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Forbes slams Levitt report

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11-12-2004, 01:31 PM
  #106
tantalum
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Originally Posted by vanlady
This is the world of corporate finance not you checking account. Let me explain, let's look at the Pheonix Coyotes, there asset valuation is up 14% over last year which represents over a 17 million dollar increase. So the corporate bottom line has increased 17 million, but the posted a 7 million dollar loss. Bottom line, there corporate value has increase 10 million.

By the way do people realize these companies supply most of the information themselves to Forbes. Companies trip over themselves to make and stay on the Forbes fortune 500 list. Companies who come off that list see losses and struggle to get back on that list. Why, because in the financial world the Forbes magazine is a bible.
Really? It's not my checking account?

The FACTS of this story are this: Forbes does not have access to the numbers. These essentially are their estimates based as they say on "speaking with bankers, broadcast sources and league sources while studying arena leases, ticket sales and prices". And even with their estimates it has over half the teams losing money...more when taxes are accounted for.

``I can't really comment on the numbers, because I don't know where they come from,'' Stars president Jim Lites told the Dallas Morning News. ``Forbes has never once asked for one number concerning our business.''

The fact is the story does not hold hockey club profitability as it's main thesis but instead the thesis is that hockey teams can help build the framework of a larger commercial success. Both the team and commercial success may benefit from each other but that doesn't mean periphery assets not directly realted to game night should be included on the NHL teams revenues as it doesn't mean the NHL teams revenues should be included as part of the bar or hotel revenues next door. Those beneficial results are already reflected in increased ticket sales (and concessions, parking etc..) and increased exposure for the team (perhaps a bigger TV deal, more press means more fans means more ticket sales) while the bar and hotel sell more beer and more nights in the hotel. That is how these things are reflected in the bottom line. BUt just because owner A is making money with the hotel or movie theater or whatever DOES not mean he doesn't have a right to make moeny with the NHL club as a SEPARATE entity and business.

It's all well and good to say "but his other holdings in the area are making money" when talking about the individual owner BUT the fact is the team entity is NOT making money. That's the issue. You can't honestly tell me that a prospective sports team owner will even seriously look at Phoenix or LA or various other teams that are operating at a loss. Why? Because that owner is not going to get all the periphery revenues UNLESS he buys all those periphery assets. I.E. HE WILL LOSE MONEY IF HE BUYS THE TEAM. Now take it further...if the LA owner sells just the Kings and keeps everything else these things you and Forbes talk about will not be reflected in the new Kings owners revenues. So why would they be just because they are owned by the same guy? Saskins thinks the owners other holdings have bearing on this issue as do you. Sorry but Saskins and you are completely and utterly WRONG. Just because the Kings may benefit from the commercial district does not mean anything other than the increased ticket revenues should be included as NHL revenue. It just doesn't and indeed CAN'T work that way JUST because it is the same owner. I'm sure the players are making profits on their investments other than their career. Some even own a bar or restaurant that benefits from the team being present and their celebrity. I guess by this strange logic of Saskins they can afford to perhaps pay the team to play hockey instead of the other way around. You know take a loss on that part of their business as their other investments after all are making money.

From Fischler:
"Believe it or not, it took a visit to a Staten Island bar mitzvah for me to be convinced that the NHL's work stoppage is NOT the fault of ownership.

It is precisely the fault of a patently myopic Players' Association leadership which refuses to acknowledge the obvious; the NHL is bleeding big-bucks and needs more than a band-aid to save it.

How did this remarkable insight come about at a bar mitzvah?

Well, there I was at the appetizing table, dishing up some cole slaw and potato salad when the proud father, Marc Gold, introduced me to a young gentleman from Westchester County.

Turns out he's part-owner of the Tampa Bay Devil Rays and I congratulated him on being in the same town as the Stanley Cup champion Lightning.

"Funny you should mention that," the well-heeled investor replied. "My group actually was interested in buying an NHL team before we got into baseball.

"We checked the NHL numbers and they were awful. In fact, they were so bad right across the entire league spectrum that we decided that it was ridiculous to consider such a move. To an investor, hockey just doesn't work."

No, the man was not planted there by NHL propagandists to sway my opinion against the Players' Association. He was a real, live sports millionaire who loves hockey as a sport, but certainly not as a vehicle for making a profit.


Fischler

I.E. if you are just buying a team it doesn't make a bunch of sense for most of them as the team does not make money. BUt of course I'm sure the owners were hiding the number from prospective owners as well

In the end it doesn't matter because no matter whose numbers you believe...the NHL's (which by the way the NHLPA have access to and haven't put forth a differing report) or the Forbes numbers the business is losing a bunch of money. Over half the teams are not making money...before taxe expenses etc.


Last edited by tantalum: 11-12-2004 at 01:44 PM.
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11-12-2004, 01:38 PM
  #107
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Originally Posted by vanlady
Because quite simply, the owner would not have the arena if it were not for his team. You seem to think that the owners have invested their hard earned money in these arenas. Wrong, read the article again over 19 billion dollar in facilities have been built and owners of major league franchises have paid less than 1/3 of that. The tax payer pays the rest. What do the tax payers get, a guarentee that there team stays in the city.
Generalisations like that make you look bad. There are owners who paid for their arenas (example #1, Montreal). Also, while it was popular during the 90s to give arenas to teams, this has changed lately and the taxpayers dollars are much harder to come up with to finance arenas.

Also, you look like the perfect spin-doctor. Instead of putting a straight-up argument, you usually spin things around to "support" whatever you want. You contradict yourself through several posts, but always spinning it your way. You purposely use extreme examples while keeping quiet on the examples that don't support what you want (sharks guy who made some money vs the devils guy who lost $50M in assets value over 2-3 years?).

As to the Forbes, well their numbers have consistently been wrong on franchise values. The prices that franchises are sold at are very seldomly close to the Forbes values. The true test is the market, not some theoretical number you come up with. Plus, most of their claims of what is "hockey revenue" is ludicrous. They're talking like the NHL teams are currently a jewel for TV channels (when hockey's rating is lower than Poker and many other things), like the NHL teams are carrying NBA teams on their backs (hahahaha....). The real estate exploits of some owners are the exception, not the rule. The facts are that even if you include all kind of bogus revenue streams (LA Clippers rent? WTH!!!??? I guess AEG wouldn't pull that in if the LA Kings were moved to another city...) and use vague estimations, the Forbes still comes up with a $100M loss for an industry, before amortization (which kind of negates the fact some NHL teams didn't pay their rink), before loans, etc.

In a post, you even claim that investments in bonds and such aren't reported in the team's earnings. I find that hard to swallow, especially for a canadian team. Tell me who their auditor is so that I know they do a real crappy job (and tell the CCRA, I'm sure they'll be all over it).

As to the players not trusting the owners, well then why not go play for someone else? Would you work for someone you don't trust? Imo, it's a given that if you work for another party, you need to have a certain level of trust...

You write that the Phoenix Coyotes had asset valuation going up 14%. Can you provide details? Which assets? Why? Also, if you go into asset valuation, you're going to have to include debts and so on on top of the usual loss, otherwise it doesn't make any sense. (side note: I'm not really surprised though that you would skip certain details)

In today's NHL, the best run teams are the Minessota Wild, the Chicago Blackhawks. Why? Because they make a profit even though on ice they aren't the best, and since about 50% of the teams can't make the playoffs every year, financially it is the best way to run your team. Is it your wish to have more teams run like them? Do you really think that is what the NHL should become? I find that hard to swallow.

The market is changing daily. The way entities are managed is also evolving on a daily basis. Today, each "center" must contribute to the overall profit. If the hockey team doesn't make you money, ditch it and replace it with something else that brings you more profit (or cut the loss).

As a fan, I want a stable NHL, where the franchises will stay and be competitive every year in the same cities. That can only be achieved through a remake of the financial operations of the NHL as a whole. Whether the players agree or not, I could care less honestly.

P.S.: One glaring proof that the NHL is not "economically viable" (as in the risk/reward return rate is a very bad one) is that when teams are for sale they have a hard time finding a local buyer. What this means is that local investors (which are plenty everywhere in NA) feel they can invest their money in something else that will give them a better rate of return. When not even a single local entity/group/holding is interested in buying the local hockey team, you're in a very bad position...


Last edited by SuperUnknown: 11-12-2004 at 01:44 PM.
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11-12-2004, 02:41 PM
  #108
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Originally Posted by Smail
Generalisations like that make you look bad. There are owners who paid for their arenas (example #1, Montreal). Also, while it was popular during the 90s to give arenas to teams, this has changed lately and the taxpayers dollars are much harder to come up with to finance arenas.

Also, you look like the perfect spin-doctor. Instead of putting a straight-up argument, you usually spin things around to "support" whatever you want. You contradict yourself through several posts, but always spinning it your way. You purposely use extreme examples while keeping quiet on the examples that don't support what you want (sharks guy who made some money vs the devils guy who lost $50M in assets value over 2-3 years?).

As to the Forbes, well their numbers have consistently been wrong on franchise values. The prices that franchises are sold at are very seldomly close to the Forbes values. The true test is the market, not some theoretical number you come up with. Plus, most of their claims of what is "hockey revenue" is ludicrous. They're talking like the NHL teams are currently a jewel for TV channels (when hockey's rating is lower than Poker and many other things), like the NHL teams are carrying NBA teams on their backs (hahahaha....). The real estate exploits of some owners are the exception, not the rule. The facts are that even if you include all kind of bogus revenue streams (LA Clippers rent? WTH!!!??? I guess AEG wouldn't pull that in if the LA Kings were moved to another city...) and use vague estimations, the Forbes still comes up with a $100M loss for an industry, before amortization (which kind of negates the fact some NHL teams didn't pay their rink), before loans, etc.

In a post, you even claim that investments in bonds and such aren't reported in the team's earnings. I find that hard to swallow, especially for a canadian team. Tell me who their auditor is so that I know they do a real crappy job (and tell the CCRA, I'm sure they'll be all over it).

As to the players not trusting the owners, well then why not go play for someone else? Would you work for someone you don't trust? Imo, it's a given that if you work for another party, you need to have a certain level of trust...

You write that the Phoenix Coyotes had asset valuation going up 14%. Can you provide details? Which assets? Why? Also, if you go into asset valuation, you're going to have to include debts and so on on top of the usual loss, otherwise it doesn't make any sense. (side note: I'm not really surprised though that you would skip certain details)

In today's NHL, the best run teams are the Minessota Wild, the Chicago Blackhawks. Why? Because they make a profit even though on ice they aren't the best, and since about 50% of the teams can't make the playoffs every year, financially it is the best way to run your team. Is it your wish to have more teams run like them? Do you really think that is what the NHL should become? I find that hard to swallow.

The market is changing daily. The way entities are managed is also evolving on a daily basis. Today, each "center" must contribute to the overall profit. If the hockey team doesn't make you money, ditch it and replace it with something else that brings you more profit (or cut the loss).

As a fan, I want a stable NHL, where the franchises will stay and be competitive every year in the same cities. That can only be achieved through a remake of the financial operations of the NHL as a whole. Whether the players agree or not, I could care less honestly.

P.S.: One glaring proof that the NHL is not "economically viable" (as in the risk/reward return rate is a very bad one) is that when teams are for sale they have a hard time finding a local buyer. What this means is that local investors (which are plenty everywhere in NA) feel they can invest their money in something else that will give them a better rate of return. When not even a single local entity/group/holding is interested in buying the local hockey team, you're in a very bad position...
I will correct my statement for you. The strong majority of US teams.

If you had read the article you would have found the team valuations and there percentage of increase in a single year. For those of you that want to rebuff those valuations I suggest you look to the Thrashers as a perfect example of just how close Forbes is. The Thrashers, arena and basketball team sold for 250 million, Time Warner kept a percentage of the team and the over all valuation for the teams and arena is 308 million, guess what Forbes is only 3 million off, in corporate terms that is nothing it is less than 1% of the deal.

IMO the best fiscally run teams in the NHL are Vancouver, Toronto and yes Minnesota. Coaching does not equate to how a team is fiscally run.

In many cases owners can't just replace teams. In most cities in the US the leases and government funding are directly tied to the team.

As for the sale of teams, did the Thrashers just not get sold? Isn't a new owner for Vancouver waiting to see if the new CBA contains revenue sharing before signing (by the way if the new CBA does contain revenue sharing the deal falls through), by the way the reason McCaw was having problems selling Vancouver, he wanted to keep the arena. Why aren't teams selling, look at Nashville, when the team moved to the city it received one of the best leases in the NHL. The Preds got 100% of all arena revenue and a lucrative by out clause at the end, what did the owners do just before putting the team up for sale? Transfered that lucrative lease to a holding company called Powers Management, the holding company is not part of the sale. Don't beleive me Google is a wonderful tool.

And finally my favorite, if you don't trust em go play for someone else. The NHL would cease to exist.

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11-12-2004, 02:43 PM
  #109
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Originally Posted by vanlady
Why do you think you have never heard of Levitt doing one of these reports before? Because the US senate pointed the finger directly at Levitt for the collapse of Enron and Worldcom when he headed the SCC. He isn't doing audits all over the US, give your head a shake.

http://www.findarticles.com/p/articl...18/ai_83699604

Quoted as this article seems to have been missed by the masses here. Not trying to question they guy's integrity here but come on... the man is linked to Enron.

Quote:
Originally Posted by MacDaddy Version 1.3
Any creative accountant worth their salt could show profit or losses to represent the best interests of their client.
People always seem to forget about this concept. When everyone is discussing how great Levitt is and how respected etc, etc, just remember if you get your taxes done by an accountant, he/she is probably trying to get the most out of your tax return; not to harm you. Not saying that Levitt absolutely, positively did that but some of you people are taking this man's word as gospel.

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11-12-2004, 02:48 PM
  #110
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Originally Posted by me2

According to Forbes the Hawks made $9m last year. So Wirtz must be a great manager. There should be more Wirtz running this league not less. Then again $9m operating income (according to Forbes) isn't much of a return on an enterprise supposedly worth $178m. Poor old Bill Wirtz, he runs his team like a business, makes a profit (at least according to Forbes) and slagged by the fans as a cheapskate.
I don't follow Hawks financies so closely, but if this true, there's nothing wrong with Wirtz in THIS respect, sticking to budget he feels he can afford/wants to spend. You can question the fans, though.

As for the whole concept of this thread, it's understandable that players, who basically just want to play hockey, don't want to get too deep into each franchise's and each owner's businesses. They are not primarily aspiring to become businessman, lawyers or accountants, nor they want the NHLPA to be forced to hire more lawyers and accountants just to keep track of what owners are doing with their businesses, whether they are lying, hiding revenues for tax purposes or whatever.

The players (and thus NHLPA) would probably much rather leave all that to each individual owner who knows his business best, and let the owner after his careful(?)consideration decide the players' salaries and other hockey operations costs of his team. Therefore it's understandable that NHLPA isn't too interested to investigate Levitt report, URO's etc. The players would much rather negotiate a CBA, where the best experts (owners) dealt with these issues amongst themselves.

But the players are likely to negotiatiate even this, if the owners really need help to run their business properly. But it's understandable, that they don't see this as their first option or duty.

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11-12-2004, 02:52 PM
  #111
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Quote:
Originally Posted by shakes
People always seem to forget about this concept. When everyone is discussing how great Levitt is and how respected etc, etc, just remember if you get your taxes done by an accountant, he/she is probably trying to get the most out of your tax return; not to harm you. Not saying that Levitt absolutely, positively did that but some of you people are taking this man's word as gospel.
It really is comments like that that piss me off. Would it make you feel better if Levitt reported $10 million less then the total the NHL is missing??? It baffles me when people say, look, there is another 2-3 million not reported there, etc. Its one thing to miss-represent a million here or there, but to claim losses of over $200-$300 million is the point. For the people that say the owners are lying about the numbers, are they really going to put themselves out on the line and claim losses of hundreds of millions of dollars, fearing that someone might call them out and catch there act??? Get real!!!

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11-12-2004, 02:55 PM
  #112
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Originally Posted by shakes
Quoted as this article seems to have been missed by the masses here. Not trying to question they guy's integrity here but come on... the man is linked to Enron.

People always seem to forget about this concept. When everyone is discussing how great Levitt is and how respected etc, etc, just remember if you get your taxes done by an accountant, he/she is probably trying to get the most out of your tax return; not to harm you. Not saying that Levitt absolutely, positively did that but some of you people are taking this man's word as gospel.
George W Bush is linked to Enron. He still got a 2nd mandate.

As to taxes, well the accountant's job is to get the most back within legal boundaries. Just as when they do an audit, they do it within certain boudaries (set by some national accountant board...).

I read the Levitt report, and by an accountant standards, it's pretty solid and paints a fairly good overall situation (and not a team by team analysis). I'm sure some teams bend the numbers more than others, I'm sure some teams try to hide some revenues, but hey, what's important is the health of all the teams, not just of a few here and there. Overall, the numbers are calculated using business standards way of calculating them, which means that they're calculated so they are comparable to other business ventures (not hockey) and should be to compare the rate of return on investment. The Levitt report did include where the numbers were from, how they were calculated, etc. The Forbes number are just that, numbers and the only explanation is "hearsay" (banker told us and so on).


Last edited by SuperUnknown: 11-12-2004 at 03:03 PM.
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11-12-2004, 02:58 PM
  #113
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Originally Posted by vanlady
And finally my favorite, if you don't trust em go play for someone else. The NHL would cease to exist.
You didn't address his question at all.

Why the heck should the players care if the NHL ceases to exist? If they can't trust them and likely never will, get the hell away from the crooks and go further their careers in Europe and/or Russia. I'm sure the team owners over there are paragons of virtue and keep everything above board.

But then I guess if there's no NHL, there's not much need for an NHLPA or a Bob Goodenow to lead them...is there?

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11-12-2004, 03:00 PM
  #114
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Originally Posted by gary69
The players (and thus NHLPA) would probably much rather leave all that to each individual owner who knows his business best, and let the owner after his careful(?)consideration decide the players' salaries and other hockey operations costs of his team. Therefore it's understandable that NHLPA isn't too interested to investigate Levitt report, URO's etc. The players would much rather negotiate a CBA, where the best experts (owners) dealt with these issues amongst themselves.
This is a marked contradiction though in the player's claims. They say they want the owners to deal with the business part, claiming they are the experts. On the other hand, they blame the current problems on the owners, claiming they mismanaged and mishandled the situation.

So either the owners are experts or poor managers. Either the players know the business side or they don't (and then don't judge the owner's performance and still believe they are experts, and as such that there really is a problem).

You can't always have the best of both worlds. Either you settle one way or the other.

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11-12-2004, 03:11 PM
  #115
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Originally Posted by vanlady
According to Forbes the NHL is losing 93 million, not hundreds of millions.
Forbes conveniently leaves off little things like "interest" and "taxes", as if they don't exist. Not to mention they don't even ask to see any of the books, and all their numbers are educated guesses at best.

Yes, I phrased that poorly. I was trying to say the league still collectively loses over a hundred million a year. Once again, we have *independent* confirmation of just how bad the NHL is bleeding, and how things need to be changed, and you PA types can't even see it.

Quote:
Originally Posted by Digger12
And while you're at it, could I trouble you to send me the links of the Eagleson fall, and how his secretaries had to go into witness protection and how Goodenow risked his life...you've mentioned these before. I'm not doubting you, I just can't find any info about it. Thanks.
Heh, good post. You've noticed that too eh? Vanlady leaves these little nuggets of "truths" and then totally disappears when called on them?

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11-12-2004, 03:15 PM
  #116
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Originally Posted by gary69
The players (and thus NHLPA) would probably much rather leave all that to each individual owner who knows his business best, and let the owner after his careful(?)consideration decide the players' salaries and other hockey operations costs of his team. Therefore it's understandable that NHLPA isn't too interested to investigate Levitt report, URO's etc. The players would much rather negotiate a CBA, where the best experts (owners) dealt with these issues amongst themselves.
I agree with this statement completely.

If I was an NHL player, I would want the owners to control themselves individually as well. After all, the owners have proven that they are their own worst enemy. If I was short sighted, then all I would see is guys like Iilitch or Dolan or Hicks shelling money out of pocket to my benefit.

Ta hell with the other 20 teams trying to keep up. They will pay what they can afford and I would look to cash in with the guys that are willing to compensate me over and above what the game can actually support.

Now since I am not a player and am trying my hardest to see things longterm, I say the NHL needs to protect themselves from themselves and unfortunately the owners have created such a mess with the cooperation of the players that something drastic has to be done.

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11-12-2004, 03:44 PM
  #117
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Originally Posted by Craven Morehead
It really is comments like that that piss me off. Would it make you feel better if Levitt reported $10 million less then the total the NHL is missing??? It baffles me when people say, look, there is another 2-3 million not reported there, etc. Its one thing to miss-represent a million here or there, but to claim losses of over $200-$300 million is the point. For the people that say the owners are lying about the numbers, are they really going to put themselves out on the line and claim losses of hundreds of millions of dollars, fearing that someone might call them out and catch there act??? Get real!!!



Oh My.. did you even read what you wrote? Yes is would make me feel better if he represented the books CORRECTLY. To say that its ok for Levitt to miss millions here and there is an asinine thing to say. If you are going into a barganing position with the books as your main evidence, then you better be damn sure they are correct or you generally find people tend not to believe you.

Also.. yes.. I do believe the owners have and would lie about the numbers. Don't get me wrong, its not like I think they are all making money, but I certainly believe they are including expenses that they shouldn't be and not including revenues where they should be.

Quote:
Originally Posted by Smail
George W Bush is linked to Enron. He still got a 2nd mandate.
I'm not sure if this point is rebutting my statement or agreeing with it.

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11-12-2004, 04:15 PM
  #118
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Originally Posted by vanlady

Isn't a new owner for Vancouver waiting to see if the new CBA contains revenue sharing before signing (by the way if the new CBA does contain revenue sharing the deal falls through),
This only strengthens what I've been feeling all along, that Bettman's talk of "meaningful revenue sharing" is nothing but hot air.

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11-12-2004, 04:42 PM
  #119
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This is directed to Vanlady, if you dispute the Levitt report soo much tell me what is missing on the 12 page balance sheet (i mean what revenues or expenditures are missing), after looking at it many times it seems to me it does what it is supose to do and that is FOCUSING on the NHL TEAM ONLY.

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11-12-2004, 05:17 PM
  #120
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Originally Posted by vanlady
As anyone in accounting and finance will tell you the profit and loss statements are smoke screens. If you want to know the real truth about the financial health of any business you look at the asset valuation. In the case of the NHL they have increased 31% over 6 years. Do you realize that kind of increase puts the NHL at the same level of increases as Microsoft through the 90's. Anyone in finance will tell you that any league that has increased by 31% CANNOT
I don't look at the GAAP (generally accepted accounting principles) of the NHL/NHLPA. I don't even look at the financial values of the teams to determine what ide I am on in the lockout. I look at the General disinterest of Americans when it come to hockey. The NHL just lost a big TV contract in the US, while singing a more lucrative one in Canada.

I look at Game 7 of the Stanley Cup final the past 2 years, and realize that hundreds of tickets were still available on gameday in Tampa and New Jersey. I look at the National and International media taking an interest in the NHL when small market Canadian teams like Calgary, and their fans, who revive the passion in the game. Calgary was like a Canadian mardi gras in Cowtown for two months. People flocked there during the later rounds from Canada and the US just for the festivities.

That is when it really hits home that it doesn't matter whether the NHL expands to Las Vegas or New Orleans. Nobody than a few diehards in both cities will notice. When the NHL removes the Quebec's and the Winnipeg's from the league, I view them more as a corporation, not a league. It may be business, but it takes away from the love of the game.

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