Goodbye Alberta????

[thinkwild]

Its not only about having a chance to win a Cup, which there are many examples of small markets making impressive runs and beating big spending teams, its about teams being able to consistently keep the players they have without losing them to wealthier clubs...

You consistently lose players who have reached the age where they have a choice where to play. If you arent winning, they wont choose you, nor will you be able to afford it. If you are winning with them, not only will they want to take less to stay, but others will want to come, and if you are experiencing playoff success and revenue, you will have more money to pay them than when you were losing.

They arent going to big markets. They are going to winning markets. THe ones that can afford them and who they help. Every small market has an equal advantage to develop a team that can get to that spot. Detroit and Colorado arent really big markets, nor the richest owners.

Under the current economic system there's no way Tampa could afford to keep their star players all together because they just do not have the revenues...teams like Philly, Toronto and others can keep their core together because of their financial advantages...

Who is Tampa Bay about to lose. Richards? Lecavalier? Maybe they have to trade Khabby and put in Grahame. Oh how horrible. I dont see any problems in their near future. Who are they about to lose? They cant compete without signing some big name UFAs?

No longer do we have to go through competitive droughts."

The Flames and Oilers among the most profitable in the league, and yet Bettman is out peddling the fact the system doesnt work and these franchises are in peril.

The problems he says are profound; only a cap will solve them. To save the Canadian franchises. Except they are all doing fine. To prevent Edmonton from going through another competitive drought and restoring their glory days before salaries went out of control. How does he say this with a straight face?

Teams should be able to expect a system that allows them opportunities to succeed within their means and pace of development at the time. The ability to make money. Not the guarantee. If they want a guarantee, they would of bought T-bills.

No one expects the league to be a charity. It is to be a business. Where management doesnt spend on salaries driving themselves to bankruptcy and yet still keep their jobs.

 

[MrMackey]

Teams are run as businesses. The owners want a cap for business reasons. If 75% of the teams fail and the league folds, tough. Sports are like water. They will find their level and do well. There is no law that says there has to be 30 teams. If pro hockey can only survive as a 10 or 15 team league, there's nothing wrong with that. It should be embraced by those who love it, and the ones who don't don't need it forced upon them.

That's fine, but in the broader economics of the league, TV contracts, corporate sponsorship and player endorsements are a major factor in increased revenue. This is greatly inhibited in a 15 league team... especially if there are no teams where hockey draws popular support but has a comparatively small population (Edmonton, Pittsbugh, Buffalo).

The players would do better to have a system that ties salaries to payroll and then work with the league to increase revenues. Revenues has nothing to do with the teams making money... so if all 30 teams lose $20M apiece, but revenues rise through a big TV contract state-side and increased licencing of the NHL and player brands, then the players will still make more money.

For the record, I'm not advocating a hard cap. But I do think that a punitive luxury tax based on a percentage of revenues, and revenue sharing between the teams is important.

 

[thinkwild]

The teams are businesses that are dependant on the other businesses' economic health. If 75% of the teams can't generate enough revenue to survive, then the league will collapse.

Luckily thats not true. If 20 % were having troubles, i.e. 6 teams, and three were because they are awaiting an arena, (NJ, NYI, Pit) and 3 are because of ticket sales not taking off until they develop their brand by having success (Ana, Car, Fla), several more are losing money because they spent too much and now have stopped, wouldnt some temporary revenue sharing help until they regain their feet be better?

If instead of 75% collapse, only 20% collapse, they dont have to be dependant on economicly challenged franchises anymore, allowing their businesses economic health to improve.

 

[MrMackey]

Luckily thats not true. If 20 % were having troubles, i.e. 6 teams, and three were because they are awaiting an arena, (NJ, NYI, Pit) and 3 are because of ticket sales not taking off until they develop their brand by having success (Ana, Car, Fla), several more are losing money because they spent too much and now have stopped, wouldnt some temporary revenue sharing help until they regain their feet be better?

If instead of 75% collapse, only 20% collapse, they dont have to be dependant on economicly challenged franchises anymore, allowing their businesses economic health to improve.

I'm not sure if this is the most ridiculous argument I've heard on the subject. You are suggesting that the league's economic difficulties are caused by a handful of teams who are having temporary revenue problems... easily solved by spreading around some of the other teams' profits for a few years??

Teams like Edmonton can eke out rare profits because of events like the Heritage Classic, a bottom-third payroll, and a weakening US dollar. It is certainly not the norm. It would be very difficult to hand over even a small percentage to teams like the Panthers, Isles, Pens, etc... unless they could be assured reciprocal treatment during their typical season.

I do agree revenue sharing would help though... probably more than a cap.

 

[DownFromNJ]

Hate to tell you this, but the Canadian dollar is only getting stronger because the US dollar say a temporary dip. We weakened it to get us out of the recession (stupid action by our administration, but thats another debate). Even now we are taking steps to strengthen the dollar.

 

[MrMackey]

Hate to tell you this, but the Canadian dollar is only getting stronger because the US dollar say a temporary dip. We weakened it to get us out of the recession (stupid action by our administration, but thats another debate). Even now we are taking steps to strengthen the dollar.

I'm assuming by the rest of your post, you mean the US dollar is strengthening?

I was at a conference last week and an economist from RBC Financial was talking about the strength of our CDN dollar. Then he demostrated that its actually weakening against the Euro and other major currencies and it was just the US dollar weakening that had given us the perception of a strong CDN dollar, for the reasons you mentioned.

Then he said we could see the CDN dollar go above $0.90 for a short time, but would likely come back down to the $0.75-$0.80 range as the US administration made moves to strengthen their dollar again.

Its unlikely that the NHL will resume while the dollar is as high as it is now.

 

[YellHockey*]

Wow, the Oilers made 3.3 million in one year after continuous years of mad spending cuts and salary dumps...What an investment! Of course, the Oilers have been an economic powerhouse for years now...Everyone knows that running the team in Alberta is practically a licence to print money.

It would be if they had decent teams. But Alberta has suffered through some of the worst management over the past decade because the fans bought management's bs about being disadvantaged as small markets and didnt hold management accountable.

The teams should be able to expect a profit running their team every year.

Why? Do you not believe in capitalism?

Why is it that the NHLPA thinks that the owners should be subsidizing their ridiculous salaries by running either at sustenance level or below?

Because the owners decide how much they pay out in salaries. The PA isn't forcing the owners to do anything.

Name me many other industries where a good number of the employees make more salary in one year that the company does in profit.

Telecom. Dot com's. Non-profit organizations (which the NHL is).

 

[thinkwild]

You are suggesting that the league's economic difficulties are caused by a handful of teams who are having temporary revenue problems

Yes, It is certainly looking that this is the case. The majority of the losses are not CBA related, and will fix themselves on their own through time. Now remember we arent suggesting status quo. We are suggesting lowering the status quo, and providing more opportunities to maintain this better level.

 

[thinkwild]

Name me many other industries where a good number of the employees make more salary in one year that the company does in profit.

Service organizations that have their employees as the product. Hairdressers, management consulting companies, TV and movies...

 

[MrMackey]

It would be if they had decent teams. But Alberta has suffered through some of the worst management over the past decade because the fans bought management's bs about being disadvantaged as small markets and didnt hold management accountable.

How does a fan hold management accountable?

Do they not do that by not attending games? Is that not what happened during the Pocklington years? Once new management was in place did they not come back to 90%+ capacity in attendance despite annual increases in ticket prices? Did that stop Guerin, Weight, Hamrlik, Marchant, Joseph and others demand pay raises that were not in line with what the team was able to raise in revenue? Were they not demanding this money because they saw that other teams had paid similar players much more $$ in other markets, despite the fact that those teams lost tons of money and had no spending restrictions?

Please inform me how I could've made a difference as a fan, and held the Oiler management accountable and stopped them from trading away players that made lots of money elsewhere.

Why? Do you not believe in capitalism?

OMG, this free market argument that the PA talks about is so ridiculous. If they want a free market then they should get rid of the union, guaranteed contracts, arbitration and the entire league. Then any person in the world could decide to start a team, negotiate independantly with any player, compete with any other team that's willing to play that particular season, and decide the parameters under which they'll play those games.

Pure capitalism doesn't exist anywhere in the world. Why do people on either side of the argument bring this up thinking they've just hammered home a point.

Because the owners decide how much they pay out in salaries. The PA isn't forcing the owners to do anything.

That's wrong. Unless I've missed something with arbitration and players holding out.

Before you say that they had the chance to turn down the players' demands, remember that the owners have to answer to their fickle fans. The teams that are overpaying do not have fans that hold their teams accountable to the bottom line, only to wins and championships.

 

[MrMackey]

Yes, It is certainly looking that this is the case. The majority of the losses are not CBA related, and will fix themselves on their own through time. Now remember we arent suggesting status quo. We are suggesting lowering the status quo, and providing more opportunities to maintain this better level.

I'm not talking about losses, I'm talking about economic problems. Sports franchises are designed to lose money.

However, they can't survive without positive cash flow and that's nearly impossible when labour costs are in excess of 60% of revenues, and when there is no mechanism to tie those costs to revenues it is dangerous IMO.

 

[thinkwild]

Since when does capitalism preclude unions, guaranteed contracts, arbitration, CBAs?

Calgary owners had to face their fickle fans. The fans who didnt believe they had a chance under the current system. But the fans were wrong. And the team made money. As did Edmonton. And the players are offering further help.

Presumably, the cap allows them to cut these players and not be accountable for it. Oh well, the cap made me do it.

 

[MrMackey]

Service organizations that have their employees as the product. Hairdressers, management consulting companies, TV and movies...

I don't know a hairdresser who makes more money than the owner of the salon. Likewise with the business consultant or actor/actress.

Unless, of course, that person is a sole proprietor in which case the salary IS the profits.

I think its more accurate what BlackRedGold said... basically industries which are in peril or supported by the government.

 

[thinkwild]

However, they can't survive without positive cash flow and that's nearly impossible when labour costs are in excess of 60% of revenues, and when there is no mechanism to tie those costs to revenues it is dangerous IMO.

There is a mechanism - a businessmans desire not to lose money. THis is a foundation of the system. If the owners dont mind losing money, like Leonsis when he made a plan to lose $70mil over 5 years and was ok with it.

If positive cash flow is a requirement, why the 60%. If the league revenues were $1.3Bil, they would need more than 60% right. If league revenues were in fact $2.4Bil last year, or will be $3Bil in a couple years, wouldnt ther percentage change even more? If they needed 60% 10 years ago, why do they still need it with the new revenues today?

 

[thinkwild]

I don't know a hairdresser who makes more money than the owner of the salon. Likewise with the business consultant or actor/actress.

The employees will collectively make more of a percentage of revenues than the owners will in profit. Certainly in management and Software Consulting companies this is the case.

 

[MrMackey]

Since when does capitalism preclude unions, guaranteed contracts, arbitration, CBAs?

Like I said, pure capitalism doesn't exist anywhere because it is completely unregulated. Look up laissez-faire.

One person can just as easily argue capitalism for getting rid of arbitration, as someone else can argue against a salary cap. It is stupid, IMO, that either side uses it as an argument.

Calgary owners had to face their fickle fans. The fans who didnt believe they had a chance under the current system. But the fans were wrong. And the team made money. As did Edmonton. And the players are offering further help.

That's great. I haven't heard any of that myself, but maybe that's part of this new proposal that's been rumoured.

Presumably, the cap allows them to cut these players and not be accountable for it. Oh well, the cap made me do it.

Again, I'm not for a hard cap. I believe it will be harder for all teams to keep the players they want under a cap-only system.

In any case, I'm not sure what you're saying in this last point.

 

[BCCHL inactive]

The Devils over and over? Do they spend? Nope.

Sure they do. They just don't go overboard on free agents like the New Yorks, the Colorados, the Detroits, etc. New Jersey drafts well and has arguably the best scouting staff in the NHL, but they do have the financial resources to keep their stars around, whereas teams like Edmonton and Calgary do not.

That is the whole problem. Calgary had a spectacular season. However, the unravelling of the team already started when Craig Conroy signed with Los Angeles this summer. Over the last few years, Edmonton lost guys like Doug Weight, Bill Guerin and Mike Comrie. Calgary had to fight tooth and nail just to re-sign Jarome Iginla to a contract many were not sure they could afford.

Whether or not the NHL feeds us garbage numbers, they are right in that the system has to change, and they need to make it right this time.

 

[MrMackey]

The employees will collectively make more of a percentage of revenues than the owners will in profit. Certainly in management and Software Consulting companies this is the case.

The question was:

Name me many other industries where a good number of the employees make more salary in one year that the company does in profit.

1. A good number of employees means individually, not collectively.

2. Most businesses anywhere have higher labour costs than profit (as a percentage of revenue).

Despite point #2, any business that brings in revenues like NHL teams (in the millions or billions) will not have as high a percentage in labour costs. Take Delloite Consulting... they are completely consultant driven, but they would not be able to pay for travel, office space, marketing and other expenses if the combined salararies of their consultants was as high as it is in the NHL (percentage-wise).

 

[thinkwild]

Sure they do. They just don't go overboard on free agents like the New Yorks, the Colorados, the Detroits, etc. New Jersey drafts well and has arguably the best scouting staff in the NHL, but they do have the financial resources to keep their stars around, whereas teams like Edmonton and Calgary do not.

THey can keep Holik, Mogilny, Nieuwendyk, whereas Calgary or Edmonton has to lose them. Its not fair to poor small market teams. They lose Weight and Marchant.

That is the whole problem. Calgary had a spectacular season. However, the unravelling of the team already started when Craig Conroy signed with Los Angeles this summer.

Craig Conroy leaving will be the unravelling of Calgary? You have to be kidding me? Thats so touching you get so attached to the players on the team, even if you just traded for them.

 

[Scheme]

And you will not get this under a cap system either, where player movement has been shown (in the NFL) to be faster than under any other model.

Green Bay Packers in the NHL would have folded and moved away a long time ago in the current CBA.

 

[YellHockey*]

Green Bay Packers in the NHL would have folded and moved away a long time ago in the current CBA.

Why? If the NHL is a gate driven league and the Green Bay Packers sold out every game as an NHL team at above average prices, why would it have folded? It would have the entire state of Wisconsin to use for its tv market.

 

[codswallop]

It is obviously clear that the current situation pits a "free market" system against some degree of regulation (the extent of which is the main point of the labor dispute)

My opinion has always been that although NHL hockey is clearly a full fledged buisiness as much as say, making steel, it simply can't be treated the same way.

The goals of a hockey league and traditional industry are different. If the world has only say 3 major producers of steel, because all of the others have been inefficient, we accept that as part of the free market economy. The problem is that the NHL, by its definition, is a market with a set amount of firms. 30 or maybe 24 by the time we see the next NHL puck drop. The league and its members consent to this, rely on this and it forms a essential part of the stability of the league. Because the NHL is in essence a cartel, the 30 members of the league need each other to survive.

If the truest free market theories are followed, the league would arguably be left with only a handful of the most "efficient" teams.

I've tried this before. Attempted to explain a few basic economic principles debunking certain arguments that the NHL is in any shape or form a "free market". It isn't and it's not that difficult to see. So arguments pertaining to a free market system are inherently flawed, certain factors take a slightly or even greatly altered meaning in an "imperfectly competitive market". To give it a definition, you can say the teams represent an oligopoly. You can also say the the league and the players union represent a bi-lateral monopoly. Neither of those scream free market, and they never will. Unless of course they tear down the entire structure and start from scratch (I think we can safely say that won't happen though).

It didn't fly then, I'm pretty sure it won't fly now. Unfortunate, yes. But some people hear only what they want to hear.

 

[SPARTAKUS*]

For you all nhlpa lovers better get use to the idea of a form of salary cap in the nhl the owners are willing to wait two years if they have to but next time the nhl open for business it will be with a salary cap....yeah baby!!!! :lol

 

[nomorekids]

For those who are ha-ha'ing the thought of Calgary being in financial danger simply because they made money last year...

...look over the 10 years prior to that. A trip to the finals will make ANY team a profit..and one profitable year does not make up for millions and millions lost in previous years. Calgary and Edmonton need a favorable CBA just as much as Carolina and Florida, like it or not.

 

[FlyersFan10*]

Believe me when I say I have no troubles with anyone making money. That should never be an issue. A healthy league with all teams making money and all players making money is ideal. The problem I have with the salary cap is that it punishes teams like Toronto, Philadelphia, Detroit, New York, Dallas, etc.....for creating their market and working their hardest to generate as much revenue as possible for their product. On the other hand, you have teams like Los Angeles, Boston and Chicago that continually crap on their fans by letting their stars go for nothing and then claim that they are doing it for the fans. In the meantime, the owners are pocketing millions, but because it isn't the millions the owners are projecting, they end up crying poor. The problem with a salary cap is that it pretty much ensures that those who aren't spending to win and are going on the cheap are always going to make money. That isn't fair. That's ripping off the fans. What people are saying is that the skinflints have a right to make money even when they are short changing the fans? I don't think so. The league will never address the issue of those who are cutting payroll to maximize profits. And that's wrong. If you're going to have a salary cap, then the salary minimum better be between $500,000 to $1,000,000 below the actual cap. If it isn't, you can bet that Wirtz and Jacobs and other owners will try to have a 15 to 20 million dollar team just so that they can maximize profits.