote:
Originally Posted by Dado
No need for that.
Just let teams that go broke, go broke.
No-cost contraction.
Thinking out loud...
Phoenix Coyotes go bankrupt. Assuming no white knight (or dark night) attempts to walk in an purchase the assets, the creditors get to assume the assets and do as they please, which could include liquidation by selling off assets, including all the player contracts. At that point, does the NHL allow a dispersal draft or allow the creditor owners sell the contracts? Now the NHL is involved. Do they want to contract, or do they want to allow one of many potential relocation suitors to purchase the team so that the League can save face?
Let's face it. We just had the perfect scenario last spring. The NHL could have blocked all relocation talk and simply allowed the Coyotes to fold after the season and could have simply voted no to the Thrashers relocation, forcing ASG to field a team or file bankruptcy.
Quote:
Originally Posted by kdb209
Except, as long as there are relocation opportunities, they will not contract - they will relocate or be sold locally at a discount - even if it requires bankruptcy protection to break existing leases or other commitments. An NHL Franchise is still an asset with value, that the owners (or their creditors) will act to maximize that value of.
And that's what sports teams have done in the bigger leagues since the demise of the Cleveland Barons. Heck, since 1998 we've had:
Pittsburgh
Buffalo
Ottawa
Phoenix
Dallas
All declare bankruptcy to basically provide bankruptcy protection.
Phoenix Coyotes go bankrupt. Assuming no white knight (or dark night) attempts to walk in an purchase the assets, the creditors get to assume the assets and do as they please, which could include liquidation by selling off assets, including all the player contracts. At that point, does the NHL allow a dispersal draft or allow the creditor owners sell the contracts? Now the NHL is involved. Do they want to contract, or do they want to allow one of many potential relocation suitors to purchase the team so that the League can save face?
Creditors could not sell off player contracts. They could assume control of the franchise through bankruptcy and orchestrate it's sale, but if they liquidated the franchise or defaulted on the player contracts the League has the option (but is not required to) to assume all existing SPCs and assign them as they choose (dispersal draft, etc). If the league did not assume the SPCs, they would be terminated and the players would become UFAs.
true. but what happens when there's nowhere else to move? if the coyotes move to QC or seattle, there will still be other teams with problems
Toronto could easily hold a 2nd team. Hamilton & area could also have a team. If the right CBA is in place, there'll always be owners looking for a team.
As long as you can sell your team to someone who has an available arena somewhere in North America, there is no need for contraction.
The NHL has used up Winnipeg (Atlanta) and is about to use up Quebec (Phoenix). Where does the next team-in-trouble go? I expect one of the Islanders or Devils to be the next problem. Yes, there are NHL-spec arenas in Atlanta/Houston/KC/Portland, but the arena managers there don't want an NHL team. That is the most likely scenario for contraction before 2016, unless Bettman can find another owner soon.
Seattle's hockey arena is merely speculation today. Sacremento might be the dark horse, assuming they don't "pull a Barclay's" with their new arena. Hamilton is an outside possibility, assuming MLSE's new owners can be talked into allowing it.
The NHL has used up Winnipeg (Atlanta) and is about to use up Quebec (Phoenix). Where does the next team-in-trouble go? I expect one of the Islanders or Devils to be the next problem. Yes, there are NHL-spec arenas in Atlanta/Houston/KC/Portland, but the arena managers there don't want an NHL team. That is the most likely scenario for contraction before 2016, unless Bettman can find another owner soon.
Seattle's hockey arena is merely speculation today. Sacremento might be the dark horse, assuming they don't "pull a Barclay's" with their new arena. Hamilton is an outside possibility, assuming MLSE's new owners can be talked into allowing it.
Truth be told, I really don't think that there is another team on the relocation block any time soon. No way that the Devils move so soon after getting a new arena, for the simple fact that it would send a horrendous message around the league about the instability of the NHL and that building a new arena is a bad proposition for locals. And the Isles, in spite of their troubles, don't seem likely to move despite all their problems, as I don't see the NHL approving a relocation out of that market and, from what I've heard, there seems to be at least some interested local buyers that'd want the team and to take a crack at building a new place in their own way (or, worse comes to worse, they just play in the Barclays Center even with it being tiny and not designed at all for hockey). Finally, the BJs, though you didn't mention them, seem like they're having their arena financing sorted out, seemingly eliminating them as a relocation candidate for at least a while. Other teams often mentioned, like the Stars and Blues, aren't moving out of those markets despite ownership questions, don't care what anyone says. And the Panthers aren't moving either, as they're operating within the ownership's overall business strategy moving forward of accepting the team being in the red while using them as an anchor tenant in the arena and a centerpiece of their area redevelopment to overall make money.
So, in all actuality, after the Yotes situation is settled, I honestly don't think we're going to see another relocation for at least a decade, if not more, giving plenty of time for Seattle to get an arena and Kansas City and Houston to get potential ownership groups in place for either relocation or expansion.
And really doubt that Sacramento will be interested enough in an NHL team as well. I'd put Vegas ahead of them in terms of likelihood, and I don't even think they're at all realistic of a possibility.
The NHL has used up Winnipeg (Atlanta) and is about to use up Quebec (Phoenix). Where does the next team-in-trouble go? I expect one of the Islanders or Devils to be the next problem. Yes, there are NHL-spec arenas in Atlanta/Houston/KC/Portland, but the arena managers there don't want an NHL team. That is the most likely scenario for contraction before 2016, unless Bettman can find another owner soon.
Seattle's hockey arena is merely speculation today. Sacremento might be the dark horse, assuming they don't "pull a Barclay's" with their new arena. Hamilton is an outside possibility, assuming MLSE's new owners can be talked into allowing it.
There will be cities available for team transfers. Eventually, if the NHL shows interest in certain cities, I can see an interested buyer willing to purchase a failing team for relocation. The league has the option right now to relocate to:
Quebec City
Kansas City
Hamilton (if they wanted to)
Seattle is already in talks to build an arena, and with Houston a possibility, the league does have options for relocation. Although, it would be awful to see so many teams relocate like the NBA has in recent years.
The Sabres are now stable, and there will be teams that can find owners to take on the team. It all depends on the marker/ownership dynamic. Phoenix does not work because there are too many issues and no owner wants to take on the team there. Otherwise, most other teams have a shot of keeping their team with a healthy ownership.
The NHL has used up Winnipeg (Atlanta) and is about to use up Quebec (Phoenix). Where does the next team-in-trouble go? I expect one of the Islanders or Devils to be the next problem. Yes, there are NHL-spec arenas in Atlanta/Houston/KC/Portland, but the arena managers there don't want an NHL team. That is the most likely scenario for contraction before 2016, unless Bettman can find another owner soon.
Seattle's hockey arena is merely speculation today. Sacremento might be the dark horse, assuming they don't "pull a Barclay's" with their new arena. Hamilton is an outside possibility, assuming MLSE's new owners can be talked into allowing it.
Hartford anyone? Not sure why they get ignored, especially when it comes to the NY area teams. Possible new arena done for 2016 just in time for Islanders/Devils drama.
Hartford anyone? Not sure why they get ignored, especially when it comes to the NY area teams. Possible new arena done for 2016 just in time for Islanders/Devils drama.
That's the key there. It's possible, but it's not a sure thing, yet.
Plus, I'm expecting the Bruins and Rangers to try to sabotage the idea of planting a team in Hartford as they view Connecticut as their turf (in spite of their responses in the past about the hypothetical of the Whalers coming back).
And really doubt that Sacramento will be interested enough in an NHL team as well. I'd put Vegas ahead of them in terms of likelihood, and I don't even think they're at all realistic of a possibility.
Sacramento has done a preliminary approval for an arena. Las Vegas ??? And we never know what team problem is going to "come out of the woodwork". 15 months ago, all eyes were on Phoenix moving to Winnipeg, and we got blind-sided by Atlanta.
The league has the option right now to relocate to:
Quebec City
That's where Phoenix is going this spring.
Quote:
Originally Posted by 1927
Kansas City
I don't think so. They're doing just fine, thank you, without a major league anchor tenant. Problem is that an NHL team can not work without getting all the concession and parking revenue for at least its own events, if not all events at the arena. This would mean less profit for arena management, and the city. Atlanta's owners dumped the Thrashers after crunching the numbers. Mayor Sly James hasn't been too friendly to subsidizing an NHL or NBA team. Fuggedaboutit
Quote:
Originally Posted by 1927
Hamilton (if they wanted to)
If MLSE and Buffalo wanted to. Again Fuggedaboutit.
Quote:
Originally Posted by 1927
Seattle is already in talks to build an arena
IF the NBA moves a team there... otherwise... Fuggedaboutit.
Quote:
Originally Posted by 1927
and with Houston a possibility
A dozen years ago, Les Alexander was interested. Today he's pushing 70, and the economic meltdown plus his divorce have reduced his personal fortune. He's not interested. Do you really thing Bettman would've sent the Thrashers to Winnipeg if Les Alexander in Houston was at all interested? Or Paul Allen in Portland, or anybody serious in KC?
If Sacramento doesn't "pull a Barclays" with their new arena (i.e. make it NBA-specific), they might be a dark-horse candidate for a franchise.
