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The Business of Hockey Discuss the financial and business aspects of the NHL. Topics may include the CBA, work stoppages, broadcast contracts, franchise sales, NHL revenues, relocation and expansion.

Is the Sun Belt Expansion becoming a success? (Mod: or Non-traditional markets)

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Old
07-06-2010, 02:56 PM
  #251
wickedwitch
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Originally Posted by Gump Hasek View Post
That is your personal read into what many Canadian fans are saying.

My take is that many of us are dissatisfied that the southern US teams are recipients of money being taxed from our own profitable franchises, money that should be used to build a war chest by each individual franchise here - at a time when their fortunes are at their greatest. This money is being taxed at a massively disproportionate rate (from the profitable Canadian franchises mainly & NYR) in comparison to the pittance the NHL offered to save a few Canadian teams via a program that existed for a total of two years and that program (CAP) was put in place only after two teams had already left. The money taxed from Canadian teams just last season was more than the CAP program generated over its entire history for the Canadian recipients, IIRC.

The point being that Canadian hockey businesses are being taxed so that marginal US franchises may survive another day, taxed at a rate far greater than any "relief" that came this way, while at the same time the league hems and haws about adding additional Canadian teams, despite that the current Canadian teams (which make up 1/5 of the league) - provide roughly 1/3 of its revenues.

If the Southern franchises paid their own way, no angst would exist on this side. The CAP (Canadian Assistance Program) was put in place because the Canadian dollar was extremely low at the time, and the problem was that the teams garnered their revenue in Cdn dollars but had to pay player expense in USD. Canada's NHL troubles had little to do with a lack of paying customers.

To summarize, some of us don't like our teams being taxed to support US teams while at the same time the league ignores that a larger percentage of revenue is being derived here, and that the league seems unwilling to meet excess demand for NHL hockey here, while at the same time other teams are given a pass for thousands of empty seats in the name of growing the game... growing it on the back of money essentially taxed from Canadian fans.
Short term pain for long term gains. The vast majority of expansion teams, even the ones that end up being very successful, aren't immediately profitable. It takes time and success to build a fan base. So the entire league has to support these teams during this period. But in the end, many of these teams become successful, and end up profiting the league much more than they ever cost.

Of course a few teams may never end up being profitable, even after years of winning, and those are the teams that are a problem. Of the new expansion teams, Tampa is the only team that even somewhat fits that category.

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07-06-2010, 03:17 PM
  #252
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Originally Posted by The Gibson Cup View Post
So back to the OP:

SJ yes
Ana a little less than yes
LA getting there
Phoenix BIG HUGE NO
Dallas yes but at the edge
Nashville no
Atlanta no
Carolina yes
TB NO
Florida NO


So 6 out of 10 are not doing very good or in other word not self supporting.
Except that you're looking at the OP completely wrong. It's not a matter of "did we add highly profitable franchises to the league?"

That's not what makes expansion successful. What makes expansion successful is growing the revenue base of the league. Which they did.

21 voted in 1989 and told commissioner John Zeigler to expand to at least 28 by 1999. In 1989, each team took home $809,524 dollars from the US TV deal.

Since then, the increase in US TV deal by adding more markets have earned each team over $27 million, plus another $25.6 million in expansion fees.

Not to mention any revenues by NHL Network, which wouldn't be possible without adding 10 Top 40 US Markets to the TV footprint.

Once again, bash the southern markets all you want, but they made the northern markets lots of money.

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Old
07-06-2010, 03:20 PM
  #253
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Originally Posted by The Gibson Cup View Post
But then you'll agree the way revenues are generated (self-generated without a huge TV contract) today we are living in a sort of Robin Hood system.
Agreed to by the owners, because the CBA (as a whole) was in their collective interest - and in most cases also in their individual interests.

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07-06-2010, 03:22 PM
  #254
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Originally Posted by KevFu View Post
Except that you're looking at the OP completely wrong. It's not a matter of "did we add highly profitable franchises to the league?"

That's not what makes expansion successful. What makes expansion successful is growing the revenue base of the league. Which they did.

21 voted in 1989 and told commissioner John Zeigler to expand to at least 28 by 1999. In 1989, each team took home $809,524 dollars from the US TV deal.

Since then, the increase in US TV deal by adding more markets have earned each team over $27 million, plus another $25.6 million in expansion fees.

Not to mention any revenues by NHL Network, which wouldn't be possible without adding 10 Top 40 US Markets to the TV footprint.

Once again, bash the southern markets all you want, but they made the northern markets lots of money.
And each has given way more then that in revenue sharing. So the $$$ they made has long since given back.

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07-06-2010, 03:23 PM
  #255
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Originally Posted by kdb209 View Post
Agreed to by the owners, because the CBA (as a whole) was in their collective interest - and in most cases also in their individual interests.
I do believe that will change at the next CBA.

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07-06-2010, 03:26 PM
  #256
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Originally Posted by The Gibson Cup View Post
LA getting there
???????????????

The Kings have averages 16K plus despite missing the playoffs for 8 straight years.
Show me another franchise than can do that, especially one with another franchise 30 miles down the road.

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07-06-2010, 03:27 PM
  #257
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Originally Posted by The Gibson Cup View Post
And each has given way more then that in revenue sharing. So the $$$ they made has long since given back.
And each has saved way more than that in reduced salary costs due to the cap - which which would not have come without revenue sharing.

I really don't understand the fetish like obsession some have with Revenue Sharing.

It's not their money. It doesn't make their ticket prices any more expensive. It doesn't effect their teams roster or on ice performance. All it does is take money out of their owners' pockets - money that those owners agreed to pay.

Such sympathy for billionaires.

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07-06-2010, 03:30 PM
  #258
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Originally Posted by The Gibson Cup View Post
I do believe that will change at the next CBA.
I seriously doubt it - unless you mean that revenue sharing will be increased.

There are more teams satisfied with the status quo than the few large market contributers who may complain.

And GB still has his supermajority clause - you are going to have to find 24 owners to approve a CBA over GB's objections.

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07-06-2010, 03:46 PM
  #259
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Originally Posted by kdb209 View Post
And each has saved way more than that in reduced salary costs due to the cap - which which would not have come without revenue sharing.

I really don't understand the fetish like obsession some have with Revenue Sharing.

It's not their money. It doesn't make their ticket prices any more expensive. It doesn't effect their teams roster or on ice performance. All it does is take money out of their owners' pockets - money that those owners agreed to pay.

Such sympathy for billionaires.
My obsession is with billionaires paying millionaires and said millionaires pocketing the $$$ instead of spend their own $$$ to get better like the Ilitch's did. There needs to be direct link between RS $$$$$ and the next years salary increases for said teams.

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07-06-2010, 06:15 PM
  #260
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Quote:
Originally Posted by kdb209 View Post
And each has saved way more than that in reduced salary costs due to the cap - which which would not have come without revenue sharing.

I really don't understand the fetish like obsession some have with Revenue Sharing.

It's not their money. It doesn't make their ticket prices any more expensive. It doesn't effect their teams roster or on ice performance. All it does is take money out of their owners' pockets - money that those owners agreed to pay.

Such sympathy for billionaires.
I think you'll find the average canadian ticket price is higher than the average non traditional market ticket price.

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07-06-2010, 08:04 PM
  #261
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Originally Posted by KevFu View Post
Except that you're looking at the OP completely wrong. It's not a matter of "did we add highly profitable franchises to the league?"

That's not what makes expansion successful. What makes expansion successful is growing the revenue base of the league. Which they did.

21 voted in 1989 and told commissioner John Zeigler to expand to at least 28 by 1999. In 1989, each team took home $809,524 dollars from the US TV deal.

Since then, the increase in US TV deal by adding more markets have earned each team over $27 million, plus another $25.6 million in expansion fees.

Not to mention any revenues by NHL Network, which wouldn't be possible without adding 10 Top 40 US Markets to the TV footprint.

Once again, bash the southern markets all you want, but they made the northern markets lots of money.
27 million each since 1989? thats 21 years ago. divide 27M by 21 years and you get roughly 1.3 M
so they make an extra 1/2 M per year( they were already getting 800K per).not really LOTS of money if you are a team PAYING into rev. sharing.

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07-06-2010, 08:06 PM
  #262
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Originally Posted by Little Bunny Foo Foo View Post
???????????????

The Kings have averages 16K plus despite missing the playoffs for 8 straight years.
Show me another franchise than can do that, especially one with another franchise 30 miles down the road.
rangers say hello. maybe not 8 yrs straight, but i believe they could miss the playoffs for 8 yrs and still EASILY sell 17-18K per game.

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07-06-2010, 08:07 PM
  #263
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Originally Posted by The Gibson Cup View Post
Both have spent close to top of cap. The same can't be said of Atlanta.
Not during Dollar Bill's heyday. And isn't cheap ownership a viable reason for fan revolt regardless?

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07-06-2010, 08:17 PM
  #264
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Originally Posted by Shawa666 View Post
I think you'll find the average canadian ticket price is higher than the average non traditional market ticket price.
Which has exactly what to do with Revenue Sharing????

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07-06-2010, 09:24 PM
  #265
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Are Southern teams bringing down the value of NHL franchises? The NHL will not even disclose how much the Lightning were sold for.

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07-06-2010, 10:07 PM
  #266
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Originally Posted by vivianmb View Post
rangers say hello. maybe not 8 yrs straight, but i believe they could miss the playoffs for 8 yrs and still EASILY sell 17-18K per game.
Rangers are an original 6 team, everyone excpects them to sell out most games. I think he means a "southern" team.

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07-06-2010, 10:11 PM
  #267
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Are Southern teams bringing down the value of NHL franchises? The NHL will not even disclose how much the Lightning were sold for.
What league discloses purchase prices for their teams (excluding expansion franchises, of course)?

None that I am aware of.

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07-06-2010, 10:46 PM
  #268
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Quote:
Originally Posted by Shawa666 View Post
I think you'll find the average canadian ticket price is higher than the average non traditional market ticket price.
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Originally Posted by kdb209 View Post
Which has exactly what to do with Revenue Sharing????
Well, when you take in consideration that the main source of revenue of an average is the people in the arena, It's got a lot to do with Revenue Sharing. Do I have to explain to you that more people getting their butts in those seats, at a higher price will generate more revenue to share to those non traditional markets?

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07-06-2010, 10:57 PM
  #269
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Originally Posted by Shawa666 View Post
Well, when you take in consideration that the main source of revenue of an average is the people in the arena, It's got a lot to do with Revenue Sharing. Do I have to explain to you that more people getting their butts in those seats, at a higher price will generate more revenue to share to those non traditional markets?
True - but what does that have to do with people's incessant complaints about Revenue Sharing. Revenue Sharing has zero effect on those prices - it just changes which owner a small portion of that money goes to.

I stated:

Quote:
I really don't understand the fetish like obsession some have with Revenue Sharing.

It's not their money. It doesn't make their ticket prices any more expensive. It doesn't effect their teams roster or on ice performance. All it does is take money out of their owners' pockets - money that those owners agreed to pay.

Such sympathy for billionaires.
And you responded with a complete non sequitur about ticket prices.

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07-06-2010, 11:08 PM
  #270
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One question nobody poses in these discussions is: What if the NHL had remained only in the Northern US and Canada?

My answer would be, "We'd be complaining about how only 12k go to games in Hamilton and Hartford while Boston and Buffalo can muster 14k" In other words, hockey would be even more of a niche sport than it already is. It wouldn't be on TV at all, and they probably wouldn't have video games or other national marketing for it (at least in the US). Also, you could kiss there being healthy AHL, ECHL (okay, so they're struggling), and dynamic junior and college feeder-leagues goodbye.

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07-06-2010, 11:09 PM
  #271
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Quote:
Originally Posted by The Gibson Cup View Post
Atlanta Thrashers of the NHL are at 36.5m, not even to the cap Min. That's what we are talking about. If you want to show the NBA stuff it kind of proves that hockey comes second or third in Atlanta.

Show the sustain support. You keep avoiding this.

So back to the OP:

SJ yes
Ana a little less than yes
LA getting there
Phoenix BIG HUGE NO
Dallas yes but at the edge
Nashville no
Atlanta no
Carolina yes
TB NO
Florida NO


So 6 out of 10 are not doing very good or in other word not self supporting.
Ana, TB and Carolina all won cups recently. Something, for example, Vancouver has never done. And even with such success TB and Carolina have had to received major revenue sharing dollars since the lockout, somewhat surprising for recent SC teams.

I think Carolina and TB are still big question marks long-term.

GHOST

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07-06-2010, 11:17 PM
  #272
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Originally Posted by vivianmb View Post
27 million each since 1989? thats 21 years ago. divide 27M by 21 years and you get roughly 1.3 M
so they make an extra 1/2 M per year( they were already getting 800K per).not really LOTS of money if you are a team PAYING into rev. sharing.
Already took the $809,000 into account (with a ballpark inflation for subsequent years), so it's still $27 million. And...

Quote:
Originally Posted by The Gibson Cup View Post
And each has given way more then that in revenue sharing. So the $$$ they made has long since given back.
Why is revenue sharing linked to expansion? The disparity in revenue between the top third and the bottom third would still be quite vast in a 21-team NHL, especially if Winnipeg, Quebec, and Hartford remained in tiny markets with old antiquated buildings (not to mention Minnesota and NY Islanders in horrible buildings), and at the time Buffalo, or Pittsburgh for that matter.

The current revenue sharing structure is based on midpoint: If every team in the league was making $25m+ in profits, revenue sharing would still be doled out by the richest clubs regardless of which teams drew in the least revenue. The existence of teams in the South doesn't change it. You could move PHX, ATL, NASH, FLA, and TB to Hamilton, Quebec, Winnipeg, Hartford and Saskatoon tomorrow. And the teams below the midpoint are still getting revenue from the teams that are above it.

The average revenues of the 21 NHL teams that existed in 1989 was $99.3 million (for 2008 according to Forbes).
The average revenue for all 30 in 2008 was $93.97 (same Forbes data)

So, while you can use that to say "See, the Southern Markets bring the average revenue down..." a higher percetage of the 30-team NHL is above the midpoint than the 21-team NHL.

The 30 team NHL currently has 17 teams (57%) below the midpoint, at an average of $14.67 million below it.
Of the 21 teams from 1989, 13 (62%) are below what the midpoint would be, at an average of $15.22 million below it.

and that's not even mentioning how a ton of each teams revenues would be tied to items that would have a price inflate with a larger league:
-- League-wide sponsorships ("The Official ___ of the NHL" appearing in more cities, reaching 37% of US/CAN instead of 24%)
-- Arena sponsorship deals (You're brand name is now in 43% more newspapers than before!)
-- TV deals based on market size yes, but also inventory: Many more games to sell.
-- More customers buying NHL Licensed gear than before
-- NHL Network and internet commerce

It also stands to reason that increasing the number of teams in the league led to more high paying jobs for Canadian citizens. According to one study I found from NOVEMBER 19, 2007, of the players who had appeared in NHL games that season (just one month in), 348 of them were Canadians. Now, a 21-team NHL would have only 483 total roster spots. A 30-team NHL has 690.

The league is, in general, 50% Canadian, so you've got to think that 207 new jobs in the NHL (not to mention accompanying growth in the AHL), most of which make at least middle six figures, meant a HELL OF A LOT OF MONEY entering Canada's economy. Now, I'm no economist. I took AP economics 16 years ago and don't remember jack from it. But I can't help but think that would help the Canadian dollar go up.


I'll say it again (for those of you who missed it my first 900 times), instead of posturing and arguing and turning everything into a "Southern Markets Suck" debate, why not just admit "I hate that we expanded into the Southern (and Western) United States, so I'm going to bash them every chance I get" ? The simple fact is, 21 men who were smart enough to make billions of dollars thought adding 7-9 NHL teams would make them more money. And the NHL keeps sending out press releases about record-setting revenues. I have to think those 21 men are, for the most part, happy with their decision.

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07-06-2010, 11:23 PM
  #273
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Originally Posted by Toxostoma Rufum View Post
One question nobody poses in these discussions is: What if the NHL had remained only in the Northern US and Canada?

My answer would be, "We'd be complaining about how only 12k go to games in Hamilton and Hartford while Boston and Buffalo can muster 14k" In other words, hockey would be even more of a niche sport than it already is. It wouldn't be on TV at all, and they probably wouldn't have video games or other national marketing for it (at least in the US). Also, you could kiss there being healthy AHL, ECHL (okay, so they're struggling), and dynamic junior and college feeder-leagues goodbye.
I think there is a case to be made for having a presence in major media markets in all four corners of the country. Maybe the league expanded too quickly, diluting their own product and efforts in the process. I'm biased though in that I think 30 is too big regardless of how the teams have been deployed-- but there is a need to appear to be "national" that tends to be overlooked.



@KevFu. You really should dust off that economics book.

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07-07-2010, 12:25 AM
  #274
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Quote:
Originally Posted by Toxostoma Rufum View Post
One question nobody poses in these discussions is: What if the NHL had remained only in the Northern US and Canada?

My answer would be, "We'd be complaining about how only 12k go to games in Hamilton and Hartford while Boston and Buffalo can muster 14k" In other words, hockey would be even more of a niche sport than it already is. It wouldn't be on TV at all, and they probably wouldn't have video games or other national marketing for it (at least in the US). Also, you could kiss there being healthy AHL, ECHL (okay, so they're struggling), and dynamic junior and college feeder-leagues goodbye.
Yes, the NHL would be more niche sport if it didn't expand its borders. But I am with Fugu on this one...The timeline and choices for expansion were not ideal.

My main dispute with the expansion/relocations was that it tried to annex the South instead of invading it.

If the goal was to add major US markets that were untapped, starting with Miami, Tampa, Anaheim and Ottawa made zero sense.

Ottawa didn't extend their borders, but they did need to add Canadian teams (much like they need to now)

Miami was a big market, but Tampa isn't. They were merely what we'd call in college conference re-alignment talk "A good travel partner"

Same with Anaheim. Their addition accomplished nothing but help Bruce McNall pocket $25 million because we had a team in LA, and they already had THE GREAT ONE.

San Jose was a great addition because it put Gretzky in the Bay Area and helped grow the game there; and of course there was the whole MIN co-owner thing that made it not a "true expansion."

In my humble opinion, they should have gone:

1991 - San Jose
1993 - Miami, Atlanta
1993 - Dallas (from Minnesota)
1995 - Denver (from Quebec)
1996 - Phoenix (from Winnipeg)
1997 - Charlotte (from Hartford)

Adams: MON, BUF, TOR, BOS, PIT, WAS
Patrick: NYR, NYI, NJD, PHI, FLA, ATL
Norris: DET, CHI, STL, COL, DAL, HOU
Smythe: VAN, EDM, CAL, PHX, LA, SJ

1998 - Ottawa (Adams), Charlotte (Patrick), Houston (Norris), Seattle (Smythe)
2004 - Nashville, Tampa
2010 - Quebec, Winnipeg
2016 - Columbus, Anaheim
2022 - Kansas City, Las Vegas

EAST
Adams: OTT, QUE, MON, BUF, TOR, BOS
Patrick: NYR, NYI, NJD, PHI, WAS, PIT
Campbell: FLA, ATL, CAR, TB, NASH, CBJ
WEST
Norris: DET, CHI, STL, DAL, HOU, KC
Smythe: VAN, EDM, CAL, SEA, WIN, MIN
Wales: LA, SJ, PHX, COL, ANA, Vegas

19 of the top 22 US markets: 1-13 (SJ=Bay Area), 15-16, 18-19, 21-22. Plus 29-33, 38 (25 of the top 38) and 50 (Buffalo).

But that's OT. Sorry.

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07-07-2010, 12:36 AM
  #275
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Originally Posted by tarheelhockey View Post
Did they ever say that? Seems inconsistent with offering Kovy a $100m contract...
Talking out of both sides of your mouth there aren't ya?? You called Thrashers ownership cheap...not willing to shell out bucks for players. Here you are suggesting that they are willing even though revenues are weak.

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