why is Expansion money NOT part of formula?

Discussion in 'The Business of Hockey' started by Brent Burns Beard, Sep 7, 2006.

  1. Brent Burns Beard

    Brent Burns Beard DontTouchMyDonskoi!

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    Expansion money CBA question

    Do any of our resident CBA experts know if new expansion money counts in the salary cap formula?
     
  2. Irish Blues

    Irish Blues Still on hiatus

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    It's not explicitly mentioned; however, 50.1 mentions a "non-exhaustive" list of items that count as revenue and a "non-exhaustive" list of items that do not count as revenue. IMO it would since expansion fees are typically distributed among the existing teams - the only question would be the length of period over which the expansion fees would be spread out.

    Example: if 2 teams are added at $200 million each, neither the league nor the NHLPA would want revenues used for calculating the salary cap to go from say $2.4 billion in 20X0 to $2.8 billion in 20X1 and then back down to $2.4 billion in 20X2.
     
  3. jamiebez

    jamiebez Registered User

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    I was always under the impression that it wouldn't count as revenue for cap purposes. After all, the union wins by getting 40 new jobs (assuming 2 teams are added).

    This could just be my impression gleaned from reading other un-CBA-educated sources (like most of the media ;) )
     
  4. Irish Blues

    Irish Blues Still on hiatus

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    :D That's why both sides have lawyers. Let them fight over it.
     
  5. kdb209

    kdb209 Registered User

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    Actually it is explicitly listed as excluded from HRR - Article 50.1(b)(ii).

     
  6. Irish Blues

    Irish Blues Still on hiatus

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    :teach: That is why you're HF's CBA guru. :bow:
     
  7. Brent Burns Beard

    Brent Burns Beard DontTouchMyDonskoi!

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    thanks for the answer .. and to answer this poster, i dont believe the union wins if the revenue does not up, it just means revenue/32 teams is the cap, which means each team cap goes down and so does each players share is spread over 40 more units.

    i personally think the players should have been given a share of it, it is revenue afterall. whats to stop the owners from putting all their resources into generating excluded revenues at the expense of the health of the game?
     
  8. jamiebez

    jamiebez Registered User

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    Fair enough... I assumed the new teams would be able to pull in "average" revenues to make up that gap, but that likely won't be the case.
     
  9. kdb209

    kdb209 Registered User

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    No, the PA does win - revenues will go up by adding two (or more) new teams worth of gate receipts, luxury boxes, local TV deals, concessions, parking, etc.

    It is not likely that teams could really generate large revenues from the excluded sources, and the PA learned from the NFL - the included/excluded lists are not exclusive, and any new revenue sources will be judged by an arbiter as to whether they are closer to the currently included revenue streams or the excluded ones. The NFL was not as flexible, so the owners came up with new revenue streams - exclusive stadium advertising deals, corporate sponsorships, and naming rights - that were not included in the CBA. This has resulted in a huge disparity in income between NFL teams, despite the leagues vaunted TV deals and revenue sharing.

    The list of excluded revenues are pretty specific, and except for expansion fees, arena deals, and francise sales not large revenues.

     
  10. Brent Burns Beard

    Brent Burns Beard DontTouchMyDonskoi!

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    With speculation that an expansion team could cost north of $250 million dollars (http://www.tsn.ca/tsn_talent/columnists/darren_dreger/), how come this isnt included in the pool of hockey related revenue?

    this is NEW revenue, as opposed to selling an existing franchise. i dont disagree that the proceeds from a sale of an existing franchise should have nothing to do with the players, but expansion fee's i dont see why they shouldnt. yes i know new teams will mean more money for the players, but this is a HUGE pot of gold for the owners that is not shared with the players. i thought Bettman was all about a "partnership"?

    any opinions on the matter?
     
  11. Pepper

    Pepper Registered User

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    Considering NHL isn't going to expand during the next CBA, it's a moot point.

    Also NHLPA gets 23-25 new members to their association so I don't think they are complaining.
     
  12. Brent Burns Beard

    Brent Burns Beard DontTouchMyDonskoi!

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    i disagree that they wont expand ... especially if the new PIT owners manages to squeeze his team out of town, i can see the NHL going back to PIT with an expansion team, much like they did with MIN and ATL.

    And if they expand by 1, they really need to expand by 2, which brings KC, Vegas and Houston into play. As well as expanding, they would then goto a 20 team playoff, which makes sense and drives revenues UP.

    and as far as 23-25 new members, that only is a GOOD thing if the revenue goes up proportionatly, otherwise the current players are simplying spreading their 54% amongst more people. this is another reason why the players should get a share of the expansion money, as compensation for diluting their 54%.
     
  13. Pepper

    Pepper Registered User

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    The total amount of money players get will go up in every case, how much is debatable.
     
  14. Irish Blues

    Irish Blues Still on hiatus

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    The likely reason is as Pepper mentioned - the addition of a new franchise means the addition of players to the payrolls, so the NHLPA gets something out of expansion as well. Signing a $70 million national TV contract doesn't automatically give the NHLPA something without an agreement in place that players will get a fixed percentage of league revenues. It's also possible to a lesser extent that adding expansion fees - even if spread out over 3-5 years - will cause too much of a change in year-to-year revenues that at some point when it's no longer counted, league revenues would have to have a pretty decent jump to catch up.

    Also realize that the addition of 2 new teams means new sources of gate revenue, a pretty solid bump in merchandise sales, and so forth. It's not like league revenues ex-expansion fees will be the same before and after expansion ... so the players wouldn't (shouldn't) lose anything in the process. It's more likely they'll end up getting a bigger slice of the pie.
     
  15. crashlanding

    crashlanding Registered User

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    I think this is as good a reason as any, perhaps the NHL should use this to pay back any escrow payments to the players over the next five years if the league doesn't take in enough revenue, but it should not factor into the determination of the cap number. It would be an artificial inflation of league revenues that would disappear the next year or whenever the time span it's spread out across ends. At that point you could have teams over the cap when it drops back down, which could create financial chaos.

    I hope the league doesn't expand, at least not until all the teams get comfortable with the new cap economy. If they do expand I hope do it by 2 and they break the league into four divisions and rename them Norris, Patrick, etc. and have divisional playoffs.
     
  16. crashlanding

    crashlanding Registered User

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    I think this is as good a reason as any, perhaps the NHL should use this to pay back any escrow payments to the players over the next five years if the league doesn't take in enough revenue, but it should not factor into the determination of the cap number. It would be an artificial inflation of league revenues that would disappear the next year or whenever the time span it's spread out across ends. At that point you could have teams over the cap when it drops back down, which could create financial chaos.

    I hope the league doesn't expand, at least not until all the teams get comfortable with the new cap economy. If they do expand I hope do it by 2 and they break the league into four divisions and rename them Norris, Patrick, etc. and have divisional playoffs.

    Edit: On second thought I think the owners would get screwed on such a deal in this CBA. Doesn't the players' slice of the pie increase once the league reaches a certain higher revenue total? Like when they hit 2.6B the players get 56%?

    If the average team revenue stayed the same the players would get a larger slice from every team just because two more are going to skew the revenue totals. They'd probably have to negotiate a change in this number before any new franchises were added.
     
  17. Changeiscoming

    Changeiscoming Rebooting myself Sponsor

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    The NHL will(IMO) have some teams in trouble within the next few years do to no support from fans

    I think you will be looking at 2012-2016 area if the nhl expands again

    and it is not likely that they will expand any more

    they shouldn't have more teams then the other pro leagues in America
     
  18. SJeasy

    SJeasy Registered User

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    Another issue with expansion is that new franchises tend to underperform established franchises initially. The franchise fees should at the very least be held in escrow to guarantee the survival of existing franchises. The other place for the franchise fees is that in the event of bankruptcy, all current player contracts should be guaranteed over and above the worth of the bankrupt franchise. The league should be the guarantor of last resort.
     
  19. Jaded-Fan

    Jaded-Fan Registered User

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    If the NHL allows the Pens to leave when the offer that is on the table in writing is there for the taking - I am not so sure the Pens' fans would come right back. We have suffered through some God-awful hockey for the past six years, and right on the brink of good things happening we need to start all over with thatcrap? The NHL should not treat a town with over 100 years of hockey history that way. I would be very disheartened and likely would eventually come back, but it would be hard.
     
  20. TorontoSports

    TorontoSports Registered User

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    The NHL will expand to 32 by 2010 I bet. At that time the Sonics will potentially move leaving seattle vacant of a 3rd Professional franchise, Portland may be on the radar still, KC will be there with their arena, Houston and Vegas will also be there. I also think of the current franchises will relocate at some point to one of the cities I just mentioned.
     
  21. CanadianDestroyer

    CanadianDestroyer Registered User

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    At this moment the NHL is more concerned with finding stability under the new CBA. This means trying hard to keep teams where they are with stable ownership and steady revenue. If expansion is in the making, don't expect any news until the decade is out. The current CBA is good until 2011 so I would imagine they would starting planning one afterwards when the next CBA is out.
     
  22. I personally would never come back, I went through it with these pens im not going to pay my money to watch a new team sorry. Pens leave Pittsburgh will be dead to NHL hockey forever-and th worst part is this areas kids hockey is taking off. Pretty soon it will be standard i think for 2 or 3 pittsburghers to be drafted each year at least. That would be DESTROYED if the pens left.
     
  23. Montrealer

    Montrealer What, me worry?

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    I could see expansion happening within the next two years if the KC people offer enough money (and they seem desperate to get a major tenant for their new-in-2007 arena)

    Since they'd require 2 teams, I'd guess one of Portland, Las Vegas or Houston would end up with the other one.
     
  24. sticknrink

    sticknrink Registered User

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    With the way the divisions are setup, I cannot see the NHL expanding to 2 unless they add 4 more in quick succession.

    The 3 divisions have 5 teams each and with the emphasis on division al play it would screw things up if one division had an extra team.

    Unless of couse, they add 2 teams and the league switches to two divisions of 8 per conference ...
     
  25. Metallian*

    Metallian* Registered User

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    the nhl will never expand again. never.

    relocate? maybe

    but there is no reason to think the nhl believes it can have more teams than either the mlb or nba
     

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