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Stern to NHLPA on Levitt:"can't imagine a person of more reliability on economics.."

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Old
02-22-2004, 07:17 PM
  #51
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Quote:
Originally Posted by CH
I do not claim to know exactly what the NHL's true financial position is, but I have shown that there is strong reason to doubt that it is what they say it is. It has never been as bad as they say it is.
It's never been as bad because things escalate over time.

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02-22-2004, 09:03 PM
  #52
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Originally Posted by IslesJack
It's never been as bad because things escalate over time.

It was far worse in the 1930's and early 40's. The NHL fell from a peak of 10 teams down to 6.

And probably would have folded outright were it not for Jim Norris.

But you would know this is you had read Net Worth.

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02-22-2004, 09:19 PM
  #53
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Quote:
Originally Posted by CH
It was far worse in the 1930's and early 40's. The NHL fell from a peak of 10 teams down to 6.

And probably would have folded outright were it not for Jim Norris.

But you would know this is you had read Net Worth.

Yes....because the NHL was so popular amongst pre-war depression era fans!

......John Meynard Keynes could not have helped Hockey back then....

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02-22-2004, 09:28 PM
  #54
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Look....is there room on any Financial Audit to make adjustments.....Yes. I am an Analyst...I am sitting for my CFA very soon, and probably my CPA just to have the additional yet unnecessary background......I'll be the first to admit that a few thousand here or there can be shuffled easily without being caught. I'm not sayng it is ethical, but it is possible.........

.........Now, nearly $300 million...Impossible....Hell, any thorough Analyst could have caught Enron's misplay just off of their Cash Flow Statement, but it was a time of "Irrational Exuberance" and Analysts really didn't look at fundamentals much less care....Until it bit them in the a*&.....It was quite obvious that Cash Flows didn't match up with their reported revenue......But to hide nearly $300 million on an Audit without being discovered?????? That's crazy....Especially considered that NHL Revenues were under $2 Billion. Do you realize that companies like Circuit City have Revenues five times that of the NHL!!!.....The NHL is not large enough to hide JACK!..Agressive Accounting could have maybe netted the NHL about $1 million...maybe $2 million if Levitt went out on a limb....The NHL is in real bad shape. That's the bottom line!

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02-23-2004, 08:25 AM
  #55
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Quote:
Originally Posted by CH
This book (which you havent read have you?) is very well researched and footnoted. I can and have followed up many of its claims.

The disturbung thing is it shows a pattern of behaviour for the NHL. There is no sign whatsoever that this pattern has ended.

I do not claim to know exactly what the NHL's true financial position is, but I have shown that there is strong reason to doubt that it is what they say it is. It has never been as bad as they say it is.
So you know nothing about accounting. Have read a book from 1991. Done your own research based on claims in this book. And you have only been able to tell us there is strong reason to doubt the NHL is being honest.

Well you got me sold. The NHL has no problems. It doesnt matter that salaries have risen astronomically since 1991. Attendance has slipped in recent years. TV rating are lower then what watching paint dry would attract. Lets just continue to live in 1991 and pretend nothings changed.

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02-23-2004, 09:17 AM
  #56
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Originally Posted by iagreewithidiots
So you know nothing about accounting. Have read a book from 1991. Done your own research based on claims in this book. And you have only been able to tell us there is strong reason to doubt the NHL is being honest.
That's a good job of misrepresenting the situation isn't it?

Quote:
Originally Posted by iagreewithidiots

Well you got me sold. The NHL has no problems. It doesnt matter that salaries have risen astronomically since 1991. Attendance has slipped in recent years. TV rating are lower then what watching paint dry would attract. Lets just continue to live in 1991 and pretend nothings changed.
Again I never claimed the NHL has no problems whatsoever. If you want to argue that point find somebody who is willing to make it.

My point is simple. I see no reason whatsoever to take the NHL at their word when they talk about their financial situation given that they have never been honest in the past.

If it was my job to negotiate a new CBA for the NHL, step one is to give me access to their books. Let my accountants go through them. Maybe we can produce our own "Levitt report" see how close it comes to the NHL one. I bet there are significant differences. Once the NHL's financial position is demonstrated in a transparent way negoatiation can begin. Until then its a non-starter.

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02-23-2004, 10:26 AM
  #57
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I find it somewhat amusing that when this report came out the pro player argument was simply that the audit was incorrect.

Goodenow said that they did not have a chance to review it BUT despite that it is clearly incorrect.

Players such as Craig Conroy from the Flames promptly does an interview and says that he is no accountant and hasn't read the report but despite that he says that it just proves that the NHLPA will never know how much the league actually collects in revenue because the report is so obviously wrong.

That sentiment is repeated by players throughout the league.

I have to wonder, right now Levitt's credibility is getting challenged by anyone and everyone that is supporting the players throughout this whole soap opera and these same people seem to be taking Goodenow's statements and the players statements at face value.

Where should the actual credibility gap exist here? Should it be with the report or with Goodenow and the players who try to discredit it without actually even looking at it?

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02-23-2004, 10:27 AM
  #58
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CH, you work for the NHLPA or something? Its the only reason I can think of you would spend so much time on this thread fighting for them.

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02-23-2004, 10:40 AM
  #59
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Quote:
Originally Posted by thinkwild
Stu, you should follow up some of the great links CH provided. It may fill in some context for the blanks you are asking qualifications for. I found the links very enlightening, thanks CH.
Thinkwild,

Thanks for following up on your post. I've been looking for someone who's on the "skeptical" side of the discussion whose opinion I respect to post their opinions on the subject.

You have a long post, which I'll read in a little detail later, but a couple of points I want to offer.

I don't expect someone to provide an accurate breakdown of the where the money the NHL is accused of hiding here. This report did a good job at answering a lot of questions about the finances NHL. Some people here still have many outstanding questions. I would like to know what they are. You have provided some, which, like I said, I'll take a detailed look at later.

Here's a few items for thought though.

Levitt made a statement about withdrawal of funds through salaries, and relatives etc., and his analysis showed that everything seemed to be within reason (i.e. no exorbanant salaries).

Levitt also commented that there wasn't any heavy shifting of funds between fiscal years, which takes away another common avenue of manipulating income.

As for the discussion about the merits of accounting data, I'm well versed in this topic. I have an accounting background, and follow this information well outside my interest as an NHL fan.

Pure skeptics would like to say that all accounting information is useless, since it can be manipulated, however, public accounting information still provides the fundamental basis of our security markets. THe system still has merit, however, one has to have an understanding of the system works to interpret the data, and find out the real story. You can't just look at the bottom line, and make a conclusion. That's where footnotes, or some documentation of methodology, come in (which Levitt HAS provided in his report).

That's also why I've asked for an opposing view. I want to know what particular unanswered questions an intelligent and still skeptical fan has. Thanks for participating, thinkwild.

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02-23-2004, 12:10 PM
  #60
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Quote:
Originally Posted by Tiki
CH, you work for the NHLPA or something? Its the only reason I can think of you would spend so much time on this thread fighting for them.

I'm not fighting for the NHLPA. I am questioning the reliability of any financial numbers the NHL releases. They have a history of misrepresenting financial figures in every situation where they have had the opportunity to do so and they clearly have the means and the motive to do it in this case.

Why hasn't the NHLPA ever been given access to their books?

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02-23-2004, 12:58 PM
  #61
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Quote:
Originally Posted by CH
I'm not fighting for the NHLPA. I am questioning the reliability of any financial numbers the NHL releases. They have a history of misrepresenting financial figures in every situation where they have had the opportunity to do so and they clearly have the means and the motive to do it in this case.

Why hasn't the NHLPA ever been given access to their books?
Well each team is essentially a private enterprise isn't it? So they have no obligation to put their books out in public. How do you negotiate if the other side knows your hand?

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02-23-2004, 01:56 PM
  #62
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Originally Posted by ehc73
Well each team is essentially a private enterprise isn't it? So they have no obligation to put their books out in public. How do you negotiate if the other side knows your hand?

Once both sides have an understanding of the bottom line in the NHL. And both sides trust that their information is reliable then they can begin serious negotiation.


I interpret "knowing your hand" to mean knowing what you want to get out of the negotiations and your strategy to make sure you achieve that. Neither side is expected to tell the other side of that.

That is not the question, the question is why should the NHLPA (or anyone else) take the NHL's word about their financial situation given how much misinformation they have spread about it in the past? If it turns out that the situation really is as bad as the NHL claims then what harm is there in letting the NHLPA discover that for themselves - by letting their accountants look at the books? Unless the NHL knows that their interpretation of their financial situation is highly subjective and no accountant who doesn't have reason to tow their party line (ie one the NHL hired) would not possibly reproduce their numbers.

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02-23-2004, 02:20 PM
  #63
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Originally Posted by CH
That is not the question, the question is why should the NHLPA (or anyone else) take the NHL's word about their financial situation given how much misinformation they have spread about it in the past?
You seem to be basing much of your opinion on the situation by what was presented in "Net Worth".

It was a different time, a different era and with different owners. I am not sure what was done 50 years ago is representative of what the league is facing today. In fact even the injustices done 20 years ago is more a result of Eagleson and the corrupt PA than it was the owners.

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02-23-2004, 02:53 PM
  #64
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Quote:
Originally Posted by copperandblue
You seem to be basing much of your opinion on the situation by what was presented in "Net Worth".

It was a different time, a different era and with different owners. I am not sure what was done 50 years ago is representative of what the league is facing today. In fact even the injustices done 20 years ago is more a result of Eagleson and the corrupt PA than it was the owners.

Some of the owners are the same. In fact the worst offenders Bill Wirtz and Jeremy Jacobs are still around.

How much actually has changed?

My guess is its the same ballgame with different numbers.

Only under Bob Goodenow has the players association ever begun to have effective leadership (although there was a myth that Alan Eagleson provided strong leadership that took many years to be debunked). So now the NHL owners lies cannot be as blatant - but does that mean they are gone altogether?

The fact that the Levitt Report was done without NHLPA knowledge and released without much notice for the NHLPA indicates to me that it is a public relations document meant to show the fans how poor a shape the NHL is in and not to convince the NHLPA of anything. And from reading this board they seem to have succeeded with a large portion of fans.

If the intent was to make ammends with the NHLPA then both sides would have selected an accountant together and made this a more transparent process. It seems clear that hiring an accountant to do a secret audit was done by the NHL only so that they could bury the results if the didn't like them. Turned out it wasn't necessary to do this.

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02-23-2004, 03:40 PM
  #65
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Thinkwild, here are some answers to your questions,

Notes to the Statements
The report does include notes. In fact, the document pretty contains a step-by-step on his methodology. The disclosure in this report far exceeds the note disclosure of any other set of public financials that I've seen.

Why Teams are Losing Money
The purpose of this report is to convey to the NHLPA that they are indeed losing money. "Why" is irrelevant, until there is acceptance of this fact. My curiousity lies with those who were previously skeptical. Do people that doubted the NHL claims before, now believe that they indeed may be losing money?

Annual Trend vs. One Time Losses

Levitt did address the issue of shifting resources between fiscal years in his statements. His analysis also included an examination of 2001-02 and 2002-03.

Management Salaries

Levitt addressed this issue in his press conference. He stated that all salaries and payments given to owners or family members of ownership were all reasonable in nature for the services performed. He also said that personal use of business assets (i.e. team jets, etc.) were limited, and were actually much better managed in the NHL than in other industries that he's seen.

Depreciation

This is simply not included. The report has stated that it is only looking at net income before interest and depreciation. Including depreciation, by definition, will only make the losses bigger.

Intangible Assets

It is Net Income which is being reported. Intangible assets do not appear on income statements, except through amortization, which is excluded from the analysis, as mentioned earlier, and if included, would only increase the size of the losses.

Contract Buy-Outs

Expensing the buy-outs in the current year makes the most sense, as the GAAP matching principle dictates that the expenses should match the revenues for which they were used to earn. The only other option to do that is to retroactively adjust prior year's expenditures, which is a general no-no. Frankly, I would be suspicious if this was handled in any other way.

Arena Reporting

Teams are asked to allocate their revenues and expenditures of their arena based on their current methods, however, they are evaluated with the benchmarking excercise, to ensure it doesn't materially deviate from the norm for the purposes hiding income. The results showed that teams, using their methodology, were within $2 million as if they used the benchmarking standard (by pro-rating expenses and revenues to hockey events based on gross ticket receipts).

As for the 50%+ ownership requirement, only 8 teams do not have this level of ownership. I can't tell you for certain if these teams aren't using intermediary in these cases, but given that the only advantage of doing this would be to mislead this report, it seems rather unlikely they would have this structure set-up this way. If you really are skeptical about this, you can always investigate this cases yourself. I'm sure you can find out which teams do not own their arenas outright, and investigate the level of arms reach from there if you wish.

Credibility of the Report

You claim that the creators of this report do not stand to lose any credibility with this report, of which I completely disagree. Levitt, if ever proven, or even accused, to have willingly distorted the information stands to lose a great deal of credibility, and very negatively impact his career.

Overall, while I value your point of view, none of the points you've brought forward are enough to raise sufficient doubt to me that the NHL has lost somewhere in the neighbourhood of $250+ million. A lot of your comments seem to be focused on the "why" side of the equation, so I'd thought I'd ask you to indicate What is your thoughts on the leagues profitability. Do you think that the league is losing money on its hockey operations and arena, it's just that it's their own fault? Or, do you think the losses are fabricated, and you feel the areas of concern that you brought up are signicant to adjust the Levitt's losses by the $273 million into a healthy operating profit? Did this report shed any light on the financial matters in the NHL in your eyes?

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02-23-2004, 03:52 PM
  #66
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Quote:
Originally Posted by CH
Some of the owners are the same. In fact the worst offenders Bill Wirtz and Jeremy Jacobs are still around.

How much actually has changed?

My guess is its the same ballgame with different numbers.
The sleazy owners were able to get away with it only because all 6 teams were in cahoots. It wasn't just the owners that were involved either but the GM's as well.

It is impossible to believe the same kinds of things are going on today with a 30 team league and changing ownerships every year. Not to mention that many of the guys that make up the highest ranks of hockey tody were former players and in some cases former agents. Are we to believe that former hockey players that fought tooth and nail for a fair agreement would suddenly turn to the dark side? Former agents that argued to get as much money as they could for their clients are suddenly hypocrites?

If I recall correctly, at the peak of corruption with the owners, weren't the Wings, Hawks and Rangers actually owned by the same family or had an affiliation with the same family at one time? Weren't the Rangers set up to basically provide a legitimate reason to build an arena that was actually needed for boxing because there was so much more money in that sport? I think the Hawks were a front for some kind of boxing venture also, weren't they?

Basically what I am getting at is, a long time ago the owners were very crooked. But alot of their shady dealings were because the size of the sport they were dealing with allowed for it, the lack of a spotlight on the moves and decisions they were making and the people they had working under their thumbs.

This is a different time, hockey (although it is the smallest of the big 4) is now big business. The business side of the game no longer allows for the type of shady dealings that were once common.

There is no comparison between the two era's.

Quote:
Originally Posted by CH
Only under Bob Goodenow has the players association ever begun to have effective leadership (although there was a myth that Alan Eagleson provided strong leadership that took many years to be debunked). So now the NHL owners lies cannot be as blatant - but does that mean they are gone altogether?
Well if you were to ask me if I think that the owners are capable of spinning information to suite their position, I would say yes. Do I think that the owners are actually lying? NO.

This Levitt report is not interpretting revenues and costs that only suites the owners position. He is using a formula that has apparently already been accepted by an ownership group and Players association from another professional sports league. In my opinion that is the most unbiased avenue to take.
I honestly don't know where the dispute can be.

Quote:
Originally Posted by CH
The fact that the Levitt Report was done without NHLPA knowledge and released without much notice for the NHLPA indicates to me that it is a public relations document meant to show the fans how poor a shape the NHL is in and not to convince the NHLPA of anything. And from reading this board they seem to have succeeded with a large portion of fans.
I would bet the farm that if the report didn't favour the owners position then no body would know about it today. But that is irrelevant to the validity of the report.
This is where I think it is perfectly fair to question the leagues chosen course of action but also where I don't understand why the integrity of the report is questioned along with it.

They are two totally seperate issues in my opinion.

Quote:
Originally Posted by CH
If the intent was to make ammends with the NHLPA then both sides would have selected an accountant together and made this a more transparent process. It seems clear that hiring an accountant to do a secret audit was done by the NHL only so that they could bury the results if the didn't like them. Turned out it wasn't necessary to do this.
I don't think making amends with the PA had anything to do with it. I think it was a necessary action taken by the league and for the league in light of the upcoming negotiations. The fact that the results were shocking enough to be distributed as a PR move is a side issue.

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02-23-2004, 06:47 PM
  #67
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Quote:
Originally Posted by CH
I'm not fighting for the NHLPA. I am questioning the reliability of any financial numbers the NHL releases. They have a history of misrepresenting financial figures in every situation where they have had the opportunity to do so and they clearly have the means and the motive to do it in this case.

Why hasn't the NHLPA ever been given access to their books?
While that could be the case (and I will not even begin to claim any knowledge on that) I see a direct corelation between player salaries goin through the roof and my season tix doing the same thing. While I'm not exactly thrilled with the owners taking the high road all the time, I think the players are getting way too much from a fan base that can not continue to support pay out these types of dollars.

Just my personal opinion.

..... nad I do know you don't work for the NHLPA, because if you did you waould not have enough time to commish my keeper league.

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02-23-2004, 09:23 PM
  #68
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Quote:
Originally Posted by copperandblue
This is a different time, hockey (although it is the smallest of the big 4) is now big business. The business side of the game no longer allows for the type of shady dealings that were once common.

Then explain the Rigas family. Or the fact that Melnyk and Anshutz are being investigated by the SEC. Or why did Charles Wang retire from Computer Associates?

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02-24-2004, 08:28 AM
  #69
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Quote:
Originally Posted by copperandblue
The sleazy owners were able to get away with it only because all 6 teams were in cahoots. It wasn't just the owners that were involved either but the GM's as well.

...More stuff about the NHL of the 1930s and 40s was cut...
You make it sound like the corruption ended a long time ago. It didn't. It is documented to have continued well into (at the very least) the 21 team NHL John Zeigler and Alan Eagleson (and Bill Wirtz and...) were tied together financially. Imagine the head of the NHLPA, president of the NHL and a spokesmen for the owners all being cohorts. The settlement in labor disputes in the NHL as recently as the 1980's included the owners paying "more" money into the NHL pension fund. When that more money was already there as interest that the existing pension money had already earned. And this pension fund paid greats like Gordie Howe only a few hundred dollars a month. Yet the NHLPA and others maintained it was the best pension fund in pro sports. The NHL maintained that these kinds of settlements were going to bankrupt the league.

Its situation normal for owners to complain about high salaries and the league failing financially when the fact is the league has expanded rapidly through out the 90's (to the point that no further expansion would be possible for a while, salaries have expanded rapidly (and large contracts are still being signed today!) , revenues have expanded rapidly also - nearly every team has a state of the art new arena with luxory boxes galore. Likely things have slowed down a bit since the bubble in the stock market burst - however even before the burst there were owners all over the place pleading poverty. There is no fundamental reason why the current CBA will lead owners into poverty. I doubt it is doing that right now. I'm sure most owners make a handsome profit from their NHL ownership. Why change? The owners figure they can bring out a new system that will be even more profitable if they cap salaries. This may come at the expense of the fan. It may prevent good teams from staying together - in effect forcing everyone to be mediocre. I am against that.

But thatís not really the issue. About 2 years ago baseball needed a new CBA. The baseball owners were busy telling us how many millions they were losing hand over foot. They sang the same story the NHL sings now. Why? Because the best position to negotiate a new agreement is one where you have convinced the other side that you have to give back or we will all be out of business. It has never been true (at least not in my lifetime).

The Levitt report is a fancy document the NHL produced for public relations purposes and it is serving its job. Does it really say anything about the actual economic picture of the league? I am agnostic on that and leaning toward doubt because nothing the NHL has ever said had anything to do with its actual economic picture.

I want to see the NHLPA repeat the audit. I am sure they will disagree with the NHL. I expect both sides will be wrong. I expect the truth will lie in the middle. I donít believe that you become a multi-millionaire capable of owning an NHL team by hemmoraging money. Yet the NHL wants us to believe that is exactly what is going on. I do not buy it.

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02-27-2004, 02:17 PM
  #70
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For those who don't understand or believe (or whatever else) in accounting, there's a place where accounting gets tested: the market place.

The best way to know if the accounting is done well is to test its true market value. When introducing new accounting principles (or changing existing ones), the accounting organisations (CICA in Canada) try to make them reflect the true market value, since in the end, that's what good accounting should aim for.

As such, a good way to know if something is overvalued or undervalued is to look at the transaction prices.

Back in 1991, NHL franchises value were skyrocketing, and buyers were lining up to buy existing/new franchises. That situation persisted until about 1997-98? Then the NHL franchises value started to decline (the true market value), and there were less and less buyers attracted to the NHL franchises year after year. In the past few years, many teams were sold at a value that was lower than books value and buyers are hard to come by.

Based on those true market events, it's safe to say that the situation has been going down since 1991, since if the NHL was still in as good a financial position as it was back then, the buyers would still be lining up like they used to. That's just from an easy observation over the true market value of NHL teams, and that can't be denied unless you don't believe in true market economy.

Since buyers are rare for NHL franchises, that transaction prices for the franchises are near liquidation value and not close to the assets value, then that clearly points out the NHL is in a bad financial situation, which makes it believable that the NHL is indeed suffering those losses and that the Levitt report might be exact. In the short term, teams can live through it, but in the long term it has to be fixed, something the NHL is going to do with the next CBA. That's why there will probably be a long lockout next year and why the owners won't budge.

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02-27-2004, 02:26 PM
  #71
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Quote:
Originally Posted by CH
But thatís not really the issue. About 2 years ago baseball needed a new CBA. The baseball owners were busy telling us how many millions they were losing hand over foot. They sang the same story the NHL sings now. Why? Because the best position to negotiate a new agreement is one where you have convinced the other side that you have to give back or we will all be out of business. It has never been true (at least not in my lifetime).
I don't know why people bring out the Baseball CBA. It's the worse thing the baseball ever did (to sign that CBA). Interest in baseball is going down in all North America except a few cities that "exploit" the CBA (I'll let you guess which ones...).

The Montreal baseball franchise is now a joke, and it's been in a bad position for a few years simply because there are no worthy buyer for the franchise out there. Sure, some groups show interest into "moving" the team, but they don't have any plan to make the franchise work out. The good buyers (and investors) are all fleeing the MLB as fast as they can, since there are only 4-5 good baseball markets left in the USA. The MLB is as close to wrestling as it will ever be: they subsidized low income teams to field "decent" teams which they can beat, just like the WWF hires 2nd rate wrestlers to get beat again and again by the big guns.

The last thing the NHL fans should want is to be in the MLB situation in the next few years.

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02-27-2004, 05:24 PM
  #72
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Quote:
Originally Posted by CH
Once both sides have an understanding of the bottom line in the NHL. And both sides trust that their information is reliable then they can begin serious negotiation
Why. Because then they can negotiate a fair split? Even with perfect transparency, wouldnt a negotiated split negate the principled market stand the union is taking? Would it damage the delicate balaance achieved by the market. Id have to question my support if they will sell out like that.


Quote:
Originally Posted by discostu
Do people that doubted the NHL claims before, now believe that they indeed may be losing money?
Perspective is a funny thing eh. Im just as incredulous that people that believed owner claims before, can still believe it with all the information out there.

If I could write as well as CH, I would of said what he said.

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02-27-2004, 05:29 PM
  #73
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Originally Posted by discostu
This report did a good job at answering a lot of questions about the finances of the NHL
Wow Stu, you actually waded through my first morning coffee stream of consciousness. I feel bad putting you through my babbling. Sometimes im a real foghorn leghorn. Im in big danger of doing it again right now.

But there were no numbers in this report. It answered nothing. It shed no light. Just a bunch of blank if impressive looking schedules, with vague guidelines, like - use your best guess, that were to be filled out by owners with vastly different sets of books.

Levitt basically comes right out and states in his report, (presumably hoping no one will actually read that paragraph), that basketball and football record things differently and direct comparison is difficult. He then compares them and concludes hockeys' numbers are worse than the books of sports he says you cant really compare them to. Then he goes on TV for a media release to convey we should trust him on that, and gives the soundbite he was paid for. And he looks so damn trustworthy. And tickets are sooo expensive and players sooo highly paid. It seems so logical. We want to believe him..We must save the poor owners from themselves.

Of course a problem with an idiot proof system, is that you get a system run by idiots.

I feel like im telling you there is no Santa Claus. Rather than respond individually to all your thoughtful detail counterpoints, which i am not qualified to do, i am asking you to examine your fundamental assumptions and perspective first. How the heck can you trust these guys?

Even listening to Bettman speak lately, he never seems to say what the problem is. He says, we all know what the problem is. And he knows how to fix it.. But he leaves it to our imagination what the problem actually is it seems. Smart lawyer. Oh sure he gets leaks out, but when confronted on it, he says he never said that. He says he never proposed a hard cap. And like any good lawyer when lying, he isnt technically lying. It all depends on what you mean by the word "IS". Everyone seems to believe he has said it. What are we to believe? That our perceptions have been all wrong?

Man im doing it again, I apologize. Another stream of consciousness coming. I am frustratingly incapable of making a pithy one paragraph point on this subject.

Quote:
Originally Posted by discostu
What is your thoughts on the leagues profitability. Do you think that the league is losing money on its hockey operations and arena, it's just that it's their own fault? Or, do you think the losses are fabricated, and you feel the areas of concern that you brought up are signicant to adjust the Levitt's losses by the $273 million into a healthy operating profit?
I dont know. And I have no way of knowing. I am just a fan.

Profitability sure seems in their control. And the $300mil CBA fund sure keeps haunting me as they discuss their alleged $270mil loss.

Should we trust them? To start, consider these 4 pts:

1. Forbes says they lost 120 mil, Levitt says 287 mil. It would seem common agressive accounting procedures can certainly produce significantly more than 1mil of difference legally.

2. As Tom Benjamin would say, the NHL is probably the only sport with more ex-owners in jail than ex players. A trend that is continuing in this 21st century.

3. The link CH provided, listed a number of companies under federal investigation for misrepresenting their financial statements to their shareholders and auditors. And the indictment list is a who's who of NHL owners! The very thing you want to accept from owners at face value - their books - currently has them under federal investigation in the USA for accounting fraud. You are demonstrating a much higher degree of trust than American capital markets, courts, and congress who appear to have reached a crisis of confidence in the methods used to prepare financial statements by these very same companies.

I can understand that Enron and Worldcom and many of the NHL teams parent companies under scrutiny are sophisticatedly structured, 21st century corporations, and the accounting for intellectual property rights, innovative resource development contracts, and the like, can lead to some much trickier cost accounting issues than a hockey team would. Nevertheless, the pattern and history is there.

4. The LA kings were owned by Mcnall who went to jail for fraud over his books on the Kings. Anschutz the current owner is now trying to stay out of jail for misrepresenting his financial statements. The owner in Buffalo was led away in handcuffs for fraud with the teams books. When Rod Bryden was forced to reveal his books, the numbers were quite different than he had painted. The NHLPA examined 4 books released to them and found $50mil in unreported revenue. And Will Wirtz and jeremy jacobs, when do you start to pause and say hmmm, its possible they are lying about their books.


Surely you can see at least a justification for a healthy dose of skepticism. Even though we want to believe what the arch capatilist owners are saying publicly about their impotence in negotiating contracts with their employees, or running their businesses on budget, hopefully at least as a starting point you can say there is probable cause to question their public claims. That blind trust is unwarranted. That benefit of the doubt should not be afforded the owners. I think the evidence overwhelmingly suggests it.

Its not that because this is the 21st century, they cant get away with lying. Its: this is the 21st century, more than ever we have to assume they are strategically representing their numbers. Its the sign of the times

I know Ottawa Senators, the prototype small market Canadian team the changes are allegedly needed to save, appear in no danger under the current system. We dont need the help thanks. But they want to shut the league down to save us. Or was that last years reason? I cant keep up anymore. Its all so confusing.

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02-27-2004, 09:50 PM
  #74
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Quote:
Originally Posted by Smail
Back in 1991, NHL franchises value were skyrocketing, and buyers were lining up to buy existing/new franchises. That situation persisted until about 1997-98? Then the NHL franchises value started to decline (the true market value), and there were less and less buyers attracted to the NHL franchises year after year. In the past few years, many teams were sold at a value that was lower than books value and buyers are hard to come by.

Based on those true market events, it's safe to say that the situation has been going down since 1991, since if the NHL was still in as good a financial position as it was back then, the buyers would still be lining up like they used to. That's just from an easy observation over the true market value of NHL teams, and that can't be denied unless you don't believe in true market economy.

Since buyers are rare for NHL franchises, that transaction prices for the franchises are near liquidation value and not close to the assets value, then that clearly points out the NHL is in a bad financial situation, which makes it believable that the NHL is indeed suffering those losses and that the Levitt report might be exact.

All that says is that revenue growth has stopped in the NHL. When revenues are growing because of new rinks, new teams and additional competition amongst sports networks of course values will rise. The investors are hoping that revenue growth continues on for the long run just like tech investors did for unprofitable tech companies that were growing but not making any money. As soon as growth stopped, the share value (franchise valuation) dropped.

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02-27-2004, 10:02 PM
  #75
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Quote:
Originally Posted by BlackRedGold
All that says is that revenue growth has stopped in the NHL. When revenues are growing because of new rinks, new teams and additional competition amongst sports networks of course values will rise. The investors are hoping that revenue growth continues on for the long run just like tech investors did for unprofitable tech companies that were growing but not making any money. As soon as growth stopped, the share value (franchise valuation) dropped.
Yeah, it means that today investors don't think it's profitable to invest into an NHL franchise for multiple reasons. Not only revenues are not growing, but costs are at an all-time high.

Since today the NHL is not profitable, the numbers that are reported by the Levitt report seems good.

Also, keep in mind that there is a possibility for growth in the NHL, but not until the current mess is cleaned up. Be sure that if NHL franchises were a worthy investment (ie: they were making profits required by the market), then there would be buyers for franchises.

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