Actually, Nichols said "in excess of $ 80 million"
Tom_Benjamin said:
I think the three smaller Canadian cities are very comparable, with Calgary probably the best market. If Oiler fans really believed they have a winner - as Ottawa fans now do - I think they will get the same attendance at much higher prices. To suggest otherwise implies Oiler fans don't care whether their team is any good or not. I can't believe that.
Nichols was quoted in one of the papers as saying Oiler revenues were now $80 million Canadian. That's very nearly the league average with a mediocre team. Factor in a low payroll and they are one of the more profitable operations in the NHL. They have to be delivering a good return on the investment, particularly since the investors only put up $35 million in cash originally.
Surely a winner in Edmonton adds $30 million in playoff revenues, increased prices, higher attendance, more corporate sponsorships and increased ratings and broadcast revenues. How much more would an elite team generate in Edmonton?
None of the other costs in the operation go up to get this extra money. The team would get the same profits, the same return on investment if they spend all the extra money on player salaries. That would allow them a payroll in the $60 million range. (A better idea is a $50 million payroll and really fat profits to set against a rainy day, but that's my strategy. I would not spend $60 million on players today because $60 million teams are too old. I like $50 million teams.)
If they build a really good team, I think they will have the money to pay for it.
Tom
The quote from Nichols is so good the NHL uses it in the CBA section of their website.
http://nhlcbanews.com/reaction/ownerquotes.html
I have no doubt about the ability of all Canadian teams to make money , either. I think the CBA and revenue issues for the Canadian teams had dwindled considerably when the CBA expired (and were overblown anyways, but that doesn't matter now that a lockout is in place). Ottawa, Edmonton, and Calgary were the ones crying wolf the loudest from about 1998 to 2002 , so they have to stay the course.
If the Oilers' fans (and a few more elements of Edmonton's media) would pressure Oiler management for results the same way the EIG is pressuring Gary Bettman for changes in the CBA, Edmonton would be a team that could not miss in a couple of years. And, yes, Edmonton Oiler fans would pay the piper....if not the current ones who are filling Rexall Place at relatively cheap ticket prices, the ones who would be ready to jump on the bandwagon with their wallets and purses wide open.
For a franchise that has had little playoff success in recent years and fills management positions with people who are as green as grass when it comes to hockey executive experience, the Oilers have run a pretty successful operation from the business end of things.
Using a low-investment/low-risk/ inexperienced-human-resources business module isn't likely to pay off very big, but the EIG has done a good job of protecting and enhancing their investment without improving their on-ice product to any appreciable degree (so far). An example is how the EIG is looking for protection from fluctuating currencies - they want to pocket all gains in the Canadian dollar , but also want complete insulation from down turns in the loonie....Jim Matheson touched on this in his Sunday, December 5th hockey roundup in the Edmonton Journal. The currency issue is huge for the EIG. Matheson quotes Cal Nichols as saying that they made money last year....." more because of the better Canadian dollar than we made on the outdoor game. but if the dollar goes back to 64 or 62 cents of the American, then what? We want a formula (salary cap) that will work all the time."
I'm not sure if the bracketed salary cap reference came from Matheson or Nichols, but a salary cap is the formula the EIG is pushing hard for. I still think it will be little or no better for the Oilers on the ice than the old CBA was. The only thing I can see a salary cap doing for the Oilers is putting enough downward pressure on all NHL payrolls so that the EIG can improve their margins, and , thus, profits. If a salary cap means one or two "quality" players can fit into the Oilers payroll structure, that is all fine and dandy. However, I'm not convinced that the NHL talent pool is so deep that a salary cap can redistribute the limited supply of elite hockey players to a significant degree. Salary cap or no salary cap, Edmonton isn't going to be an elite team now or ever without elite maanagement, elite player development, and elite (or elite/lucky) drafting....
The Forbes valuation of the team has gone from $68 million to $104 million in six years...I don't think an owner's equity increase of $ 36 million in six years on a $ 35- $37 million cash investment is too shabby.....
http://www.forbes.com/finance/lists...ssListType=Misc&uniqueId=314229&datatype=Misc
I think the EIG will continue to stick to a minimum risk/minimum investment business plan, and only try to build a championship-calibre team if there is enough raw drafted and developed talent in their system to take a real shot at becoming elite. For every rebuild that succeeds in the NHL, there has to be 4 or 5 that fail. Any rebuild that doesn't work in Edmonton is going to result in a quicker teardown even with a salary cap in place, which is absolutely fine by me.
It's relatively safe and easy for the EIG to make a profit in Edmonton with a full house paying moderate NHL prices for a team in the middle of the pack than it is to make the risks and sacrifices necessary to become elite. Cal Nichols may be much more charming than Harold Ballard and get along better with his employees and business associates, but I think his business plan for the Oilers is little different from the Toronto Maple Leaf business plan circa 1968-1991...
Matheson also mentioned how the mistrust about the numbers from the owners is a huge problem. The NHLPA says the Oilers have made "a profit of $ 9 million" , but clarifies that the actual figure is $ 8.7 million, and that is over the last six years. Matheson goes on to say they only made money...." because they got hefty expansion and Canadian currency revenue from the league.".....I guess that's what the fans are supposed to believe, what some of the fans actually want to believe, and that's how myths become truths in the NHL....