Was Lack of Meaningful Revenue Sharing the Real Stumbling Block?

[handtrick]

The only logical explanation for what happened today that I can come up with is that the small market teams that killed the deal today did it as leverage to get the big market owners to revenue share....essentially holding this season hostage to getting the revenue sharing that these big market teams all but refuse to do.

Why else would the players angry, feeling like they were duped.....because they WERE. This was an owners fight today, and the players were just here for window dressing. I think the time for chicken between Bettman and Goodenow was Wednesday, but the day for chicken between the big market owners and small market owners was today......

I could still envision a rabbit being pulled out of the hat by the end of the weekend, but that hope is slim to none. If it does occur, I think you will see meaningful revenue sharing as part of it.

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[futurcorerock]

The only logical explanation for what happened today that I can come up with is that the small market teams that killed the deal today did it as leverage to get the big market owners to revenue share....essentially holding this season hostage to getting the revenue sharing that these big market teams all but refuse to do.

Why else would the players angry, feeling like they were duped.....because they WERE. This was an owners fight today, and the players were just here for window dressing. I think the time for chicken between Bettman and Goodenow was Wednesday, but the day for chicken between the big market owners and small market owners was today......

I could still envision a rabbit being pulled out of the hat by the end of the weekend, but that hope is slim to none. If it does occur, I think you will see meaningful revenue sharing as part of it.

I concur...

The Owners are much more fragmented than they were touted as being last week.

However, I think tonight the owners will be meeting by themselves to clean up all of this. I'm sure the players sat by and watched quietly while the NHL collectively broke up. I expect them back tomorrow at the table, hopefully making the small markets put up and shut up. Hopefully the rest of the 25 owners can gag these guys.

 

[Lowetide]

That could certainly be the case, the events as they unfolded would fit into your timeline.

The other thing could be that they honestly did feel that Bettman shut it down too close to the finish line but upon further review they were far apart.

Or, maybe someone got greedy at the end of this thing.

The two items I cannot for the life of me understand are:

1. why the NHL feels that the players have to ensure all 30 teams be profitable, and

2. why the two chief negotiators never actually show up in these meetings.

 

[SENSible1*]

Profit sharing is the way to go.

 

[not quite yoda]

Profit sharing is the way to go.

Not for everyone...

MTL is a Canadian team you would think could use help there. However Boivin (team president) says his team is amongst the league leaders in revenue and they still register losses every year. Their problem is that their expenses are too high.

Reducing the payroll therefore (through a cap and the roll back) could proove to be helpfull. However, for a team like MTL, revenue sharing would only hurt them. They would have to help out the "poorer" teams (in revenues) and thus creating even greater losses than they are already suffering.

 

[Quiet Robert]

Revenue sharing is more important that the cap question. Without meaninful revenue sharing, the cap is basically useless. Imagine a cap but no revenue sharing. In such a scenario, Pittsburg will still be spending 25 million. Just because the cap is at 42.5 (theoretically) does not mean teams can spend up to that amount. With no revenue sharing, where do teams get the money to raise their payroll?

My fear is that meaningful revenue sharing will be forgotten, and since Gary only needs 8 owners to get an offer approved, he could (theoretically) get a cap with no revenue sharing. Is this possible? Could he get a deal with no real revenue sharing? There are certain owners who must be against revenue sharing, is it possible they hijack the situation and force Gary to make a bad offer?

Anyways, I don't know if this is possible, but any answers would be appreciated.

 

[not quite yoda]

Revenue sharing is more important that the cap question. Without meaninful revenue sharing, the cap is basically useless. Imagine a cap but no revenue sharing. In such a scenario, Pittsburg will still be spending 25 million. Just because the cap is at 42.5 (theoretically) does not mean teams can spend up to that amount. With no revenue sharing, where do teams get the money to raise their payroll?

A cap and the roll back would likely reduce the value of all contracts making better players more affordable for small market teams (like EDM being able to keep their stars). At the same time, there would be less payroll disparity between the teams, making lower payroll teams more competitive. There would be less parity. And while big market teams would be forced to reduce their expenses (through a lower payroll), their revenues would theoreticaly renain the same making them more profitable.

All teams would be more competitive; richer teams would be profitable. Without revenue sharing.

 

[SENSible1*]

Not for everyone...

MTL is a Canadian team you would think could use help there. However Boivin (team president) says his team is amongst the league leaders in revenue and they still register losses every year. Their problem is that their expenses are too high.

Reducing the payroll therefore (through a cap and the roll back) could proove to be helpfull. However, for a team like MTL, revenue sharing would only hurt them. They would have to help out the "poorer" teams (in revenues) and thus creating even greater losses than they are already suffering.

You should note I said PROFIT sharing, not revenue sharing.

http://www.hfboards.com/showthread.php?p=2523209#post2523209

 

[Phanuthier*]

All it was today was 2 sides that thought they had the other by the ball sack, and thought the other side would fold.

On the owners side, they thought they had finally showed the PA that they were serious, adn the players would fold. On the players side, they thought the owners were desperate to revive the dead season, and the owners would fold.

Both sides were wrong, and this circus clown of a hold out is turning more and more into a gong show, as people lose more and more respect for this league and the PA.

 

[Jaded-Fan]

Wasn't today more about giving the players one last chance to come in and take that $42.5 million offer . . . without linkage no less. I really think that the owners, and most here on this board, truly thought that the players finally got it, that the offers do not get any better, the pie only shrinks and can not get better . . . .hell, ESPN may just cancel the piddling $70 million option they had for next year and the year after . . . read that again . . . $70 measly dollars . . . that is the cost of Derik Jeter's toilet paper. And they are debating cancelling it. Wake up players. What kind of deal can the owners offer when they have no television revenue to speak of? The next telelvison deal may be $35 million.

True, we thought the NHL may stretch their offer from 42.5 million to $45 million, but apparently that was wrong. So what. Who here doubts that the players were idiots to walk away when they were given a second chance to take that Wednesday offer?

 

[Enoch]

the pie only shrinks and can not get better . . . .

Tell that to Ted Saskin - He feels it can't get any worse....

 

[vanlady]

The only logical explanation for what happened today that I can come up with is that the small market teams that killed the deal today did it as leverage to get the big market owners to revenue share....essentially holding this season hostage to getting the revenue sharing that these big market teams all but refuse to do.

Why else would the players angry, feeling like they were duped.....because they WERE. This was an owners fight today, and the players were just here for window dressing. I think the time for chicken between Bettman and Goodenow was Wednesday, but the day for chicken between the big market owners and small market owners was today......

I could still envision a rabbit being pulled out of the hat by the end of the weekend, but that hope is slim to none. If it does occur, I think you will see meaningful revenue sharing as part of it.

I agree with you

 

[shveik]

Not for everyone...

MTL is a Canadian team you would think could use help there. However Boivin (team president) says his team is amongst the league leaders in revenue and they still register losses every year. Their problem is that their expenses are too high.

Reducing the payroll therefore (through a cap and the roll back) could proove to be helpfull. However, for a team like MTL, revenue sharing would only hurt them. They would have to help out the "poorer" teams (in revenues) and thus creating even greater losses than they are already suffering.

And what is the reason for these losses with such great revenues? Can't be player costs, Montreal is not really at the top of the league there (please correct me if I am wrong). To me it sounds like the team is terribly mismanaged

 

[vanlady]

And what is the reason for these losses with such great revenues? Can't be player costs, Montreal is not really at the top of the league there (please correct me if I am wrong). To me it sounds like the team is terribly mismanaged

Montreal pays more in taxes than the 24 american teams combined. Not much they can do about that.

 

[Jazz]

Montreal pays more in taxes than the 24 american teams combined. Not much they can do about that.

property taxes to be exact....go figure..

 

[shveik]

Montreal pays more in taxes than the 24 american teams combined. Not much they can do about that.

What kind of taxes are we talking about here? It cannot be profit taxes (since they are *losing* money, right?). The only other tax I can think of is property tax, but that cannot be that much different for say Toronto and Vancouver. So which tax is it, I am confused.

 

[not quite yoda]

What kind of taxes are we talking about here? It cannot be profit taxes (since they are *losing* money, right?). The only other tax I can think of is property tax, but that cannot be that much different for say Toronto and Vancouver. So which tax is it, I am confused.

They pay excessively high property taxes because of the prime time downtown location of the arena. American teams' arenas were mostly financed by government. So they pay little or no taxes. The other Canadian cities have very sweet deals compared to MTL. We are paying something like 8 million$ a year (and this is after a special reduction by the city).

Then you have the weaker canadian dollar that doesn't help either...

 

[RandV]

I think they pay something like $15million a year in property taxes? They really got shafted when they had their arena made. All Canadian teams have it bad compared to the Americans, but Montreal is tops.

 

[not quite yoda]

And what is the reason for these losses with such great revenues? Can't be player costs, Montreal is not really at the top of the league there (please correct me if I am wrong). To me it sounds like the team is terribly mismanaged

Nope. Actualy right now we have great management. Boivin and Gainey are excellent. It's Corey and Houle that messed the team up and set us back several years. For one thing, building the arena should have NEVER been entirely financed by the private sector (Molson). Some say we should have just done major renovations to the old Forum. Some say The Centre is too big (biggest capacity in the League). Anyways... Corey messed up there. Wasn't Boivin. Boivin has maximized revenues since getting here yet we still lose money because of taxes, the weak dollar and our payroll. Also we apparently can't charge tickets for the fans as high as Toronto does (poorer city)....

 

[shveik]

They pay excessively high property taxes because of the prime time downtown location of the arena. American teams' arenas were mostly financed by government. So they pay little or no taxes. The other Canadian cities have very sweet deals compared to MTL. We are paying something like 8 million$ a year (and this is after a special reduction by the city).

Then you have the weaker canadian dollar that doesn't help either...

That's a lot of taxes

But is it fair to write it off on the Canadiens only? I mean, is the arena used for other sports/concerts?

 

[not quite yoda]

I think they pay something like $15million a year in property taxes? They really got shafted when they had their arena made. All Canadian teams have it bad compared to the Americans, but Montreal is tops.

Yeah I don't remember what the exact figures were but I think the original tax bill was about 12 or 13 million$ a year. After asking for a special reduction every year they finally got one to about 8 million$ I think. But it is still insanely superior to every other team in the League.

 

[not quite yoda]

That's a lot of taxes

But is it fair to write it off on the Canadiens only? I mean, is the arena used for other sports/concerts?

Well the arena is owned by the team owner (Gillett) so it all comes to the same. There is no basketball or other sports team there shouldering the load. Apparently the building by itself loses money despite concerts year around, if that makes any sense. Anyways, the taxes are killing us.

 

[Wetcoaster]

Not for everyone...

MTL is a Canadian team you would think could use help there. However Boivin (team president) says his team is amongst the league leaders in revenue and they still register losses every year. Their problem is that their expenses are too high.

Reducing the payroll therefore (through a cap and the roll back) could proove to be helpfull. However, for a team like MTL, revenue sharing would only hurt them. They would have to help out the "poorer" teams (in revenues) and thus creating even greater losses than they are already suffering.

Montreal sits at # 8 in terms of revenues for 2004 with $90 million with a payroll of about $39 million. They have a hefty property tax bill of about $8 million on the arena which is more than all the US teams pay in property taxes combined. According to Forbes they made a profit last season of $7.5 million.

 

[shveik]

Well the arena is owned by the team owner (Gillett) so it all comes to the same. There is no basketball or other sports team there shouldering the load. Apparently the building by itself loses money despite concerts year around, if that makes any sense. Anyways, the taxes are killing us.

So in a way I was right about mismanagement, except this shows how one bad decision can weigh down on the franchise long after the person who made that decision is gone. Would not it be better for the arena to be built at location where the land is not so expensive?

Anyhow, IMO this also illustrates a point that an NHL team cannot be easily considered as a separate entity financially. As it is, Canadiens are paying the property taxes for Gilette's land. This reminds me of a little property tax law in the US, that drastically reduces the taxes on farmland. The developers just buy up the land and then let a couple of cows onto it, or grow some trees ("wood" farm?), and write off a bunch of taxes while they develop it. Or while the land is sitting there waiting for them to get around to developing it.

So maybe that was a well calculated decision after all.

 

[not quite yoda]

Montreal sits at # 8 in terms of revenues for 2004 with $90 million with a payroll of about $39 million. They have a hefty property tax bill of about $8 million on the arena which is more than all the US teams pay in property taxes combined. According to Forbes they made a profit last season of $7.5 million.

ok welll...

1. Dailey said to not trust Forbes as they have no access to the books.
2. I am pretty sure we still lost money last year. Boivin said we needed to get to the 3rd round to break even and only got to the 2nd round.
3. Even if we did make a profit (and Boivin therefore lied), it would have been entirely thanks to our semi-successfull playoff run (5 extra home games at increased seat prices).

Every team *should* be able turn a profit regardless of wether it makes the playoffs or not. 14 of 30 teams miss the playoffs. Yet all 30 teams need to make a profit in order to stay healthy and afloat.