Cash flow should have very little to do with a position on signing bonuses. The CBA rules have taken most of the year-to-year variance out of the total compensation. And a team that isn’t financially healthy enough to have a bank line of credit to help them with cask flow variance has much bigger issues than this.
As a season ticket holder myself, I can assure you that even on my 8 month installment plan they have about half of my money by July or so for the coming season, and I expect some of their advertising and commercial account contracts are front loaded as well for reasons such as this.
While the year to year balance may make the math easier to figure, it doesn’t change when clubs receive cash flow. Most seasonal businesses operate at a negative cash flow until well into their season. The Blues of prior years have often said they they didn’t make money till the playoffs or in the playoffs. So their cash flow doesn’t catch up to their expenses till later in the season. So they are already floating money to cover expenses at that point.
We know the Blues are a cap team despite a mid sized market base and funding stream. Ticket prices are also in that mid market size range. While it does make sense that ticket holders have contributed more upfront and therefore the Blues would be cash flowing earlier than a typical, pay as you go, gate revenue would suggest, you still have to remember that they are likely operating in the red as the season starts.
We also have to extrapolate how much influx of cash those initial installments cover. With gate revenue being the majority of revenue for NHL clubs, it makes sense that it takes time to break even.
All these issues are compounded if you are floating salary payments through a loan. The interest you incurred on that loan will take you even longer to break even and make it harder to make a profit.
I think the thing we have to remember is NHL franchises are long term investments. You make real money on the sale. Sure there is money to be made from cash flow on a year to year basis, but the asset accruing long term value is why you are in it from a business standpoint, especially as a mid market team.
It’s really for us to spend other people’s money, but the reality is that most owners expect a well functioning business model to be adhered to.
Whether bonuses are a problem for the Blues financially, it is unclear. But, it’s not hard to see how they could possibly be a problem financially. It you are a large market team, this is much less of an issue. And, when you have multiple players with heavy bonus laden contracts, all of this gets that much harder to manage.
Again, we are taking about millionaires here, so my sympathy level is virtually nothing, but I get the logic of why they would be opposed to bonuses from a financial and even a principled standpoint.
