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Contraction a necessary evil for survival of NHL says economist

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Old
12-17-2012, 03:46 PM
  #451
ToursLepantoVienna
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Contraction?

Many fans: sure!
NHL: no.
NHLPA: no.

Next question?

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12-17-2012, 07:51 PM
  #452
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Originally Posted by Plan The Parade View Post
Contraction doesn't really fix the problem.

Let's say you contract two teams that were losing 15 million a year. Since NHL revenue just went up by 30 million, the salary cap goes up.

Except revenues didn't actually increase. The amount of money Toronto or Carolina or St. Louis is taking in didn't go up; negative receipts were taken away.

So the problem of having teams that can barely spend to the cap floor without losing millions isn't fixed at all.

And the difference between the haves and the have nots isn't the problem either. Every sports League on the planet has teams that make more money than others, due to market size, fan passion, constant success, a sexy logo, or whatever. The problem is that in the other 3 leagues in North America (well, this is a big issue for the NBA as well, so 2), the lower half isn't just behind the big markets: the lower half is losing serious money.

So to fix this, you need to either:
--Cut costs, or:
--Increase income (revenue sharing).

Contraction doesn't lead to either of those solutions. It just worsens them.
I just disagree with your final assessment.

The cap doesn't have to increase. At the end of the day, fair or not, the only players at risk of losing their jobs are 5th stringers who see a few seasons in the NHL at best.

Contraction is what the NHL needs in the worst way. Not least of which is to be MORE respectable.

Just because a league has 30 teams doesn't make it any more legitimate than a league with 28 if there are more than 2 teams who love to lose and make no money.

What the hell is the point?


Don't forget that ridding bad teams means more meaningful matchups. Most people don't care to watch games between superior teams and bum teams.

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12-17-2012, 11:08 PM
  #453
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I just disagree with your final assessment.

The cap doesn't have to increase. At the end of the day, fair or not, the only players at risk of losing their jobs are 5th stringers who see a few seasons in the NHL at best.

The cap does need to increase. That's what linkage to HRR is. Ownership is not going to give up on linkage, and if there is linkage, then eliminating the worst-revenue teams drives the cap up, ipso facto.
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Contraction is what the NHL needs in the worst way. Not least of which is to be MORE respectable.
Sure, I'd bet the Atlanta sports scene really respects us right now. Let's leave a few more bodies in our wake and see what that does for our reputation as a viable business.

You do not build credibility as a sport by being so incompetent at supporting your franchises that the death penalty is seen as preferable to any of multiple other known solutions to the problem of the have/have not divide (in no particular order, revenue sharing, relocation, or simplyadjusting the linkage formula more in favor of low revenue squads)

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Just because a league has 30 teams doesn't make it any more legitimate than a league with 28 if there are more than 2 teams who love to lose and make no money.
That's an interesting opinion you've got there. I'm not sure I agree with it. I think contracting teams is such a bush league, small-time, sport-on-the-brink-of-out-ant-out-collapse solution to the problem that it DOES make the league less legitimate that there's a serious pro-contraction movement running rampant among its more outspoken thinkers.

Our goal is to become as legitimate as the NFL, NBA and NHL. When was the last time any of these leagues contracted? (answer: The Cleveland Spiders, before the turn of the last freaking century!)

Phoenix notwithstanding, it's not like any revenue losses in most of these weak franchises come out of your pocket. And any contraction money? Any payout to the owner who's losing his team? Probably would, in terms of higher costs to the ownership of your own favorite franchise (assuming it wasn't put under the axe itself to get you down to 20. Surprise!).

If you're having so much trouble recognizing the right of the Nashville Predators to exist that you're willing to fork out your hard-earned to make them go away, the problem is a little closer to home than Nashville.

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Don't forget that ridding bad teams means more meaningful matchups. Most people don't care to watch games between superior teams and bum teams.

Define a meaningful matchup. you seem to be laboring under the delusion that fans would be able to remember that there had once been 30 teams in the now 20 team league, so that the fact that the team was in 20th place overall made it relevant instead of being a "bum team." Every bit of vitriol and contempt currently reserved for places 26-30 would then be reserved for places 16-20.

The single biggest casualty of contraction of that magnitude, besides the loss of the franchises themselves, would be the conference quarterfinals. If you have 20 teams there's NWIH you're going to have 16 of them in the playoffs. What a bush-league-caliber bad joke that would be. We might as well just scrap Lord Stanley and hand out participation awards. Nope. 3 playoff rounds, 8 teams in the playoffs.... [MOD]


Last edited by Killion: 12-17-2012 at 11:32 PM. Reason: a tad overboard there Dojji...
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Old
12-18-2012, 09:03 AM
  #454
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I think all of the southern teams, and by that I mean teams located in the southeastern United States, are living on borrowed time now that Bettman has his TV deal. He did absolutely nothing when ASG was in the process of ruining the NHL brand in Atlanta. He even resorted to the mythology that the Flames left due to the lack of fan support.

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12-18-2012, 09:10 AM
  #455
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And I think that's pretty ridiculous.

Do you really think "grab and run" is anything but a bush league tactic? Heck it's worse than bush league, it's outright fraud. This league is still going to be here God willing when the current media deal expires, and we're going to want another one. That media deal makes us more money per year than all the Southern teams are losing combined.

We got that deal in large measure because of our token exposure into those markets. The network is a partner with us in increasing that exposure once the deal is signed. They knew going in the market there was weak, they are counting on it growing just like we are. Pulling out of those markets would be a serious form of betrayal.

I do not understand this desperation to retreat from the southern markets. I see no objective worth depriving an entire region of hockey.

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12-18-2012, 09:18 AM
  #456
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The whole point of the 90's expansion was geared towards convincing TV execs that hockey wasn't a fringe sport with only regional appeal. If folks would flock to see the game in Raleigh or Phoenix, than surely they would tune in to see Pittsburgh play Washington on Sunday afternoons. Now that they've got their TV deal, all these non-traditional markets are expendable.

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12-18-2012, 09:24 AM
  #457
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Originally Posted by Dojji View Post
I do not understand this desperation to retreat from the southern markets. I see no objective worth depriving an entire region of hockey.
They drag the league down by their lack of competitiveness.

If the league's main interest is maintaining that (1) all teams are profitable (2) all teams can enter the market for players with similar chances of success and thus (3) have similar chances of winning championships, then the presence of considerably less competitive teams in the league (less fans, less sponsorship money, less local TV money, lower ticket prices) force the league to move toward progressively stricter limits on what teams and players are allowed to do to gain an edge (because those moves would naturally favor the stronger teams).

It can be argued that this need to consistently tighten the screw on economic freedom within the league is what causes these labor relations disasters on a regular basis. With the most obviously uncompetitive teams removed, the playing field - which the league now needs to fix more with every CBA - would naturally level.

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12-18-2012, 09:31 AM
  #458
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Originally Posted by TheMoreYouKnow View Post
They drag the league down by their lack of competitiveness.
Every one of the Southern expansion teams have gotten through multiple rounds of the playoffs at least once, all but 2 of them multiple times, and 4 of them have won Cups in the last decade (if we count Colorado as a Southern expansion team, and we probably should).

Lack of competitiveness? Are you BSing me? You want to know who lacks competitiveness? THE FREAKING LEAFS!!! Disgustingly uncompetitive franchise. Contract them, and leave the cash-strapped southern teams who fight for everything they get alone.

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12-18-2012, 09:33 AM
  #459
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Originally Posted by Dojji View Post
Every one of the Southern expansion teams have gotten through multiple rounds of the playoffs at least once, all but 2 of them multiple times, and 4 of them have won Cups.
Which is exactly why it is so sad they still have weak fan bases who pay very little to go to games if they do at all.

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12-18-2012, 09:34 AM
  #460
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Originally Posted by Dojji View Post
I think contracting teams is such a bush league, small-time, sport-on-the-brink-of-out-ant-out-collapse solution to the problem that it DOES make the league less legitimate that there's a serious pro-contraction movement running rampant among its more outspoken thinkers.
I think expanding the league much too quickly into many markets that can't/wont support hockey is more bush-league than contracting.

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12-18-2012, 09:37 AM
  #461
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Originally Posted by coldsteelonice84 View Post
Which is exactly why it is so sad they still have weak fan bases who pay very little to go to games if they do at all.
[Mod] We show you full barns; low ticket prices, We show you that the team is paying for itself, it's something else. Your contempt for the southern markets is clouding your perception and blinding you to the fact that most of them are starting to succeed -- even if they do need help from a good arena situation to do it (hint: so does Winnipeg)

It's long past the point now that no one should take this part of the argument seriously.


Last edited by Killion: 12-18-2012 at 10:38 AM. Reason: lets not get "personal"...
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12-18-2012, 09:39 AM
  #462
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Originally Posted by Dojji View Post
Lack of competitiveness? Are you BSing me? You want to know who lacks competitiveness? THE FREAKING LEAFS!!! Contract them, and leave the cash-strapped southern teams who ACTUALLY KNOW HOW TO COMPETE FOR THINGS alone!
Worst. Businessman. Ever.

Yes, let's contract a team that brings in a boatload of revenue for the NHL.

On-ice performance does not necessarily translate to a good market. We've already seen this with many Southern US teams. Most/all Canadian teams can stink for a while and still draw well - THOSE are good markets. You keep those markets because at the end of the day it's all about money.

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12-18-2012, 09:41 AM
  #463
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I think expanding the league much too quickly into many markets that can't/wont support hockey is more bush-league than contracting.
I really disagree.

Or, let me rephrase that. I agree that overexpansion is dangerous. I completely disagree that this league has overexpanded.

If anything, the number of untapped markets in the south and west that could possibly support a team given the chance tell me we've probably expanded to the right degree, the question is are our franchises in the right places.

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12-18-2012, 09:42 AM
  #464
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Worst. Businessman. Ever.

Yes, let's contract a team that brings in a boatload of revenue for the NHL.

On-ice performance does not necessarily translate to a good market. We've already seen this with many Southern US teams. Most/all Canadian teams can stink for a while and still draw well - THOSE are good markets. You keep those markets because at the end of the day it's all about money.
I was responding to a ridiculous argument with an example that gave the lie to it.

For the love of God people is a bit of critical reading too much to ask?

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12-18-2012, 09:46 AM
  #465
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Originally Posted by Dojji View Post
If anything, the number of untapped markets in the south and west that could possibly support a team given the chance tell me we've probably expanded to the right degree, the question is are our franchises in the right places.
And what franchises might those be? If nobody is losing money, why is that the manta we keep hearing from the NHL, that some teams are ecstatic there is no season because they aren't hemorrhaging money due to a lack of interest in the team?

I assume you are suggesting revenue sharing to support them and let them grow over time?

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12-18-2012, 09:47 AM
  #466
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Nice strawman.

I'll be over here when you'd like to present an ACTUAL argument.


Last edited by Killion: 12-18-2012 at 10:40 AM. Reason: not reqd...
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12-18-2012, 10:02 AM
  #467
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I am thinking that contraction may be something that overtakes the NHL, rather than something they do on their own. If there is no season the legal procedures will tie up the league for at least a second season. That's a long time. Will all thirty franchises remain? If there are teams that do not make any profit, then finance a legal marathon, without any revenue for two years that do not restart would anybody be surprised?

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12-18-2012, 10:30 AM
  #468
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Originally Posted by Dojji View Post
Every one of the Southern expansion teams have gotten through multiple rounds of the playoffs at least once, all but 2 of them multiple times, and 4 of them have won Cups in the last decade (if we count Colorado as a Southern expansion team, and we probably should).

Lack of competitiveness? Are you BSing me? You want to know who lacks competitiveness? THE FREAKING LEAFS!!! Disgustingly uncompetitive franchise. Contract them, and leave the cash-strapped southern teams who fight for everything they get alone.
This is the business forum, who gives a crap how many playoff games you win if the tickets go for 2$ on Stubhub and the business isn't making money? We're refering to competitiveness as a business not as a sports team. The Maroons folded within 3 year of winning the Stanley Cup.

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12-18-2012, 11:05 AM
  #469
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Originally Posted by JuniorNelson View Post
I am thinking that contraction may be something that overtakes the NHL, rather than something they do on their own. If there is no season the legal procedures will tie up the league for at least a second season. That's a long time. Will all thirty franchises remain? If there are teams that do not make any profit, then finance a legal marathon, without any revenue for two years that do not restart would anybody be surprised?
That seems like it would be different than directly contracting teams for whatever reasons, which is not something any league anywhere tries to do. There have been times when owners didn't want to expand, but do any owners come out in favor of contraction? I'm sure even the NFL, NBA, and MLB could use a few fewer teams in their leagues, for the same reasons as people give for the NHL, but every avenue is taken before going down that road.

If it got to a point where the NHL could basically not control such a situation, and I'm not qualified enough to know if such a state is possible or not, then that's a different story.

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12-18-2012, 12:00 PM
  #470
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This is the business forum, who gives a crap how many playoff games you win if the tickets go for 2$ on Stubhub and the business isn't making money? We're refering to competitiveness as a business not as a sports team. The Maroons folded within 3 year of winning the Stanley Cup.
If you want to talk about competitiveness, what the team has accomplished matters. End of discussion.

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12-18-2012, 12:38 PM
  #471
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If you want to talk about competitiveness, what the team has accomplished matters. End of discussion.
"End of discussion" I see you got this all figured out.

The competition on the ice is merely the product that the team and the league are trying to sell. This product can be very good or very bad, but at the end of the day product quality is just one small aspect of whether the business is competitive in the marketplace.

Let's try an example in another industry.. A guy makes mean pork BBQ in his restaurant, top notch. Unfortunately his pork BBQ restaurant is located in a mostly Muslim neighborhood of Beirut where most people aren't allowed to eat pork and thus shun his business. He depends on the small number of locals who will eat pork and a small group of people travelling to his area just for the pork BBQ, but it's not enough most of the time and things aren't going well. His product is exceptional, but location and the resulting demand level still make his business uncompetitive.

Meanwhile across town in a mostly Christian neighborhood a guy owns a pork BBQ shop that's been a local favorite for many decades. Recently, quality slipped but it's still the best BBQ place in that part of town - it is however notably worse than the first guy's place. But location and tradition may still mean this guy is far more competitive than the first guy. This business makes loads of money off the many hungry mouths in the area and can pay its staff much better wages and it can buy better ingredients as well.

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12-18-2012, 02:08 PM
  #472
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You're depending too much on hockey definitely not being able to succeed in the south, I could name you all the counterexamples, but frankly I'm home sick from work and I've done it 20 billion times before and yet one more johnny-come-lately with the same old tired argument is not worth it.

Suffice it to say, find another dead horse to beat. This one has been pounded into blood and dust. The argument that the sunbelt markets cannot succeed is wrong, and provably so, and repeatedly proven so in this board. If you want to make this same assertion again without making at least some rudimentary effort to educate yourself, then I've already spent more time on you than I probably should. Good day.

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12-18-2012, 02:28 PM
  #473
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I think all of the southern teams, and by that I mean teams located in the southeastern United States, are living on borrowed time now that Bettman has his TV deal. He did absolutely nothing when ASG was in the process of ruining the NHL brand in Atlanta. He even resorted to the mythology that the Flames left due to the lack of fan support.
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Originally Posted by Bongo View Post
The whole point of the 90's expansion was geared towards convincing TV execs that hockey wasn't a fringe sport with only regional appeal. If folks would flock to see the game in Raleigh or Phoenix, than surely they would tune in to see Pittsburgh play Washington on Sunday afternoons. Now that they've got their TV deal, all these non-traditional markets are expendable.
If a new league pops up I can tell you right now anything with more then 22 teams is out of the question. Two southern teams, Dallas and Atlanta. would be enough.

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12-18-2012, 02:44 PM
  #474
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Florida is the third largest state in the United States. You CAN'T ignore that market entirely. The Lightning have been more of a success than a failure in their history and their ownership has made a lot of positive strides.

Similarly, if you're going to bother with Dallas you might as well hit Houston too. Those two markets are stronger with each other to play against than either one is alone and either market can provably stand alone anyway.

And at that point, we're pretty much quibbling over the existence of Carolina, Florida, Nashville and Phoenix. And really, of the three, only Phoenix is demonstrably unsustainable and two of the remaining three (Nashville and Florida) are demonstrably sustainable, even if other revenue streams do have to cover for losses of the actual hockey squad.

A healthy revenue sharing scheme is more than enough to save anyone else except for Phoenix, in other words. Get Phoenix sorted out and get hockey back on the ice and only a handful of bitter enders are even going to care how many teams there are in the NHL.

There is no reasonable point to considering contraction. Only irrational nationism disguised as budget-consciousness (with someone else's money no less).


Last edited by Dojji*: 12-18-2012 at 02:50 PM.
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12-18-2012, 02:49 PM
  #475
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"End of discussion" I see you got this all figured out.

The competition on the ice is merely the product that the team and the league are trying to sell. This product can be very good or very bad, but at the end of the day product quality is just one small aspect of whether the business is competitive in the marketplace.

Let's try an example in another industry.. A guy makes mean pork BBQ in his restaurant, top notch. Unfortunately his pork BBQ restaurant is located in a mostly Muslim neighborhood of Beirut where most people aren't allowed to eat pork and thus shun his business. He depends on the small number of locals who will eat pork and a small group of people travelling to his area just for the pork BBQ, but it's not enough most of the time and things aren't going well. His product is exceptional, but location and the resulting demand level still make his business uncompetitive.

Meanwhile across town in a mostly Christian neighborhood a guy owns a pork BBQ shop that's been a local favorite for many decades. Recently, quality slipped but it's still the best BBQ place in that part of town - it is however notably worse than the first guy's place. But location and tradition may still mean this guy is far more competitive than the first guy. This business makes loads of money off the many hungry mouths in the area and can pay its staff much better wages and it can buy better ingredients as well.
To be blunt, that's a terrible example. You're talking about something that is forbidden, as opposed to simply being new and unusual.

You'd have been better served to talk about opening up sushi restaurants in the United States 20 years ago, or Mexican restaurants in the United States 40 years ago, or Italian restaurants in the United States 100 years ago; all are better examples. But then you'd be forced to admit that people exposed to something new and exotic don't automatically reject it and continue to do so.

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