the problem isnt salaries

Discussion in 'The Business of Hockey' started by Brent Burns Beard, Oct 29, 2004.

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  1. Brent Burns Beard

    Brent Burns Beard DontTouchMyDonskoi!

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    the problem isnt salaries, its revenue disparity between markets.

    Ok, so some teams generate more revenue. if the owners want to fix that, why kill the NHL over it when all they need to do is share their revenues with each other ?

    a salary cap does not raise revenue for lower revenue teams, so how is that the answer to "revenue disparity" in fact, the players proposal does address this quite effectivly (if the owners would negotiate the salary tax% and trigger).

    Revenue disparity is an ownership problem and has little to zero effect on competitive balance.

    I see rich well run teams like NJD, DET and COL winning and dominating and I see rich poorly run teams like WSH, NYR and TOR not winning.

    I see "revenue challenged" teams like ANA, BUF, CRL, MIN, SJS, OTT, CGY and TBY having just as many chances if not more.

    If the owners of ANA, BUF, CRL, MIN, SJS, OTT, CGY and TBY think its unfair that DET, COL, NYR, TOR and PHI have more revenue then TAKE IT UP WITH THEM !

    If revenue disparity is the true problem, the owners should look to themselves to fix it. A luxury tax is a fair mechanism for this.

    DR
     
  2. Bring Back Bucky

    Bring Back Bucky Registered User

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    I think you have an interesting argument, but the fallacy I see is this: If the league is to survive in its existing markets, many of them can not generate the revenue to support the current salary model. They simply can not, and billionaire owners didn't get rich by being stupid; they are not likely to agree to run the league as a co-op. That concept is never going to fly in a capitalist society. The best outcome is that the big market teams can make a mint while the small market clubs can be profitable if properly managed. As such, for today's NHL to survive, they need to bring costs down to a level attainable in many of the current markets. As such, I can't think of any mechanism other than capping costs by a salary cap. Otherwise, the league is going to have to do serious restructuring, because I truly believe the old model would lead to plugs being pulled in several current markets. Then you would see a true free market, and the supply of players would flood the market and far exceed demand and drive salaries down. I believe that in such an event, players would rue that they didn't compromise on a cap and preserve the market for their services.
    My opinion only... ;)
     
  3. Digger12

    Digger12 Gold Fever

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    I believe that Bettman has come out more than once and publicly stated that improved revenue sharing is going to be a required component of the new CBA, whether he actually meant it or not is another matter but he has said it.

    I don't have a problem with a luxury tax component, but IMO the teeth it would need in order to be effective would be instantly branded as "essentially a salary cap" by the players. It's going to take a lot of butting of heads to hammer this thing out, assuming they even get to that stage.
     
  4. Sotnos

    Sotnos Registered User

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    Just to back you up on this, yes he has said it numerous times, as has Daly.

    And the salaries are definitely still part of the problem IMO.
     
  5. dawgbone

    dawgbone Registered User

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    Not sure how a league is going to survive when 75% of it's revenues go to player salaries... no matter how much revenue sharing there is.
     
  6. Tom_Benjamin

    Tom_Benjamin Registered User

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    Both Bettman and Daly have said that their proposal includes "significant" revenue sharing. I'll believe it when I see it. If the news reports are correct, the NHL rejected the luxury tax presented by the players because it would involve $35 million in revenue sharing - which was too much for the owners. How much is significant?

    DR is absolutely right. Disparities between teams are revenue disparities. These differences do not spring from the market size, they spring from the quality of the product presented on the ice.

    Tom
     
  7. Digger12

    Digger12 Gold Fever

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    So the revenue disparity between New York and Edmonton springs from the Rangers putting a higher quality product on the ice? The standings for the last 7 years would tend to disagree. You can certainly say that the Rangers have paid through the nose to provide many more marquee names than the Oilers have, but for me a quality product is one that wins, which is something the Rangers have done anything but.

    And the fact that you could fit around 15 Edmontons into 1 New York population wise has NOTHING to do with it? Honestly?
     
    Last edited: Oct 29, 2004
  8. Bring Back Bucky

    Bring Back Bucky Registered User

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    I think I must misunderstand what you mean, cause there's no way you think that, right???
     
  9. Brent Burns Beard

    Brent Burns Beard DontTouchMyDonskoi!

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    you are mixing up issues ... the revenue disparity that NYR has over EDM has not given them any on ice advantage, so EDM shouldnt worry that it cant compete on the ice with NYR. the problem EDM has is it cant earn the same profits as NYR.

    so, EDM is locking out there players to solve a problem that has nothing to do with them.

    EDM should take it up with NYR if they feel its unfair that NYR is 15x the size of EDM.

    DR
     
  10. Digger12

    Digger12 Gold Fever

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    It sure as hell does have something to do with them, in the sense that when one fat cat team decides to overpay for something, it has the potential of totally messing up EDM's salary structure.

    As I've stated before, the Rag$ of the world can pay what they want as far as I'm concerned, I don't particularly care...EXCEPT when that decision impacts the owners that actually have a semblance of fiscal sanity and actually are trying to stick to a budget.

    A system is needed to lessen this phenomena, whether it's a hard/soft cap or a luxury tax/revenue sharing monopoly kitty matters little with me.
     
  11. Biggest Canuck Fan

    Biggest Canuck Fan BCF

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    DR.... you are 100% correct. It is the leagues duty though to control the amount of salary spent by a "big" market money making machine so that teams like Edmonton and the like can compete.

    I look at it this way. Tiger woods could never win a tournament but he will still be the highest paid athlete because of his sponsorship deal.

    That is what the players will go to the larger markets, for the larger sponsorship deals.

    But contracts in a league like the NHL should be regulated. Then a player leaves not because he is paid more by another team, but because he feels the sponsorship deals are worth more in New York than in Edmonton.
     
  12. PecaFan

    PecaFan Registered User

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    Incorrect. The league as a whole is losing 200+ million dollars each year. If you re-distribute all the income exactly even 30 ways, guess what?

    The league as a whole still loses 200+ million. The only thing that would change is who lost and how much.

    And that's why revenue sharing alone is not a solution.
     
  13. It Kills Me

    It Kills Me Registered User

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    i don't understand how Toronto is poorly run, last i checked from the 2003 season next to Minnesota, Toronto was the team with the highest earnings.
     
  14. thinkwild

    thinkwild Veni Vidi Toga

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    This solution seems entirely unfair to me. You state it well and I understand it. But those clubs and the market naturally wants to spend that money. How can it be considered fair that the players arent entitled to a certain portion of the revenue they generate. Your theory is sound, but surely there is a more not only ethical, but something that market forces can guide too way of doing it. I always thought by default, if we can get the market to do it, its better. Not free market, market forces.

    I think the principle of the current CBA, whether its current form works perfectly or not, is the fairest approach. Rather than cap spending, find a way to render it not a significant advantage. Take away the need for spending or its advantage in developing a championsip team. And acknowledge that championship teams are going to have mor erevenue than other teams.

    If all salaries took a one time correction to a level that is desired by owners, the principles behind the current CBA, I think are the fairest way to approach the problem.


    Perhaps there is a way to do this while at the same time creating an ability for the owners to apply end of year corrections if leaguewide costs did too much damage.
     
  15. SuperUnknown

    SuperUnknown Registered User

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    Thing is that on-ice success and on-books success is two different things.

    From a fan perspective, true success is on-ice success. From a businessman's perspective, true success is on-books success.

    Personnally, I think a cap is a good way to let true success on-ice a priority, since cost certainty will achieve a somewhat success on-books.
     
  16. YellHockey*

    YellHockey* Guest

    Did you consider the Leafs well run during the days of Harold Ballard and the appropriately named Carleton Street Cashbox (aka Maple Leaf Gardens)?
     
  17. Brent Burns Beard

    Brent Burns Beard DontTouchMyDonskoi!

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    ok, so then they are a well run team with lots of revenue ... since they have had no chance at the cup in a few decades, i fail to see why we have to shut down the NHL in order to stop them from ... not winning ?

    more proof that any advantage TOR has cannot be translated onto the ice.

    dr
     
  18. thinkwild

    thinkwild Veni Vidi Toga

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    And to be fair, its not that the Leafs had no chance at the Cup, but more that they had no long term unfair advantage in developing a champ the right way, the only way.

    Both Ottawa and Toronto have different means at their disposal. The classic opposites. Biggest of the big vs. smallest of the small. Yes Toronto can spend and we cant, and maybe early on this will give them more playoff appearances, but in the long run I dont feel they have such an unfair advantage over us in ability to develop a champ our way that I cant live with the differences. I dont think we need to be afraid of this advantage. It is just a difference, but if you are courageous, you can still do it the right way. They have beaten us, but I cant honestly say I think its the money they spend that gives them an unfair advantage over us anymore. It used to seem that way.

    But spending now is starting to help Toronto less and less. If you go too far, there comes a point where you get to like where the Rangers or Washington did, and Dallas may soon follow, where it just must be torn down. Not because you cant afford it, but because it just stops working. If you end up with the entire core of your team is over 31, and you arent winning, you have hit rock bottom. Time for rehab.
     
  19. Brent Burns Beard

    Brent Burns Beard DontTouchMyDonskoi!

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    exactly and the part that the cappers dont see is that the biggest advantage OTT has will taken away if the NHL gets their cap.

    the rights to their best drafted players until they are 31. thats right, to get the CAP, players are going to demand and get lower UFA age and dont think that they wont want the same home run on that issue that they will be forced to give on the cap issue itself.

    so, look at how well OTT has drafted and imagine that in a succesion of years Redde, Hossa, Havlat, Spezza, Chara, Alfie, Phillips all hit UFA at age 25 or 26. thats when OTT will lose its advantage over NYR, TOR and WSH and so on ...

    why dont fans prefer keeping the UFA age high and demand the owners negotiate the players model.

    DR
     
  20. MarkZackKarl

    MarkZackKarl Registered User

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    Ottawa is doing just fine.

    I would just like the point out that Ottawa is hardly revenue challenged. In 2003, despite the bankruptcy, they were one of the most profitable teams in the NHL. This past season they had a 12 million increase in payroll but that was offset by the lack of debt on the team.

    From a fan that goes to many many Sens games, we have the 7th highest prices in the league and our revenue streams are healthy. I would say that REGULAR season revenue wise, we are pretty damn close to Colorado, and are more profitable than the Rangers, Blues and Dallas, all of which are "big spenders".

    In fact, taking our announced attendance and multiplying it by our average ticket price gave Ottawa the 5th highest "projected ticket sale revenue" in the league last season. Of course this may not be entirely accurate, however with us being 3rd at 147 suites, I have little doubt we're top 10 or 12 in revenue generation. That means that 18 teams below us, the 4th smallest market, are making less money... hmmmmmmmmmmmm....
     
    Last edited: Oct 30, 2004
  21. Brent Burns Beard

    Brent Burns Beard DontTouchMyDonskoi!

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    ok, so if OTT can do it, why cant any other similar markets. also, another team we dont need to kill the NHL over.

    so why the lockout again ?

    dr
     
  22. ceber

    ceber Registered User

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  23. YellHockey*

    YellHockey* Guest

  24. thinkwild

    thinkwild Veni Vidi Toga

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    And even if by some stretch of the imagination it was true that Ottawa is losing less money by not playing, why would that be true?

    Smolinski, Bondra and de Vries?
    An Eagles concert?
    45% of board advertising revenue allocated to the team instead of 70%?
    GM Should be fired?
    Not enough season tickets sold?

    THe players have expressed sympathy to their plight and offered to negotiate means to lessen their losses. Melnyk is hardly helpless without options. He did buy the team with a promise that he would spend what it takes to create a winner. Seems a pretty empty promise now.
     
  25. Brent Burns Beard

    Brent Burns Beard DontTouchMyDonskoi!

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    ok, so if OTT decided to not trade for BOndra, Devries and other high priced vets, would they still lsoe money ?

    are you saying teams should be able to add as much veterns to their team without having to worry about going over budget ?

    let me give you an example. off line i run a multi million dollar enterprise and we have an opportunity to add a vetern business development person from our competition. he costs a lot of money, but he has the upside to more than pay for his wages and associated costs. however, if he doesnt, we stand to lose quite a bit of money on the venture. should our business be guaranteed a profit no matter what decisions or risks the management takes ? i wish it were so easy ! on the other hand, should our business have our hands tied if we want to take that risk even if its a foolish risk ?

    just like in the playoffs, the Sens added payroll in the hopes it would pay off (it didnt). they could have gone with a less risky option and maybe had less of a chance to lose money, but decided not too. why should we shut down the league over this ? because you think OTT should be able to add any amount of high priced vets any time they want ???

    dr
     
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