KHL business aspects discussion

[Jussi]

They're not big enough to run a hockey club, but Yota Devices (mobile phones) is one notable Russian company that does their R&D in Oulu. Still, Kärpät wouldn't be a good fit.

And most importantly, have no interest in KHL

 

[ybnvs]

Imagine playing for a team that doesn't even pay you.

 

[vorky]

The Alliance of European Hockey Clubs will hold its second autumn theme meeting in Stockholm on 11 November 2017 in conjunction with the two NHL regular season games between the Ottawa Senators and the Colorado Avalanche.

The E.H.C. Alliance is thrilled that both the National Hockey League’s Deputy Commissioner Bill Daly and Alexey Krasnov, Vice-President of the Kontinental Hockey League, will attend and make presentations about their views and strategies for Europe.

Bill Daly, Deputy Commissioner, NHL
NHL’s international strategy

Alexey Krasnov, Vice President, KHL
KHL’s new business plan & roadmap for the league’s 2nd decade

 

[vorky]

Translation: zisk=profit, tržby=revenues/sales

 

[alko]

Translation: zisk=profit, tržby=revenues/sales

WTF??? The were really in green numbers? Then why such bigg issues with salaries?

 

[Jussi]

WTF??? The were really in green numbers? Then why such bigg issues with salaries?

Well obviously they were in the green because they didn't pay salaries.

 

[SoundAndFury]

As I was writing the post for "KHL attendance" thread I realized that really, Jokerit, Minsk and Barys are the only expansion teams hanging in there. Others:

Lev - gone.
Lev 2 - gone.
Donbass - gone.
Medvescak - gone.
Kunlun - looking more and more like a joke.
Riga - barely alive for no apparent reason.
Slovan - same as Riga except fans didn't give up on it yet.

10 years have gone, is this acceptable or is the KHL failed project? With all the poop CHL is getting at least that league seems sustainable. Jokerit is the only KHL team which managed to survive in real business environment and only by losing tones of money.

Same with new-born unicorn Kunlun. The brightest (and the only, really) expansion hope is a joke nobody's taking seriously. 1,5 years have passed and they still don't have arena, still don't have fans and still are playing in front of 1k people.

We can draw countless charts and diagrams but the big picture is ugly. And there was always this argument being thrown around: NHL didn't happen overnight either, it takes time. But really, isn't things even bleaker now, after 10 years, than they were on Day 1?

 

[vorky]

As I was writing the post for "KHL attendance" thread I realized that really, Jokerit, Minsk and Barys are the only expansion teams hanging in there. Others:

Lev - gone.
Lev 2 - gone.
Donbass - gone.
Medvescak - gone.
Kunlun - looking more and more like a joke.
Riga - barely alive for no apparent reason.
Slovan - same as Riga except fans didn't give up on it yet.

10 years have gone, is this acceptable or is the KHL failed project? With all the poop CHL is getting at least that league seems sustainable. Jokerit is the only KHL team which managed to survive in real business environment and only by losing tones of money.

Same with new-born unicorn Kunlun. The brightest (and the only, really) expansion hope is a joke nobody's taking seriously. 1,5 years have passed and they still don't have arena, still don't have fans and still are playing in front of 1k people.

We can draw countless charts and diagrams but the big picture is ugly. And there was always this argument being thrown around: NHL didn't happen overnight either, it takes time. But really, isn't things even bleaker now, after 10 years, than they were on Day 1?

Perhaps Medvedev was too optimtic about expansion to Europe. As you know there is a big anti-KHL feelings, because ... we (Europeans) can not run the league, but evil Russians run it ... so we (Europeans) are not interested to join. Still, the KHL has been able to negotiate with club/s from Europe. I mean the negotiations with potential newcomers in 2019 & 2020. I am sure these new teams will not be "Medvescak´s level", but "Jokerit´s".

The KHL has shared money with clubs since 2014/2015, which was not before. Good signal. If you compare the KHL to the CHL, then.... the CHL plans to share 3,7 mil EUR (for 32 teams, if no change) in 2022 or something. The KHL shared around 5 mil EUR for last season, this sum will grow & will be shared with 24 clubs in future. The point, the KHL earns now more than the CHL plans in 2022 or something like that. If the KHL is fail project, I do not know how to describe the CHL ...

The KHL plans to strenghten clubs´ & league´s commercial potential, so more money in future.

You can not look at past & say "the same will happen to new teams", I mean Lev or Medvescak or Donbass. Lev Prague should be replaced by Sparta Prague, but for some reason this did not happen. Donbass, you know why they are not in the league anymore. Medvescak was a back up plan, because there was not other option. If there is expansion to Europe in 2019 & 2020, new teams will be in the KHL for many years. Not like Medvescak or Lev Prague. The KHL does not need such adventure anymore. Now we have only two options - strong European club or nothing.

I can imagine a political climate is a key factor for Dinamo Riga.

Regarding Slovan, lower attendance is because of transfer´s policy of the club. Too many changes in club´s roster from season to season. When a roster is stable, fans will come to an arena. Of course, results are important too. The money as well.

KRS had better attendacne in Beijing than in Shanghai. So attendance should grow when in Beijing again.

 

[Rigafan]

As I was writing the post for "KHL attendance" thread I realized that really, Jokerit, Minsk and Barys are the only expansion teams hanging in there. Others:

Lev - gone.
Lev 2 - gone.
Donbass - gone.
Medvescak - gone.
Kunlun - looking more and more like a joke.
Riga - barely alive for no apparent reason.
Slovan - same as Riga except fans didn't give up on it yet.

10 years have gone, is this acceptable or is the KHL failed project? With all the poop CHL is getting at least that league seems sustainable. Jokerit is the only KHL team which managed to survive in real business environment and only by losing tones of money.

Same with new-born unicorn Kunlun. The brightest (and the only, really) expansion hope is a joke nobody's taking seriously. 1,5 years have passed and they still don't have arena, still don't have fans and still are playing in front of 1k people.

We can draw countless charts and diagrams but the big picture is ugly. And there was always this argument being thrown around: NHL didn't happen overnight either, it takes time. But really, isn't things even bleaker now, after 10 years, than they were on Day 1?

Well to be fair Riga, Minsk and Barys were all part of the KHL from day one. So calling them expansion teams isn't right. The idea is in the name isn't it, 'Kontiental' league so I don't think we have failed, we/they whatever just always compare it to the NHL. Which isn't fair also. There are different ways of doing business, which is right, which is wrong? Who cares really. So NHL teams pull out of cities with lifelong fan bases because the local government wont pay billions for a new rink, when said owners are billionaires. And in the KHL rich men put on a show in their home cities for local fans knowing full well they will never make money from it - its all the same!

Untill the KHL is part of the CHL it will remain a joke wannabe Scandinavian superleague - that the Scandinavians don't even care about

Donbass also isn't a fair team to mention, they literally had no arena to play in, what else could they do? Move to west Ukraine and have 0 fans in attendance every game?

I think the league still needs time, sure 10 years has gone but its getting better. Kunlun, unfortunately aren't working out so great, I think they'll vanish and the league needs to think more long term for its next expansions before kicking traditional russian teams out of the league. i.e no Milan club please.

 

[SoundAndFury]

Vorky post has a lot of reasonable arguments in it albeit it's all in the "remains to be seen" mold.

Rigafan, on the other hand, kind of missed the point. I called Riga, Minsk, Barys expansion teams because they were expansion teams when RSL turned into the KHL. Caling CHL "joke wannabe Scandinavian superleague" is even harsher and more ridiculous considering 1) at this point KHL is nothing more but RSL (plus Jokerit) powercreeped by SKA and CSKA spending; 2) literally every country but Russia is participating in it. And that's the point, that "Kontinental" is misleading as there is only 1 team in the "Kontinent" having an impact in it.

 

[vorky]

If we compare KHL 2008/2009 & KHL 2017/2018, we will see a big development. Nobody can deny it. The league is more professional than it was back in 2008.

Jokerit´s deal was announced in June 2013. Lev left the league in summer 2014, a few months before a change of the KHL leadership & all this political climate. It does not happen like "OK, we will change the KHL leadership and next day new President comes to office". It takes time, at least a few weeks or not months. And exactly at the same time Lev left the KHL. Maybe they had plans for following expansion to Europe, like Sparta replacing Lev, but it has never happened because of political issues. These hypothetical teams would be of Jokerit level. So we would have more teams "in the "Kontinent" having an impact" to quote you. This EU expansion plans were stopped, but not abandonned. They needed a time out because of the following reasons, 1. who will pay for it? 2.negotiations with hockey federations (waiting for better political enviroment) & 3. what clubs are the best candidates for us (not a club for one or two seasons like Lev Poprad)?

Medvedev was a great "founding father", but he had to make compromise with the FHR, hence so many Russian teams. Without him, no league would be launched. Europeans have not been able to do that, because there has not been so powerful man with an influence to big bussinnes. And you can not launch such a big project without money, as we can see with the current CHL. At some point, Medvedev became a problem for the KHL expansion to Europe & development (financial aspect). Why? Because it became personal, European hockey officials did not agree with his vision (expansion to Europe) due to his personality. Another reason, his team was not good at sport marketing. So, new guy & team was needed. You can compare league´s marketing in Medvedev and Chernyshenko era by yourself. We have to wait for European expansion in Chernyshenko era, signals are that he (the league with him as President) will not accept "Lev2" teams. He wants financially strong clubs, with fanbase, top notch infrastructure (arena) & developped TV market. I can see only two countries for expansion - Germany & Switzerland. I do not think cities like Paris, London or Milan are priority for the KHL.

When you have everybody, it does not mean you are the best. Especially if clubs are not satisfied with your job & you do not have the best clubs on continent (KHL). That is about the CHL.

 

[Jussi]

Perhaps Medvedev was too optimtic about expansion to Europe. As you know there is a big anti-KHL feelings, because ... we (Europeans) can not run the league, but evil Russians run it ... so we (Europeans) are not interested to join. Still, the KHL has been able to negotiate with club/s from Europe. I mean the negotiations with potential newcomers in 2019 & 2020. I am sure these new teams will not be "Medvescak´s level", but "Jokerit´s".

The KHL has shared money with clubs since 2014/2015, which was not before. Good signal. If you compare the KHL to the CHL, then.... the CHL plans to share 3,7 mil EUR (for 32 teams, if no change) in 2022 or something. The KHL shared around 5 mil EUR for last season, this sum will grow & will be shared with 24 clubs in future. The point, the KHL earns now more than the CHL plans in 2022 or something like that. If the KHL is fail project, I do not know how to describe the CHL ...

The KHL plans to strenghten clubs´ & league´s commercial potential, so more money in future.

Completely false argument considering CHL is a tournament where teams play 6 group games, plus two-part playoffs and the final. KHL regular season is 56 games plus 4 rounds of best-of-7 playoff series. Guess where who's got the smaller travel expenses and who's got bigger chance of making profit? Hint: it's not KHL clubs.

 

[Alessandro Seren Rosso]

Completely false argument considering CHL is a tournament where teams 6 group games, plus two-part playoffs and the final. KHL regualr season is 56 games plus 4 rounds of best-of-7 playoff series. Guess where who's got the smaller travel expenses and who's got bigger chance of making profit? Hint: it's not KHL clubs.

This is not what Vorky said. He talked about shared money...

 

[vorky]

This is not what Vorky said. He talked about shared money...

Exactly. The question was if the KHL is failed project. I presented an argument that the league has shared money since 2014/2015. The revenue sharing did not happen under Medvedev. So, the KHL is in better financial condition now than back in past. So we can not talk about failed project. Still, if we accept a thesis of failed project to the KHL, then we have to ask the same question about the CHL.... which plans to have smaller prize money (revenue sharing) in cca 2022 than the KHL had in 2016/17. If the KHL is failed project by this logic, the CHL is super failed project. Or not?

 

[Toro2017]

So are we playing with numbers here? Can I play too?

3,7 M€ / 125 games (CHL group stage + playoffs) = earnings per game 29,600€

5M€ / atleast 870 games (KHL regulas season + minimum playoff games) = earnings per game 5747€

Would KHL earn more, if they would participate in CHL?

 

[Alessandro Seren Rosso]

Would KHL earn more, if they would participate in CHL?

What of a question is it? More games = more revenue (at least in theory)... the problem is that it ain't that easy.
Moreover, the millions you used are money planned for 2022, while KHL money is money from last year that will even go up (most likely not too much, though) this year

 

[vorky]

What of a question is it? More games = more revenue (at least in theory)... the problem is that it ain't that easy.
Moreover, the millions you used are money planned for 2022, while KHL money is money from last year that will even go up (most likely not too much, though) this year

We do not know how KHL revenue sharing will go up, how fast, but it will go up. That is one of reasons for expansion, because European or Asian markets are more profitable (or developped if you want) than those from Russian regions. So, for example, if Yugra and Lada leave (TVs do not buy their games) & foreign clubs (TVs buy their games) join, league´s income will be bigger. As you know Jokerit´s TV deal is one of the most valuable in the league. So, if new clubs will be on the Jokerit´s level, at least, the income will grow.

So far the revenue sharing has grown by 100 million rubles per season. Originally only money from selling TV rights were shared & not all these money. The KHL has shared extra 100 million rubles based on attendance last season & plans to keep this tradition plus adding sharing based on % of commercial partners in club´s budget (state funding to be replaced by private). The KHL has not shared all money they have earned. What about the CHL?

Just a note. The KHL pays for delivering a TV signal to abroad. And it is really expensive these days because of ruble value. The league is loosing money because of it.

 

[Jussi]

We do not know how KHL revenue sharing will go up, how fast, but it will go up. That is one of reasons for expansion, because European or Asian markets are more profitable (or developped if you want) than those from Russian regions. So, for example, if Yugra and Lada leave (TVs do not buy their games) & foreign clubs (TVs buy their games) join, league´s income will be bigger. As you know Jokerit´s TV deal is one of the most valuable in the league. So, if new clubs will be on the Jokerit´s level, at least, the income will grow.

So far the revenue sharing has grown by 100 million rubles per season. Originally only money from selling TV rights were shared & not all these money. The KHL has shared extra 100 million rubles based on attendance last season & plans to keep this tradition plus adding sharing based on % of commercial partners in club´s budget (state funding to be replaced by private). The KHL has not shared all money they have earned. What about the CHL?

Just a note. The KHL pays for delivering a TV signal to abroad. And it is really expensive these days because of ruble value. The league is loosing money because of it.

It's not. Because the league assistance Jokerit receive is lumped in with the tv deal, people mistake that as the value of the tv deal.

 

[Jussi]

What of a question is it? More games = more revenue (at least in theory)... the problem is that it ain't that easy.
Moreover, the millions you used are money planned for 2022, while KHL money is money from last year that will even go up (most likely not too much, though) this year

More games, less importance in games (regular season), decreased attendance. At least that's how it went in Finland. Fans became more picky about which games they wanted to see in person. But the difference between CHL and KHL revenue is that with CHL it's prize money so it's the better you do in the competition, the more you earn. In 2015-16 season Kärpät made it into the CHL final (with good attendance at home games) and played a 7 game series in the Finnish league final and posted a 850K euro profit. Last season they failed to do either and posted a ~100K euro loss.

 

[vorky]

It's not. Because the league assistance Jokerit receive is lumped in with the tv deal, people mistake that as the value of the tv deal.

I will quote Chernyshenko but will not translated it, because I said it earlier in the thread.

В этой достаточно сложной схеме учитывается вклад каждой команды в создание стоимости телевизионных прав. Например, в Финляндии она достаточно высокая, и поэтому тот же «Йокерит» вносит большой вклад в общую копилку.

«Лига больше зарабатывает, значит, продукт становится лучше»

 

[vorky]

More games, less importance in games (regular season), decreased attendance. At least that's how it went in Finland. Fans became more picky about which games they wanted to see in person. But the difference between CHL and KHL revenue is that with CHL it's prize money so it's the better you do in the competition, the more you earn. In 2015-16 season Kärpät made it into the CHL final (with good attendance at home games) and played a 7 game series in the Finnish league final and posted a 850K euro profit. Last season they failed to do either and posted a ~100K euro loss.

You fail big time here. There is not such difference as you said. The CHL has two conditions for prize money - participation fee & your results on ice, making play-off etc. The KHL´s revenue sharing model (or prize money model if you prefer it) consists of 3 main things - participation fee, sport results (making playoff , every following round, winner of regular season etc) & TV index. So, your argument it's the better you do in the competition, the more you earn applies to the KHL. What is a difference you are talking about?

 

[Jussi]

You fail big time here. There is not such difference as you said. The CHL has two conditions for prize money - participation fee & your results on ice, making play-off etc. The KHL´s revenue sharing model (or prize money model if you prefer it) consists of 3 main things - participation fee, sport results (making playoff , every following round, winner of regular season etc) & TV index. So, your argument it's the better you do in the competition, the more you earn applies to the KHL. What is a difference you are talking about?

You still fail to understand the difference between a tournament revenue and league revenue...

 

[vorky]

You still fail to understand the difference between a tournament revenue and league revenue...

The same principle - results on ice - works in the KHL & the CHL. No difference.

 

[Jussi]

The same principle - results on ice - works in the KHL & the CHL. No difference.

But your'e completely missing out on the main point, number of games played. That fact that you're trying to put the KHL ahead while completely ignoring that fact is rather baffling.

 

[Alessandro Seren Rosso]

More games, less importance in games (regular season), decreased attendance. At least that's how it went in Finland. Fans became more picky about which games they wanted to see in person.

That's of course true, I guess more or less it's the same in all of Europe, but it's not what I was arguing. The other guy said "the KHL will earn more if they'll play in the CHL?" I'd say yes, because they will play more games. I mean, it's KHL+CHL... as little as the CHL revenue can be, then theoretically speaking it's a plus...
But of course, it's not that easy and I frankly doubt the KHL should be part of the CHL right now. Maybe in the future, we'll see.