LeHab
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- Aug 31, 2005
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MLB wanted to contract two franchises in early 2000's. Twins and Expos were voted by owners to be contracted. City of Minnesota fought and got a win.
And what about NHL Reduction?
- Thread starter alko
- Start date
MLB wanted to contract two franchises in early 2000's. Twins and Expos were voted by owners to be contracted. City of Minnesota fought and got a win.
Tom ServoMST3K
In search of a Steinbach Hero
Yeah, but that didn't go through, and my view on that (I was 10 at the time so it might be wrong) is that it really never had a chance.
garnetpalmetto
Jerkministrator
Glacial
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It was all a scheme to put pressure on the players union in advance of the new contract. Notice once the new contract was signed in 2002, contraction suddenly vanished and the league acted as if it were no longer a problem. There were no real financial issues underpinning it. It was all just a power play.
LeHab
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Wasn't sure if it was State of Minnesota or City of Minneapolis so my brain must have found a compromise.
No details, but here's an article on the basics of the Twins situation. Not behind a paywall, but requires turning off your ad blocker.
Basically, in the midst of labor strife and class warfare between the owners in the rich markets and the owners in the smaller markets, the owners had voted 28-2 to contract Minnesota and Montreal.
Purchase price for Minnesota: 250M
Metropolitan Sports Facilities Commission in Minnesota sued, and the judge gave them a temporary restraining order, since there was a lease to play at the MetroDome, and he ruled that the public good out-weighed the private interest enough to issue the order.
I'm not at all sure what happened in Montreal, but since I am still opposed to public dollars giong to sports, I think it would have been much better NOT to build Target Field for 350M. That said, the 200M for a roof for sure wasn't worth it.
But, for our use, the 250M value on the team is probably the most important part. Were the league to contract Arizona and Florida, for example, it would have to purchase the teams. That's going to cost 500M for the Yotes, because of the debt associated with the team, and also for the Panthers, which would include negotiating a buyout on their lease.
In short, such things will NEVER happen again because the cost is too great.
Basically, in the midst of labor strife and class warfare between the owners in the rich markets and the owners in the smaller markets, the owners had voted 28-2 to contract Minnesota and Montreal.
Purchase price for Minnesota: 250M
Metropolitan Sports Facilities Commission in Minnesota sued, and the judge gave them a temporary restraining order, since there was a lease to play at the MetroDome, and he ruled that the public good out-weighed the private interest enough to issue the order.
I'm not at all sure what happened in Montreal, but since I am still opposed to public dollars giong to sports, I think it would have been much better NOT to build Target Field for 350M. That said, the 200M for a roof for sure wasn't worth it.
But, for our use, the 250M value on the team is probably the most important part. Were the league to contract Arizona and Florida, for example, it would have to purchase the teams. That's going to cost 500M for the Yotes, because of the debt associated with the team, and also for the Panthers, which would include negotiating a buyout on their lease.
In short, such things will NEVER happen again because the cost is too great.
Well said. As long as there is bread there will be circus.
When the bread runs out nobody cares about the circus.
SupremeNachos
Registered User
I'm probably off by a bit but don't the top 1% Russians have like 90% of the countries wealth?
Russias economy is comfortably bigger than Canadas but lets not let that get in the way of good prose. Canadians are comfortably better off than Russians per capita. These two things are not the same.
KevFu
Registered User
The Twins owner offered his team up for contraction because he knew two things:
1. MLB had to win the bidding war to buy the team over an owner that would fight contraction, so the final price of selling the Twins to MLB would be HUGE.
2. He could negotiate that deal to include that he still had dibs on an MLB team in Minnesota. (aka, he essentially would get territorial rights fees if MLB returned to Minnesota).
He was looking to get massively paid TWICE for selling the Twins into contraction.
It was a Loria-esque move.
I think the League should go back to 26 teams. Get rid of Detroit, Montreal, Toronto, Chicago, the Rangers and Boston
Ted Hoffman
The other Rick Zombo
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In the current CBA setup, the players don't get any say in whether contraction or relocation happens. And really, the players don't care about profitability maximization; they care about revenue maximization. Profitability can give them an argument for a greater share revenues, but the bottom line is they get paid on percentage of revenues.
How would reducing the number of teams help maximize revenues?
NorthCoast
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Well, you see the future is in TV deals.
So by closing down teams you force people to stay at home, driving up the TV deals because everyone is at home cheering on their local tea...oh, wait.
BigBadBruins7708
Registered User
profit > revenue
in addition, the majority of teams would make more money playing against anyone else vs what Florida/Arizona make per game
BobColesNasalCavity
Registered User
No, just no to contraction. Now we're conflating NHL (e.g. money-making cartel) with Subway (oversaturated and noncompetitive lousy franchises) sandwich shops.
One just makes a lot of money--Even considering the rotating list of poorly-run bottom dwellers. The other has legitimate financial concerns and faces actual competition.
One just makes a lot of money--Even considering the rotating list of poorly-run bottom dwellers. The other has legitimate financial concerns and faces actual competition.
Ted Hoffman
The other Rick Zombo
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It doesn't, but that's unrelated to the point I was making. [Well, actually it would theoretically help maximize the average amount of revenue per team, but I can quickly illustrate that this leads to an inherently unstable league.]
The players don't get any share of those profits, though. Hence, my comment about them not caring about profit maximization [other than using that as leverage to get a larger share of HRR and potentially push for an uncapped system].
The owners? Yeah, perhaps they have a goal to maximize profit. They may have financial incentives to not maximize profits because of other business ventures where losses on the sports team might be acceptable - but that's a discussion way beyond everyone's scope here [unless someone is running a pro franchise as part of some business empire]. But again, the fixation on profits ignores that trying to maximize them likely means contracting a number of teams and turning the sport into a much more regional, much more niche one that has negative long-term repercussions for growing the sport.
KevFu
Registered User
Profit doesn't go to the players. The rich teams can profit more with the cap/RS than when the CBA allowed for unchecked spending.
The sad thing is that the cap/floor tie to "the midpoint" of HRR is both glorious and horrific for the NHL. It's glorious because it CAN do what the owners wanted: tying spending to revenues for the league as a whole. But it's horrific because it doesn't account for the disparity in revenue growth from franchise to franchise.
The result is that contracting the poor teams would constantly create more poor teams and the gap between first and last in revenue would become so vast, you'd need to keep contracting.
And the weird thing is that THIS:
would actually be BETTER for the league as a whole within the CBA structure, than eliminating the lowest six revenue clubs. Cutting off the top would equalize everyone and create far more stability.
Of course, that’s insane.
But I think not constantly having labor disputes with the union over the percentage because the NHL can't figure out a simple way to tighten the gap is also insane.
The idea would be you get rid of the lowest revenue team, but you also then lose 23 players for each team contracted. So, the "average" salary actually goes up. The percentage of revenues that is reduced would be much lower than the percentage of players reduced.
I assume this is what you mean:
For the lowest revenue team this number:
(Cumulative player costs)/(league wide player costs)
is a higher percentage than this number:
(Team HRR)/(League-wide HRR)
And, thus if you eliminate the team, this number:
[(Leaguewide HRR) minus (League wide player costs)]/number of teams
goes up and the league is more profitable.
Is that right?
Ted Hoffman
The other Rick Zombo
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patnyrnyg is talking about trying to maximize profit, not revenues. Revenues would theoretically be maximized by putting teams in the exact locations where total revenue is maximized and the market has the highest inelastic demand [fans will show up regardless of how the team does]. That doesn't mean all teams will all be profitable, though.
That said, both of you are mostly off base on the notion of how to decide who to contract to maximize profits. While contracting teams with the lowest revenues or highest ratio of player salaries to HRR would in theory help with trying to maximize profitability, it's more complex than that. There's all kinds of other expenses that also factor in. And, this presumes that all owners really have a goal to maximize profitability for each franchise. [Spoiler: they don't - and I'm not even talking about owners who might want to run a loss for some other reason. It's far more simple than that, if you think about it.]
That said, both of you are mostly off base on the notion of how to decide who to contract to maximize profits. While contracting teams with the lowest revenues or highest ratio of player salaries to HRR would in theory help with trying to maximize profitability, it's more complex than that. There's all kinds of other expenses that also factor in. And, this presumes that all owners really have a goal to maximize profitability for each franchise. [Spoiler: they don't - and I'm not even talking about owners who might want to run a loss for some other reason. It's far more simple than that, if you think about it.]
KevFu
Registered User
This is where my comment comes in...
The league average of revenues (Forbes estimates, after RS, not exact) was $157 million. But slot the Average into the LIST and you get:
13 above average teams are a combined $509 million above average.
18 below average teams are a combined $536 million below average.
This is a problem. We want to eliminate the poor teams because they don’t bring in enough revenue to be successful. What’s the line for that? Cutting five teams to 26 gives us a marker: Who can afford the floor?
Our bottom five have to spend over 50% of their revenues to hit that salary floor. So that’s our indicator. You dip below 50% of revenue to hit the floor, and you're gone!
We cut those five teams (without increasing anyone’s revenues) and the new average is $167 million. That raises the floor to 62.5 million, which means two more teams are over the line, needing to spend over 50% to hit the floor.
So we cut those two. AVG up again, floor goes up. Another team falls below.
So we cut them. AVG goes up again, floor goes up. Two more teams dip below the threshold.
So we cut them. AVG goes up again floor goes up. Two more teams dip below the threshold.
So we cut them. AVG goes up again floor goes up. Four more teams dip below the threshold.
This would keep going until we hit 12 teams (9 American, 3 Canadian), if no one’s revenues went up. If revenue’s went up, you’d be cutting more teams and reach the point where the Rangers put the Canadiens out of business leaving TOR vs NYR. Of course, the rest of our countries would simply be hating hockey at this point.
