Furthermore, there were plenty of exceptions to your rule- several low payroll (or lower than Toronto) teams were successful, and there are examples of high payroll teams that while drawing lots of fans, had little on ice success. What you are confusing here with regard to payrolls and success is that under the old CBA teams that were consistently successful on the ice (Cups, winning records) had to spend more than those in the cellars. Obviously, the NY Rangers and to a lesser extent Toronto, are good examples of less on ice success yet little loss of revenues.
That was my point entirely. You want a winning team? Spend a lot. That was the name of the game in the old CBA.
If you look at last year’s success stories, they will have to pay more for (a) the same level of talent, or (b) more for even less talent… which seems to be the most likely scenario, old or new CBA.
In the old CBA you couldn't keep the core of the team unless you had high payroll. In the new CBA the situation is practically the same for every team. That's the point of the new CBA. Equal playing field ('equal' being a relative term compared to the old situation)
Let me introduce you to another concept used in economics and market assessment: market potential. It incorporates things like supply and demand, elasticity in demand, and pricing at a level that the market bears… explanations to follow below.
Please, I have a masters' degree in business, I know all about that.
I don’t call $16 MM a “small†discrepancy. That would buy me a Luongo and a Chara, or Lecavalier, Richards and Modin or Gomez, Gionta and Brodeur. Sure, it reels in what could’ve been spent under the old CBA by a handful of teams spending >$50 MM, but to say the discrepancy is not significant is erroneous. Furthermore, these players’ prices could not be bid upon until they were 31. It was a classic case of overpaying for depreciating assets.
16M discrepancy is VERY small compared to 50M discrepancy. If 16M gets you that, 50M will get you ALL of those players you mentioned.
It's small when compared to previous situation.
If Nashville wins the Cup for the next 3 years, their revenues will no doubt increase (I hope) but they will not be anywhere near Toronto’s revenues. That’s where market potential comes into play. The CBA does offer hope to fans of teams everywhere that “on any given Sunday†they get a ride in the pumpkin coach, however at midnight they still won’t wake up in Toronto revenue-wise!
That's not the point - the point is that Nashville might reach a situation where they can have a financially healthy team even with 44M payroll. Nobody expects them to become a moneymaker like Leafs and frankly no team can ever reach Leafs level in terms of revenue.
I understand inflation. However you contradicted yourself without realizing you did so. “All prices keep rising.†Teams just got a 24% price (player cost) decrease with the new CBA. Furthermore the average salary went from $1.8 to $1.2 MM.
I was talking about long-term, not just one year. And the one-off 24% player cost reduction was done to correct the market.
Purchasing power is a measure used in economics to determine cost-of-living relative to time (and thus a measure of inflation) and to other regions. It measures how much you have to spend on a basic basket of goods. In fact, purchasing power in the US has been steadily decreasing for many years now due to inflation (which in turn is driven by the cost of energy, current account balances and trade balances… which also affect exchange rates, etc.).
Are you sure about the US situation? Over here in Europe purchasing power has increased steadily at the rate of 1-3% annually for the last 10 years or so.
I find it very hard to believe that U.S is different, U.S has enjoyed a healthy GDP growth since early 90s which means increasing purchasing power 99% of the time. There hasn't been stagflation in the last 15 years or so according to the data I've seen.
Again, see pricing at what the market will bear. Ticket prices should always be based on market supply and demand and no CBA can alter the economic reality that Toronto has greater demand for tickets and thus can charge a greater price.
That's exactly what I said.