Economists question Bettmans math

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PhillyNucksFan

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vanlady said:
I somewhat agree with you here. However this happens in business all the time. I have an employee that endeared himself with one of my biggest clients, the employee then came to me with unreasonable salary demands, I said sorry. That employee moved to another company and stole that client. So now I am out one of my best employees but also one of my biggest clients. Did I whine, no I went out and developed more clients and diversified that client base so I could withstand the loss.

Sorry but I have never laid the blame for my business mistakes at anyone elses door, unlike the NHL owners


You are missing a point here IMO.

Sure, what you did is right and probably inevitable.

But are you saying that the Owners are not doing that?

IMO, owner HAVE been doing that for the past 10 years!!!

I will use Oilers as an example, as they are the most successful one, and use Avs as another example.

This is hypothetically speaking only as we both know the definition of the market here is different and the relationship among owners and players are a bit different, but for the argument sake.

Oilers are you, and Oilers homegrown star are your strongest employee. The stars, most recently, Carter (or lets use Weight), have demanded or indicated the high salary he is likely to seek in a couple months time. Now, what do you do? You can either sign him, or trade him. Now, Oilers trade him, and let him go, like you have done. You develop you talent, sure, Oilers than develop new talents in Carter, Smith, etc. They live on, and stayed competitive. To the oilers credit, (i hate them, im nucks fan), but they are damn good at developing identifying and developing talents. Now, if you, like you said, owns your business and develop new talent, wouldnt you be xxx pissed if every 5 years, you develop a great sales, and every 5 years, the sales have to leave for someone and taking one of your biggest client every time. Would you not demand some change, if any if you can?

I know I would, because in the long run, I will not survive and I will close down my business. Sooner or later, i am going to run out of raw talent or the talent to identify talent and I am going to run out of big clients in this market, and I would demand a change in some way if i can. NHL owners can, because NHL is not a free market, not exactly, as the supplies are the players are limited, but so are the supplies of the employer. This is an equilibrium situation where both sides have to realize that, CBA will not work if there is no compromises and both sides have to realize that, the return of this COULD be a diminishing one as they are eroding the hockey interest in general among north americans. Lets face it, Canadians alone dont cut it.


EDIT: oops, forgot about the Avs point.

Avs on the other hand, is an example and duplicate of Oilers management IMO. They were just the same as the oilers when they were back in quebec, another small market team, and the team philosophy and culture has moved to denver with them. Now, in theory, a sensitively managed team, both financially and operationally, with unlimited budget will in term ice a very competitive product on and off the ice. Look at the Avs.. They have identified the great talent, and now, THEY have the tools to KEEP the talent. If they were still in Quebec, for argument sake, I highly doubt they will be able to keep BOTH the Sakic and Forsberg for so long, not to mention Roy! They woudl probably be just like the Oilers, trading away Forsberg for some up and coming talent and be competative all the time. That unlimited budget to sign their own players pushed them over the top.


Now, ehre is a question, Why cant we have a cap JUST on the UFAs and no cap on the homegrown teams or the players they have drafted signed the year before. This would obviously provides an advantage for the home teams to resign their players. No?

I dont know, just a though
 

vanlady

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davemess said:
See the guy/girl you hired to replace the person that just left did they know exactly how much the other person just left for? and did his/her union make sure that they asked for that same figure?

You cant compare the NHL system to the real world, in the same way you wouldnt compare the NHL to the NFL. They are all totally different.

Actually yes the person I hired did know, because just like the PA, the professional association my employees belong to have a web site where all of them share information including salary information. Heck there web site even has a calculator based on location, experience and qualifications, to determine how much they should ask for. These guys also have a mentor program and trust me you think agents in the NHL are mercenary, I let you deal with one of the mentors in my industry, will you be in for a rude shock.

I do agree you can't compare one industry to another, however the contention that the competative nature for highly qualified and sought after employees is limited to pro sports is not reality.
 

arnie

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Dec 20, 2004
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PepNCheese said:
Don't worry, I'm sure everyone will soon be shouting down the economists because they're idiots who "don't get it".

Well, everyone has always known that. Just look at Forbes. They continue to value NHL franchises at $140 million that then actually sell for $60. These people have no clue.
 

Cully9

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vanlady said:
OK as a business owner how in the lords name could an employee force you to spend money??? Sorry I have yet to see a comprehensive plan from the owners on how they intend to fix there problems, I have only seen them try and blame the players for all there mistakes. And force the players to fix problems they themselves have created.

Force is the wrong word, but when the players have the ability to collude in their efforts to increase salaries -- which is exactly what they do using the Source software -- the only time the owners can put a lid on salaries and collude is during collective bargaining.
 

Cully9

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vanlady said:
I do agree you can't compare one industry to another, however the contention that the competative nature for highly qualified and sought after employees is limited to pro sports is not reality.

And how would it negatively affect your business if you ran all your competition out of business?

Sports requires competition. The real business world does not.
 

DuklaNation

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Aug 26, 2004
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nedved93 said:
no doubt.

so, i'd like for you to explain the following: how did tampa bay (payroll $34,065,379) beat philadelphia (payroll $68,175,247) in a 7 games series last year?

They drafted Richards & Lecavalier who dont have bargaining leverage yet. Got St Louis for a song and dance. Made a shrewd trade to get Khabby. Those were the key moves. And please dont ask why cant everyone do that? Lecavalier was a 1st overall pick and late bloomers like St Louis come along once every 10 years or so.
 

Digger12

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jericholic19 said:
i have my doubts. bettman issued an ultimatum that he knew would anger the players. he begrudgingly made an offer he hoped the NHLPA wouldn't accept. similarly, goodenow used the ultimatum as the excuse why a deal wasn't manifested. these two leaders wanted to see this lockout extend. and they both probably have the balls to do a lot more damage.

im guessing if impasse is successful, we'll see replacement players for a very long time. but, if i was bettman, i'd be afraid the union might utter this word: DECERTIFICATION. dercertification of the union would mean that every player becomes a free agent. imposing a cap on all of them would be thus considered collusion and that would subject to the owners to hundreds of lawsuits. both sides lose then as the union is broken and the owners lose a sh1t load of more money.

with the season being called off, i believe the fun stuff is yet to come. there will be some good drama for the first time.

I agree about the drama, but this whole scenario is based on the assumption that the owners will try to go for impasse. What if they don't?

Who's to say they don't just sit back and let the already fractured union tear itself apart over the summer?

I'm honestly trying to see an exit strategy for the players that doesn't involve total capitulation at this point, I really can't see it. Their leadership screwed up.
 

vanlady

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Nov 3, 2004
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PhillyNucksFan said:
You are missing a point here IMO.

Sure, what you did is right and probably inevitable.

But are you saying that the Owners are not doing that?

IMO, owner HAVE been doing that for the past 10 years!!!

I will use Oilers as an example, as they are the most successful one, and use Avs as another example.

This is hypothetically speaking only as we both know the definition of the market here is different and the relationship among owners and players are a bit different, but for the argument sake.

Oilers are you, and Oilers homegrown star are your strongest employee. The stars, most recently, Carter (or lets use Weight), have demanded or indicated the high salary he is likely to seek in a couple months time. Now, what do you do? You can either sign him, or trade him. Now, Oilers trade him, and let him go, like you have done. You develop you talent, sure, Oilers than develop new talents in Carter, Smith, etc. They live on, and stayed competitive. To the oilers credit, (i hate them, im nucks fan), but they are damn good at developing identifying and developing talents. Now, if you, like you said, owns your business and develop new talent, wouldnt you be xxx pissed if every 5 years, you develop a great sales, and every 5 years, the sales have to leave for someone and taking one of your biggest client every time. Would you not demand some change, if any if you can?

I know I would, because in the long run, I will not survive and I will close down my business. Sooner or later, i am going to run out of raw talent or the talent to identify talent and I am going to run out of big clients in this market, and I would demand a change in some way if i can. NHL owners can, because NHL is not a free market, not exactly, as the supplies are the players are limited, but so are the supplies of the employer. This is an equilibrium situation where both sides have to realize that, CBA will not work if there is no compromises and both sides have to realize that, the return of this COULD be a diminishing one as they are eroding the hockey interest in general among north americans. Lets face it, Canadians alone dont cut it.


EDIT: oops, forgot about the Avs point.

Avs on the other hand, is an example and duplicate of Oilers management IMO. They were just the same as the oilers when they were back in quebec, another small market team, and the team philosophy and culture has moved to denver with them. Now, in theory, a sensitively managed team, both financially and operationally, with unlimited budget will in term ice a very competitive product on and off the ice. Look at the Avs.. They have identified the great talent, and now, THEY have the tools to KEEP the talent. If they were still in Quebec, for argument sake, I highly doubt they will be able to keep BOTH the Sakic and Forsberg for so long, not to mention Roy! They woudl probably be just like the Oilers, trading away Forsberg for some up and coming talent and be competative all the time. That unlimited budget to sign their own players pushed them over the top.


Now, ehre is a question, Why cant we have a cap JUST on the UFAs and no cap on the homegrown teams or the players they have drafted signed the year before. This would obviously provides an advantage for the home teams to resign their players. No?

I dont know, just a though

You seem to be under the impression that I have not been experiencing the same pain as the Oilers since I have been in business. I pay to develop my employees, helping them get more qualifications and experience they had before I hired them. When they just start to show promise and begin to perform at the experience level I require, they get another job paying more. As a small business owner I have never been able to compete with Microsoft, CA, Telus and Cisco, all companies I have lost employees to in the last 2 years. So yes this happens in the real world too.

I do agree with the development issue, teams should be able to retain there developed players without penalty.
 

SuperUnknown

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vanlady said:
I somewhat agree with you here. However this happens in business all the time. I have an employee that endeared himself with one of my biggest clients, the employee then came to me with unreasonable salary demands, I said sorry. That employee moved to another company and stole that client. So now I am out one of my best employees but also one of my biggest clients. Did I whine, no I went out and developed more clients and diversified that client base so I could withstand the loss.

Sorry but I have never laid the blame for my business mistakes at anyone elses door, unlike the NHL owners

Comparing an individual business situation to an industry's situation is asinine.

Regardless, here are some interesting thoughts in regards to your situation:

Why couldn't your company afford him? Why could another company? Is the other company better run than yours?

What would have happened if you couldn't replace the client you lost? If your choice was to overpay but keep the client vs let the guy go and lose the revenue forever? (or what if you couldn't replace the guy who left with someone as qualified?)
 

vanlady

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Cully9 said:
And how would it negatively affect your business if you ran all your competition out of business?

Sports requires competition. The real business world does not.

Oh yes the real world does, if there was no competition between my suppliers the cost of doing business would be astronomical. My clients also depend on competition in my industry to promote competativeness. The NHL is no different, underperforming teams require strong teams to come into there buildings to draw crowds, to provide them the money to develop there team.
 

Ol' Dirty Chinaman*

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vanlady said:

Registration required.

However,

Economics is not an exact science. Apart from the basic models and theories, everything after can be construed into different things. For example, presidential administration brings it's own economic advisors who have their own macro theories on stopping, or slowing inflation, keeping the price level consistent and at the same time increasing GDP.

Economists aren't qualified to comment on how the numbers itself will work, however they are qualified to comment on how the framework itself will work out. How the numbers will work is the jobs accountants do.

Levitt is a more than respected accountant and his report should not be second guessed.
 

AM

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Nov 22, 2004
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same old

nedved93 said:
no doubt.

so, i'd like for you to explain the following: how did tampa bay (payroll $34,065,379) beat philadelphia (payroll $68,175,247) in a 7 games series last year?

tired arguement.

I could explain it to you, but why bother, I suggest you read the board more, its been covered 4000 times.
 

Ol' Dirty Chinaman*

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vanlady said:
Oh yes the real world does, if there was no competition between my suppliers the cost of doing business would be astronomical. My clients also depend on competition in my industry to promote competativeness. The NHL is no different, underperforming teams require strong teams to come into there buildings to draw crowds, to provide them the money to develop there team.

Your clients must love your spelling inaccuracies and your misunderstanding of 'their' and 'there' ! :dunce:
 

PhillyNucksFan

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vanlady said:
You seem to be under the impression that I have not been experiencing the same pain as the Oilers since I have been in business. I pay to develop my employees, helping them get more qualifications and experience they had before I hired them. When they just start to show promise and begin to perform at the experience level I require, they get another job paying more. As a small business owner I have never been able to compete with Microsoft, CA, Telus and Cisco, all companies I have lost employees to in the last 2 years. So yes this happens in the real world too.

I do agree with the development issue, teams should be able to retain there developed players without penalty.


I am not undermining your experience or your thoughts on the business. But as i have said, it was just a hypothetical situation.

I am not saying you have not been doing what you have been doing, but what I am saying is, YOU and the OWNERS have been doing the same thing, but the difference is, owners have the power to straighten this out. (no more 5 year strongest sales leaving your company because he is just as good as you).

You see what I mean here?

In addition, in real life, the guy you LET go has very little direct or even indirect influence on your business health, whereas, NHL is different. Today if Det signed Modano, obviously, Det's signing has a positive and direct impact on the Stars team health and competitiveness. So, from this point alone, its difference. Not to mention the relatively much larger market in the real world in another industry (to compare industry is sort of off from the beginning anyway) would certainly minimize impacts on certain small businesses.
 

vanlady

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Smail said:
Comparing an individual business situation to an industry's situation is asinine.

Regardless, here are some interesting thoughts in regards to your situation:

Why couldn't your company afford him? Why could another company? Is the other company better run than yours?

What would have happened if you couldn't replace the client you lost? If your choice was to overpay but keep the client vs let the guy go and lose the revenue forever? (or what if you couldn't replace the guy who left with someone as qualified?)

Because my company is a small local firm not a multi national conglomerate. Not better run just more established, and does not and never has demanded a profit on there support structure of there product.

Not being able to replace the client was not an option, it's part of owning your own company, you are soley responsible for the way your business is run. I chose to let him go and I knew I ran the risk of losing the client, I chose to side on not putting my business in a position that could put it in finacial peril.

Actually I replaced him with a young kid out of school, simply because I have become so accostomed to losing employees to high paying conglomerates, that I now make sure I have a strong line of up and coming professionals who work for me.
 

Cully9

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Oct 15, 2004
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vanlady said:
Oh yes the real world does, if there was no competition between my suppliers the cost of doing business would be astronomical. My clients also depend on competition in my industry to promote competativeness. The NHL is no different, underperforming teams require strong teams to come into there buildings to draw crowds, to provide them the money to develop there team.

Need I point out to you that even if your supplier has no competition, the relevant point is whether YOU have competiton. If you're the only buyer, what does it matter if your supplier has no competition?

The NHL is vastly different from real business because, as you even admitted you can't compete with the Microsofts of the world -- and Microsoft has no vested interest in allowing you to compete with them. On the other hand, the Detroit Red Wings and New York Rangers od have a vested interest. They need opponents to play in order to lure fans into the building. Even better, they need reasonably competitive opponents.
 

vanlady

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PhillyNucksFan said:
I am not undermining your experience or your thoughts on the business. But as i have said, it was just a hypothetical situation.

I am not saying you have not been doing what you have been doing, but what I am saying is, YOU and the OWNERS have been doing the same thing, but the difference is, owners have the power to straighten this out. (no more 5 year strongest sales leaving your company because he is just as good as you).

You see what I mean here?

In addition, in real life, the guy you LET go has very little direct or even indirect influence on your business health, whereas, NHL is different. Today if Det signed Modano, obviously, Det's signing has a positive and direct impact on the Stars team health and competitiveness. So, from this point alone, its difference. Not to mention the relatively much larger market in the real world in another industry (to compare industry is sort of off from the beginning anyway) would certainly minimize impacts on certain small businesses.

Actually I am in the service industry and the health of my business is soley dependant on my employees skills and knowledge. I like the small market owners have no control over the big boys in my industry.
 

Sammy*

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vanlady said:
Actually yes the person I hired did know, because just like the PA, the professional association my employees belong to have a web site where all of them share information including salary information. Heck there web site even has a calculator based on location, experience and qualifications, to determine how much they should ask for. These guys also have a mentor program and trust me you think agents in the NHL are mercenary, I let you deal with one of the mentors in my industry, will you be in for a rude shock.

I do agree you can't compare one industry to another, however the contention that the competative nature for highly qualified and sought after employees is limited to pro sports is not reality.
Whats the website? Because I highly doubt the info contains salary of individuals, benifits , expected hour's, receipts & supervising numbers.
Every donkey in any city knows the general ranges of their peers. They just do not know the specifics, nor do they all collude on salary negotiations.
 

vanlady

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Nov 3, 2004
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ODC said:
Your clients must love your spelling inaccuracies and your misunderstanding of 'their' and 'there' ! :dunce:

That is what spellcheck is for, unfortuantely this board does not have that feature.
 

PhillyNucksFan

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Dec 27, 2002
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ODC said:
Registration required.

However,

Economics is not an exact science. Apart from the basic models and theories, everything after can be construed into different things. For example, presidential administration brings it's own economic advisors who have their own macro theories on stopping, or slowing inflation, keeping the price level consistent and at the same time increasing GDP.

Economists aren't qualified to comment on how the numbers itself will work, however they are qualified to comment on how the framework itself will work out. How the numbers will work is the jobs accountants do.

Levitt is a more than respected accountant and his report should not be second guessed.


Not exactly IMO.
Economics is not an exact science, sure; however, as you have said, the framework is almost a proven science that will produce the same results under an ideal world. Of course, as we know, nothing in the real world is controlled like those in a lab, but the probability of production of similar result is fairly high to omit the little difference that pay very little to none effects here.

Personaly political and economical influences certainly plays a big role in the intuition of any presidents, or any senior business managers. But that doesnt mean they are doing anything different from any other senior or presidents have been doing. They are just doing the same thing with the same theory in a different way.
 

vanlady

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Nov 3, 2004
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Sammy said:
Whats the website? Because I highly doubt the info contains salary of individuals, benifits , expected hour's, receipts & supervising numbers.
Every donkey in any city knows the general ranges of their peers. They just do not know the specifics, nor do they all collude on salary negotiations.

Actually to get specific information they have chat rooms divided into specific regional locations, every time an employee of mine has left I have asked him/her where they got the numbers and benefits packages from, the answer has always been the same. Sorry but not even I can get into the site as it is a secure website.
 

SuperUnknown

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vanlady said:
Because my company is a small local firm not a multi national conglomerate. Not better run just more established, and does not and never has demanded a profit on there support structure of there product.

Not being able to replace the client was not an option, it's part of owning your own company, you are soley responsible for the way your business is run. I chose to let him go and I knew I ran the risk of losing the client, I chose to side on not putting my business in a position that could put it in finacial peril.

Actually I replaced him with a young kid out of school, simply because I have become so accostomed to losing employees to high paying conglomerates, that I now make sure I have a strong line of up and coming professionals who work for me.

Well I do feel sorry about your business position. Seems either you're targeting the wrong market, either you can't develop key technologies, solutions or innovations that let small companies keep their market share, either that you don't have a good business structure or that you're asking for a return too high on equity.

Ever consider selling to one of the "big" companies, then pocket your capital gain and use that money to get a decent return rate without those headaches?
 

PhillyNucksFan

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Dec 27, 2002
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Since this seems to be an thread on the economics of the NHL..

I am very surprised that no one has mentioned about the elasticity of the basic NHL framework.

Or did i just missed it somewhere along the thread.. anyhow.

van, your business supply and demand are both elastic, whereas, NHL owners (the demand) is inelastic as it is fixed, and the supply, however, is not purely inelastic as there are always new players who have the talent to replace the current supply. (ie. Sydney Crosby)..

This point alone would destroy all comparison between other industries with the one in NHL.

Oh, and this provides an obvious advantage to the owners due to the pure fact that they are inlastic, a straight horizontal line across the SD chart.. they are the price setters and i think the players have forgotten that.
 

AM

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Nov 22, 2004
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he he

vanlady said:
Oh yes the real world does, if there was no competition between my suppliers the cost of doing business would be astronomical. My clients also depend on competition in my industry to promote competativeness. The NHL is no different, underperforming teams require strong teams to come into there buildings to draw crowds, to provide them the money to develop there team.

But you dont depend on your competition to be competative for you to be successfull. Its the other way around, you want your competition to be uncompetative so you can make more money!

Wake up ok?
 

Frenzy31

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May 21, 2003
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vanlady said:
Oh yes the real world does, if there was no competition between my suppliers the cost of doing business would be astronomical. My clients also depend on competition in my industry to promote competativeness. The NHL is no different, underperforming teams require strong teams to come into there buildings to draw crowds, to provide them the money to develop there team.

1st. Hockey is a regional sport. Most fans don't go to see a team play another team unless it is a rivalry. Strong teams seldom draw crowds unless something is going on, like a rivalry or WG last game in that stadium.

Based on Economics, you should take it in the opposite direction. A poor team that could not afford to keep it's top players trades them off for picks and prospects.

Yes, they have decreased the cost of running the team, however, they will now face problems as the revenue with further decrease. Consumers are no longer interested in seeing the team play so ticket sales will decrease, TV contract will also decease as the team becomes less competitive and advertisers lose interest, the loss of revenue will force to team to let other players go to try and stem the flow.

As losses continue to mount, other dept. such as scouting start to feel the cash crunch. Now you lose the ability to replenish your minor ranks as you don't have the capital to travel all over Europe to try and find late round gems. So you keep things local and continue to draft marginal players....

Soon, you wind up w/ Pitts. where the only star is the owner and the rest of the team is AHL players. The losses will continue to mount, driving ticket prices down in an attempt to gain some interest and so on until the team folds.

It is a big circle.

But nice try though.
 
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