CSE Terminates 25% of Business Operations Staff

[tradervik]

I agree that franchise valuations won't suffer too much as long as people expect the economy to rebound in the fairly near future. In the meantime, we're going to see a lot of clubs in financial pain and perhaps forced to take on (more) debt.

I believe the NHL has a pretty big loan pool ($2 billion?) that's available to all clubs, so I doubt anyone is going bankrupt. However, some franchises may need to reduce costs in every way possible including player salaries.

It will be very interesting to see how things shape up when the season finally draws to a close. As things stand, the free agent market could be a barren wasteland for the upcoming UFA crop.

 

[bandwagonesque]

I agree that franchise valuations won't suffer too much as long as people expect the economy to rebound in the fairly near future. In the meantime, we're going to see a lot of clubs in financial pain and perhaps forced to take on (more) debt.

I believe the NHL has a pretty big loan pool ($2 billion?) that's available to all clubs, so I doubt anyone is going bankrupt. However, some franchises may need to reduce costs in every way possible including player salaries.

It will be very interesting to see how things shape up when the season finally draws to a close. As things stand, the free agent market could be a barren wasteland for the upcoming UFA crop.

If revenue generated by popular spectator sports suddenly drops to a fraction of what it was and doesn't increase for a long period of time, athletes competing in those sports won't be making millions of dollars a year anymore. There's no way around it. If NHL games don't have more than a few hundred live spectators or none at all for public health reasons, salaries will drop accordingly. Alex Lafreniere's first bridge deal could be for 3 years and $1.2m.

 

[F A N]

Yeah, I wonder how the owners of the Kraken are feeling today? That's a lot of money to put out, at least the other owners got to benefit from the 7.8% CAGR. The value argument can be made for the higher end franchises in the NHL. But only a handful are on the upper end. The salary cap is more than 25% of Florida's value which means HRR is greater than 50%. For them, and others like them, revenues are very important. Just because the number is big doesn't mean the economics are great and that owners don't have to worry about losing money because "the value of their franchise will increase". That works for Toronto and New York. Not so much for some others.

A lot of it is based on the economy. Seattle's Key Arena apparently turned profitable after the SuperSonics left. There was a time when the Canucks were bleeding money. The past two seasons the Canucks' operating income was over $30M and it's not like the team has been successful on the ice.

You have to keep in mind also that some "poor" teams are owned by rich billionaires. The Panthers have one of the lowest ticket prices in the league and do not sell out. The Panthers have not had a problem spending close to the cap. The same goes for the Sabres. But these billionaire owners didn't get to where they are in life consistently losing money. They certainly don't have much of an appetite spending money to see their team lose.

 

[m9]

If revenue generated by popular spectator sports suddenly drops to a fraction of what it was and doesn't increase for a long period of time, athletes competing in those sports won't be making millions of dollars a year anymore. There's no way around it. If NHL games don't have more than a few hundred live spectators or none at all for public health reasons, salaries will drop accordingly. Alex Lafreniere's first bridge deal could be for 3 years and $1.2m.

Obviously they will make less, but this is an exaggeration. The NHL makes 35-40% of their revenue from gate. The NFL is more like 15-20%. Still lots of money to go around.

 

[Hit the post]

Obviously they will make less, but this is an exaggeration. The NHL makes 35-40% of their revenue from gate. The NFL is more like 15-20%. Still lots of money to go around.

Still, the NFL makes so much money from nongate sources it’s insane in pure dollar amounts. Can’t believe voters will always essentially hand over tax payers to provide corporate welfare to billionaires (who’ll end up generating a ton of money...both in real dollars and asset value) in that league whenever they want a new stadium. Detroit Lions could still turn a profit with nobody in the stands.

 

[bandwagonesque]

Obviously they will make less, but this is an exaggeration. The NHL makes 35-40% of their revenue from gate. The NFL is more like 15-20%. Still lots of money to go around.

Every other revenue stream will be reduced. Expenditures on advertising worldwide are dropping. Money to subsidize stadiums and give tax breaks to teams won't be there, and those practices may become politically impossible anyway. Tax revenue from ticket sales and sports-related tourism will be pretty much gone.

 

[m9]

Every other revenue stream will be reduced. Expenditures on advertising worldwide are dropping. Money to subsidize stadiums and give tax breaks to teams won't be there, and those practices may become politically impossible anyway. Tax revenue from ticket sales and sports-related tourism will be pretty much gone.

You described a hypothetical doomsday scenario where a star player on his 2nd contract will be making 20% or less of what someone in that position is making right now within 4 years and it's not going to happen. I understand what you're saying, but it's too extreme and a complete exaggeration.

If you believe this all to be true, then what are you saying the salary cap in the NHL will be in 2023-24 which would likely be Lafreniere's first year of his 2nd contract? 30 million?

 

[bandwagonesque]

You described a hypothetical doomsday scenario where a star player on his 2nd contract will be making 20% or less of what someone in that position is making right now within 4 years and it's not going to happen. I understand what you're saying, but it's too extreme and a complete exaggeration.

If you believe this all to be true, then what are you saying the salary cap in the NHL will be in 2023-24 which would likely be Lafreniere's first year of his 2nd contract? 30 million?

If the pandemic isn't under control to the point where thousands of people can safely assemble in an arena? Absolutely.

 

[iceburg]

A lot of it is based on the economy. Seattle's Key Arena apparently turned profitable after the SuperSonics left. There was a time when the Canucks were bleeding money. The past two seasons the Canucks' operating income was over $30M and it's not like the team has been successful on the ice.

You have to keep in mind also that some "poor" teams are owned by rich billionaires. The Panthers have one of the lowest ticket prices in the league and do not sell out. The Panthers have not had a problem spending close to the cap. The same goes for the Sabres. But these billionaire owners didn't get to where they are in life consistently losing money. They certainly don't have much of an appetite spending money to see their team lose.

Exactly this. I'm also not naive enough to suggest that the ego factor doesn't come into play. Billionaires like to play with other billionaires and want to be counted as part of the club. Sports franchise ownership is one sure way in.

 

[m9]

If the pandemic isn't under control to the point where thousands of people can safely assemble in an arena? Absolutely.

I don't think we would see a 30 million salary cap even if no fans ever entered an arena again. There are too many other ways to make money and too many smart people involved who would figure out a way to monetize their product through other means.

I also think the main squeeze on player contracts will be the middle tier, not the stars like we are assuming AL is in this scenario.

 

[Boose Brudreau]

Obviously they will make less, but this is an exaggeration. The NHL makes 35-40% of their revenue from gate. The NFL is more like 15-20%. Still lots of money to go around.

forbes estimated that the NHL generated ~75% of hockey related revs from: gate/game day sales (merchandise, parking, concession etc). if they can't fill those arenas, the pie is going to experience some ice bath level shrinkage.

 

[VanJack]

A lot of it is based on the economy. Seattle's Key Arena apparently turned profitable after the SuperSonics left. There was a time when the Canucks were bleeding money. The past two seasons the Canucks' operating income was over $30M and it's not like the team has been successful on the ice.

You have to keep in mind also that some "poor" teams are owned by rich billionaires. The Panthers have one of the lowest ticket prices in the league and do not sell out. The Panthers have not had a problem spending close to the cap. The same goes for the Sabres. But these billionaire owners didn't get to where they are in life consistently losing money. They certainly don't have much of an appetite spending money to see their team lose.

I get that the fact that most pro sports franchises in N.A. are owned by billionaires, who treat them as basically 'toy businesses' to play and tinker with, without worrying too much about the bottom line.

The problem is, that most of the other businesses they operate, are hemorrhaging red ink as well. And those are the enterprises that are really paying the freight.

So how long will they be happy pumping money into their 'toy businesses' to keep them afloat, while the 'meat and potatoes' businesses are bleeding cash? Not long is my guess.

 

[ChilliBilly]

You described a hypothetical doomsday scenario where a star player on his 2nd contract will be making 20% or less of what someone in that position is making right now within 4 years and it's not going to happen. I understand what you're saying, but it's too extreme and a complete exaggeration.

If you believe this all to be true, then what are you saying the salary cap in the NHL will be in 2023-24 which would likely be Lafreniere's first year of his 2nd contract? 30 million?

No reason for the cap to drop. What’s going to happen is that escrow is going to grow incredibly. Aren’t the players capped at 52% of revenue. So if revenues drop say 60% players are only going to get 40% of their Present salaries.

 

[Hit the post]

Have to sometimes wonder just how much money some of them claim to be losing. For example, I think movie companies are known for their 'creative accounting'. Forrest Gump still hasn't made Paramount money despite grossing close to 700 million worldwide (mainly to prevent Winston Groom from getting his contracted 3% of the profits - however this is the same reason why there has been no sequel; where Hollywood churns out tons of sequels/retreads/etc. Groom isn't about to be burned twice).

 

[m9]

No reason for the cap to drop. What’s going to happen is that escrow is going to grow incredibly. Aren’t the players capped at 52% of revenue. So if revenues drop say 60% players are only going to get 40% of their Present salaries.

Yeah, exactly. Because of their escrow system they won't need to drop the cap.

It will be interesting comparing what the NHL and what the NFL did as the NFL kept the same salary cap for this upcoming season and they don't have any escrow. But next season they could see a drop to their salary cap of 10%+ and then maybe even more the following year.

 

[m9]

forbes estimated that the NHL generated ~75% of hockey related revs from: gate/game day sales (merchandise, parking, concession etc). if they can't fill those arenas, the pie is going to experience some ice bath level shrinkage.

Haven't seen that anywhere, but that's interesting if true.

 

[StreetHawk]

I don't think we would see a 30 million salary cap even if no fans ever entered an arena again. There are too many other ways to make money and too many smart people involved who would figure out a way to monetize their product through other means.

I also think the main squeeze on player contracts will be the middle tier, not the stars like we are assuming AL is in this scenario.

I would expect that to be the case. You'll see the top 3-4 guys get their money.

Like for the Canucks, it will be Hughes, Petterson, Boeser, Horvat, Miller for now. If Hughes and Petey account for $17-$18 mill combined, then adding another $16 mill for the other 3, you are up to $34 million for 5 guys. Leaves you with $47 mill left to pay 18 players. That's an average of $2.5 mill per player.

Then the tough decisions of how to spend the rest of the money comes into play. It's the Gaudette, Virtanen, Rathbone, etc. group where you can only keep so many of them

 

[Hit the post]

I would expect that to be the case. You'll see the top 3-4 guys get their money.

Like for the Canucks, it will be Hughes, Petterson, Boeser, Horvat, Miller for now. If Hughes and Petey account for $17-$18 mill combined, then adding another $16 mill for the other 3, you are up to $34 million for 5 guys. Leaves you with $47 mill left to pay 18 players. That's an average of $2.5 mill per player.

Then the tough decisions of how to spend the rest of the money comes into play. It's the Gaudette, Virtanen, Rathbone, etc. group where you can only keep so many of them

Loui Eriksson, Tyler Myers, Jay Beagle, Jordie Benn and Brandon Sutter. Almost enough for two of the 'big three cap contracts' for the Laffs. But we cover FIVE roster spots with those guys compared to Toronto!

 

[StreetHawk]

Loui Eriksson, Tyler Myers, Jay Beagle, Jordie Benn and Brandon Sutter. Almost enough for two of the 'big three cap contracts' for the Laffs. But we cover FIVE roster spots with those guys compared to Toronto!

For every big contract they keep from their non big bigs they need to find cheaper options. That bad spending from prior years is going to haunt this group now.

going forward it just emphasizes that when you miss on a contract you can’t keep adding until you remove. And if you can’t remove it means you can’t take another swing.

something the regime never learned.

 

[VanJack]

Over the past five seasons, no team in the league has produced worse results for one of the highest player payrolls in hockey than the Vancouver Canucks.

Something to think about when the plebs and minions continue to walk the plank at Canuck Sports and Entertainment, as the billionaire owner cuts back.

 

[Blue and Green]

By the terms of the CBA extension, escrow cannot exceed 20% next season and declines steadily over the following three seasons to 6% maximum by the 2023-24 season.

 

[orcatown]

Lots of companies will be using the panic to lean out. Let everyone go and then selectively hiring people back. Probably lot of automation can be used to fill gaps. Only safety against this is being in the public sector where the government doesn't have to face the bottom line -although this might be increasing less so as government revenues fall drastically.

Younger people bare the brunt of this and it's ironic that they have little to fear from the virus. Indeed young people have more chance of dying from wild animal attacks as they have from a covid infection. Like there have been zero deaths in BC between the ages of 0 and 39 as of May 15 (and I believe that remains the same today) . This is consistent with data from around the world. Couple of examples here:

Japan: coronavirus patients distribution by age group 2020 | Statista

Coronavirus (COVID-19) deaths by gender and age Germany 2020 | Statista

 

[F A N]

Over the past five seasons, no team in the league has produced worse results for one of the highest player payrolls in hockey than the Vancouver Canucks.

Something to think about when the plebs and minions continue to walk the plank at Canuck Sports and Entertainment, as the billionaire owner cuts back.

Nah. They are cutting staff such as ticket sales. Obviously selling tickets is not a priority or problem right now. This current season they had over 90% renewal rate. Is that due to their ticket sales team or the fact the team has exciting young players to watch? I think it's the latter.