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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.

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Old
12-07-2004, 11:13 AM
  #26
GabbyDugan
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Originally Posted by Pepper
Healthy teams don't need cash injections from the owners.
Why not? (I'm not trying to be a wise guy. I just don't see how cash injections are unnecessary. Fortune 500 companies need cash injections all the time. The very reason Wall Street and the NYSE and other stock exchanges exist is so that companies can raise cash to inject into their businesses. Bond markets exist so that companies can raise money to inject cash to protect or expand their investments.

In my view of business, a company is almost an organic being. You use the word "healthy", but how can anything be healthy without a steady input of nutrients...in business, a cash injection is supplying nutrients.

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12-07-2004, 11:17 AM
  #27
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Originally Posted by GabbyDugan
Why not? (I'm not trying to be a wise guy. I just don't see how cash injections are unnecessary. Fortune 500 companies need cash injections all the time. The very reason Wall Street and the NYSE and other stock exchanges exist is so that companies can raise cash to inject into their businesses. Bond markets exist so that companies can raise money to inject cash to protect or expand their investments.

In my view of business, a company is almost an organic being. You use the word "healthy", but how can anything be healthy without a steady input of nutrients...in business, a cash injection is supplying nutrients.
Those companies need cash calls (via capital issue) to fund major investments such as take-overs and such. When a normal company is forced to sell share to cover operating costs, it's not a healthy business.

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12-07-2004, 11:22 AM
  #28
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Originally Posted by Pepper
Those are the players they have DRAFTED, they have made some good trades/signings on top of that.
Except that they didn't draft Marchant, Czerkawski, McGillis, Murray, Brown, or Brewer.

Why don't you just accept defeat instead of making things up?

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12-07-2004, 11:28 AM
  #29
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Originally Posted by BlackRedGold
Except that they didn't draft Marchant, Czerkawski, McGillis, Murray, Brown, or Brewer.

Why don't you just accept defeat instead of making things up?
Those were from the top of my head, sure there were mistakes but most of them were right.

But please feel free to cling on to a minor detail like that and ignore the fact that you have absolutely no facts whatsoever to back up your claims.

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12-07-2004, 11:45 AM
  #30
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Originally Posted by Pepper
Those companies need cash calls (via capital issue) to fund major investments such as take-overs and such. When a normal company is forced to sell share to cover operating costs, it's not a healthy business.
In fairness Pepper, when the cash call was made by the owners it was reported to be one of two things (or a combination);

1) It was a pre-agreed condition by the ATB (lending bank) at the time of original financing on the team purchase to pay down the loan;

2) It contributed to the teams 10 mil contribution to the NHL's "war chest" for the CBA negotiations.

As I recall, it was falt out dismissed that it was addressing operating expensenses.

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12-07-2004, 11:49 AM
  #31
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Originally Posted by GabbyDugan
The $10 million (the term "cash call" was used at the time) capital injection - why is it assumed it was used "to cover the losses"? The EIG is not a public corporation, so they don't have to disclose any of their financial transactions; when they choose to do so, they don't have to be always truthful unless it suits their purposes. Perhaps the money was used to send to the NHL to establish that $300 million "war chest". Perhaps the money was used to increase the owners equity-to-debt ratio on the team's balance sheet so that they could get a more favourable interest rate on their remaining mortgage on the team.
It wasn't to cover losses. It was to retire debt. When the EIG bought the team, they borrowed $40 million and put up $35 million in cash. The last cash call retired debt or at least that was the purpose announced by Nichols.

The real reason was that the value of the franchise was up. A cash call squeezes out small investors and gives the Cal Nichols level investors a bigger chunk of the team. The little guys in the group don't respond to the cash call. Nichols writes a cheque to cover the players who do not respond. Someone who originally put up, say, $700,000 doesn't respond because he doesn't have the $250,000 lying around. His 2% ownership share drops to, say, 1%. Nichols adds that 1% to his share by covering the short.

Nichol's share of the capital gain - yet to be realized of course - goes up.

Tom

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12-07-2004, 11:56 AM
  #32
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Originally Posted by Pepper
Well you could really take a look in the mirror, you're obviously very lost in this issue and have very little knowledge about the things you write here.

You do have to admit (if you're the honest sort) that the guy's claim about Edmonton not having a great track record of drafting and developing young talent (they're not exactly Detroit or New Jersey at the draft table are they?) is accurate. Perhaps his point is if Edmonton drafted better, got more production out of their players when they are essentially unable to leave due to a swelling contract, then Edmonton would be in a better position economically due to having developed better young players who cost less and still get them into the playoffs where the real money can be made.
Perhaps that was his point.

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12-07-2004, 12:00 PM
  #33
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Originally Posted by Tom_Benjamin
It wasn't to cover losses. It was to retire debt. When the EIG bought the team, they borrowed $40 million and put up $35 million in cash. The last cash call retired debt or at least that was the purpose announced by Nichols.

The real reason was that the value of the franchise was up. A cash call squeezes out small investors and gives the Cal Nichols level investors a bigger chunk of the team. The little guys in the group don't respond to the cash call. Nichols writes a cheque to cover the players who do not respond. Someone who originally put up, say, $700,000 doesn't respond because he doesn't have the $250,000 lying around. His 2% ownership share drops to, say, 1%. Nichols adds that 1% to his share by covering the short.

Nichol's share of the capital gain - yet to be realized of course - goes up.

Tom
You are the single most informed poster on this board and I personally find your contributions invaluable. You represent yourself on these boards very well. Even when others take cheap shots at you I've never seen you take the bait and resort to their level, which is admirable. I want to thank you for posting here, particularly in the manner in which you do so.

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12-07-2004, 12:04 PM
  #34
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Originally Posted by CorneliusBennet
You are the single most informed poster on this board and I personally find your contributions invaluable. You represent yourself on these boards very well. Even when others take cheap shots at you I've never seen you take the bait and resort to their level, which is admirable. I want to thank you for posting here, particularly in the manner in which you do so.

Tom is an excellent poster, but he frequently takes cheap shots.

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12-07-2004, 12:51 PM
  #35
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Originally Posted by OTTSENS
so if the oilers made a profit of 1 millions dollars, imagine now that there is a luxury tax system and the oilers receive 6 or 7 million dollars additional to be able to spend on players that's not a bad deal. that would improved the team gave them a better chance of making the playoffs and then who knows. let's say they go as far as the 3rd round that means a lot more revenues and a more profits doesn't it?
Thats also means 6 or 7 million dollars for other teams in the league who already have more money to spend than the oilers. There will always be the teams rich enough to fork over the big payrolls and pay the big taxes. Which is fine, but that puts more money in the pockets of owners and will in turn drive up salaries even further. If there is no limit on what owners can spend, then there will be no limit on what they do spend. There has to be some sort of link between players salaries and revenues and thats the only way it will work.

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12-07-2004, 01:16 PM
  #36
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Originally Posted by Thunderstruck
Tom is an excellent poster, but he frequently takes cheap shots.
He takes a lot of shots at the NHL management and it's gang of morons. I have zero problem with that. He definately speaks in strong terms regarding the blatant hypocrisy of the owners/league and he's taken some 'cheap' shots at public figures, but they're fair game.
And with the amount of personal abuse Tom takes because he does such a great job articulating the (very unpopular) players side of things, that he doesn't respond more frequently to those ad hominen attacks is all the more to his credit. He has to put up with a lot of poorly reasoned, ill-informed responses to his posts. He marshalls more facts in one post than most of you (myself included) do in about a hundred. Certainly and without a doubt there isn't a single poster on this board that has, IMO, displayed anywhere near the amount of insight and understanding of the league's finances than TB. I will continue to cut him a lot of slack for what he has to put up with from many, many posters on this board.

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12-07-2004, 01:25 PM
  #37
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Originally Posted by BlackRedGold
Except that they didn't draft Marchant, Czerkawski, McGillis, Murray, Brown, or Brewer.

Why don't you just accept defeat instead of making things up?
They didn't draft Gretzky either.

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12-07-2004, 01:33 PM
  #38
GabbyDugan
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Originally Posted by Tom_Benjamin
It wasn't to cover losses. It was to retire debt. When the EIG bought the team, they borrowed $40 million and put up $35 million in cash. The last cash call retired debt or at least that was the purpose announced by Nichols.

The real reason was that the value of the franchise was up. A cash call squeezes out small investors and gives the Cal Nichols level investors a bigger chunk of the team. The little guys in the group don't respond to the cash call. Nichols writes a cheque to cover the players who do not respond. Someone who originally put up, say, $700,000 doesn't respond because he doesn't have the $250,000 lying around. His 2% ownership share drops to, say, 1%. Nichols adds that 1% to his share by covering the short.

Nichol's share of the capital gain - yet to be realized of course - goes up.

Tom

Having run my own business in Edmonton for more than ten years, I've often met people supposedly "in the know" about the Oilers and EIG at social gatherings, service club meetings, Oiler games, and in the normal context of running my own business. A lot of spin and so many myths surround this "cash call" around here.


I've seen and heard a lot of interpretations of the cash call over the years, and yours makes a great deal of sense. The EIG was assembled in a rather hasty manner, and was working against a short deadline to make the bid to buy the franchise and keep the team in Edmonton. By 2001, it would make sense that some of the money that was borrowed to get the deal done was no longer needed and some of the investors were merely silent partners who really couldn't help the business beyond their initial cash contribution. Retiring the expensive debts and diluting the smaller investors to consolidate the power of the biggest stakeholders is simply good business. The fact that the "cash call" required that half the money be turned over in December of 2001 and the other half in December of 2002 would indicate the EIG was retiring the debt over a period of time to the greatest advantage of the investors.

Cal Nichols said the purpose of the cash call was to retire debt, but he has also said other things that contribute to the spin. Nichols takes every opportunity to push the rest of his agenda, and this situation was no different ....a report from the Detroit News from late 2001 shows that Nichols was also pushing the agenda that the cash call was an unwelcomed necessity "to keep the franchise afloat"...

http://www.detnews.com/2001/wings/01...rts-328010.htm

"Oilers get cash
***Members of the Edmonton Oilers ownership have come up with almost $8.9 million to keep the franchise afloat.
***Cal Nichols, the Oilers' governor and board chairman, said most investors agreed to contribute more cash in the interest of keeping the team in Edmonton.
***"This is going to a place no one wanted to go, but in the long-term interests of the franchise we thought we had to go there," Nichols said after a shareholders meeting at an Edmonton, Alberta, golf club. "I am very relieved with what happened today."
***Under the terms of the cash call, participating investors will have to write checks for half the amount they pledged by Dec. 1, with the balance due Dec. 10, 2002.
***Nichols said the cash infusion will keep the Oilers afloat through 2004, but added that without major changes to the collective bargaining agreement, which governs player salaries, the future looks bleak for small-market Canadian teams. "

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12-07-2004, 01:40 PM
  #39
CorneliusBennet
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Originally Posted by Pepper
No I didn't mention them because it's too easy for anyone who follows hockey to do that, apparently you don't fall in to that category.

Gretzky, Kurri, Tikkanen, Messier, Lowe, Anderson, Fuhr, Moog, Ranford, McSorley, Smith, Gelinas, Beukeboom, Buchberger, Huddy, Van Allen, Arnott, Marchant, Smyth, Czerkawski, Grier, Satan, McGillis, Murray, Poti, Laraque, Brown, Brewer, Comrie, Horcoff, Markkanen, Hemsky

Those for starters.
To start with a number of those guys are middling players. Sorry, no credit given for developing mediocre players, which is what Van Allen and McGillis and more than a few others are. So, not sure if you want hosanna's for developing Van Allen but you're not going to get many of them around here. Secondly, a vast majority of those guys (the good ones, anyway) were gifted the Oil (Wayne) or were the result of a favorable draft from one year or two, and this was over 15 years ago. Again, not a lot of credit given for a couple of great drafts (and some gifts) from 15 + years ago. That list comprises pretty much the cream of the Edmonton crop over the last 20 years and it still, with some obvioulsy notable exceptions, is still not all that impressive. In the last 10 years, when the supposed "profits" have not materialized, Edmonton's drafting has been mediocre at best. There are so many examples of this that my list in response to yours would easilly dwarf the handful of worthwhile examples you've managed to find.

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12-07-2004, 01:47 PM
  #40
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Originally Posted by Pepper
Those were from the top of my head, sure there were mistakes but most of them were right.

But please feel free to cling on to a minor detail like that and ignore the fact that you have absolutely no facts whatsoever to back up your claims.
Let it go man. 99% of the league has made fun of Edmonton, saying they are a farm team for other clubs. Its not worth arguing with the 1% who are trying to debunk that.

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12-07-2004, 01:55 PM
  #41
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Originally Posted by kerrly
This is in CDN funds of course.
With the American Dollar at record lows against practically every other major currency, can we now start to constantly whine about the Canadian teams having an unfair advantage?

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12-07-2004, 01:57 PM
  #42
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Originally Posted by CorneliusBennet
You do have to admit (if you're the honest sort) that the guy's claim about Edmonton not having a great track record of drafting and developing young talent (they're not exactly Detroit or New Jersey at the draft table are they?) is accurate. Perhaps his point is if Edmonton drafted better, got more production out of their players when they are essentially unable to leave due to a swelling contract, then Edmonton would be in a better position economically due to having developed better young players who cost less and still get them into the playoffs where the real money can be made.
Perhaps that was his point.
I have never denied the fact that their track record, especially with 1st rounders is very bad in recent years.

The fact is that they manage to sell the team to the public despite having no realistic chances to fight for the cup and having to trade all their best players once they reach UFA age, they also keep their team reasonably well financed compared to other teams who are deep on the red. To me that's good management financially.

Fact is that they have to trade their best players when they hit 31 because they can't afford them. NHL needs a new system.

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12-07-2004, 01:59 PM
  #43
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Originally Posted by CorneliusBennet
You are the single most informed poster on this board and I personally find your contributions invaluable. You represent yourself on these boards very well. Even when others take cheap shots at you I've never seen you take the bait and resort to their level, which is admirable. I want to thank you for posting here, particularly in the manner in which you do so.
You haven't been paying attention, he takes lots of cheap shots.

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12-07-2004, 02:01 PM
  #44
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I have never denied the fact that their track record, especially with 1st rounders is very bad in recent years.

The fact is that they manage to sell the team to the public despite having no realistic chances to fight for the cup and having to trade all their best players once they reach UFA age, they also keep their team reasonably well financed compared to other teams who are deep on the red. To me that's good management financially.

Fact is that they have to trade their best players when they hit 31 because they can't afford them. NHL needs a new system.
To begin with I am not going to argue against the notion that for many, many teams the league and their place in it is very tenuous, at best. Businesses go out of business all the time, in most cases it's considered an 'organic' part of the natural business cycle and nobody (if you're a 'true capitalist') would complain or cry about it. Secondly, it has been demonstrated that players have their statistical best years before the age 31 so technically the Oil should, if they weren't inept at drafting and developing players over the last decade, should still be able to compete even IF they had to give up ALL of their players when they reach 31. So, we're sort of a 'no-go' on that point as well.
Where does this leave us? I'm sorry there is such a disparity between the income levels of certain teams, it is obviously a problem. Why it's a problem the players must make amends for solely, I have no idea, however.

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12-07-2004, 02:02 PM
  #45
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In the last 10 years, when the supposed "profits" have not materialized, Edmonton's drafting has been mediocre at best.
OK, say the Oilers drafting was better over the last 10 years. How many would still be on the team? Go take that article that Brookes wrote, stating all the players that the Oilers could have drafted over the last 10 years. Then add up their salaries and explain to me how the Oilers would still be fielding them.

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12-07-2004, 02:05 PM
  #46
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OK, say the Oilers drafting was better over the last 10 years. How many would still be on the team? Go take that article that Brookes wrote, stating all the players that the Oilers could have drafted over the last 10 years. Then add up their salaries and explain to me how the Oilers would still be fielding them.

why? it's a pointless, completely pointless, excersize. You're asking me to waste my time engaging in what's know as 'theoretical history' and it's pointless and doesn't advance the discussion as I see it. It would assume that all other factors that influenced the players salaries in that time period would remain unchanged which is clearly not the case. Players peformances would be different, so many variables could affect the theoretical outcome that it makes the effort pointless. Sorry, won't waste my time.

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12-07-2004, 02:08 PM
  #47
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Originally Posted by CorneliusBennet
To begin with I am not going to argue agains the notion that for many, many teams the league and their place in it is very tenuous, at best. Businesses go out of business all the time, in most cases it's considered and 'organic' part of the natural business cycle and nobody (if you're a 'true capitalist') would complain or cry about it. Secondly, it has been demonstrated that players have their statistical best years before the age 31 so technically the Oil should, if they weren't inept at drafting and developing players over the last decade, should still be able to compete even IF they had to give up ALL of their players when they reach 31. So, we're sort of a 'no-go' on that point as well.
Where does this leave us? I'm sorry there is such a disparity between the income levels of certain teams, it is obviously a problem. Why it's a problem the players must make amends for solely, I have no idea, however.
You're missing the point!

Oilers are FORCED to trade their best players away, they don't even have the CHOICE of keeping them (well they have the choice of losing them for nothing).

If trading away players before they reach 31 is such a good idea, why hasn't a single Cup winner in the last 10 years done have that? Yeah, I thought so. Your logic is flawed because you fail to understand that the players you get in return are not able to match the production of the players traded away until several years later in general. So they are simply pushing their run for the cup further and further every year.

It's a no-go only if you want to think that succesful teams trade away their 31 year olds, which we all know is complete rubbish.

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12-07-2004, 02:13 PM
  #48
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why? it's a pointless, completely pointless, excersize. You're asking me to waste my time engaging in what's know as 'theoretical history' and it's pointless and doesn't advance the discussion as I see it. It would assume that all other factors that influenced the players salaries in that time period would remain unchanged which is clearly not the case. Players peformances would be different, so many variables could affect the theoretical outcome that it makes the effort pointless. Sorry, won't waste my time.
I Didnt expect you too. Unfortunatly, I wasted my time reading your posts. You just dont get it. I'll let your other discussion continue. Mabye he'll enlighten you.

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12-07-2004, 02:13 PM
  #49
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It's a no-go only if you want to think that succesful teams trade away their 31 year olds, which we all know is complete rubbish.
That's because successful teams aren't building for the future. They're competing for the Cup now.

Unsuccessful teams hope to become successful teams in the future. The best way to do that is to turn present value into future value.

Look at junior hockey. The teams that are successful trade for players that will graduate after the season while the unsuccessful ones trade away players that will be graduating soon. It has nothing to do with money. It has everything to do with building for the future.

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12-07-2004, 02:13 PM
  #50
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You're missing the point!

Oilers are FORCED to trade their best players away, they don't even have the CHOICE of keeping them (well they have the choice of losing them for nothing).

If trading away players before they reach 31 is such a good idea, why hasn't a single Cup winner in the last 10 years done have that? Yeah, I thought so. Your logic is flawed because you fail to understand that the players you get in return are not able to match the production of the players traded away until several years later in general. So they are simply pushing their run for the cup further and further every year.

It's a no-go only if you want to think that succesful teams trade away their 31 year olds, which we all know is complete rubbish.
Wow, we are not communicating at all. You've missed my point entirely and now I have to get back to my 'real job' anyway. I still cannot make any sense of one particular sentence in your post, however: "If trading away players before they reach 31 is such a good idea, why hasn't a single Cup winner in the last 10 years done have that?"
I'm sorry, but are you asserting that no team that has won a Cup in the last 10 years has ever traded a player that is younger than 31 years old?
Uhm, okay, I have to go. This is just...

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