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The Business of Hockey Discuss the financial and business aspects of the NHL. Topics may include the CBA, work stoppages, broadcast contracts, franchise sales, NHL revenues, relocation and expansion.

Is the NHLPA ready to alter its position?

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Old
11-19-2004, 01:28 PM
  #26
Jaded-Fan
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Originally Posted by Thunderstruck
The major difference is that this proposal contains a hard cap at $50 M not allowing for the unlimited spending favoured by the Yankees.
If the only way most teams can make money is (currently) a cap somewhere under $40 million, then I still say that allowing an uneven playing field of about 40% higher aggregate salaries for some teams should not be allowed as the league as a whole benefits when there is a fairly even playing field. Look at football:

1) All is dependent on draft and FA signings, so there is excitement during the season AND the off-season in every city as your team management makes moves, not dink moves, but real ones with important players. I have seen big names leave the Steelers almost every year, but new big names come into their own or be brought in. It is an exciting thing to watch, and that generates interest.

2) Percieved thumbs on the scales against your team have to weigh on the popularity of the sport.

3) It makes championships mean much more as you actually did not have a leg up

4) I would bet that the sport would grow, it happened in football, it happened in basketball, get the house in proverbial order and it would happen in hockey, increasing ironically salaries for everyone.

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11-19-2004, 01:31 PM
  #27
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Thanks for the read. The Forbes report did nothing more then put the season more at risk. What happened to the mod? Was looking for a rebuttal.

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11-19-2004, 01:46 PM
  #28
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Originally Posted by Jaded-Fan
If the only way most teams can make money is (currently) a cap somewhere under $40 million, then I still say that allowing an uneven playing field of about 40% higher aggregate salaries for some teams should not be allowed as the league as a whole benefits when there is a fairly even playing field. Look at football:

1) All is dependent on draft and FA signings, so there is excitement during the season AND the off-season in every city as your team management makes moves, not dink moves, but real ones with important players. I have seen big names leave the Steelers almost every year, but new big names come into their own or be brought in. It is an exciting thing to watch, and that generates interest.

2) Percieved thumbs on the scales against your team have to weigh on the popularity of the sport.

3) It makes championships mean much more as you actually did not have a leg up

4) I would bet that the sport would grow, it happened in football, it happened in basketball, get the house in proverbial order and it would happen in hockey, increasing ironically salaries for everyone.

I'm not following. Where is the does the 40% come from?

The proposal called for a soft cap with a tax at 35M and a hard cap at 50M

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11-19-2004, 01:54 PM
  #29
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Originally Posted by triggrman
I'm not following. Where is the does the 40% come from?

The proposal called for a soft cap with a tax at 35M and a hard cap at 50M

30% actually . . . $15 million divided by 50$ million is 30% higher spending.

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11-19-2004, 01:59 PM
  #30
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Originally Posted by go kim johnsson
You're just someone in denial then. Forbes wouldn't be such a high profile economic magazine company if they were as unreliable as you beleive and get information through 2nd and 3rd hand information. Try again.
Brian Burke on Vancover radio CKNW980 on Sportstalk last night said he had a chance to interview the writer of the Forbes report, and that the writer admitted to not having actual URO's, and league-wide financial information.

Also, Burke also stated that Forbes is a respected publication, although their track record on estimating frachise values is incredibly poor. If you want to be in denial, and continue to believe that the Forbes report is legitimate, and based on actual numbers, then be my guest, however if they didn't have access to the real numbers, then how can they produce a fair, and eligible assessment?

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11-19-2004, 02:15 PM
  #31
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Originally Posted by Thunderstruck
In 1998, Forbes valued the Blues at $154 mil. In 1999, they sold for $100 mil. (-54 mil)

In 1999, Forbes had the Penguins valued at $100 mil. They sold for $76 mil. (-24 mil)

In 1999, Forbes had the Caps valued at $145 mil. They sold for $85 mil. (-60 mil)

In 1998, Forbes had the Sabres valued at $91 mil. They sold for $76 mil. (-15 mil)

So on these four recent deals, Forbes values them at $490 mil but when someone actually had to pay for them, they only got $336 mil. Forbes was short -$154 mil on four deals when their valuations faced reality.

In 2000, the NJ Devils were purchased for $175 mil and then sold shortly there after for $124 mil. (-51 mil). Let's face it : this was a pure hosing of a deal when it originally sold.

In 2000, when the Islanders were purchased, $188 million was paid but $85 mil went towards buying the separate cable deal (according to the Pickett deal). The balance of the team went for $103 mil and Forbes had it at valued at $139 mil. (possibly short -36 mil).

So the claim by Forbes that the owners have recently been making out like bandits on asset growth gets very shakey when someone's hand starts to scribble out a cheque for buying an NHL team.


In 1995, the LA Kings were sold for $113 million. In 1999, Forbes valued them at $109 million. When they moved into an arena they invested in for co-ownership in 2000, their value suddenly leaped to $160 million. In other words, they had to put a bunch of money in to get that $160 mil value.
Wow, that really destroys ANY credibility Forbes might have had.

I'll open a new thread for this, if a mod feels it's not needed feel free to close/merge it.

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11-19-2004, 03:21 PM
  #32
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Originally Posted by Jaded-Fan
30% actually . . . $15 million divided by 50$ million is 30% higher spending.
Compared to the 120% we have now.

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11-19-2004, 03:27 PM
  #33
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Originally Posted by triggrman
Compared to the 120% we have now.
Only better by comparison . . . if that is the best argument for allowing some teams to have a competitive advantage over all the others, I remain very very unconvinced. Sort of like telling me that my partner has been stealing 75 percent of my salary for the last 20 years, but now they are agreeing to only steal 30 percent of my salary from now on, shouldn't I feel great about how generous they are being?

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11-19-2004, 03:36 PM
  #34
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Originally Posted by Jaded-Fan
Only better by comparison . . . if that is the best argument for allowing some teams to have a competitive advantage over all the others, I remain very very unconvinced. Sort of like telling me that my partner has been stealing 75 percent of my salary for the last 20 years, but now they are agreeing to only steal 30 percent of my salary from now on, shouldn't I feel great about how generous they are being?
But the thing is, your partner is pulling in 3 or 4X the revenue you are and has set himself up in a market where his clients care and expect the best in return for the $$$ they're paying to watch him perform. Why should he be forced to significantly subsidize you so your much smaller client base can watch you put the same product in front of them for a much lower price??? In short, why should his clients be forced to pay him more to help prop you up???

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11-19-2004, 03:44 PM
  #35
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Originally Posted by Benji Frank
But the thing is, your partner is pulling in 3 or 4X the revenue you are and has set himself up in a market where his clients care and expect the best in return for the $$$ they're paying to watch him perform. Why should he be forced to significantly subsidize you so your much smaller client base can watch you put the same product in front of them for a much lower price??? In short, why should his clients be forced to pay him more to help prop you up???

Your logic is fundementally flawed in understanding how a league works. Once more, it is a partnership. The Detroits, Colorados and Torontos of the world would not have a buisness without the Nashvilles and similar franchises of the world, they need a league of some size, and it is in their interest to keep the league more than something like the 6 teams it was initially. Why in the world would you want to 'compete' when you have the thumb on the scale anyways? Why not go all the way and have Toronto play a team of 9 year olds from the area over and over, you could win big then all the time. Satisfying enough for you? Fans of the teams who have a bit more revenue need to grow some cehones enough to actually compete on a somewhat level playing field as it is best for the whole. They still can pour money into scouting, management, many areas to give them an advantage, but at least keep player acquisition somewhat level.

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11-19-2004, 04:09 PM
  #36
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Originally Posted by Jaded-Fan
Your logic is fundementally flawed in understanding how a league works. Once more, it is a partnership. The Detroits, Colorados and Torontos of the world would not have a buisness without the Nashvilles and similar franchises of the world, they need a league of some size, and it is in their interest to keep the league more than something like the 6 teams it was initially. Why in the world would you want to 'compete' when you have the thumb on the scale anyways? Why not go all the way and have Toronto play a team of 9 year olds from the area over and over, you could win big then all the time. Satisfying enough for you? Fans of the teams who have a bit more revenue need to grow some cehones enough to actually compete on a somewhat level playing field as it is best for the whole. They still can pour money into scouting, management, many areas to give them an advantage, but at least keep player acquisition somewhat level.
If you think the league is a better place for carrying teams like Carolina, Nashville, Florida, Anaheim, Pittsburg etc. etc. then good for you. I just do not agree that they should be trying to ram a 31 million $$ salary cap down the players throats to try to keep these teams alive and then top it off by redistributing several million $$$'s from the Colorado's, Detroit's, Toronto's to these teams to make sure they stay alive.

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11-19-2004, 04:36 PM
  #37
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Originally Posted by Benji Frank
If you think the league is a better place for carrying teams like Carolina, Nashville, Florida, Anaheim, Pittsburg etc. etc. then good for you. I just do not agree that they should be trying to ram a 31 million $$ salary cap down the players throats to try to keep these teams alive and then top it off by redistributing several million $$$'s from the Colorado's, Detroit's, Toronto's to these teams to make sure they stay alive.

The thing that is necessarry is to have NHL popular in large markets. Read ---->The USA. You might not think that the Nashville's and Carolina's are important from a Canadian fans perpsective, and maybe they arent. But what is important is to get the NHL into US markets to grow the popularity of the sport. This does not happen over night. Everone knows that the league needs a TV contract. To get that TV contract there has to be some sort of demand from the US public. I think that it necessary and good for the future of the league to have teams throughout the US. Like I said maybe you are right about some of these locations, but if it is not in Nashville, then it will be in another US location. And if it means to "ram a 31 million sallary cap down the players throats" for the future of the game, than i'm all for it.

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Old
11-19-2004, 04:54 PM
  #38
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Originally Posted by Benji Frank
But the thing is, your partner is pulling in 3 or 4X the revenue you are and has set himself up in a market where his clients care and expect the best in return for the $$$ they're paying to watch him perform. Why should he be forced to significantly subsidize you so your much smaller client base can watch you put the same product in front of them for a much lower price??? In short, why should his clients be forced to pay him more to help prop you up???
Are you trying to say that the fans in small markets don't care or don't expect the best return on the $$$ they are paying than the fans in large markets? Are not all these teams in the same league?

The big market teams didn't hesitate to take money from the small market teams. By allowing these teams to join the league, they should be allowed to compete on an equal footing as the big market teams.

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11-19-2004, 06:08 PM
  #39
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Originally Posted by go kim johnsson
You're just someone in denial then. Forbes wouldn't be such a high profile economic magazine company if they were as unreliable as you beleive and get information through 2nd and 3rd hand information. Try again.
One of the best arguments against the salary cap is the fact that the Panther's reported a $60M+ loss last year, with a 30M payroll. In other words a cap would not help them one iota with thier losses.

The Forbes report, which identifies revenue flowing to NHL owners as a direct result of thier team ownership, is another hole in the salary cap solution.

Why should the players trust the owners anyway? They can't even handle the basic task of fielding a team of referees. Can you say Andy Van Hellomond. Do you remember official assignments being changed during the Stanley Cup Finals.

The league has no credibility with the players, on any level, and that is the reason we have no hockey.

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11-19-2004, 06:54 PM
  #40
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Are you trying to say that the fans in small markets don't care or don't expect the best return on the $$$ they are paying than the fans in large markets? Are not all these teams in the same league?

The big market teams didn't hesitate to take money from the small market teams. By allowing these teams to join the league, they should be allowed to compete on an equal footing as the big market teams.
Is that what I said? I don't think so.

A team like Vancouver has rebuilt itself to the point where it's reportedly earning 25 mill per off a 42 million $ payroll. Columbus & Minnesota have followed business plans that have them firmly entrenched in their cities.... Carolina on the other hand boasts a payroll of 35 mill & losses of 22 mill. Nashville's losing money annually despite one of the lowest payroll's in the league. Pittsburg appears on the ropes too. How many people in Florida even know there's a lockout or a championship team there?? Do you think California will be able to support 3 franchises forever?? I don't think they can now. One made it to the finals a year ago and it still has very little fan base.

I do not think the players and fans should prop up these weak teams. Before the NHL determines where there cap should be at, I just believe they should make a plan for these weak sisters. Whether it's relocate, contract or whatever, I just don't think they should set a cap exceptionally low just so these markets might survive. They have basically a $0 U.S. TV contract right now. Do you really think a sea of empty or give-away seats in non-hockey markets will change that?? Of the 13 cities hockey expanded/or relocated to in the 90's, I'd guess it's currently doing ok or better in 6 (San Jose, Dallas, Minny, Columbus, Colorado, and possibly now Ottawa) struggling in four (Phoenix, Atlanta, Nashville, Tampa) and likely won't be in Florida, Anaheim or Carolina much longer..... and then you've got places like Buff, Pitts & Washington where there's more or less indifference at this stage....

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11-19-2004, 07:25 PM
  #41
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Is that what I said? I don't think so.

A team like Vancouver has rebuilt itself to the point where it's reportedly earning 25 mill per off a 42 million $ payroll. Columbus & Minnesota have followed business plans that have them firmly entrenched in their cities.... Carolina on the other hand boasts a payroll of 35 mill & losses of 22 mill. Nashville's losing money annually despite one of the lowest payroll's in the league. Pittsburg appears on the ropes too. How many people in Florida even know there's a lockout or a championship team there?? Do you think California will be able to support 3 franchises forever?? I don't think they can now. One made it to the finals a year ago and it still has very little fan base.

I do not think the players and fans should prop up these weak teams. Before the NHL determines where there cap should be at, I just believe they should make a plan for these weak sisters. Whether it's relocate, contract or whatever, I just don't think they should set a cap exceptionally low just so these markets might survive. They have basically a $0 U.S. TV contract right now. Do you really think a sea of empty or give-away seats in non-hockey markets will change that?? Of the 13 cities hockey expanded/or relocated to in the 90's, I'd guess it's currently doing ok or better in 6 (San Jose, Dallas, Minny, Columbus, Colorado, and possibly now Ottawa) struggling in four (Phoenix, Atlanta, Nashville, Tampa) and likely won't be in Florida, Anaheim or Carolina much longer..... and then you've got places like Buff, Pitts & Washington where there's more or less indifference at this stage....


Quote:
Originally Posted by Benji Frank
Originally Posted by Benji Frank
But the thing is, your partner is pulling in 3 or 4X the revenue you are and has set himself up in a market where his clients care and expect the best in return for the $$$ they're paying to watch him perform. Why should he be forced to significantly subsidize you so your much smaller client base can watch you put the same product in front of them for a much lower price???
That is what you said. You seem to think that just because you have a bigger market, you should have advantages over other teams in the league. You sound like you want your wins handed to you. Does it make you feel good when your team beats teams that have considerably less talent than your team, mainly because your team (and other large amrket teams) was able to price them out of being able keeping their best players?


The big markets did take the small market teams entry fees to allow them in the league. If they did not want to have to "prop them up", they should never have let them in.

More or less indifference in Buffalo? You just don't know... Have you ever been to Buffalo? The arena was 85% full when the Sabres didn't even make the playoffs last year. Indifference? You apparently don't know much about what you are talking about. Even when they were near the bottom of the league the season before, they had 75% attendance. And Golisano has not been giving out a lot of free tickets like the Regas' were. Hell, they just had a Rochester Americans game in HSBC arena and had 2/3 of the arena full.

Get a clue buddy...

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11-19-2004, 07:51 PM
  #42
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blah blah blah

Get a clue buddy...
In case it was diff. to interpret, I said the fans in one city shouldn't be expected to subsidize the fans in another city. If there's a large national TV contract, maybe significant revenue sharing is an option, but not when most revenues are as a result of ticket sales in a team's city.....

As for Buffalo, they were one of the teams who announced they'd lose less not playing this year. Last year they lost close to 10 mill despite a payroll of only 32 mill. Prior to that, they declared bankruptcy despite having a payroll in the high 20's......

How solid is that?? What's a cap in the 30's going to do for them??? They're still going to have to come a long ways back to approach break even.....

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11-19-2004, 08:01 PM
  #43
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Originally Posted by Benji Frank
... Vancouver ... reportedly earning 25 mill
... Carolina on the other hand boasts a payroll of 35 mill & losses of 22 mill...
Is there another source besides Forbes and the Levitt numbers? I've only seen those two. Forbes is the more generous, giving the Canucks a 1.3 million operating income and leaving Carolina with -18.2. Are there other reports? I figure the more the better.. maybe the average will be somewhat accurate.

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11-19-2004, 08:04 PM
  #44
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Originally Posted by Benji Frank
In case it was diff. to interpret, I said the fans in one city shouldn't be expected to subsidize the fans in another city. If there's a large national TV contract, maybe significant revenue sharing is an option, but not when most revenues are as a result of ticket sales in a team's city.....

As for Buffalo, they were one of the teams who announced they'd lose less not playing this year. Last year they lost close to 10 mill despite a payroll of only 32 mill. Prior to that, they declared bankruptcy despite having a payroll in the high 20's......

How solid is that?? What's a cap in the 30's going to do for them??? They're still going to have to come a long ways back to approach break even.....
They do play in the same league. You may not have noticed, but leagues do better when all teams have the same relative chance to succeed. Just look at the NFL. Whether you like the sport or not, NFL makes considerably more money. And teams like Green Bay are just as competetive as New York or Dallas.

Detroit will also lose less this season by not playing...

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11-20-2004, 03:33 AM
  #45
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One of the best arguments against the salary cap is the fact that the Panther's reported a $60M+ loss last year, with a 30M payroll. In other words a cap would not help them one iota with thier losses.
Once again, that is the biggest myth around the discussion concerning new CBA.

FACT is that salary cap WILL help ALL teams financially, no matter what their current situation is.

With salary cap the overall price of players will drop meaning that the same $30M will get you a better team which in turn means better performance which means extra crowds -> extra revenues.

Or you can bring the same team with less money -> smaller costs -> better financial situation.

Stop spreading that myth.

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11-20-2004, 07:14 AM
  #46
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If Detroit spends more than the allowed amount they are taxed. That tax goes to the other teams allowing them to spend a little more. Also, cutting it off at $50 still limits them. I promise if Detroit goes over so will Colorado, Philly and Dallas. Lets say they all hit the max of 50, that's 15M each in taxes or 60M total or more than 2M dollars going to each team.
No need to cut it off, just start taking picks away from teams. Keep the $1 for $1 tax for over $35m but take away a 1st rnder after $45 or 50m, then the 2nd rnder at $$47m or $52m etc for each $2m.

Taking away picks eventually starves a team of cheap young talent and forces them into a nasty spiral of salaries. It frees up more pics for cheaper teams. It allows rich teams to spend their way for a few years but long term it really hurts.

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11-20-2004, 09:11 AM
  #47
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One of the best arguments against the salary cap is the fact that the Panther's reported a $60M+ loss last year, with a 30M payroll. In other words a cap would not help them one iota with thier losses.
Your numbers are as inaccurate as the league's. And don't get me wrong because I don't forsee hockey lasting in south FL (but I think it will in Tampa). But the $60M+ in losses is over about 3 yrs and the payroll's they have had were in the low $20M range (it was higher before they traded Val Bure's $3.1M and Viktor Kozlov's $2.2M but I doubt it was ever as high as $30). I think the actual numbers were closer to $18 million lost based on a payroll around $24 million.

Unfortunately that's just what was reported not what is factual. I remember a quote from a professor in college...accountants present facts by making up lies. There are so many different ways to make things seem one way or another. You can make a company look horrible on the accounting books but the reality is the opposite...many companies do the reverse of this to make shareholders happy and keep their money. Why should I believe one report by someone hired by the league or another done with 2nd hand information? They need to open the books to the people that matter the most...the *** fans!! Let the fans see how they are doing there accounting...I know a few CPA's that would be interested and could set the record straight.

I looked at the 6 proposals the league has already presented...3 of them are the exact same almost with just different words (Hard cap, Payroll Range, Performance Based). Two of them are stupid and don't make sense to solve the problem to me (the P-4 & Salary Groups). The only one that may work is the Centralize Negotiated system but that one doesn't link revenues to player costs so I can't see why the league even proposed it. So the players making a proposal with subtle changes to it is not much different than what the league did.

If the players ever did agree to some system that tied revenues to player costs, I'd hope they forced the league to ensure that every team MUST be within 5% of the cap (either over or under). If they want a $31 million cap, then every team must spend at least $29.45 million and the penalty would be severe and paid to the union if they were under or over the 5%. That will guarantee that no owner is going to attempt to pad his pockets at any point and the league could have its cost certainty. I'd bet you'll have a few owners getting out of the league quickly with that kind of stipulation.

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11-20-2004, 09:34 AM
  #48
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Originally Posted by Pepper
With salary cap the overall price of players will drop meaning that the same $30M will get you a better team which in turn means better performance which means extra crowds -> extra revenues.

Or you can bring the same team with less money -> smaller costs -> better financial situation.

Stop spreading that myth.
Please stop spreading this myth. Better performance DOES NOT guarantee extra crowds and thus extra revenue.

The year that the Florida Marlins won the World Series...it wasn't until the last month of the season that fan support started showing up at the stadium. Even last season, the fan support wasn't as strong as it should've been. Hell the 2nd & 3rd games of the season they only drew 17,622 and 18,121 respectively. The Miami Dolphins were the only team in the history of the NFL not to sell out a home playoff game. The market must be taken into account when you're talking about how a cap will reflect things. A cap for the south FL market may only delay the inevitable IMO (relocation).

Oh and the same team with less money means you still have a crappy team and instead of money going into the player's pockets, it goes into the owner's pockets. Better financial situation my arse.

The league should seriously consider using the Europe soccer league model. Break the league into upper tier and lower tier teams. Success in the lower tier means you can move up into the upper and vice versa. Bettman can then keep all 30 teams. The players all keep their jobs. Big spending clubs may still remain big spending clubs and the small market teams have a chance of moving up and can control their costs better.

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11-20-2004, 10:35 AM
  #49
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Originally Posted by me2
No need to cut it off, just start taking picks away from teams. Keep the $1 for $1 tax for over $35m but take away a 1st rnder after $45 or 50m, then the 2nd rnder at $$47m or $52m etc for each $2m.

Taking away picks eventually starves a team of cheap young talent and forces them into a nasty spiral of salaries. It frees up more pics for cheaper teams. It allows rich teams to spend their way for a few years but long term it really hurts.
It is unnecessary to take away picks. Signing free agents eventually starves a team of cheap young talent. Dallas, Detroit, New York, Toronto...

Why are these teams so lousy at developing young talent? Because they fill every vacancy with am expensive free agent.

Tom

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Old
11-20-2004, 10:45 AM
  #50
Tom_Benjamin
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Quote:
Originally Posted by RichPanther
Why should I believe one report by someone hired by the league or another done with 2nd hand information? They need to open the books to the people that matter the most...the *** fans!! Let the fans see how they are doing there accounting...I know a few CPA's that would be interested and could set the record straight.
An excellent point on a couple of levels. First, the Ottawa Senators did publish their real books with a prospectus a few years back. The results shocked even me and I was on record as saying Bryden was playing fast and loose with the truth. The Senators are an excellent business. The cash flow was positive every year after they moved into the Corel Centre.

But even if we don't see the real books, we should at least get the data that goes to the URO on a team by team basis. Why did the NHLPA have to sign a nondisclosure agreement to see them? Why didn't Levitt tell us which teams were losing money and which were making money under the Bettman basketball formula for defining revenues?

Tom

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