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If Revenue Sharing had been 100% Last Year...

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11-18-2012, 03:07 PM
  #1
DancesWithWookies
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If Revenue Sharing had been 100% Last Year...

So HRR was $3.3 Billion last season.

If revenue sharing was 100% for the last season, each team would recieve $110 million.

If team payroll was $65 million that would leave $45 million. This would give the players a 59% share of HHR (a lot, I know).

If it cost $15 million to pay for all other team expenses (flights, hotels, salaries of support staff etc) then that would leave $30 million per team.

And if each team payed $5 million to run all other aspects of the NHL (head offices/laywers/accounts/advertisements) that would be $150 million.

After all that, each team would be left with a profit of $25 million.

It seems to work well for the NFL, and wouldn't this model guarantee the long term financial stability of the NHL and avoid future lockouts if every team turned a profit? I know the Maple Leafs make $80 million a year and the Coyotes lose $25-30 million, and why should someone have to pay for the mistakes of others? But if NHL owners could put the good of the league first instead of the good of the individuals would this not solve all the problems?

Or am I way off?

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11-18-2012, 03:15 PM
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league revenues was 3.3 billion, players receive 1.8 of the 3.3 billion.

and then the teams use what is left over from the share they got 43%, which was 1.5 billion.

the nhl as a whole last season made 225 million or something like that. so if you split that up between the 30 owners, it would be 7.5 million per team.

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11-18-2012, 03:16 PM
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Nice idea except nothing forcing the Leafs, Habs and Rangers to charge what they charge at the gate. You impose a system like that the first thing the big fish will do is simply run a break even business. Because they won't have any motivation to squeeze their own fans.
If I sell a high priced product and have a large profit margin but I must give most of that away to my competitor what stopping me from selling at cost and telling my competitor to take a hike. Great for me since I probably be able to afford a few more games but the league will be in the red pretty fast. It another case where you need league wide standard pricing and revenue target for everything, ticket, beers, hot-dog, parking... Some market won't be able to afford the price hike or they won't meet their quotas.


Last edited by madhi19: 11-18-2012 at 03:22 PM.
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11-18-2012, 03:19 PM
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The players all make different amounts of money, and the owners all make different amounts of money....

Are you proposing the owners share everything? And then the players would have to also?

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11-18-2012, 03:21 PM
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Quote:
Originally Posted by madhi19 View Post
Nice idea except nothing forcing the Leafs, Habs and Rangers to charge what they charge at the gate. You impose a system like that the first thing the big fish will do is simply run a break even business. Because they won't have any motivation to squeeze their own fans.
If I sell a high priced product and have a large profit margin but I must give most of that away to my competitor what stopping me from selling at cost and telling my competitor to take a hike. Great for me since I probably be able to afford a few more games but the league will be in the red pretty fast. It another case where you need league wide standard for everything, ticket, beers, hot-dog, parking...
Exactly, it'd be a race to the bottom. Leads tickets at Florida prices. Florida tickets for free.

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11-18-2012, 03:22 PM
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Quote:
Originally Posted by GreatSaveJesus View Post
So HRR was $3.3 Billion last season.

If revenue sharing was 100% for the last season, each team would recieve $110 million.

If team payroll was $65 million that would leave $45 million. This would give the players a 59% share of HHR (a lot, I know).

If it cost $15 million to pay for all other team expenses (flights, hotels, salaries of support staff etc) then that would leave $30 million per team.

And if each team payed $5 million to run all other aspects of the NHL (head offices/laywers/accounts/advertisements) that would be $150 million.

After all that, each team would be left with a profit of $25 million.

It seems to work well for the NFL, and wouldn't this model guarantee the long term financial stability of the NHL and avoid future lockouts if every team turned a profit? I know the Maple Leafs make $80 million a year and the Coyotes lose $25-30 million, and why should someone have to pay for the mistakes of others? But if NHL owners could put the good of the league first instead of the good of the individuals would this not solve all the problems?

Or am I way off?
Way more than that to run the operations of teams. Let alone the millions owners invest in buildings/training/coaching staff and everything else. That $5 million wouldn't even cover team staff that work day-to-day and part-time staff that work event nights.

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11-18-2012, 03:25 PM
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Quote:
Originally Posted by BLONG7 View Post
The players all make different amounts of money, and the owners all make different amounts of money....

Are you proposing the owners share everything? And then the players would have to also?
Well I guess I was thinking more about percentages of revenue. Maybe its not $25 million per team, i was just loosey guestamating, but im sure each team would be profitable under 100% revenue sharing.

But your right, whats the motivation to be successful if not for profit?

My answer would be winning. The owners are very successful businessmen outside of hockey already. Perhaps the motivation should be pride in winning and putting together a great team/organization and stanley cup winner. Theres already a lot of parity in the league, so im assuming this is a strong motivating force in trying to succeed as a hockey organization.

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11-18-2012, 03:29 PM
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In theory I like the idea of tossing everything into one pile and splitting it say 45/45/10. 45% goes to the owners same goes to the players. 10% goes to a slush fund to finance the contraction of the four worse revenue generating teams. When that done you can return to a 50/50 split. And like I said you need league wide standard in pricing for everything with targets that teams must meet or face major penalties.

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11-18-2012, 03:39 PM
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Quote:
Originally Posted by madhi19 View Post
In theory I like the idea of tossing everything into one pile and splitting it say 45/45/10. 45% goes to the owners same goes to the players. 10% goes to a slush fund to finance the contraction of the four worse revenue generating teams. When that done you can return to a 50/50 split. And like I said you need league wide standard in pricing for everything with targets that teams must meet or face major penalties.
I like the idea of the big earners putting money into a slush fund to contract fiancily weak teams much more than the idea of sharing 100% of revenue with those same teams.

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11-18-2012, 03:41 PM
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Except that Molson just bought his team 650M and Rogers/Bell over 1B $. Why should they have the same benefits as the Coyotes that worth 120M? The more you invest, the more you should be able to turn profits. Given your system, the Leafs/rangers/Habs would worth as much as the Panthers. Is it fair when they paid 10x more for the franchise? Failed logic IMO.

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11-18-2012, 03:48 PM
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Originally Posted by domdo345 View Post
Except that Molson just bought his team 650M and Rogers/Bell over 1B $. Why should they have the same benefits as the Coyotes that worth 120M? The more you invest, the more you should be able to turn profits. Given your system, the Leafs/rangers/Habs would worth as much as the Panthers. Is it fair when they paid 10x more for the franchise? Failed logic IMO.
I donno about logic fail. The NFL shares about 90% of revenue and some teams are worth much more than others.

its also interesting that home teams get 60% of revenue for the game and the visiting team gets 40%

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11-18-2012, 03:50 PM
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Quote:
Originally Posted by GreatSaveJesus View Post
So HRR was $3.3 Billion last season.

If revenue sharing was 100% for the last season, each team would recieve $110 million.

If team payroll was $65 million that would leave $45 million. This would give the players a 59% share of HHR (a lot, I know).

If it cost $15 million to pay for all other team expenses (flights, hotels, salaries of support staff etc) then that would leave $30 million per team.

And if each team payed $5 million to run all other aspects of the NHL (head offices/laywers/accounts/advertisements) that would be $150 million.

After all that, each team would be left with a profit of $25 million.
Try 40-45m in non player expenses. KevFu indicated the average last year (or 2011?) was 44m.

Maclain said it was ~20m back in 2002.

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11-18-2012, 03:59 PM
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Originally Posted by GreatSaveJesus View Post
I donno about logic fail. The NFL shares about 90% of revenue and some teams are worth much more than others.

its also interesting that home teams get 60% of revenue for the game and the visiting team gets 40%
I think the actual RS that the NFL does is a LOT lower than 90%. Yes they share all of their massive TV deal. But if you look at what they do with the other monies, it's a lot less than 90%. If I guessed, it would be under 50%. The MLB and NBA are both in the 40% range. The NHL (under it's new proposal) is around 6.5% (4.5% last CBA).

So there's a lot more RS that the NHL should be doing - like 4 or 5 times what it's doing now at the very least.

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11-18-2012, 03:59 PM
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And all the teams would be worth a near equal amount - say $100 to $150 million.

So the owners of the Leafs that just purchased the team for $500 million would lose $400 million in equity. Other owners would see their team values rise or fall tremendously. In other words, you would see a transfer of wealth among owners.

Welcome to communism.

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11-18-2012, 04:03 PM
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Originally Posted by GreatSaveJesus View Post
I donno about logic fail. The NFL shares about 90% of revenue and some teams are worth much more than others.

its also interesting that home teams get 60% of revenue for the game and the visiting team gets 40%
It helped a lot that when the AFL-NFL merger was consumed TV revenue was such a joke that no owner cared about splitting that pie.
I bet some of them regreted that move later. When you think about it the NFL in it current state is a relatively young league.

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11-18-2012, 05:11 PM
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Originally Posted by GreatSaveJesus View Post
Well I guess I was thinking more about percentages of revenue. Maybe its not $25 million per team, i was just loosey guestamating, but im sure each team would be profitable under 100% revenue sharing.

But your right, whats the motivation to be successful if not for profit?

My answer would be winning. The owners are very successful businessmen outside of hockey already. Perhaps the motivation should be pride in winning and putting together a great team/organization and stanley cup winner. Theres already a lot of parity in the league, so im assuming this is a strong motivating force in trying to succeed as a hockey organization.
Except a well run franchise could be a winning franchise with a break even profit model. Once your expenses are covered the rest is profit. If there's no profit to be shared amongst other teams the owners can reward the fans since they don't earn extra profit anyways.

Besides the largest share of revenue sharing in the NFL comes from the TV contracts rather than gates...home team keeps 60% of gate. This could work in the NHL but since it's a gate driven league rather than TV driven the large franchises would likely fight a 40% donation to the visiting team. You also run into problems as the highest profit teams are in the East (Toronto, Montreal, and NYR). That creates fundamental problems with sharing gate revenue as the Western teams still suffer more than the East.

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11-18-2012, 05:22 PM
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This thread I started was just more of a thought experiment. So what would be the appropriate level of revenue sharing in the NHL to sustain current franchises and keep them off the financial cliff?

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11-18-2012, 05:36 PM
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If I own the Canadiens for example then under this model I'm PO'd that I have to revenue share with Nashville and then they go and offer Shea Weber a $100 M+ contract or I have to revenue share with Phx who aren't contributing yet give Shane Doan $5 M+.

Obviously more revenue sharing is needed but this system only works if you have less teams losing money and more teams bringing in profit.

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11-18-2012, 05:44 PM
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Quote:
Originally Posted by madhi19 View Post
Nice idea except nothing forcing the Leafs, Habs and Rangers to charge what they charge at the gate. You impose a system like that the first thing the big fish will do is simply run a break even business. Because they won't have any motivation to squeeze their own fans.
If I sell a high priced product and have a large profit margin but I must give most of that away to my competitor what stopping me from selling at cost and telling my competitor to take a hike. Great for me since I probably be able to afford a few more games but the league will be in the red pretty fast. It another case where you need league wide standard pricing and revenue target for everything, ticket, beers, hot-dog, parking... Some market won't be able to afford the price hike or they won't meet their quotas.
Other NHL teams are not competitors of each other. They are business partners. NHL teams compete against other sports, and other forms of entertainment for entertainment dollars.

Profit sharing is a good idea. It makes the league sustainable IMO. But sharing 100% of revenues is not the right Idea. If it was up to me I would suggest that every team who loses money would be topped off through revenue sharing. If a team loses 10M then they receive 10M in revenue sharing. They obviously would have to set spending limits on teams who would lose money. IE how much you pay your office staff and what not. They probably even have to set ticket prices at reasonable rates for the market.

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11-18-2012, 06:35 PM
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Quote:
Originally Posted by GreatSaveJesus View Post
Well I guess I was thinking more about percentages of revenue. Maybe its not $25 million per team, i was just loosey guestamating, but im sure each team would be profitable under 100% revenue sharing.

But your right, whats the motivation to be successful if not for profit?

My answer would be winning. The owners are very successful businessmen outside of hockey already. Perhaps the motivation should be pride in winning and putting together a great team/organization and stanley cup winner. Theres already a lot of parity in the league, so im assuming this is a strong motivating force in trying to succeed as a hockey organization.
30 different owners, 30 different markets, it would be a hard sell amongst the owners who are doing well, such as the Leafs,Habs,Flyers, Boston etc but your idea does have some merit. It would be nice to see all 30 teams sharing in profits...

Along the same lines though, would the PA ever do the same? If the cap was at 60M and there are 20 guys on the team, then would they all make the same, 3M each...if the owners would share everything, would the players? Probably not...

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11-18-2012, 06:37 PM
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Quote:
Originally Posted by GreatSaveJesus View Post
So HRR was $3.3 Billion last season.

If revenue sharing was 100% for the last season, each team would recieve $110 million.

If team payroll was $65 million that would leave $45 million. This would give the players a 59% share of HHR (a lot, I know).

If it cost $15 million to pay for all other team expenses (flights, hotels, salaries of support staff etc) then that would leave $30 million per team.

And if each team payed $5 million to run all other aspects of the NHL (head offices/laywers/accounts/advertisements) that would be $150 million.

After all that, each team would be left with a profit of $25 million.

It seems to work well for the NFL, and wouldn't this model guarantee the long term financial stability of the NHL and avoid future lockouts if every team turned a profit? I know the Maple Leafs make $80 million a year and the Coyotes lose $25-30 million, and why should someone have to pay for the mistakes of others? But if NHL owners could put the good of the league first instead of the good of the individuals would this not solve all the problems?

Or am I way off?
Yes- you are way off. It runs ~ $35-40 million above player payroll.

If a team has $60 million in player salary, break even is about $100 million.

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11-18-2012, 06:46 PM
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Yes- you are way off. It runs ~ $35-40 million above player payroll.

If a team has $60 million in player salary, break even is about $100 million.
$35-40 million to what?

43-45 hotel stays, Flights, Food, Coaches, Trainers, Other personal, office staff. What am I missing?

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11-18-2012, 06:58 PM
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Originally Posted by GreatSaveJesus View Post
So HRR was $3.3 Billion last season.

If revenue sharing was 100% for the last season, each team would recieve $110 million.
The non-payroll expenses are quite a bit higher than the figure you used, but the point remains valid, there is in fact enough revenue in the league to make all teams profitable at current (actually slightly above current) payroll costs.

The owners can, in fact, solve all their issues without involving the players or changing the CBA.

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11-18-2012, 07:00 PM
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Along the same lines though, would the PA ever do the same?
To a considerable extent, they already do. Guys like Crosby are making half of what they "should" be making, while third and fourth liners are making several multiples more than they "should" be making.

The players do far more "revenue sharing" amongst themselves than the owners do in their little group.

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11-18-2012, 08:19 PM
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Karl Marx would approve. How about all the players split up the money evenly as well. Its only fair right? Approx $2.2B as per your example divided by the 700+ players, $3.1MM each. The best players would be happy with this Im sure. What about arena costs?

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