Bill Daly – The NHL is Healthy

Discussion in 'Fugu's Business of Hockey Forum' started by Fugu, Mar 14, 2007.

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  1. Fugu

    Fugu Administrator

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    I'm surprised this piece hasn't been picked up. While the reporter could/should have expanded a bit on some of the questions and issues as they're pretty interesting, there's still a few interesting comments from Bill Daly.

    Star-Ledger Link to Bill Daly Q&A:


    Some excerpts:


    *Admits conventional television has been a challenge for the NHL for a while and continues to be a challenge.

    *Versus could have done a better job with content they did/did not pick-up, but feels they’re improving and much of this was expected


    *The NHL never meant to take hitting out of the game, and hopes it continues. “What we have made a conscious effort to deal with in an effective way are hits that are dangerous.â€


    *Sees a potential for abuse in the rental player industry. “Obviously an agreement like that, whether implied or expressed, would clearly be a viola tion of our (CBA) as well as league rules and bylaws.†Mentions this has been explored with the NHLPA, but doesn’t expect any changes

    --This is probably the biggest surprise to me. Anyone know what Daly is referring to when he says the CBA has provisions to dissuade teams from this behavior? It almost sounds like wishful thinking in that he’d like to have a clause about this but the NHLPA would not be amenable to it.


    *Currently projecting about 6-7 percent growth in revenues = $47-49 million cap. If inflation factors are applied per CBA provision, which were not done in the past, this figure could go up by an additional $1-2 million.
     
  2. kdb209

    kdb209 Registered User

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    It's not clear exactly what Daly is refering to here concerning the rent-a-player market. If he is refering to a Doug Weight kind of situation where a team re-signs a rent-a-player they traded away and there was any kind of specific agreement between the player and team concerning re-signing before the trade, that could be construed as a violation of Article 26.2.

     
  3. Hawker14

    Hawker14 Registered User

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    the problem with a rule such as "A UFA cannot re-sign with a club that traded him in the preceding season" is that it restricts a player's "free agency", ie. it limits his ability to negotiate with all 30 teams.

    i honestly can't see the nhlpa going for it, now that Saskin seems to be gone. Now that the NHL's mole is gone, Daly and Bettman will have to enforce "verbal nudge/nudge wink/wink deals" solely from the NHL side.
     
  4. Irish Blues

    Irish Blues Present once again

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    I'm surprised no one went berserk and demanded an investigation this past offseason after Doug Weight went back to St. Louis, especially considering he all but admitted in his press conference with Carolina after being dealt that he was just staying for the rest of the season and going back to the Blues after the playoffs. Of course, Mark Recchi went back to Pittsburgh after winning the Cup, so who knows.
     
  5. Fugu

    Fugu Guest


    Yes, I doubt the NHLPA would ever agree to something that would further restrict player options. The acquiring team knows that risk exists so they have to factor that into the equation. Thus I don't see why the NHL feels it has to police this aspect of team trades. No one is forcing any participant to make deals for UFA's at the deadline.
     
  6. Fugu

    Fugu Guest

    Does anyone care to predict if inflation will be factored in when the cap is set - now that Saskin is gone? This could have the cap going to the $50-52 MM level.
     
  7. La Grosse Tendresse

    La Grosse Tendresse Registered User

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    Yep, and the NHL is doing just fine...
     
  8. GSC2k2*

    GSC2k2* Guest

    Mole? What the hell are you talking about? :shakehead
     
  9. Irish Blues

    Irish Blues Present once again

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    If the upper limit is $50 million after adding the 5% inflation factor, you can bet Edmonton will be trying hard to put together a group of teams to get the factor waived with the "... but we can't compete with a $50 million cap" argument.
     
  10. Hawker14

    Hawker14 Registered User

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    interesting question.

    small market teams like edmonton and calgary will probably have a problem spending close to that level since they have to subsidize francises in cities close to three times their size or more like st. louis and atlanta.
     
  11. hillbillypriest

    hillbillypriest Registered User

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    I don't understand this proposition. If the cap is based on percentages of revenue, isn't inflation implicitly built into the determination of the cap?

    edit: I just read the linked article which mentions the inflation factor. Can anyone elaborate on what the purpose of the inflation factor is?
     
    Last edited: Mar 14, 2007
  12. GSC2k2*

    GSC2k2* Guest

    After having been subsidized themselves in seasons past? You bet.
     
  13. GSC2k2*

    GSC2k2* Guest

    It is rather straightforward. It is not "inflation" per se. It is more "expected revenue growth", which can come from higher prices or increased attendance or new revenue streams - not "inflation".

    The player's share is based on a percentage of what the revenue is. The cap is based on $8 million above what the average revenue is expected to be. This is determined by calculating what revenue was in the year past, and adding 5% to it - an assumed growth factor. Doing it this way prevents the escrow form being too far off.

    Example:
    If revenues are $2.1 billion in a year, then in order to figure out what the cap will be in the next year, one takes 54% of that to get the player's share. Divide that by 30, and you get the average compensation per team. You get the upper and lower limits by adding and subtracting $8 million. That being said, for that year the player's share will be the prescribed percentage of overall revenue (ie 54%). The CBA assumes that revenues will grow by 5% per year (unless the parties agree otherwise). If they did not factor in what one expects growth to be (since it is actual revenue at the end of the year that detemrines the players' share), then escrow would be unnecessarily high.

    I hope that expalins it.
     
  14. Fugu

    Fugu Guest


    It's hardly the same thing. As you know, those subsidies were based on an attempt to equalize the CAN : USD disadvantage Canadian teams faced when the CAN took a nose dive. I don't think any of the equalization payments ever approached the highest revenue sharing checks sent out after the first year, and probably did not fully address the full amount of the disadvantage faced due to currency fluctuation.

    Secondly, while we both know that cost certainty is the intent of the CBA-featuring the cap with linkage, in fact many fans believed it would somehow benefit small market Canadian teams more than it has been doing (benefit defined as money flowing in, not out).
     
  15. Irish Blues

    Irish Blues Present once again

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    I think the point is that Canadian teams were subsidized for several years, St. Louis and Atlanta (assuming both qualify for revenue sharing this season) will have been "subsidized" for a whole 2 years.

    Of course, if Edmonton doesn't make the playoffs this season (probably a safe bet), that's a good chunk in revenue they won't have compared to 2005-06 ... which, considering they're in a 16,839-seat arena and the lease they have that prevents them from raking in all the revenue generated at Rexall Place, could conceivably mean they might end up qualifying for revenue sharing themselves even though they're playing to a packed house 41 times a year and even after the ticket increases imposed after the Finals run.

    And that would rip a huge hole in the "Canada supports all the weak U.S. franchises, move one up to Canada because we can support hockey without needing help from others" argument, wouldn't it?
     
  16. Fugu

    Fugu Guest


    Good summary. Unless the parties agree otherwise. I'm not completely clear on this portion of the determining the cap. I thought the NHLPA and NHL had to agree to exclude the 5% over the projected revenue, otherwise it is automatically included. It needs to be a bilateral agreement, not an unilateral objection.

    If you look at the way Daly refers to the matter, he does leave it open as a distinct possibility absent some other arrangement. With Saskin having been seen as rather cooperative in his NHL/NHLPA partnership venture, one could not assume that the strict letter of the CBA would be applied.

    The other point that should not be overlooked is that the player's share of the NHL revenues will rise from 54% to 55-56% depending on where that final revenue figure ends up.
     
  17. Fugu

    Fugu Guest



    I think the Oilers playoff revenues were approximately $26 million, so yes, they are going to have a huge fall.

    As to your other point about team's being able to cut if simply by selling out at somewhat average prices? People aren't paying attention to revenue streams and the plight of several US teams that do reasonably well at the gate. That's a whole different debate though, but I'm sure it will get pulled in....
     
  18. Hawker14

    Hawker14 Registered User

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    your exactly right. Canadian teams were generating very strong revenues, but were disadvantaged by the low Canadian dollar as the majority of expenses were in US$. ie.

    True. The most surprising aspect of the CBA and revenue sharing is just how terribly several US markets are doing generating revenues. The fact a team like Phoenix, after 9 years in operation, gave away an average of 3500 freebie tickets per game in '05-'06, is a clear example of how poorly the NHL is doing in certain markets. The Canadian teams collected currency equalization, but still generated strong revenues in local dollars. What are the marginal US teams' excuses ?
     
  19. hillbillypriest

    hillbillypriest Registered User

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    Thanks for your response. What I'm taking from this is that the difference between assuming and not assuming the 5% annual revenue growth is that there is a greater risk that if revenues don't grow by the assumed amount, there's a greater risk that there players will have to make an escrot payment. Is that the upshot? If so, it seems to me that the reason the NHLPA may not have wanted to use the 5% inflation factor is that they are protecting the comparatively lower paid players at the expense of the higher paid players. Is that right?

    Anyway, I'm not sure if franchises like Edmonton that are on record as favouring a lower cap would be as concerned about a cap increase to $50 M caused by using the 5% factor as they would be about a cap of $50 caused by league revenue growth.

    Sorry if I don't get this right. I sure appreciate the heavyweights on this board that have demistified the CBA for lazy guys like me!
     
  20. Irish Blues

    Irish Blues Present once again

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    Don't forget about all the Oilers merchandise that was sold when they acquired Pronger ... and then :lol: all the Pronger merchandise that people rushed out to by so they could destroy when Pronger announced he wanted out of Edmonton. (Because, you know as well as I do that it really hurt him when they burned the jerseys with his name on them, ripped to shreds the pictures with his image on them, and crushed the figurines made in his likeness when he cashed his royalty check from the NHLPA for all those sales attributable to him.)
     
  21. hillbillypriest

    hillbillypriest Registered User

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    Come on. Do you really think people bought stuff just so they could destroy it? I'm pretty sure that doesn't add up to a number with too many zeros (if any) at the end.
     
  22. GSC2k2*

    GSC2k2* Guest

    Actually, it is more a situation of protecting the vast majority of players with signed contracts. The players who benefit from a higher cap are the unsigned players. The higher the cap, the bigger contracts they sign. The bigger contracts they sign, the higher the risk of escrow cutting into everyone's paycheck, including the players with existing contracts.
     
  23. hillbillypriest

    hillbillypriest Registered User

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    Fair enough, thanks.
     
  24. GSC2k2*

    GSC2k2* Guest

    Responses are as follows:

    1. "Local revenues", as you refer to them, can be higher when they are worth less on an absolute basis. Similarly, when the US currency is valued at a high level, their revenue will necessarily be lower because they are collecting more valuable currency. By your logic, a team in Thailand that generated 150 million baht would be doing great, even though that is worth about twelve bucks US (I exaggerate for effect, but hopefully you get my drift).

    2. The reason why teams are subsidized is irrelevant in the end. The point is that US teams did not HAVE to subsidize CDN teams, but they did. Revenue sharing creates a stronger league.

    3. Furthermore, my point was to demonstrate that revenues are cyclical for a variety of reasons. Canadian teams are doing excellently these days. That was not always the case. While the low Cdn dollar was the putative reason for subsidization, it still would not have been all that necessary if the western teams were doing well.

    4. Further to #3, in the first part of this decade, the western Canada teams were lower tier. Calgary and Edmonton were 17th and 20th in attendance in 2000-01. The next year, Edmonton was 17th and Calgary was 21st. The next year, 15th and 17th, and the year after that, 14th and 16th. A whole pile of mediocre. Big time player Vancouver was 13th and 11th in the first two years of this decade, and in 1999-2000, they averaged a paltry 14,600 (less than Phoenix that year) and ranked 24th.

    5. Nichols' claims of generating $80 million were in Canadian dollars, as you may recall we discussed and determined in an older thread on this topic.

    6. While you pooh-pooh the subsidization of the Canadian teams due to a weak dollar, you do not credit the "strong revenues" that they are experiencing now to the impact of the vastly improved US dollar. You cannot have it both ways.

    .

    The usual suspects around here seem to think that Canada carries the NHL and always has. Far from it, folks (as the numbers above demonstrate amply). Toronto and Montreal have been perennially strong, but do not be fooled into thinking it is a "Canadian" thing. It is a "storied NHL franchise in two of the bigger markets" thing. Everything else, including the vaunted "perennial sellouts" Calgary and Vancouver is cyclical, just like many of the US markets. The other Canadian teams are in an upswing, aided and abetted greatly by a freakish economy in Alberta. However, teams go up and down, and economies go up and down, and team attendance and financials go up and down with them. The only thing that helps hockey teams in "established" markets is the speed with which the market responds to the team's improvement and the slowness that it takes a lousy team to erode an established market (although it CAN be eroded - with few exceptions like TO and MON).

    The lesson: do not assume that it is a Canada/US thing. Canadian teams are doing well now, after a lckout starved a nation of hockey for a year. The Canadian teams are still reaping benefits of that pent-up demand, along with a superheated western economy. Neither of those conditions will last forever. IF the CDN dollar goes down, and the western economy cools down (as it must), you might be a little surprised who starts subsidizing who.

    Hawker, I find it interesting but predictable that you have taken your rough and estimated calcs from another thread and now turned them into a "fact". You didn't think those of us paying attention would let you get away with that, would you?
     
  25. GSC2k2*

    GSC2k2* Guest


    Yes, I read it as being subject only to the mutual agreement of both parties as well.

    One thing I have been meaning to poit out, fugu, is that the decision to forego the 5% inflation is hardly evidence of any "ccoperative" feeling form the NHLPA or a cozy relationship.

    As you know, the players get what their percentage says they get, regardless of the cap. As such, the NHL cares a little but does not care nearly as much as the NHLPA should. In deciding whether to forego the 5%, the question really is whether the NHLPA believes revenues will achieve the 5% growth and what the projected escrow might be that could go back to the owners in whole or in part. If the NHLPA does not think the escrow will all come back, then it becomes a value judgment by them as to whether a decison should be taken to benefit the majority of players who are already signed (that is, forego the automatic escalation) or benefit the FA players (put the escalation in and keep the cap as high as possible). Either way, collectively the NHL pays the same amount.
     

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