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Melnyk Interview (Regarding Alfredsson and teams finances)

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Old
08-12-2013, 05:17 PM
  #76
John Holmes*
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I guess it's all open to interpretation.

What I get from the Melnyk interview is this:

I need a casino, or we're destined to be a welfare team. Furthermore, I need a casino or we're destined to be a welfare team. And really, to get right to the point, I need a casino, or we're destined to be a welfare team.

I need a casino, or we're destined to be a welfare team. I need a casino, or we're destined to be a welfare team. I need a casino, or we're destined to be a welfare team.

In conclusion, I need a casino, or we're destined to be a welfare team. I need a casino, or we're destined to be a welfare team. I need a casino, or we're destined to be a welfare team, and I need a casino, or we're destined to be a welfare team.

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08-12-2013, 05:22 PM
  #77
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This is just depressing...

Very happy we've gone for plan B though... Ryan > Alfie.

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08-12-2013, 05:23 PM
  #78
Vesa Awesaka
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Just curious how does shared revenue work in the NHL? I was under the impression that nashville and phoenix take the biggest cuts. Wouldnt our cut increase if we dont become profitable as the salary cap increases?

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08-12-2013, 05:55 PM
  #79
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Originally Posted by Vesa Awesaka View Post
Just curious how does shared revenue work in the NHL? I was under the impression that nashville and phoenix take the biggest cuts. Wouldnt our cut increase if we dont become profitable as the salary cap increases?
Not sure, but I doubt that we suddenly generate less revenue than teams beneath us, so I doubt we will be eligible for revenue sharing if ever.

After reading, its seems like any team that's not top 10 (in revenue) is eligible. We're closer to being a team that contributes to revenue sharing rather than receiving anything significant from it.


Last edited by HavlatMach9: 08-12-2013 at 06:08 PM.
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08-12-2013, 06:10 PM
  #80
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Rod Bryden era all over again - poverty pleas etc... difficult to win if we're not going to spend when the time is right, difficult to see Karlsson stay if we're not going to win. Frustrated that so much good will built up during the rebuild is being squandered away by mgmt/ownership.

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08-12-2013, 06:23 PM
  #81
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Can't wait until the "Save Our Sens" rallies start up again.

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08-12-2013, 06:34 PM
  #82
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Originally Posted by Topside View Post
Is your argument that cap teams aren't better than cap floor teams? I guess I don't understand how they aren't related. The owner will lose money if player salaries are more than ticket sales. The problem is that there isn't the necessary demand for the Senators in Ottawa if they won't accept a price increase. The options would be an owner willing to lose money and keep current ticket prices, or move the team to a place where ticket prices can go up.
You're assuming that everyone that is buying a ticket at 100% price would also buy at 110%. The market has already placed the value of a ticket. The relationship between expensive tickets and high performing teams isn't there. The relationship between slashing player salaries and discounted tickets isn't there. You're assuming that money would be reinvested in the team, which it may or may not be.

Once a ticket price has been adjusted, it doesn't go down.. you might be saying yes now to a higher price on the condition that we pick up player X's salary but that won't always be the case.

Ticket prices are not tied to cost, they are tied to demand.
You have to understand this to understand why it is a fallacy to say: Raise ticket prices so we can raise the internal budget.



When Eugene talks in an interview about needed to raise tickets to get better players, he isn't explaining financial realities of the club, he is entering into a negotiation stance with the general public, and since we are not privy to the pertinent information about the club, we are going to get fleeced.


Last edited by Rals: 08-12-2013 at 06:40 PM.
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08-12-2013, 06:53 PM
  #83
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More posturing for casino sympathy. Im not saying hes not hurting $ wise, but its all too conveniently timed.

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08-12-2013, 06:55 PM
  #84
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Quote:
Originally Posted by DefenseMinister View Post
We certainly will. But you won't be able to call the Sens a "floor" team until they are actually at the floor.
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Originally Posted by nanuuq View Post
well that's not quite right either.
At what percentage of the difference between floor and cap would you say
"someone is spending to the cap" =
"someone is spending to the floor" =

cap = 64.3 million
floor = 44 million

seems at 54 million, with still needing to sign cowen we are not either a cap nor floor team, but a middling team :O
Quote:
Originally Posted by The Great Below View Post
30 teams in the league
Sens are 29th in spending

29th = middle?
I think this has a lot to do with wording. Technically, the Sens around the middle of the salary cap (i.e. (64.3 + 44) / 2 = $54.15M). However, the sudden contraction of the salary cap means the the median team spending hasn't had a chance to level off at the mid-point of the cap. The middle of the league (i.e. average team salary) still better reflects the mid-point of a $70.2M cap (i.e. $62.2M) and is actually at $61.68M (and likely higher since many teams still aren't up to a 23 man roster).

So, on average, NHL teams are spending about $7.8M more than Ottawa.

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08-12-2013, 07:25 PM
  #85
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Quote:
Originally Posted by Senscore View Post
Can't wait until the "Save Our Sens" rallies start up again.
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Originally Posted by V for Voodoo View Post
More posturing for casino sympathy. Im not saying hes not hurting $ wise, but its all too conveniently timed.
There wont be any response to a Save Our Sens rally until there is some answer to the
continuing Travis Yote allegations that Melnyk is draining the Sens and or loading them with debt to keep his other enterprises afloat.

As far as making a statement by letting Alfie go and proclaiming that the Sens have their own internal cap-and that we he wont invest in the city anymore-these things won't necessarily bring the response from fans that he seems to expect regarding the Casino and can in fact backfire pretty fast.

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08-12-2013, 07:46 PM
  #86
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Originally Posted by DefenseMinister View Post
The only reason McArthur was signed was because they didn't get Alfie back. The amount that they paid McArthur was around what they wanted to get Alfie back for.

This would allow them to make a big move like Clarkson/Ryan.
That's not what the article states. It basically says there was money to go out and sign a top 6 forward, and Alfie was included in that. IE No Alfie = No money for a Ryan type.

Something doesn't add up. This smells like more spin doctoring before Alfredsson makes his first public address in Ottawa.

So far, we've already gone over his alleged internal cap (with a significant piece remaining unsigned), acquired two top 6 forwards when he says there was only room for one, and now he's saying he has no problem with spending more on rentals. Is the sky really falling or are some people deciding to drink the kool aid just to further their own agendas? Hmmm.

I'll start worrying when we actually do lose our homegrown talent, instead of just speculating and preemptively *****ing about it.

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08-12-2013, 07:55 PM
  #87
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Quote:
Originally Posted by Rals View Post
In simple terms.

Ticket prices are dictated by demand for product (REVENUE!)

Player salaries represent a cost-to-owner (COSTS!)

those two things aren't directly related.
I fail to see how costs and revenue for a business are not related...

(I added the bolded parts)

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08-12-2013, 07:56 PM
  #88
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Quote:
Originally Posted by FolignoQuantumLeap View Post
That's not what the article states. It basically says there was money to go out and sign a top 6 forward, and Alfie was included in that. IE No Alfie = No money for a Ryan type.

Something doesn't add up. This smells like more spin doctoring before Alfredsson makes his first public address in Ottawa.

So far, we've already gone over his alleged internal cap (with a significant piece remaining unsigned), acquired two top 6 forwards when he says there was only room for one, and now he's saying he has no problem with spending more on rentals. Is the sky really falling or are some people deciding to drink the kool aid just to further their own agendas? Hmmm.

I'll start worrying when we actually do lose our homegrown talent, instead of just speculating and preemptively *****ing about it.
Pretty much this. I have no clue what's going on, and until Ryan walks or Cowen gets moved or something like that, I'm not worried.

If there was no money at all, or if re-signing guys next year was gonna be a problem, MacArthur would not have be signed.


The Sens must make more money than Phoenix, Nashville, Florida, Tampa, etc. They must. Yet the Sens still spend less. Melnyk is just a cheapskate. But hopefully he'll step up and sign the core young players when they need new deals. This team will do well and grow together, I don't see Melnyk messing that up and letting good players walk time and time again.

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08-12-2013, 08:01 PM
  #89
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Quote:
Originally Posted by FolignoQuantumLeap View Post
That's not what the article states. It basically says there was money to go out and sign a top 6 forward, and Alfie was included in that. IE No Alfie = No money for a Ryan type.

Something doesn't add up. This smells like more spin doctoring before Alfredsson makes his first public address in Ottawa.

So far, we've already gone over his alleged internal cap (with a significant piece remaining unsigned), acquired two top 6 forwards when he says there was only room for one, and now he's saying he has no problem with spending more on rentals.
There's probably some spin doctoring involved here and the timing of Melnyk's interview is curious to say the least.

We're at $$53,835,833 in cap hit but only $50,877,500 in actual payroll. That includes O'Brien(whom they are trying to trade) and Pageau(who can be sent down).

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08-12-2013, 08:09 PM
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Quote:
Originally Posted by BonkTastic View Post
I fail to see how costs and revenue for a business are not related...

(I added the bolded parts)
They definitely are related in a normal business, but not in a franchise system where salaries (costs) are decided by total league revenue and ticket prices (revenue) decided by local markets.

This arrangement under normal business conditions is a recipe for disaster, the NHL attempts to deal with it via revenue sharing which to date as been less than effective.

As general info,the Sens sent out an email todaywith some interesting info, "Since this past January, we’ve experienced tremendous growth in our season ticket base and are now rapidly approaching our goal of 13,000 season seat owners for the 2013-14 season!".

This would indicate a significant demand for tickets at current price levels, the effect on this demand at some increased price is difficult to determine without polling STHs.

However I would assume the Sens would see some decline in the ST base if prices were to rise.

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08-12-2013, 08:16 PM
  #91
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Quote:
Originally Posted by BonkTastic View Post
I fail to see how costs and revenue for a business are not related...

(I added the bolded parts)
I never said revenue, and you incorrectly added it to my quote.

Demand for tickets sets the price, the price of tickets does not have a correlation to player salaries. (Leafs, Panthers)



Also, costs and revenue aren't directly related either, but this is a hockey forum, not an economics forum, and i'm to lazy to explain.

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08-12-2013, 08:20 PM
  #92
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Originally Posted by MandyAlwaysKnows View Post
Pretty much this. I have no clue what's going on, and until Ryan walks or Cowen gets moved or something like that, I'm not worried.

If there was no money at all, or if re-signing guys next year was gonna be a problem, MacArthur would not have be signed.


The Sens must make more money than Phoenix, Nashville, Florida, Tampa, etc. They must. Yet the Sens still spend less. Melnyk is just a cheapskate. But hopefully he'll step up and sign the core young players when they need new deals. This team will do well and grow together, I don't see Melnyk messing that up and letting good players walk time and time again.
Let's hope you are right.

Yet Melnyk has been pretty clear, he doesn't intend to operate the Sens at the cap ceiling nor does he intend to operate the team at a loss.

Assuming he has being honest with his statements regarding the Sens financials, I don't see an easy way forward without the Sens increasing revenue significantly or a continued pressure on holding/removing costs.

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08-12-2013, 08:21 PM
  #93
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Quote:
Originally Posted by Rals View Post
I never said revenue, and you incorrectly added it to my quote.

Demand for tickets sets the price, the price of tickets does not have a correlation to player salaries.



Also, costs and revenue aren't directly related either, but this is a hockey forum, not an economics forum, and i'm to lazy to explain.
1) Ticket prices affect revenue.
2) Costs and Revenue are related to the bottom line of a business. Successful business: Revenue > costs (with some exceptions).


This is not rocket science. Sure, there are advanced economics that we can discuss in which businesses can continuously dump money into their product despite the fact that the return on that investment won't help them get into the black, or vice versa, but this is really the black-and-white part of running a business, here.

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08-12-2013, 08:23 PM
  #94
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Quote:
Originally Posted by BonkTastic View Post
1) Ticket prices affect revenue.
2) Costs and Revenue are related to the bottom line of a business. The more revenue you can generate, the more costs you can add.

This is not rocket science.
While what you say is true, you are ignoring how the NHL functions.

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08-12-2013, 08:24 PM
  #95
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Quote:
Originally Posted by Rals View Post
I never said revenue, and you incorrectly added it to my quote.

Demand for tickets sets the price, the price of tickets does not have a correlation to player salaries. (Leafs, Panthers)
Hey if salaries are higher, there should be more demand.

As others have said, not worried unless something major happens. I'm happy Melnyk saved the team, but I'm not a fan of him being so involved with the team, and I wouldn't trust whatever he says to the media because it seems calculated.

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08-12-2013, 08:29 PM
  #96
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Quote:
Originally Posted by Holdurbreathe View Post
They definitely are related in a normal business, but not in a franchise system where salaries (costs) are decided by total league revenue and ticket prices (revenue) decided by local markets.

This arrangement under normal business conditions is a recipe for disaster, the NHL attempts to deal with it via revenue sharing which to date as been less than effective.

As general info,the Sens sent out an email todaywith some interesting info, "Since this past January, we’ve experienced tremendous growth in our season ticket base and are now rapidly approaching our goal of 13,000 season seat owners for the 2013-14 season!".

This would indicate a significant demand for tickets at current price levels, the effect on this demand at some increased price is difficult to determine without polling STHs.

However I would assume the Sens would see some decline in the ST base if prices were to rise.
- Revenue sharing would be either a cost (for the richer clubs) or a revenue (for the poorer clubs). Depends on which side you're on, but it shows up on one side of the ledger for a club or the other (or not at all, if you're in the middle).

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08-12-2013, 08:33 PM
  #97
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Originally Posted by Holdurbreathe View Post
While what you say is true, you are ignoring how the NHL functions.
The NHL does have some irregularities when compared to "regular" businesses, but at the end of the day, each team has a ledger, and the goal is to be in the black by the time the revenue sharing equalizations are paid out.

If you can charge more per ticket, you are increasing your revenues, and you can afford more in player salary. Period. They are connected.

There are lots of hiccups in how a team generates revenue, and what the costs are for each club (which can vary wildly), but "more revenue = more capital to invest in your business" is a very, very basic concept that is not lost on the NHL.

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08-12-2013, 08:37 PM
  #98
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Originally Posted by Holdurbreathe View Post
They definitely are related in a normal business, but not in a franchise system where salaries (costs) are decided by total league revenue and ticket prices (revenue) decided by local markets.
I'm not completely sold on this. It's not like the league says every team has to spend exactly $54M on salaries, regardless of how much money you make. Teams can spend between $44.3M-$64.3M, meaning there's a significant amount of leeway for teams depending on how much money they can or are willing to spend.

Obviously supply and demand dictates where that sweet spot is, but changing ticket prices is still going to have a direct impact (positive or negative) on how much money the team makes...and hence how much money the team can spend. If Melnyk is being honest when he's saying that he's keeping the ticket prices low then, depending what the demand is, he might be able to spend closer to the cap by raising ticket prices.

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08-12-2013, 08:37 PM
  #99
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Quote:
Originally Posted by BonkTastic View Post
1) Ticket prices affect revenue.
2) Costs and Revenue are related to the bottom line of a business. Successful business: Revenue > costs (with some exceptions).


This is not rocket science. Sure, there are advanced economics that we can discuss in which businesses can continuously dump money into their product despite the fact that the return on that investment won't help them get into the black, or vice versa, but this is really the black-and-white part of running a business, here.
Revenue is all money earned, top line, total.

Profits are Revenue-expenses.

You can spend $100023409823042380 developing the worlds most expensive widget, is no one buys it you have no revenue. The relationship is not a direct one.

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08-12-2013, 08:42 PM
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I say this with no intended malice to the fine people of this forum, But i am assuming most of the people here are neophytes when it comes to finance & economics.

With that said, I hope those interested parties would read this:
http://www.uwp.edu/departments/econo.../lesson03.html

It is a 101 lesson about sports economics directly explaining the relationship between price and tickets. Those that dredge through the lesson will come out with a better understanding of economics. It is 25 slides long, I found it to be the most succinct and complete explanation of ticket pricing in my cursory Google search.

About me: I am an accountant who almost exclusively works conducting value audits.


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