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Could the NHL ever adopt MLS single owner system?

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Old
12-14-2012, 04:47 PM
  #1
monkeywork
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Could the NHL ever adopt MLS single owner system?

MLS (Major League Soccer) has a very interesting model that allows the "owners" to create rules and limits on contracts without having to worry about the old collusion thing that would happen if the NHLPA went away and the NHL clubs stayed put.

Essentially MLS is a corp and it owns all the teams, the people we would traditionally consider owners are actually just share holders in MLS.

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12-14-2012, 04:54 PM
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to expand on it a bit more. The way it works in the MLS (at least how I understand it) is a player wants to play in the league and some team shows interest in them (alternatively a team can ask the MLS to approach a player). Once the player agrees to a contract with league then the the essentially enter a waiver wire of sorts and teams can pick up people off the wire (however they then move to the bottom of the waiver list). You can execute trades in the league and trade your actual waiver wire position.

Further explained here:

http://www.mlssoccer.com/2012-mls-roster-rules


It works really well for the league at controlling the salaries and avoiding a ton of the mess that the NHL currently has.

Would be interesting if the NHLPA disbanded then the NHL turns around and says ok all contracts signed while in the NHLPA are gone and the NHL has adopted an MLS type ownership style... (yes I know unrealistic but interesting to think about)

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12-14-2012, 05:13 PM
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I think Bain Capital pitched this to the owners during the last lockout:

http://www.thehockeynews.com/article...ownership.html

If this thing ever goes truly nuclear, it will probably be considered.

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12-14-2012, 05:28 PM
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BLONG7
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With Jeremy Jacobs being the sole owner... The players would love that...

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12-14-2012, 05:44 PM
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It's already been discussed a few times in the past. Quick search shows these two threads discussing them and the consensus answer seems to be that it's very unlikely to ever happen.

http://hfboards.hockeysfuture.com/sh....php?t=1258791
http://hfboards.hockeysfuture.com/sh....php?t=1276227

As kdb209 puts it:

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Originally Posted by kdb209 View Post
The Bain thing was a complete pipedream.

They never would have gotten the unanimous approval of all 30 owners, which would have been required.

And, they would never have gotten federal approval - under both labor and anti-trust law. While a single entity league is perfectly legal and free of many anti trust restrictions, converting a multiple ownership league into a single entity ownership one would very likely never clear anti trust muster - since the effect would be to reduce/eliminate competition in the labor market.

Let alone what the Canadian gov't might have had to say about it.

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12-14-2012, 05:53 PM
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IF it STARTED off that way, it's possible.

I don't think the government would allow the merger of 30 franchises into 1 corporation, from what I have read.

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12-14-2012, 05:55 PM
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a corporation running a competitive sports league sounds like absolute insanity to me. they would be obligated to favor the big money making teams.

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12-14-2012, 09:07 PM
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MLS mode works ok for a small, not very culturally important league like MLS.
So, for example, MLS worked hard to get Beckham to play for LA Galaxy. The rest of the, then struggling, league didn't mind this big city favoritism because they were still in survival mode.

But imagine how much people would freak if the NFL, NBA, MLB, or NHL were actively steering the biggest stars to the big market cities.

The temptation of the single-entity model to rig things to favor the big markets is too powerful to resist. MLS can fly under the radar with shady tactics like that cause most people aren't paying attention. And those that are, are still just happy to have a viable pro soccer league in the North America.

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12-14-2012, 09:17 PM
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I don't know if owners making money like the Aquillini's (Canucks owner) and the other owners making money would like that. You also have telecom's in Canada who own the Maple Leafs.

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12-14-2012, 09:24 PM
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haseoke39
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Quote:
Originally Posted by IU Hawks fan View Post
IF it STARTED off that way, it's possible.

I don't think the government would allow the merger of 30 franchises into 1 corporation, from what I have read.
Well, I think they surely could, but a lot would have to change about the ownership structure, and you'd have to do it in a way that might compromise their ability to continue acting as independent entities.

I imagine this:

One central board of directors. The board of directors hires 30 GMs. The GMs all have a common budget. Write something into the charter that says that when enough fans sign some thing or other asking for their GM to be fired, that the board has to do it and hire a replacement (to give fans a feel that they're not pawns rooting for a corporation). Total revenues go into one giant pot and get redistributed to shareholders pro rata. Different owners get different amounts of shares depending on the value of their team.

The problem with that going forward is that you've delinked number of shares from team revenue forever. So Toronto's owner is going to get 400 shares and Buffalo's owner is going to get 90 shares and even if the teams flip in terms of profitability down the line, that's what you're stuck with. You're effectively cashing the owners out now based on their current values. You can write into the charter of the new corporation that you have a mandatory annual dividend or something like that, but each owner's share of that dividend is fixed.

The plus would be, however, that you could probably become super cost competitive very quickly. Teams could be moved at leisure without concern for finding ownership, player costs could be lowered down to whatever marginal rate still gets you the best players in the world. You do this and all of a sudden, 90 shares for Buffalo might become worth a lot more.

Bain's not a dumb company, they saw what they could do with one entity running the whole league in terms of efficiencies. If they had known in 2004 what would happen to league revenues over the next 6 years, they absolutely would have raised their price, and might have been able to actually pull the deal off.


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12-14-2012, 09:24 PM
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Quote:
Originally Posted by IU Hawks fan View Post
IF it STARTED off that way, it's possible.

I don't think the government would allow the merger of 30 franchises into 1 corporation, from what I have read.
That's how I see it. So what if another WHA is started as a single entity? Would the new league be at an advantage or a disadvantage, I wonder?

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12-14-2012, 09:27 PM
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Originally Posted by haseoke39 View Post
Well, I think they surely could, but a lot would have to change about the ownership structure, and you'd have to do it in a way that might compromise their ability to continue acting as independent entities.

I imagine this:

One central board of directors. The board of directors hires 30 GMs. The GMs all have a common budget. Total revenues go into one giant pot and get redistributed to shareholders pro rata. Different owners get different amounts of shares depending on the value of their team.

The problem with that going forward is that you've delinked number of shares from team revenue forever. So Toronto's owner is going to get 400 shares and Buffalo's owner is going to get 90 shares and even if the teams flip in terms of profitability down the line, that's what you're stuck with.
Right, but I think there's something having to do with their anti-trust exemptions that wouldn't allow it legally.

I remember hearing this when the American Needle used the NFL and they tried to make the claim to the court that they were a single entity. The courts ruled that they are not, which set precedent for the Big 4 leagues to not be able to become that. Or something along those lines.

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12-14-2012, 09:33 PM
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Quote:
Originally Posted by IU Hawks fan View Post
Right, but I think there's something having to do with their anti-trust exemptions that wouldn't allow it legally.

I remember hearing this when the American Needle used the NFL and they tried to make the claim to the court that they were a single entity. The courts ruled that they are not, which set precedent for the Big 4 leagues to not be able to become that. Or something along those lines.
The NFL absolutely is not a single entity. But it absolutely could become one if it followed the right rules. Ever heard of a merger?

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12-14-2012, 09:42 PM
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If that ever happened, I'd be done. It's why I don't watch MLS, too easy to manipulate the entertainment.

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12-14-2012, 09:50 PM
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Quote:
Originally Posted by haseoke39 View Post
The NFL absolutely is not a single entity. But it absolutely could become one if it followed the right rules. Ever heard of a merger?
That's what I'm talking about, I don't believe they are legally allowed to merge.

Someones gotta know more about this, because I'm just speculating off what I remember. Maybe kdb?

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12-14-2012, 09:54 PM
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Quote:
Originally Posted by cutchemist42 View Post
If that ever happened, I'd be done. It's why I don't watch MLS, too easy to manipulate the entertainment.
Well, it depends on how you structure it. I would imagine you create a giant corporation, but really rig the charter at the beginning to establish some key competitive features: board of directors must appoint 1 GM per team, GM can't be fired following a winning season or absent low attendance, GM otherwise can't be pressured by the board, maybe create a procedure whereby if enough fans file some kind of motion they can get a GM canned to mimic the effect of public pressure on an isolated operation.

You can put a ton of **** into a corporate charter - basically anything that doesn't violate another law. You just have to be smart about thinking up what rules you would have to put in place for the corporation to effectively function like 30 enterprises even though it will all really be one up top.

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12-14-2012, 09:57 PM
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Originally Posted by IU Hawks fan View Post
That's what I'm talking about, I don't believe they are legally allowed to merge.
I'm no corporate lawyer, but I did just finish my law school exams in corporate law and securities regulation. So for whatever my limited perspective is worth, I can't think of any law out there that would prevent them from merging. In fact, I don't think anyone's ever tried it, so I can't think of when a court would even have had occasion to rule to the effect that they can't. And Delaware surely never passed a law specifying special merger rules for sports franchises.

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12-14-2012, 10:02 PM
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The other thing is why would the owners ever want to merge and lose their franchise values?

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12-14-2012, 10:12 PM
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Originally Posted by IU Hawks fan View Post
The other thing is why would the owners ever want to merge and lose their franchise values?
You give them more money than their franchise is worth now. That's the whole idea of venture capitalism - you identify some business that could be making a lot more money under different management, and pay them off (often at a high premium over what the market suggests they're worth right now) in order to get control of the whole thing. Then you make a killing off it by reorganizing everything, move Phoenix to Toronto's suburbs, put a 40% cap in place, whatever.

One way you could do this would be a cash deal, just give the owner of the Sabres 1.5x what he thinks his franchise is worth. Another would be to convert all 30 teams into one organization and then issue stock proportional to franchise's respective worth to all 30 owners (the owners could then sell it to the public, whatever, but it would be NHL stock, not stock of any one franchise). You could write a charter rule of the new NHL co. that says all shareholders receive a mandatory annual dividend proportional to x% of the league's profit, and owners would be in the same position they would have been had they decided to keep the franchise (plus, they wouldn't be on the hook for any losses, for which purpose you would make x% something less than 100 by enough to allow the league to build up a little rainy day fund). Pay them a little (smaller) premium off the top, and you can put everyone in a better position than if they decided not to sell.

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12-14-2012, 10:17 PM
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The reality of MLS is far different from the NHL's

Not only it is a second-tier league in the continent (well behind the big 4, plus college football/basketball, plus maybe NASCAR/golf/tennis) but it's hardly a Top 10 league in its own sport. Top talent won't come - for now. The MLS, as a whole, HAS to grow if it ever wants to be an impact league worldwide. As a single entity it's a lot easier to drive the league's own goal and minimize opposition from ownership. In the long run, it's also in each owner's best interest if the whole league's clout grew since there's a lot of potential for expansion in North America - many times more than the "potential" for NHL growth.

It's a lot harder to convince owners of large hockey markets (i.e. Aquillini, MLSE, Molsons, etc.) to reduce their own power and likely individual profits in the short run.

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12-14-2012, 10:21 PM
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Quote:
Originally Posted by haseoke39 View Post
You give them more money than their franchise is worth now. That's the whole idea of venture capitalism - you identify some business that could be making a lot more money under different management, and pay them off (often at a high premium over what the market suggests they're worth right now) in order to get control of the whole thing. Then you make a killing off it by reorganizing everything, move Phoenix to Toronto's suburbs, put a 40% cap in place, whatever.
Pretty much every team has been bought and sold in the past couple of decades so that tells me most owners are not in this for the long-term. I think most could be persuaded for the right price. The worry would be for Snyder, Jacobs and Illitch. You would have to make an outrageous offer or pry the team from their cold, dead hands.

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12-14-2012, 10:26 PM
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It's a lot harder to convince owners of large hockey markets (i.e. Aquillini, MLSE, Molsons, etc.) to reduce their own power and likely individual profits in the short run.
Everything else you've said is true, but I want to clarify that if someone were to buy up the NHL and turn it into one large corporation, you'd have pay owners a substantial premium over what their franchises are worth now. It would be, in almost any scenario I can think of, a big payday up front.

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12-14-2012, 10:29 PM
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Originally Posted by Mr. Fancy Pants View Post
Pretty much every team has been bought and sold in the past couple of decades so that tells me most owners are not in this for the long-term. I think most could be persuaded for the right price. The worry would be for Snyder, Jacobs and Illitch. You would have to make an outrageous offer or pry the team from their cold, dead hands.
Add Terry Pegula to that list. He quite literally took his $4B net worth, quit the oil business and decided his mission for the second half of life was to win Stanley Cups. I'm not saying it would happen. I'm saying it's probably legally and economically feasible.

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12-14-2012, 10:37 PM
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Quote:
Originally Posted by haseoke39 View Post
Everything else you've said is true, but I want to clarify that if someone were to buy up the NHL and turn it into one large corporation, you'd have pay owners a substantial premium over what their franchises are worth now. It would be, in almost any scenario I can think of, a big payday up front.
And where would that money come from? Those franchises generate dozens of million of profits in dollars per year; in the Leafs/Habs case specially it doesn't particularly matter how good is the on-ice product is. They would have to be paid a LOT. Like, a lot. Whoever was committed to making the NHL a single entity would not only have a truly vast amount of assets but be risky enough to believe the move would pay its dividends. And of course they could turn around and sell their franchises for 9 digits easily, maybe someone would pay a billion dollars for the Leafs.

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12-14-2012, 10:46 PM
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And where would that money come from? Those franchises generate dozens of million of profits in dollars per year; in the Leafs/Habs case specially it doesn't particularly matter how good is the on-ice product is. They would have to be paid a LOT. Like, a lot. Whoever was committed to making the NHL a single entity would not only have a truly vast amount of assets but be risky enough to believe the move would pay its dividends. And of course they could turn around and sell their franchises for 9 digits easily, maybe someone would pay a billion dollars for the Leafs.
Banks.

Or a big group like Bain.

Or maybe you wouldn't have to have the money up front at all. I've suggested above a way in which no actual money has to flow on day 1, the owners could all just trade in their franchises for stock in NHL Co. It would mean owners would have to buy the business plan, pretty much, would have to believe that the value of that stock would be worth more than their franchises, once the league was centrally controlled and operated, so that they felt confident that they'd in essence be getting a premium. But it could be done. Bain offer $4B for the NHL is 2004 (and they'd surely need more money now). But groups exist that can finance this kind of thing. Or just go to a bank and do a leveraged buyout with outside financial backing that believes your plan will work.

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